An individual earning near the national median at $50,000 a year would pay more than $17,450 more per year in taxes to fund Democrats’ Medicare for All proposal. That’s not even half of it.
Democratic candidates for president continue to evade questions on how they will pay for their massive, $32 trillion single-payer health care scheme. But on Monday, the Committee for a Responsible Federal Budget (CRFB) released a 10-page paperproviding a preliminary analysis of possible ways to fund the left’s socialized medicine experiment.
Worth noting about the organization that published this document: It maintains a decidedly centrist platform. While perhaps not liberal in its views, it also does not embrace conservative policies. For instance, its president, Maya MacGuineas, recently wrote a blog post opposing the 2017 Tax Cuts and Jobs Act, stating that the bill’s “shortcomings outweigh the benefits,” because it will increase federal deficits and debt.
That centrist position makes CRFB’s analysis of single payer all the more devastating, because one cannot write it off as coming from a right-wing group. And its analysis is devastating, carrying it three main messages, as follows.
Consider some of the options to pay for single payer CRFB examines, along with how they might affect average families.
A 32 percent payroll tax increase. No, that’s not a typo. Right now, employers and employees pay a combined 15.3 percent payroll tax to fund Social Security and Medicare. (While employers technically pay half of this 15.3 percent, most economists conclude the entire amount ultimately comes out of workers’ paychecks, in the form of lower wages.) This change would more than triple current payroll tax rates.
Real-Life Cost: An individual earning $50,000 in wages would pay $8,000 more per year ($50,000 times 16 percent), and so would that individual’s employer.
A 25 percent income surtax. This change would apply to all income above the standard deduction, currently $12,200 for individuals and $24,400 for families.
Real-Life Cost: An individual with $50,000 in income would pay $9,450 in higher taxes ($50,000 minus $12,200, times 25 percent).
A 42 percent Value Added Tax (VAT). This change would enact on the federal level the type of sales/consumption tax that many European countries use to support their social programs. Some proposals have called for rebates to some or all households, to reflect the fact that sales taxes raise the cost of living, particularly for poorer families. However, using some of the proceeds of the VAT to provide rebates would likely require an even higher tax rate than the 42 percent CRFB estimates in its report.
Real-Life Cost: According to CRFB, “the first-order effect of this VAT would be to increase the prices of most goods and services by 42 percent.”
Mandatory Public Premiums. This proposal would require all Americans to pay a tax in the form of a “premium” to finance single payer. As it stands now, Americans with employer-sponsored insurance pay an average of $6,015 in premiums for family coverage. (Employers pay an additional $14,561 in premium contributions; most economists argue these funds ultimately come from employees, in the form of lower wages—but workers do not explicitly pay these funds out-of-pocket.)
Real-Life Cost: According to CRFB, “premiums would need to average about $7,500 per capita or $20,000 per household” to fund single payer. Exempting individuals currently on federal health programs (e.g., Medicare and Medicaid) would prevent seniors and the poor from getting hit with these costs, but “would increase the premiums [for everyone else] by over 60 percent to more than $12,000 per individual.”
Reduce non-health federal spending by 80 percent. After re-purposing existing federal health spending (e.g., Medicare, Medicaid), paying for single payer would require reducing everything else from the federal budget—defense, transportation, education, and more—by 80 percent.
Real-Life Cost: “An 80 percent cut to Social Security would mean reducing the average new benefit from about $18,000 per year to $3,600 per year.”
The report includes other options, including an increase in federal debt to 205 percent of gross domestic product—nearly double its historic record—and a more-than-doubling of individual and corporate income tax rates. The impact of the last is obvious: Take what you paid to the IRS on April 15, or in your regular paycheck, and double it.
In theory, lawmakers could use a combination of these approaches to fund a single-payer health care system, which might blunt their impact somewhat. But the massive amounts of revenue needed gives one the sense that doing so would amount to little more than rearranging deck chairs on a sinking fiscal ship.
CRFB reinforced their prior work indicating that taxes on “the rich” could at best fund about one-third of the cost of single payer. Their proposals include $2 trillion in revenue from raising tax rates on the affluent, another $2 trillion from phasing out tax incentives for the wealthy, another $2 trillion from doubling corporate income taxes, $3 trillion from wealth taxes, and $1 trillion from taxes on financial transactions and institutions.
