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Sanders' Healthcare Plan: Could it Work?

Author: Jacob Jackson

Bernie Sanders may never be president of the United States, but his campaign will have at least accomplished one thing: to once again raise the national consciousness about single-payer health insurance coverage and whether it could actually work. According to Sanders, his plan, which he has dubbed Medicare for All, would provide free health care for all citizens while saving trillions of dollars in health care costs. It would mean no more co-pays, no more deductibles and no more fighting with insurance companies over billing disputes. While that may hold a certain appeal for the throngs of people who attend his rallies, most Americans remain skeptical of any government-run program, let alone one that manages one-sixth of the economy. Setting aside the certainty that such a program could never pass a Republican-controlled Congress, there are several reasons why Sanders' health plan could not be politically or financially feasible in this country now or at any time in the foreseeable future.

What Exactly Is Bernie Sanders' Health Care Plan?

The Sanders health care plan would be a federally administered program to cover every citizen from cradle to grave, for every possible medical treatment, including preventative care, specialty care, inpatient and outpatient care, and vision and dental care. According to the plan, a patient would show a government-issued insurance card to the doctor of her choice, and the doctor would be reimbursed by a Medicare-like agency.

To pay for the $1.38 trillion per year plan, taxes would take the place of premiums. The plan would tax households an extra 2.2%, and the rich would pay marginally higher taxes. Employers would be taxed at 6.2%, and they would no longer be funding employer-sponsored plans. Sanders would also increase estate taxes. More taxes would be raised by eliminating many of the tax breaks for the rich. The plan would also raise revenue from cost reductions by eliminating the massive amount of administrative waste that occurs in the insurance billing process.

Middle-class families would save, on average, about $5,000 per year, and the country would realize overall savings in health care costs of $6 trillion over 10 years. The savings in health care costs would come in large part from allowing Medicare to use its scale and leverage to negotiate medical and prescription drug prices directly with providers.

Single-Payer Systems Are Not Proven to Work

The centerpiece of the Sanders health care plan is a single-payer system in which the government pays all the bills for the citizens. In doing so, the government is the primary instrument in setting the prices for medical treatments. Medicare is a single-payer system. Proponents of a single-payer system typically point to other countries as examples of successful government-run health care systems. However, most of them do not have single-payer systems. They have taxpayer-funded social insurance programs that ensure everyone is covered, but they are not necessarily run by the government.

The only true single-payer systems that exist are in Canada and Taiwan. As much as single-payer proponents want to hold up Canada as a shining example, the actual results are not very flattering. According to a 2014 study by the Fraser Institute, people with serious medical conditions are forced to wait anywhere from 18 weeks to 30 weeks for treatment. The reason there are not many complaints from wealthier Canadians is they can afford private insurance that allows them to get more immediate treatment in neighboring U.S. cities. Americans under a similar plan would have nowhere else to go for quicker treatment.

A Single-Payer System Would Not Lower Health Care Costs

According to his proposal, Sanders' plan would cover the entire continuum of health care at no real cost to Americans. To that extent, his Medicare for All plan is not like Medicare at all. Medicare does not cover everything, and it requires co-pays and deductibles, although they are subsidized by taxpayers. But even with that, health care costs have increased significantly under Medicare. The same can be said when employer-sponsored plans were introduced. Initially, these plans paid for the majority of an insured person's health insurance costs, leaving the private insurers with the responsibility of negotiating prices. That has led to a continuous escalation of medical costs.

Who Wants the Government to Control Spending on Medical Treatments?

The way a single-payer system actually cuts costs is by reducing reimbursements to medical providers. One way to do that is by forcing medical providers to meet the government's pricing scheme. As has been the case with Medicaid, Medicare and, to a great extent, the Affordable Care Act, an increasing number of doctors are opting out of these programs because the reimbursements are insufficient.

The other way the government accomplishes cost reductions is by dictating which medical treatments are to be covered based on cost/benefit criteria. This could mean telling an 80-year-old cancer patient that the cost of the required medical treatment outweighs the benefit of living a few extra years. The collective uproar over the supposed death panels in the Affordable Care Act is a clear indication the American people are not prepared to have the government tell them no.

Americans Have Little Appetite for More Taxes

The implementation of the Affordable Care Act is costing Americans more than a trillion dollars in new taxes. This is over a 10-year period. Sanders' single-payer plan will cost taxpayers a trillion dollars in new taxes every year for the next 10 years. With the exception of lower-income earners, everyone will have to pay more taxes to cover the costs of Sanders' plan, which taxes nearly every revenue in the economy. His plan also relies heavily on an aggressive cost-cutting strategy; if those costs are not realized, the only way to make up for the shortfall is by increasing taxes. After the massive tax increases of the last eight years, most Americans are not in the mood for more, especially when they see government spending increasing every year.

Conclusion

For a single-payer plan to work in the U.S., it would have to be financially, socially and politically acceptable to the vast majority of Americans. Bernie Sanders has yet to reveal many of the details of the plan, so any discussion of whether it is financially feasible is only conjecture. There is no real way to calculate the total costs of the program or the amount of savings the plan purports to achieve. After the nontransparent way in which the Affordable Care Act was passed through Congress, the American people are going to want the complete details of the plan's costs and benefits.

People can look at the Canadian experience with a single-payer system to draw some conclusions as to its social application. They can also look to the government's handling of the Veterans Affairs Hospitals and the Affordable Care Act as some measure of its ability to completely take over the health care system. However, politically, the Sanders plan is a nonstarter. The American public is not likely to accept an even larger government takeover of the health care system, and there is little appetite for more taxation.

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