The Fallacy of Replacing ObamaCare with Medicare-for-All

Commentary by John C Goodman

Source: The Heartland Institute

Now that the problems with implementing ObamaCare are becoming increasingly apparent, Progressives are touting "single payer" health insurance as a replacement for ObamaCare.

For those who haven"t been following the debate for the past 50 years, "single payer" is what we used to call "national health insurance," and before that "socialized medicine," and before that "government-provided health care." Proponents often explain single payer to lay audiences simply as Medicare-for-All. By the way, advocates of single payer, who now call themselves "progressives," used to call themselves "liberals," and before that "socialists," all in the hope that continual relabeling will somehow make their ideas seem sensible.

Managed by For-Profit Firms

Labels aside, the problem is that people on the left are so obsessed with "public" rather than "private" and "nonprofit" rather than "for-profit" they become oblivious to basic facts:

  • Most government health care programs are mainly managed by private companies-for-profit companies more often than not.
  • One in four Medicare enrollees is actually in a private insurance plan, and almost all the rest of Medicare is being managed by private companies (Blue Cross, Cigna, etc.)
  • Nearly 70 percent of Medicaid enrollees are in private plans-a number that is expected to grow.

Moreover, moving everyone into Medicare would not solve the looming problems caused by ObamaCare. Just consider the following.

Paying for Medicare-for-All

A while back, the National Center for Policy Analysis calculated we could pay for national health insurance with a 15% VAT tax. But if it were easy to impose such a tax, the Democrats would have financed ObamaCare that way. Bottom line: the easiest way to fund Medicare-for-All is the same way we are funding ObamaCare.

Individual Mandate

For the very same reasons that ObamaCare made insurance mandatory, Medicare-for-All would also have to be compulsory. Otherwise, people would only join when they are sick. To make the budget balance, people would have to pay a premium that, on the average, equals the expected cost of their care. Just like ObamaCare, there would have to be subsidies for lower-income families. The healthy would be overcharged, and the sick would be undercharged. Incentives to game the system would be monumentally destructive without a mandate.

Employer Mandate

For people at work, there would be enormous pressure to pretend employers pay for fringe benefits rather than workers themselves. Employers thus would have to buy their employees into Medicare. That would raise the issue of exempting small business, exempting part-time workers, etc.

Cuts in Medicare Provider Fees

Almost half the funding for ObamaCare comes from reduced spending on current Medicare beneficiaries. Forget for the moment that there would not be enough doctors willing to treat patients for the paltry fees under a Medicare-for-All scheme. Since the money will still be needed, these benefit cuts will not go away.

New Taxes

ObamaCare taxes everything from tanning salons to pacemakers to wheelchairs and crutches. Obviously, these taxes wouldn't go away.

Managed Care

Doctors on the left hate managed care every bit as much as doctors on the right. The problem is that current third-party payment practices give everyone perverse incentives; and when they act on those incentives they make costs higher, quality lower, and access to care more difficult. The Obama administration is experimenting with Accountable Care Organizations and other reforms to deal with this problem, but nothing the administration is doing is working. Even under Medicare-for-All, we can't change the rate of growth of health care spending unless we change the way providers are paid.

The Exchanges

What the left hates the most about ObamaCare is the idea of competition. That's because of their fundamental dislike of the economic model of medical care delivery. The left dislikes the exchanges because they dislike the idea of competition. But for reasons given above, we have no alternative to the economic model if we want to control costs.

No Problems Solved

Moving everyone into Medicare would not solve a single problem of any importance we started with in ObamaCare. Indeed, we would likely encounter additional problems along the way.