Several of the proposals CRFB analyzed would raise tax rates on the wealthiest households above 60 percent. At these rates, economists suggest that individuals would reduce their income and cut back on work, because they do not see the point in generating additional income if government will take 70 (or 80, or 90) cents on every additional dollar earned. While taxing “the rich” might sound publicly appealing, at a certain point it becomes a self-defeating proposition—and several proposals CRFB vetted would meet, or exceed, that point.
The report notes that “most of the [funding] options we present would shrink the economy compared to the current system.” For instance, CRFB quantifies the impact of funding single payer via a payroll tax increase as “the equivalent of a $3,200 reduction in per-person income and would result in a 6.5 percent reduction in hours worked—a 9 million person reduction in full-time equivalent workers in 2030.”
By contrast, deficit financing a single-payer system would minimize its drag on jobs, but “be far more damaging to the economy.” The increase in federal debt “would shrink the size of the economy by roughly 5 percent in 2030—the equivalent of a $4,500 reduction in per person income—and far more in the following years.”
Moreover, these estimates assume a great amount of interest by foreign buyers in continuing to purchase American debt. If the U.S. Treasury cannot find buyers for its bonds, a potential debt crisis could cause the economic damage from single payer to skyrocket.
To say single payer would cause widespread economic disruption would put it mildly. Hopefully, the CRFB report, and others like it, will inspire the American people to reject the progressive left’s march towards socialism.
Taxpayers could have to shell out nearly $23 billion a year to provide Obamacare coverage to illegal immigrants, according to a new analysis being released Thursday that puts a high price tag on one of the Democratic presidential candidates’ top election promises.
Nearly 5 million illegal immigrants have incomes that would qualify them for Obamacare’s subsidies that help pay lower-income Americans’ premiums, and they would average about $4,600 a year, the Center for Immigration Studies calculates.
If all of them signed up, that would total $22.6 billion a year. Even assuming a more realistic enrollment rate of about half, it would cost taxpayers $10.4 billion a year, according to the organization, which advocates for less immigration overall.
Under an alternative plan, in which the lowest-income illegal immigrants are put on Medicaid while others receive Obamacare subsidies, the costs would be similar, the study found.
“Any serious debate on providing health care coverage to those in the country illegally requires a cost estimate,” said Steven Camarota, research director at the organization, who said his findings were a reminder that “tolerating illegal immigration creates a significant burden for taxpayers.”
The group released another report Thursday calculating that immigrants who use Medicaid — legal and illegal — already cost more per family than native-born Americans. The reason, the analysis says, is that they are more likely to be less-educated and have larger families.
It’s become a must-have position for Democratic presidential candidates that illegal immigrants deserve access to government-sponsored health care. At one of the debates, all 10 candidates on stage raised hands when asked if they backed the idea.
But the candidates have different ideas about how to get there.
Sen. Bernard Sanders, father of “Medicare for All,” says he would cover illegal immigrants through his fully government-run system.
Former Vice President Joseph R. Biden at the debate agreed that illegal immigrants should get coverage — “It’s the humane thing to do,” he said — but later slimmed down that commitment, saying they should be allowed to buy into Obamacare and should be able to get emergency coverage. That latter part is already the law.
Mr. Camarota warned that if illegal immigrants are covered, the next steps could be to offer taxpayer-sponsored health care to guest-workers in the U.S. on temporary visas.
“The high cost of providing healthcare to less-educated workers who earn modest wages is a reminder that tolerating illegal immigration or allowing such workers into the country legally is likely to create a significant burden for taxpayers,” he wrote.
He said he couldn’t calculate how much of an incentive health care could be in enticing people to enter the U.S. illegally.
President Trump is moving in the other direction.
In an executive order last week, he announced a new policy banning entry of immigrants deemed likely to become a drain on the U.S. health care system — chiefly those who show up at emergency rooms, where they can’t be denied care, and then leave the public with the bill.
Whether to extend Obamacare to illegal immigrants was an issue Congress grappled with in 2009 and 2010 as it was debating passage of the Affordable Care Act. The party’s leaders concluded such a step could poison the entire health care effort, since the public seemed opposed to the idea.
It’s not clear much has changed in public attitude.
A CNN poll over the summer found 59% of Americans opposed offering government-sponsored health care to “undocumented immigrants.”
