Medicare for All: If We Can’t, We Shouldn’t

Monday, I wrote: If we can, we should. And if you agree, then I’m sure you also agree that if we can’t, we shouldn’t.

If you don’t accept that simple logic, then you are not being objective.

I have as many friends who call themselves Democrats as Republicans, and lately, the conversation has increasingly turned to the concept of Medicare for All. While I’m sure it’s pure coincidence and has nothing to do with the work of Broken Healthcare, I often get asked my opinion of Medicare for All. Unfortunately, I have proven woefully inept at getting people to understand why I believe Medicare for All would not only be a disaster but would be the death knell for American healthcare.

A couple of months ago I started trying a different tack. I had observed that my friends who are supporters of Medicare for All favor it for moral reasons, and on that subject, we are mostly in agreement that something must be done to fix our broken healthcare system. But moral justification tends to lead to emotional, not objective, economic reasoning, thus making it a hard debate to win.

Essentially, what I’ve said to people is, “Why don’t we step out of the world of healthcare for a moment—it’s too emotional. Instead, let’s examine how things might work through an analog, say the food industry.”

For me, there are many similarities between food and healthcare. Clearly food (along with water) is a basic necessity of life. And I think most of us believe that everyone has (or at least should have) the right to not starve to death in the United States of America, where food is abundant and cheap. We ache for children who are going hungry, feeding millions of them through our schools. We help the poor with food stamps (now SNAP) and we subsidize farmers. So, what would happen if we adopted a Food for All program that ran like today’s Medicare?

A Cars for All program might be similarly appealing. What would the auto industry look like if government established what features a car needed, what price would be paid, and how repairs and maintenance would be paid?

How about a Housing for All program? We all care about ending homelessness. So why not let the government decide what housing everyone needs? It would certainly be a lot more fair.

You see, it’s the “All” in Medicare for All that is the problem. I am in favor of subsidizing healthcare for those who need it, but when we start to make the assumption that the government should provide a minimum level of something for everyone, we distort the market in ways we can barely imagine. Right now, government-sponsored healthcare is only half the market and it’s destroyed the entire market for all of us, creating price distortions and stifling competition. Medicare and Medicaid, the lowest prices in the market, don’t result from competition, they result from price setting by bureaucrats which makes people believe they are truly the lowest prices possible. Only competition can find the lowest prices. This misperception has also created the concept of cost-shifting to the private sector.

Taken in sum, it’s a dysfunctional economic system that all started with government interventions.

Medicare created hospital Charge Masters and mandated that everyone be “charged” the same price (before discounts). In other words, the government created hospitals’ greatest Weapon of Mass Corruption. In 1973, the Federal Government allowed the nation’s non-profit health insurers to become for-profit businesses while leaving intact certain exemptions from anti-trust regulation that was only intended for non-profits. Decades later, we have an incredibly corrupt health insurance industry that is already starting to do the same to Medicare through Medicare Advantage plans.

Government created the fee-for-service model and allows obscene abuse of patent law that enables pharmaceutical companies to keep generic options off the market. The Federal Government also wrote into law that it may not negotiate drug prices, which keeps costs artificially high.

Government also created the Medical Loss Ratio (MLR) via the Affordable Care Act (ACA), eliminating the incentive for insurance companies to drive prices down, instead creating a perverse incentive to allow prices to rise.

For the private sector, government has created High Deductible Health Plans, Health Savings Accounts, and Health Reimbursement Accounts, none of which have brought down the cost of healthcare by driving greater consumerism; and there was never any evidence to suggest they would in the first place. These were merely political ideas. Every government-lead effort to engineer a better healthcare system has failed, leaving us with what we have now. So now, for some reason, we believe we can achieve better results by further broadening government’s domain?

The only tried and true system, the one that we have 250 years’ of experience with—one that has given us the cheapest energy in the world, the cheapest and most abundant supply of food in the world, broad home ownership, a car in every driveway , and so much more—is the one system we haven’t tried.

The Free Market is capable of giving us the best healthcare system in the world. The confusion is that because our healthcare system is so economically dysfunctional, many believe it is capitalism run amok, when in fact the problem with our healthcare system is just the opposite—it’s capitalism denied.

This is the debate that must take place before we go any further down the path of Medicare for All. The question is whether we have truly tried free market principles in healthcare yet, and if we haven’t, is it smart to move to a more engineered system, whatever form Medicare for All might take, without first trying the one system that we know works in every other market?

And finally, please just come back to the original question: “If you believe we can engineer a Medicare for All system, then why wouldn’t we also apply the same principles to food, automobiles, and housing?” If you cannot, or will not, answer that question, then ask yourself “why not?”

So, this is the bottom line for me—it’s not about morality, because on the grounds of morality, I think If we can, we should. Unfortunately, we can’t, so we shouldn’t. And there’s still another way that we haven’t tried.

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