Sen. Bernie Sanders, I-Vt., in an op-ed accusing President Trump of lying about "Medicare for all," starts out with a whopper of his own.
"It would guarantee everyone could get the healthcare they need without going into debt at far lower cost than the current dysfunctional system," Sanders writes in USA Today.
The problem with his pie-in-the-sky statement, and the op-ed that follows, is that it fails to recognize the natural tradeoffs between access and cost in healthcare policy. In doing so, he also ignores the value of individual choice and the distinction between public and private that is central to the American character.
Let's start with cost. This has been the source of some confusion that has been exploited, so it's worth noting that when discussing "costs" there are different types of costs people are talking about. One way of looking at cost is how much the proposal will increase federal government spending. The other way of looking at it is how much the proposal will affect the overall amount of money that the U.S. collectively spends on healthcare from all sources. So, if the federal government is shouldering more of the healthcare burden, it means that it is absorbing costs that otherwise would be paid by individuals, businesses, and states. Of course, all of the costs of government are ultimately borne by taxpayers, but advocates of the Sanders approach argue that by pooling all of the money spent on healthcare together and taking out the profit motive of insurers, it can create efficiencies that will reduce overall spending. So the cost question is really two questions: 1.) How much will the Sanders proposal cost federal taxpayers? 2.) How will it affect national health spending overall?
[Trump: Bernie Sanders' 'Medicare for all' can't work, 'government can't run everything']
Though there is no Congressional Budget Office score of the Sanders proposal, there have been a number of outside studies, both of which reached a similar conclusions about the 10-year cost to the federal government, but differed in terms of estimates about national health spending.
The liberal Urban Institute, in a 2016 study looking at the Sanders campaign plan, found that it would increase federal government spending by $32 trillion over a decade. A study done this summer by the libertarian Mercatus Center looking at Sanders' senate proposal found it would cost $32.6 trillion over a decade. To put this staggering number in perspective, the CBO projects that over the next 10 years, income taxes on individuals and business will raise a combined $26.2 trillion. This means that even if a President Sanders were to double income taxes, it still wouldn't pay for his healthcare plan.
When it comes to national healthcare expenditures, that's where the two plans diverge. Sanders, as he did in his op-ed, likes to tout the claim that the Mercatus Center study determined it would save about $6,000 per person over a decade. (This study found it would reduce national health expenditures by $2 trillion, which Sanders divides by the U.S. population). On the other hand, the Urban Institute study found that under the Sanders plan, national health spending would increase by $6.6 trillion. So what accounts for the large discrepancy?
The difference is that the Urban Institute and Mercatus make competing assumptions about how much doctors, hospitals, and other medical providers would be paid under the Sanders plan. The Mercatus study rests on the assumption that the Sanders plan would lead to an immediate 40 percent cut in payment rates relative to private insurance.
Now, here's where we get to the access issue. Sanders claim of $6,000 per person in savings is dependent on an assumption that doctors and hospitals would, four years from now, be able to absorb an immediate 40 percent cut in pay from those who otherwise would be paying privately. What's more, they would be hit with this cut at the same time that the Sanders plan would be increasing demand for services by extending insurance to 30 million more people, expanding benefits, and eliminating out-of-pocket spending that might otherwise discourage individuals without serious illnesses from seeking care. In the real world, there is no way such a sudden reduction in revenue coupled with an explosion in demand for services can be absorbed without affecting the availability or quality of care.
The tradeoffs are pretty clear. If the federal government offers more generous payment rates, then the Sanders plan would cost well north of $32 trillion and any "savings" to national health spending would melt away. If the plan reduces payment rates further, it will only make access problems more severe.
So, this is why Sanders is lying to the American people when he writes that his plan would "guarantee everyone could get the healthcare they need" and at a "far lower cost" than the current system.
But there is also an important point to be made about the value of choice, which doesn't figure into a purely factual analysis of his claims.
The Sanders plan would, within four years, force about 180 million people who have private insurance off of their plans. Once implemented, the plan would make it illegal for individuals to purchase insurance that offers benefits that conflict with the national plan. In one of the most difficult periods of his administration President Barack Obama faced tremendous backlash over the cancellation of a few million plans — the Sanders plan would produce that on steroids.
It's a very dangerous place for us as a society to make no distinction between public and private spending. If government banned all restaurants and offered free food to all at government cafeterias, most people would see that as problematic even if there were circumstances under which it could reduce our national food budget. When it comes to the personal decisions involved in healthcare, there should be even more reason to be wary of government control.
Note: This post was updated to make clear that the Sanders plan would lead to an immediate 40 percent cut in payment rates relative to private insurance, which covers about 180 million people, rather than to all insurance types.