In the absence of federal action, some Democrat-led states have taken steps.
California Gov. Gavin Newsom signed legislation in July to expand state health care assistance to low-income young adult illegal immigrants, granting them coverage under Medicaid. The state had already covered juvenile illegal immigrants and “Dreamers” who had status under the Obama-era DACA program, but the new law expands coverage to any illegal immigrant up to age 25.
The state estimated roughly 90,000 people will get coverage, at an additional cost of nearly $100 million a year.
The best way to ensure better medical care for all is to reject Medicare for All.
Health care ranked as most important issue, save for “the ability to beat Donald Trump,” for Democratic voters in a FiveThirtyEight/Ipsos poll taken before and after last week’s presidential debate.
The debate revealed fissures among the party’s presidential aspirants on health care.
Bernie Sanders pronounced his desire that “every American has health care as a human right and not a privilege.” But under the senator’s “Medicare for All” scheme, private health insurance becomes illegal.
Would any American regard it as in keeping with the First Amendment if the government limited all 330 million of us to one church or one newspaper? The senator’s conception of rights, several opponents seemed to say, is wrong.
“While Bernie wrote the bill, I read the bill,” Amy Klobuchar quipped. She objected to Medicare for All forcing about half of Americans off their existing private insurance. “I don’t think that’s a bold idea,” the Minnesotan noted. “I think that’s a bad idea.”
Mayor Pete Buttigieg said he supported “Medicare for all who want it.” He objected to the one-size-fits-all quality of Sanders’ plan. “I trust the American people to make the right choice for them,” he told Sanders. “Why don’t you?”
Joe Biden balked at the price, estimated to eclipse what the federal government currently takes in in revenues. The former vice president pointed out, “Nobody’s yet said how much it’s going to cost the taxpayer.”
Sanders and Sen. Elizabeth Warren, who supports his plan, pushed back. Vermont’s junior senator railed against “the drug companies and the insurance companies.” Warren explained, “I’ve never met a person who likes their insurance company.”
Given that insurance companies issue bills to consumers, this necessarily makes them unpopular. But the majority of costs come from hospitals (33 percent) and physician and clinical services (20 percent), according to the Center for Medicare and Medicaid Services (CMS). We want to kill the messenger. Those primarily responsible for the message — $25 for two aspirin pills, $120 for a cloth sling, $57,000 for a knee replacement — somehow not only escape our wrath but also win our admiration.
Hospitals gouging patients occurs most glaringly in places where hospitals operate as a monopoly and in emergency situations. The common denominator in both circumstances involves the inability to compare and shop.
In a paper published earlier this year in the Quarterly Journal of Economics, academics at Yale, Penn, MIT, and Carnegie Mellon note hospital price increases for the privately insured when competition decreases. “Prices at monopoly hospitals are 12% higher than those in markets with four or more rivals,” their abstract reads.
Monopoly hospitals also have contracts that load more risk on insurers (e.g., they have more cases with prices set as a share of their charges). In concentrated insurer markets the opposite occurs — hospitals have lower prices and bear more financial risk. Examining the 366 mergers and acquisitions that occurred between 2007 and 2011, we find that prices increased by over 6% when the merging hospitals were geographically close (e.g., 5 miles or less apart), but not when the hospitals were geographically distant (e.g., over 25 miles apart).
In the emergency room, when circumstances necessarily kill the ability to shop, spending per patient more than doubled from 2008 to 2017, according to research compiled by Kevin Kennedy and John Hargraves for the Health Care Cost Institute.
Reducing health-care costs requires more competition, not a monopoly. Change soon comes, and not necessarily legislative change of the Medicare for All variety. Data stored in the cloud and available via an app may make medical costs and outcomes transparent, which should reduce cost. Medicare for All will retard this process since the whole health-care industry will lobby against the smartphone apps, and the consolidation of the entire industry necessarily leads to less competition.
Beyond transparency enabling health-care consumers to shop, the industry appears ripe for new players. Amazon, JPMorgan Chase, and Berkshire Hathaway, for example, entered the field last year. If they do not ultimately seek to dethrone the status quo, why did UnitedHealth’s Optum sue to stop a former employee from working at the trio’s health-care startup? A $3.6 trillion industry remains too big a cash cow for the giants of tech and finance to resist a milking.
