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Reality Check: The Costs of Single-Payer Health Care

By at 3 January, 2019, 2:45 pm

By Karen Kerrigan 

Think tanks on the right and left have reached the same conclusion: A “Medicare for All” government-run health care program is shockingly expensive.

The Urban Institute calculated that the plan championed by Senator Bernie Sanders (D-VT) will cost taxpayers $32 trillion over 10 years, and the George Mason Mercatus Center pegged the ten-year cost at $32.6 trillion.  For entrepreneurs and small business owners concerned about out-of-control spending and the current size of government, here’s a stat that will fuel those worries: Our mammoth federal government would grow by two-thirds under a single-payer system!

According to a January 3, Washington Post article, the “new Democratic majority in the House will hold the first hearings on Medicare-for-All legislation, a longtime goal of the party’s left” with new legislation expected in a few weeks.

In the Congress that just ended, a third of Senate Democrats were co-sponsors of S. 1804, the Sanders bill.  On the House side, 124 Democrats signed onto H.R. 676, a Medicare “expansion” bill that would “provide all individuals residing in the United States and U.S. territories with free health care that includes all medically necessary care, such as primary care and prevention, dietary and nutritional therapies, prescription drugs, emergency care, long-term care, mental health services, dental services, and vision care.”

No private insurance is allowed under these bills, only plans that cover procedures that are not “medically necessary” like “cosmetic surgery.” Taxes on everyone pay for these plans (although revenue comes up way short in terms of what’s needed), and many of those tax hikes would disproportionately fall on the backs of – you guessed it – small business owners, the self-employed, entrepreneurs and their hard-working employees.

According to the Mercatus Center study noted above: “Doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the [Sanders] plan.”

So, supporters of a government-run system need a lot of money, and in the promise land of health-care-for-all these resources magically appear by simply “taxing the rich” or are derived from the savings that will come from a government system that runs with the efficiency of a Swiss watch.

With the current split between the House and Senate in the 116th Congress, it will be quite difficult for Bernie’s activists – though fueled by the energy of newly-elected Rep. Alexandria Ocasio-Cortez (D-NY) and her other “new deal” colleagues – to advance legislation that implements this government-run system.  But momentum behind the fantasy scheme has been given new life, which means it’s time to review the harmful impact for patients, small businesses and health care consumers.

After all, the goal of supporters is to continue to win transitional reforms and public support that will lead to full single-payer in 2021 (if the elections turn out in their favor).  As Paul Krugman divulges in a December 31, New York Times piece about political strategy and how “Green New Deal” supporters must learn from the passage of Obamacare:

“Single payer had no chance of being enacted under President Barack Obama, but a somewhat awkward public-private hybrid system that preserved employer-based insurance was (just) doable….Now that the principle of universal coverage is out there, a gradual transition to some version of Medicare for all is starting to look politically possible; but it was important to start with policies that achieved big progress without greatly disrupting people’s lives.”

So, let’s review some of the realities of single-payer that would greatly disrupt people’s lives.

Harms of a Single-Payer Government-Run Health Care System

Massive Spending Increases and Costs: As noted above, an assessment by the liberal Urban Institute found that Senator Bernie Sanders plan estimates that national health expenditures would increase by $6.6 trillion (16.6%) over the next decade. As a result of transitioning to a single payer system, federal expenditures would dramatically increase by $32 trillion over the same decade, imposing a massive tax increase on small businesses, the self-employed, American seniors and families.

The Currently Insured Will Pay Much More for Government-Run Health Care: According to a an analysis from Emory University, roughly 70 percent of working privately-insured households will pay more under a single-payer plan than they do for health insurance today.  Approximately 180 million Americans obtain private coverage from their employers, and a government-run single-payer plan would eliminate this coverage. In addition, American workers are “largely positive” about the quality of health care they receive, according to Gallup, with 75% saying the healthcare they receive is “excellent” or “good.”  That does not matter under single-payer.

Medicare Advantage Eliminated:  More than 19 million seniors depend on Medicare Advantage – the private form of Medicare that provides critical financial protection, such as out-of-pocket caps on health care costs, and benefits beyond traditional Medicare.

For these seniors, the added protection against soaring health care costs and affordable disease management and care coordination provided by Medicare Advantage can make a difference in maintaining their health and independence.

Under a single-payer plan, Medicare Advantage would be eliminated. These benefits and many other critical coverage options, including Medicare supplement insurance (Medigap), would largely end, exposing seniors and vulnerable beneficiaries to gaps in care and greater financial uncertainty.

Rationing is Reality, Timely Access to Health Care Threatened:  In the United Kingdom, where the National Health Service (NHS) maintains authority over the number and type of health services available to patients, the agency recently ordered more than 55,000 non-urgent operations cancelled or delayed for at least a month in order to accommodate urgent and emergency care, according to the Pacific Research Institute.

In total, more than 3 million British residents faced wait times longer than 18 weeks for surgery – a figure expected to increase to more than 5 million residents facing delays in care by 2019.

After approving a new treatment for blood cancer in children and young adults in Sept 2018, the UK’s National Institute for Health and Care Excellence (NICE) rejected the same treatment for adults with aggressive leukemia just two weeks later, creating a rationing system across the country.

Canadians also face steep barriers to care under their single-payer system. According to research from the University of Toronto, “long waits for non-urgent services like hip replacements or M.R.I. scans for back pain are a genuine problem in many parts of the country…more than a third of Canadians wait more than two months to see a specialist, and 18 percent of Canadians wait at least four months for elective surgery.”

America’s Doctor Shortage May Worsen: With the growing shortage of U.S. physicians, particularly primary care doctors, and the current challenge many individuals have in finding doctors, a government-run system may exacerbate this crisis

According to a Heritage Foundation report: “A Physicians Foundation survey reveals that 49 percent of doctors feel often or always burned out. The survey found that 58.3 percent of physicians primarily complained about the regulatory and paperwork burden, and the second-most and third-most common complaints were ‘erosion of clinical autonomy’…A Medscape survey also found that the largest proportion of physicians, 56 percent, felt that ‘too many bureaucratic tasks (e.g., charting, paperwork)’ contributed to burnout; 39 percent pointed to being overworked…”

Just imagine how a government-run system would impact burnout, paperwork burden and autonomy.

Harmful Economic Impact:  An increase in payroll taxes to fund the government’s single-payer plan (2.2 percent for workers and 6.2 percent for employers) along with other costs would eliminate nearly 11.6 million jobs. The magnitude of tax increases necessary to fund this massive government program does not help to foster the type of business climate that enables entrepreneurship and healthy small business growth.  A single-payer, government-run health care system is exactly the type of policy that harms the ecosystem for risk-taking to start a business, and imposes hefty costs that affect the ability of owners to compete and operate a successful business.

Conclusion

Given what we already know about the dangers and breakdowns of single payer and government-run health care, it’s hard to believe that politicians and advocates continue to push these schemes.  Yes, many reforms are still needed to improve access to, and the affordability of health insurance and health care, but a system fully run by the government is irrational policy.

In places where it has been tried or is currently operating, single-payer has caused extraordinary disruption for patients, practitioners, taxpayers and within the health care system itself. The sad stories and mismanagement associated with our own Veterans Affairs health system, for example, is testament to government’s ability – or lack thereof – to effectively manage the intricacies of the nation’s $3.5 trillion health care sector (2017 data.)

It’s not too late for some elected officials to come to their senses. Thankfully there are millions of health care consumers, professionals, small businesses and taxpayers who have a strong stake in  bringing single-payer supporters out of their delusional thinking when it comes to such a system.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council  

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