The Libertarian-leaning Mercatus Center at George Mason University has recently released a study which concludes that the federal government would have to spend an additional $32 trillion over ten years to cover the cost of a Bernie-Sanders-envisioned Medicare-for-all healthcare program. Conservative and Libertarian media outlets immediately reported on the study’s findings (which match estimates made by a left-leaning think tank from just a few years ago) to persuade their audiences that this plan is too expensive to even consider. Many left-wing and mainstream media outlets have countered this claim by saying that the $32 trillion cost of medicare-for-all could actually amount to overall savings in healthcare spending. The latter outlets are wrong.
The George Mason study only tells us how much it would cost to provide Medicare-for-all if all Americans were using Medicare as their sole means of healthcare financing. What the study does not mention (something we should be able to figure out ourselves) is that 90% of Medicare recipients receive supplemental health coverage from their employers, the private sector, additional federal programs, and other areas. In other words, Medicare does not get the job done. If the $32 trillion were spent on Medicare-for-all, the vast majority of Americans would be spending more on top of that if they actually wanted sufficient healthcare.
However, it is unlikely that supplemental healthcare would even be available. Medicare-for-all would increase the demand for healthcare (when people have health insurance, they use it more often whether they need it or not) without adding any new doctors, nurses, hospitals, medical equipment, medicines, or anything else patients need. When demand increases and supply does not, prices rise. And what do socialists propose when price increases are looming? Price controls! In other words, removing the incentive for doctors and nurses to work harder and doing the same for companies that invest in new medicines and medical procedures (the US is the world’s leader BY FAR in healthcare innovation… Medicare-for-all would cut it down to size).
Finally, if we throw economics and unintended consequences out the window and accept the left-wing line that we’d actually save a few trillion dollars with Medicare-for-all, you have to consider who we is. To pay for Medicare-for-all, doubling income taxes and the corporate tax rate would not even cover the federal government’s costs. And only about half the country definitely pays federal income taxes. This means that a little over half the country’s taxes would be doubled to pay for everyone’s healthcare. Those who pay no federal income taxes would be putting zero skin in the game and reaping all the rewards. With respect to those who are physically unable to provide for themselves, the most productive Americans would shoulder a greater burden while the least productive would have their check-ups paid for.
In short, Medicare-for-all would only save money if everyone accepts the quality of care provided by Medicare now. Americans would also have to accept the fact that alternative options would be in shorter supply, meaning they would be far more expensive. As Medicare-for-all would increase demand for healthcare without increasing the supply of healthcare providers, medicine, or equipment, costs would rise and/or incentives to provide healthcare would disappear (and access would be rationed further than it is now). Lastly, only some Americans would be on the hook to pay for all of this… and it would be a big hook at least twice the size of the one they are on now.
Want a better alternative? Let’s throw out the insurance model altogether. Have health insurance cover only medical expenses in which life or limb are in jeopardy and pay out of pocket for everything else. Let states and municipalities manage Medicare, Medicaid, and other government healthcare programs, so there is more room for experimentation and greater ability for local populations to make changes that work for them. Reduce the FDA’s role in drug approval, so patients and healthcare providers can have more options faster. Knock down trade barriers between American consumers and foreign medical suppliers, so domestic merchants have to face more competition. Legalize marijuana, so it can be used a cheap and non-deadly pain treatment. And lower taxes and spending in general, so Americans can keep more of their money and spend it on healthcare for themselves and their loved ones however they see fit.