Competition is coming. Price transparency is coming. If Medicare for All is coming, then neither is coming.
Even the ‘moderate’ proposals would sabotage private coverage, driving everyone into a government-run system. That’s probably why Democrats don’t really answer questions about their health proposals.
For more than two hours Thursday night in Houston, 10 presidential candidates responded to questions in the latest Democratic debate. On health care, however, most of those responses didn’t include actual answers.
As in the past several contests, health care led off the debate discussion, and took a familiar theme: former vice president Joe Biden attacked his more liberal opponents for proposing costly policies, and they took turns bashing insurance companies to avoid explaining the details behind their proposals. Among the topics discussed during the health care portion of the debate are the following.
Most notably, Massachusetts Sen. Elizabeth Warren again declined to admit whether individuals will lose their current insurance, or whether the middle class will pay more in taxes, under a single-payer health care system. By contrast, Vermont Sen. Bernie Sanders claimed that while all (or most) Americans will pay higher taxes to fund his single-payer system, middle class families will come out ahead due to his plan’s elimination of deductibles and co-payments.
The problems, as Biden and other Democratic critics pointed out: First, it’s virtually impossible to pay for a single-payer health care system costing $30-plus trillion without raising taxes on the middle class. Second, even though Sanders has proposed some tax increases on middle class Americans, he hasn’t proposed nearly enough to pay for the full cost of his plan.
Third, a 2016 analysis by a former Clinton administration official found that, if Sanders did use tax increases to pay for his entire plan, 71 percent of households would become worse off under his plan compared to the status quo. All of this might explain why Sanders has yet to ask the Congressional Budget Office for a score of his single-payer legislation: He knows the truth about the cost of his bill—but doesn’t want the public to find out.
Believe it or not, Biden once again repeated the mantra that got his former boss Barack Obama in trouble, claiming that if people liked their current insurance, they could keep it under his plan. In reality, however, Biden’s plan would likely lead millions to lose their current coverage; one 2009 estimate concluded that a proposal similar to Biden’s would see a reduction in private coverage of 119.1 million Americans.
Minnesota Sen. Amy Klobuchar echoed Biden’s attack, saying that while Sanders wrote his single-payer bill, she had read it—and pointing out that page 8 of the legislation would ban private health coverage. (I also read Sanders’ bill—and the opening pages of my new book contain a handy reading guide to the legislation.)
For his part, Sanders and Warren claimed that while private insurance would go away under a single-payer plan, people would still have the right to retain their current doctors and medical providers. Unfortunately, however, they can no more promise that than Biden can promise people can keep their insurance. Doctors would have many reasons to drop out of a government-run health plan, or leave medicine altogether, including more work, less pay, and more burdensome government regulations.
While attacking Sanders’ plan as costly and unrealistic, Biden also threw shade in Warren’s direction. Alluding to the fact that the Massachusetts senator has yet to come up with a health plan of her own, Biden noted that “I know that the senator says she’s for Bernie. Well, I’m for Barack.”
Biden’s big problem: He wasn’t for Obamacare—at least not for paying for it. As I have previously noted, Biden and his wife Jill specifically structured their business dealings to avoid paying nearly $500,000 in self-employment taxes—taxes that fund both Obamacare and Medicare.
Tax experts have called Biden’s avoidance scheme “pretty aggressive” and legally questionable, yet neither Democrats nor Thursday’s debate moderators seem interested in pursuing the former vice president’s clear double hypocrisy about his support for Obama’s health care law.
I’ll give the last word to my former boss, who summed up the “contrasts” among Democrats on health care:
Dem debate on health care:@berniesanders: If you like your health plan, too bad, we are going to take it away now.
“Moderate” Dem: If you like your health plan, don’t worry, we will gradually take it away.#DemDebate #DemocraticDebate2078:47 PM – Sep 12, 2019Twitter Ads info and privacy104 people are talking about this
As I have previously noted, even the “moderate” proposals would ultimately sabotage private coverage, driving everyone into a government-run system. And the many unanswered questions that Democratic candidates refuse to answer about that government-run health system provide reason enough for the American people to reject all the proposals on offer.
Polling shows Medicare for All unpopular when it means eliminating private insurance
Sen. Elizabeth Warren (D., Mass.) discussed her health care plan Friday, outlining a vision where everyone eventually “transitions” to a government health care plan.
