The further to the left or the right you move, the more your lens on life distorts.

Saturday, February 13, 2016

Universal Health Care

To the joy of many progressives, the Democratic party is veering to the left. As a consequence, there is a possibility, albeit a relatively small one, that Bernie Sanders will continue to defeat Hillary Clinton in upcoming primaries and ultimately gain the presidential nomination.

Sanders is applying a well-worn strategy used by every socialist—offer lots of "free" stuff to those on at the middle and lower ends of the income scale and grow government as quickly as possible (via profligate spending) to strengthen your control of the populace. Claim that deficits and debt are nothing to worry about, that "efficiency" will reduce government costs, and finally, that the "rich" will be taxed heavily to pay for it all. All of that is a lie, but no matter—it works with a growing segment of the electorate.

Let's take one of Bernie Sander's trademark programs—Universal Health Care—the holy grail of liberal/socialist politics for a generation. Yevgeniy Feyman dissects the program:
Democratic candidate Bernie Sanders recently released his health-care plan: a government-run single-payer system for the U.S., similar to what many European countries have. Criticism of the plan has so far focused on its lack of political feasibility, but there is an even more important reason to be wary: Accounting for costs and tax increases, it would reduce labor supply by 11.6 million. In a struggling economy, with tepid wage growth, hurting employment should be the last thing on any politician’s agenda.

The plan truly promises everything under the sun. Not only will everyone be able to get any medical treatment needed — with no cost at the point of service — but the plan won’t require a terribly high tax increase. The funding mechanism boils down to an increase in payroll taxes: an “income-based premium” of 2.2 percent for individuals and a tax of 6.2 percent on employers. Because economists, as well as the non-partisan Congressional Budget Office and the Joint Committee on Taxation, recognize that the "employer share" of payroll taxes is mostly borne by workers in the form of lower wages, this translates to an 8.4 percentage point increase overall.

These elements of the plan were the first to draw criticism. Not only do most single-payer countries fund their health-care systems with higher taxes on the middle class, but they also typically exclude a variety of services and drugs from coverage. Without being able to say no to some expensive drugs and services, the government would have a tough time driving down prices.

But perhaps the most stinging rebuke came from veteran health economist Kenneth Thorpe of Emory University. In Thorpe’s estimation, Sanders’ plan would require a total tax hike of 20 percentage points, and would cost $1.1 trillion more each year than the campaign has estimated. This is at least partly because the government would have to pay more than Medicare’s low rates to keep doctors and hospitals in the system, and making health care free at the point of delivery would also increase use of health-care services.
Innumerate progressives and other low information voters would prefer to believe Bernie's claims (think: Willful suspension of disbelief). After all, the claims sound great—free and excellent medical care that someone else will pay for. Only one problem—that's not true. What we'll get—what all participants in existing universal healthcare programs get—is higher taxes, fewer choices, longer wait times, less state of the art cures, more bureaucracy, greater inefficiency and fraud, and a monstrous entitlement that will eventually lead to national insolvency.