Bernie Sanders' Health Care Plan Proves That U.S. Single-Payer is an Expensive Fantasy
It's too disruptive and too expensive.
Domestic critics of single-payer have long charged that the idea is an expensive fantasy. And over the last few weeks, that's basically the tack that Hillary Clinton has taken in pushing back against rival Democratic presidential candidate Bernie Sanders' idea for a single-payer system. Sanders has no idea how to pay for his plan, Clinton said, and, in fact, had not even released a plan at all. Instead, she argued, the best bet for Democrats would be to stick with Obamacare and try to improve it.
On Sunday night, shortly before the Democratic primary debate, Sanders released his plan, dubbing it, Medicare for All: Leaving No One Behind. The plan provides some details about how Sanders' would pay for his plan—through a combination of increased taxes on high earners and fees on the middle class—but rather little else. It is an attempt to prove the critics wrong. And it is a failure in almost every way.
The Sanders plan would require $1.38 trillion—trillion! with a T!—in additional federal spending every single year. That's roughly 8 percent of total GDP. As a comparison, the official cost estimate for Obamacare—which almost didn't pass over concerns about its price tag—when it was passed was about $900 billion over an entire decade.* Sanders is proposing to spend far more than that every single year.
The tax hikes required to pay for this much new spending would be enormous, and while the Sanders plan does its best to place most of the burden on high earners through a slew of income tax hikes that increase the top marginal rate up for 52 percent for income over $10 million, he also adds new taxes on employers and an additional 2.2 percent flat tax on virtually all income beyond the standard deduction (currently $28,800 for a family of four). This is in addition to increased taxes on investment, a big hike in the estate tax, and a cap on tax deductions for high earners. Given that a single-payer plan already failed in Sanders' incredibly liberal, tax-hike-friendly home state of Vermont because of the tax burden it would impose, it is virtually impossible to imagine a plan like this making it through the U.S. Congress.
In the plan, Sanders tries to pretend that the new flat tax isn't really a tax, but an "income-based premium." But in Sunday night's debate, Sanders, when asked, didn't really deny that his plan would raise taxes on middle-income families. Instead, he argued that his plan would do away with health insurance premiums entirely, replacing them with his new tax, and that the end result would be savings for the middle-class.
There are two problems with this. The first is that those savings only happen if the Sanders plan can hold down costs. But as Ezra Klein points out, the savings imagined in the Sanders plan are extremely aggressive—one might even say completely ridiculous—by any measure, and Sanders provides no details on exactly how he would achieve them.
In fact, he seems to suggest that his system would pay for just about any kind of treatment for any person, which would have the opposite effect. Sanders totally refuses to reckon with the sort of tradeoffs that might conceivably produce some savings, probably because that would entail admitting that the largest savings can only be achieved by denying treatments and restricting care—in other words, by having the government engage in the sorts of behaviors that people dislike from insurance companies. The point is that his savings are totally bogus.
Sanders' defense also reveals another problem beyond his savings: The way he would get rid of private health insurance premiums would be to get rid of private health insurance. That's what a single-payer health insurance plan is: a single, government-run health insurance system that pays all the health care across the country. Now, in reality, some countries with "single-payer" systems also allow for add-on plans beyond what single-payer covers, so a single-payer system wouldn't necessarily outlaw all private insurance payment. But even still, a plan like the one Sanders proposes would entail radical upheaval of the current health insurance regime, with lots and lots of people losing their current employer-sponsored health insurance.
And the problem is that most people like their current health plans and doctors. This is something that Hillary Clinton understands all too well. The threat of disruption was one of the biggest reasons why the Clinton health care plan she worked on in the 1990s failed. It's why, in order to pass Obamacare, President Obama had to promise repeatedly—and falsely—that if you like your plan, you can keep your plan, despite knowing this wasn't strictly true.
Bernie Sanders' single-payer plan makes no such promise. Indeed, it is essentially a promise that you can't keep your current plan, because the whole idea is to get rid of the current system of health care financing and replace it with a government-run system. Disruption is the essential element of a single-payer overhaul.
In other words, what Sanders' plan proves is that critics are right, and that single-payer in the United States is an expensive and politically hopeless fantasy peddled mainly by people who are utterly unwilling to contemplate or admit the tradeoffs it would require.
At the same time, the persistence of this fantasy, the success of the Sanders campaign, and the thrust of Hillary Clinton's response—which is basically that the Affordable Care Act is a good start but needs work, especially on cost control—combine to reveal something else: an enduring liberal dissatisfaction with health care law in its current form. To many of those on the left, it seems, even Sanders' deeply implausible fantasy plan is preferable to Obamacare.