“Your Medicare for All proposal would eliminate private insurance, correct? Is that right?” Des Moines Register opinion editor Kathie Obradovich asked Warren at a presidential candidate forum.
Warren, who raised her hand at last month’s Democratic debate to indicate she would abolish Americans’ private health insurance plans, briefly hesitated before answering.
“What it does is it transitions people to more complete insurance coverage, more complete health care coverage, at a lower cost, which I think is what we all want,” she said. “Everyone gets covered, but we do it at the lowest possible cost.”
“Would that also include Medicare Advantage and Medicare Part D, which have private providers within the Medicare umbrella?” Obradovich asked.
“So, the basic structure of the plan is to get everyone covered,” Warren said.
She said a “significant feature” of Medicare for All is that it would pay for “long-term care.”
“The problem we’ve got right now in the United States is that the insurance companies are sucking value out of our health care system,” she said. “Look at the basic business model. It’s charge the maximum amount you can in premiums, and pay out the least that you can in health care coverage.”
Warren supports Sen. Bernie Sanders’s (I., Vt.) single-payer Medicare for All, which Sanders said last week would cost up to $40 trillion over the next decade. Other Democrats running for president have said there should be a role for private insurance, supplemental care, or a public option to buy into a government-run program.
Polling has shown support dwindles for Medicare for All when respondents are told it would eliminate their private health plans. A poll in February found only 13 percent of Americans wanted a true single-payer system that abolished private insurance.
Ezra Klein thinks it’s “ridiculous” to ask Democratic presidential candidates whether they want to abolish private health insurance. It’s supposedly ridiculous because the correct answer isn’t yes or no, but “it depends.”
Several of the Democratic candidates have endorsed Senator Sanders’s Medicare for All bill. Klein takes up the subject:[I]f you assume both the generosity and the financing of Sanders’s plan, there’s really no reason to debate private insurance. If the government will cover everything, with no copays or deductibles or hidden forms of rationing, then there’s no need for private coverage. . . .[Sanders’s bill] doesn’t actually abolish private insurance. It outlaws “health insurance coverage that duplicates the benefits provided under this Act.” If the proposed benefits contracted during the legislative process, it would open more room for private insurers to enter the system. So even Sanders’s answer to this question isn’t truly “yes” or “no.” It depends on what’s covered, which in turn depends on how much Americans are willing to pay in taxes.
Klein then lists questions that he thinks debate moderators should be asking instead: Would your plan include cost sharing at the point of service, how would prices be determined, and so on. They’re not bad questions. But neither is the question about outlawing private insurance. In the first place, whether the Sanders proposal would change in the legislative process is irrelevant to the question of what the candidates are seeking. Their endorsement tells us the answer to that question. It is also hard to picture the Sanders proposal changing so much that anything like the private health-insurance policies that scores of millions of Americans now rely on could survive.
Several candidates — Gillibrand, Warren, Sanders, Harris, and probably a few others I’ve forgotten — have endorsed, of their own free will, making it illegal for Americans to buy the kind of insurance most of them now have. Americans should be informed about what Democratic health programs will look like. They should know as well whether they’ll have a choice about participating.
By Fox News•
Americans hate to wait. We scout out the shortest grocery line. We choose the fastest delivery option. We chafe at slow-moving internet speeds. And we don’t like to wait for health care when we or our loved ones urgently need it. But if America gets saddled with a radical new health care system called “Medicare-for-All,” a lot of waiting for health care will be in your family’s future.
When Americans got tired of waiting around in clogged emergency rooms for last-minute care, the marketplace responded. Urgent care facilities started sprouting up, offering care for non-life-threatening illnesses and injuries. Hospitals, sensing a threat to their business, now buy billboards advertising current wait times in their ERs.
But in countries where the marketplace has been supplanted by government-run health care systems like Medicare-for-All, people have no choice but to wait for desperately needed health care on the government’s timetable. Not for minutes or hours, but weeks and months.
According to a comprehensive study by the nonpartisan Fraser Institute, patients in Canada wait an average of nine weeks to see a specialist, and an additional 11 weeks on top of that to receive treatment. Even when every day counts, such as treatment of cancer, patients have to wait a month before getting radiation therapy.
