Bernie Sanders' New Single Payer Plan Is a Wild Legislative Fantasy
The new plan refuses to grapple with costs or tradeoffs.
Today, Bernie Sanders will release a proposal for single-payer health care, co-sponsored by 15 Democrats. To call it a plan is, in some sense, too generous: Although it envisions a sweeping and generous system that would make government the primary payer for nearly all health care in the United States and virtually wipe out employer health coverage in the space of just a few years, it is not really a plan. Instead, it is a legislative fantasy built on a combination of wild overconfidence in government and an almost comical refusal to grapple with costs or trade-offs.
To be sure, it is a compelling fantasy: As outlined in a New York Times op-ed, it would offer coverage to all and benefits more generous than most employer provided plans, with no copayments. It would break the link between insurance coverage and employment and put an end to Obamacare's unstable system of exchanges and subsidies. Although it would allow some private coverage options to exist at the margins, it would mean that most Americans never have to deal with an insurance company again. More than anything else, what Sanders is selling is simplicity, ease of access, and systematic unity.
"I think the American people are sick and tired of filling out forms," Sanders told The Washington Post. "Your income went up — you can't get this. Your income went down — you can't get that. You've got to argue with insurance companies about what you thought you were getting. Doctors are spending an enormous amount of time arguing with insurers."
This is by far the most effective part of the Sanders pitch: America's health care system is a fragmented, confusing, and unequal mess, split between employer coverage favored by the tax code, individual private insurance partly subsidized by Obamacare's tax credits, and government payers like Medicare and Medicaid. Even when interacting with private payers, it is often maddeningly difficult and bureaucratic. On top of that, it is also incredibly expensive.
But this frustrating, pricey, and unnecessarily complex system is a direct response to decades of flawed and contradictory government policies. Most working age people get their health coverage through their job because of a tax carve out for employer benefits that dates back to World War II. Medical prices, to the extent they exist at all, are opaque in part because of an overreliance on generous insurance that stems from this tax code favoritism and in part because of the byzantine price setting mechanisms employed by government payers, which, in turn, exert influence on the rates that private insurers are willing to pay. Premiums are rising in the individual markets created under Obamacare in large part because of regulations like guaranteed issue and community rating that are built into this system.
The fragmentation and frustration that Sanders decries, in other words, was created by government. Yet his solution is to wipe it all away and replace it with a system that relies on vastly more government, at huge probable expense.
Sanders argues that this would allow the government to offer comprehensive coverage while reducing health care spending and saving most families thousands of dollars a year. Turning over nearly complete control to the government would not, on its own, reduce national health care spending. Health insurance industry profit margins are modest, and eliminating them would barely make a dent in overall health care spending. In some ways, government payers like Medicare, which tend to be lax when it comes to fraud prevention and wasteful spending, are actually less efficient than private insurance.
As the primary payer, government could, of course, exert far more influence on reimbursement rates for health care services. But that amounts to a plan to pay doctors and other health care providers less. Medicare typically pays far less than private insurance for most services, and Medicaid pays less still. But the health care sector as we know it today could not exist if Medicare payments were extended to all services. Cutting all reimbursements to Medicare levels would mean that many health care providers would quit or shrink their operations. Hospitals, many of which already struggle to maintain their huge and expensive payrolls, would reduce service or close their doors entirely.
The likely outcome of such a transition would be massive, sustained chaos across the health care sector. Even if the chaos were somehow manageable, the easy access that Sanders promises would be swiftly undermined by service disruptions and other complications stemming from the changeover. In making his case, Sanders tends to ignore all of this. His plan exists in an imaginary world without economic tradeoffs or consequences.
Nowhere is this more obvious than in its promise of benefits. Sanders frequently argues that his preferred system would merely put the United States in line with other developed nations. On the contrary, it would go far beyond what other countries with single payer systems offer. The Sanders plan would offer a far greater array of benefits than Australia, the Netherlands, or Canada—a country that Sanders often uses as a comparison with the U.S., but where the majority of the population relies on supplementary private insurance to cover the gaps left by the government system. Many international single-payer systems also require some form of copayment from the individual seeking service; the Sanders plan would make all of its benefits available without any individual contribution.
Instead, it would be paid for entirely through tax increases. Which tax increases would those be? On who, and for how much? On these questions, the Sanders plan is silent.
This is the real tell in Sanders' pitch. Although it is willing to imagine long lists of benefits in great detail, but it has essentially nothing to say about how to pay for them. It is a fantastical sales pitch for a luxury product with no price tag attached.
Single payer has never had a chance in the United States precisely because the tax increases required to fund it has proven too high for even liberal constituencies. Sanders' home state of Vermont, one of the most liberal states in the country, nixed a single payer plan for this reason. Sanders' refusal to describe a funding mechanism makes clear that he has not discovered a way around this problem. His only tactic is to avoid talking about it in any detail.
The American health care system has many problems. But the Sanders plan would not solve any of them. It is not really a solution in the conventional sense at all. It is a vision of an impossible world in which those problems simply don't exist to begin with.