Advanced-stage heart disease can trigger a heart attack or stroke at any time, but in Canada, you’ll wait about two and a half months for coronary bypass surgery unless you are already in an emergency situation. If your life is not at imminent risk, you will wait even longer for care. If you need to be treated by an OB-GYN in Canada, expect to wait 21 weeks. If you’re suffering from acute knee or back pain, you’d better stock up on ibuprofen: you could wait six months to three-quarters of a year for orthopedic surgery.
In Britain, where the government’s role in health care is even more pervasive, wait times are much worse. A 2019 study by the Royal College of Ophthalmologists found that tens of thousands of elderly patients are left struggling with near blindness due to a government cost-cutting drive that relies on them dying before they qualify for cataract surgery. According to another study by the Royal College of Surgeons, nearly a quarter of a million Britons were waiting more than six months—some even longer than nine months—to be scheduled for surgery and other medically necessary treatment.
Why do government-run health care systems—including so-called single-payer schemes like Medicare-for-All—result in long waits for needed care? Because unlike the private sector, government has zero incentive to customize care to individual needs. It achieves efficiencies primarily by doling out one-size-fits-all health care to everyone, regardless of unique circumstances.
Government is also poor at adjusting to medical innovations, new technologies and changes in epidemiology. For example, Canada has struggled to handle the rise in asthma incidence rates. The Canadian Lung Association found that the average wait time for asthma testing is four weeks, with one in four asthma sufferers waiting longer than three months to be tested. In the U.S., private insurance usually covers most of the cost of expensive MRIs to evaluate medical conditions. But in Canada, where MRIs are “free,” wait times have steadily increased, reaching 364 days in British Columbia. Not surprisingly, some Canadians have taken to paying out-of-pocket for an MRI.
Medicare-for-All and its various derivatives all have one ultimate goal: to push the private sector out of health care and replace it with more government. This means that government will be deciding what health care Americans can get and when—not doctors, not hospitals, and certainly not patients. When politicians absurdly promise to make health care “free,” what they actually mean is that government will pick up the tab and bill us later, while deciding what it will pay for and how much to pay. Those decisions obviously and inevitably will impact choice, quality and availability.
This week, on June 26-27, twenty Democratic presidential contenders will face off against one another on the debate stage. Nearly all of them publicly support Medicare-for-All or some variation. Each one should be asked: why should Americans be forced to wait longer (and ultimately pay more) for lower-quality, government-controlled health care?
House Speaker Nancy Pelosi is considering a monumental change to Medicare — and believes that President Donald Trump might support her plan.
Her big idea? Binding arbitration — a method that empowers government-appointed “arbitrators” to dictate the price of new medications and treatments. She hopes it’ll lower drug spending.
That would represent an enormous change from the status quo. Right now, drug makers negotiate directly with private insurers and healthcare providers.
Arbitration is just a fig leaf for government price controls. Arbitrators are supposed to be unbiased. But they’d likely always side with the government officials who appointed them — and set prices well below fair-market value. Like all price controls, arbitration would discourage medical innovation.
Under Medicare, drug coverage is broken into two parts. Medicare Part B covers potent medicines, like chemo- and immunotherapies, that physicians administer in hospitals and doctor’s offices. Medicare Part D covers prescription drugs that patients can pick up at the pharmacy.
For both programs, drug prices are determined through negotiations between drug makers and private payers, like hospitals or insurers.
In a binding arbitration system, if Medicare officials aren’t satisfied with those negotiated prices, they could appoint an arbitrator to do their bidding. Medicare officials would explain to arbitrators why they feel a lower price is justified. Pharmaceutical companies would justify their own suggested price.
Arbitrators would then choose a legally binding price. And their decision wouldn’t be limited to the two proposals on offer.
This type of dispute resolution is also called “baseball arbitration.” Baseball teams are well known for bringing in neutral arbitrators to resolve contract disputes. But Pelosi’s arbitration plan shouldn’t be compared to the big leagues, as the government would run the entire show. Government officials would get to pick the arbitrators — and would almost certainly choose ideologues who agree with them. So the “negotiation” would function identically to price controls.
Price controls always stifle innovation and harm patients in the long run.
Drug development is a risky business. It takes about $2.6 billion and between 10 and 12 years, on average, to create just one new drug. Around 90 percent of medicines never make it past clinical trials.
Investors are willing to take such financial risks on the off chance their drug succeeds and is profitable. Price controls eliminate that potential by making it harder for companies to recoup their R&D expenses. No investor would risk her capital knowing the government could undervalue her discoveries.
Just look at what price controls did to Europe. In the 1970s, European companies made more than half of the world’s new drugs. Then governments across Europe began to implement various price control schemes over the next 10 years. European countries develop less than 33 percent of new drugs today.
The United States, on the other hand, is the global leader in drug development — and has done so for over three decades. Because our healthcare system values drugs fairly, drug innovators are eager to research and develop drugs stateside. In fact, America’s biopharmaceutical industry dedicated close to $90 billion in R&D efforts in 2016.
All that investment has paid off, too. In the United States, researchers are developing roughly 4,000 new medicines targeting a range of diseases — including potential cures to Alzheimer’s, cancer, and diabetes.
If binding arbitration takes off, Americans may never benefit from these potential treatments. Instead, patients would be left at the mercy of diseases for which there are currently no cures.
Binding arbitration doesn’t deserve President Trump’s support — or the support of Democrats. Letting the government set drug prices would hinder future medical advances.
By Wesley J. Smith • National Review
bamacare failed. There is no denying it anymore. The supposed “signature achievement” of the 44th president isn’t just opposed by Republicans. The Affordable Care Act has now been jilted also by many Democrats, who, like so modern-day Lotharios, have abandoned their once-burning ardor for state insurance exchanges to pursue “single-payer” health care.
Some readers are yelling, “That was the plan all along!” Yes, but the stew is not fully cooked. I doubt President Obama and the Pelosi Congress of 2009 and 2010 planned for their party to move so radically this soon. Oh well. With burning hatred for everything Trump as the accelerant — and with polling popularity of Bernie Sanders’s “Medicare-for-all” legislation of last year serving as a justification — much of the Democratic party now unapologetically embraces outright socialized medicine.
The newly filed 120-page “Medicare for All Act of 2019,” authored by Pramila Jayapal (D, Wash.), already has 106 co-sponsors — nearly half of the Democratic caucus — and it seeks to yank America hard toward the port side of the political spectrum. The bill — which resembles Medicaid more than it does Medicare — would transform our entire health-care system into an iron-fisted centralized technocracy, with government bureaucrats and bioethicists controlling virtually every aspect of American health care from the delivery of medical treatment, to the payment of doctors, to even, perhaps, the building of hospitals. It would obliterate the health-insurance industry and legalize government seizure of pharmaceutical manufacturers’ patents if they refuse to yield to government drug-price controls.
Here are some of the plan’s most destructive features:
It Would Drown the Country in Red Ink: True to its title, the bill promises comprehensive and encompassing “free” health care for everyone, including primary care, hospital and outpatient services, dental coverage, vision, audiology, women’s reproductive health services, long-term care, prescription drugs, mental-health and substance-abuse treatment, laboratory and diagnostic services, ambulatory services, the list goes on and on. Last year’s version of the plan authored by Bernie Sanders (I., Vt.) — which didn’t include coverage for dental and long-term care — was estimated to add $32 trillion to the budget over ten years. It is also not irrelevant that the current Medicare — which is far more limited — is scheduled to go broke in 2028.
Yes, There Would be Rationing: The bill creates a Physician Practice Review Board “to assure quality, cost effectiveness, and fair reimbursements for physician-delivered items and services.” The term “cost-effectiveness” is code for rationing, which the law acknowledges by prohibiting the use of assessment methods of determining “any value or cost-effectiveness that discriminate against people with disabilities.”
Private Payment for Covered Health Services Would Effectively Be Banned: The bill requires that all covered medical services be provided without any out-of-pocket cost to patients. The only fee to which a doctor, hospital, or other service provider would be entitled would be that paid by the government. Kiss the health-insurance industry goodbye.
Doctors and Hospitals Would Become Government Contractors: The state would not, strictly speaking, employ doctors directly. But doctors would be coerced into becoming government contractors by the requirement that they sign a “participation agreement” to be eligible to receive payments from the government. The participation agreement forces medical professionals and institutions to:
Doctors who object to the provisions of a participation agreement would have little choice if they wanted to continue their careers, since they could be compensated for services only if they were deemed “qualified providers,” a status restricted to those who sign the agreement. (This is known in law as a “contract of adhesion,” meaning providers have no bargaining power or ability to negotiate terms.) If an individual provider’s agreement were revoked, he or she would be ineligible to be hired by a hospital or medical group, because their participation agreements require that they not employ any provider whose participation plan was “terminated for cause.”
Private-Pay Health Care Would Be Destroyed: What about doctors who wish to operate concierge practices, that is, accept cash directly from patients? Outside of the few non-covered fields such as cosmetic surgery, good luck! The doctor cannot have signed a participation agreement, since qualified providers “may not bill or enter into any private contract with any individual eligible for benefits under the Act for any item or service that is a benefit under this Act.” That means the doctor’s entire practice would have to be made up of people who opted not to be covered by the government, a very small pool of patients — the few very wealthy who could afford to foot their entire medical expenses out of their own pockets, and I suppose, “medical tourists” who travel to the U.S. for the purpose of obtaining treatment.
The Bill Seeks to Remove Profit in the Health-Care Sector: True to its socialist roots, the would eliminate profit in health care. Indeed, the bill states quite explicitly:
It is the sense of Congress that tens of millions of people in the United States do not receive healthcare services while billions of dollars that could be spent on providing health care are diverted to profit. There is a moral imperative to correct the massive deficiencies in our current health system and to eliminate profit from the provision of health care.
To enforce the “sense of Congress,” the bill forbids bureaucrats who determine the medical fees that will be paid to providers — which includes institutions as well as doctors and group practices — from taking into account the costs of “marketing” the “profit or net revenue of the provider, or increasing the profit or net revenue of the provider” or “incentive payments, bonuses, or other compensation based on patient utilization of items and services, or any financial measure applied with respect to the provider.” You think doctors have trouble receiving adequate compensation from Medicare and Medicaid now? Just you wait!
The Government Could Steal Pharmaceutical Patents: The bill requires the government to negotiate the price of medicines with drug companies. The bargaining power in that negotiation would — as with participation agreements — be all with the government. If a company refused to agree to the government’s price, the bill states, “The Secretary shall authorize the use of any patent,” by another company “for purposes of manufacturing such drug for sale under Medicare for All Program,” with compensation paid to the patent-owning company in an amount determined by the bureaucracy. How willing would pharmaceutical executives be to green-light the billions in investments required to develop new medicines knowing that the government could simply seize their patent and license another company to manufacture the drugs if they refused to sell it at a price the government demands?
Illegal Aliens Would Receive Free Health Care. Eligibility to receive benefits is not limited to citizens and aliens here legally. Rather, the bill reads: “Every individual who is a resident of the United States is entitled to benefits for health care services under this Act.” Illegal aliens living here are residents. Talk about a migration magnet. The only limitation on coverage for aliens is a provision that forbids eligibility to anyone traveling here “for the sole purpose of obtaining health care items and services provided under the program.” That’s much less than meets the eye. If an illegal alien traveled here to work, to escape violence, or to be with family, the exclusion clause would not apply. Further demonstrating the intent to cover those here illegally, enrollment in the program would be automatic “at the time of birth in the United States (or upon establishment of residence in the United States).” Residency could conceivably be established by a state driver’s license — now widely allowed illegal aliens — or even a utility bill. And get this: Unlike today’s Medicare identifier, the new Medicare Card would specifically not include a Social Security number, which many illegal aliens don’t possess.
Women Would Receive Free Abortion: Currently, the “Hyde Amendment” prohibits federal funding of abortion. That rare bit of culture-wars comity would be destroyed by the bill, which provides: “Any other provision of law in effect on the date of enactment of this Act restricting the use of Federal funds [i.e., Hyde] for any reproductive health service shall not apply to monies in the Trust Fund [the government entity that would be established to pay health-care costs].”
The Medicare for All Act of 2019 won’t become law while there is a Republican Senate and president. But the 107 co-sponsors in the House have put the country on notice. If the Democrats take over the government in 2021 as they — and some Never Trump Republicans — hope, by 2022, the United States health-care system will become a wholly controlled subsidiary of the United States government, bereft of liberty, increasingly sclerotic, managed by unelected bureaucrats churning out thousands of pages of onerous regulations, a centralized authoritarian mess from which the country’s health-care system would never recover.