Bernie Sanders’s health care plan is underfunded by almost $1.1 trillion a year, a new analysis by Emory University health care expert Kenneth Thorpe finds.
Thorpe isn’t some right-wing critic skeptical of all single-payer proposals. Indeed, in 2006 he laid out a single-payer proposal for Vermont after being hired by the legislature, and was retained by progressive Vermont lawmakers again in 2014 as the state seriously considered single-payer, authoring a memo laying out alternative ways to expand coverage…..
He also argues it would leave 71 percent of households with private insurance worse off once you take both tax increases and reduced health care expenditures into account.
Single payer is tough. As I argued in my post Medicare 200: Medicare E, there are a lot of questions that have be answered to create a feasible plan that could survive first contact with a friendly Congress much less first contact with a hostile Congress:
I understand the desire to use Medicare as the basic structure of a national single payer system as it is a pre-exisiting program whose skeleton is strong enough to build on. However that skeleton has some odd deformities to it, and a lot of trade-offs have been built into Medicare that would need to be re-examined if we were to massively expand Medicare’s scope….
- How should we treat people whose current insurance has an actuarial value (AV) in the high 80s or better (Medicaid, CHIP, Cost sharing Silver 1st and 2nd Tier, Platinum, good union deals etc)? Do we transition everyone to Medicare’s 81/82% acturial value and tell people with good, high AV insurance to suck it? Do we keep high AV plans? If we keep high AV plans, how do we prevent massive cost dumping of sick people from private pools into public pools.
- How do we treat Medicare Supplemental policies to increase AV?
- Medicare is a good insurance program but it is not a perfect insurance program. The biggest problem with Medicare from a beneficiary point of view is that it does not limit maximum annual exposure to costs nor does it do well with extreme outliers of care. As we’ve seen, Medicare Part B has a 20% co-insurance rate with no out of limit cap. Medicare Part D has a 5% co-insurance rate with no annual cap. Medicare Part A limits annual and lifetime hospital days covered….
I have a much harder time seeing how that end is achieved if Medicare-E advocates don’t start answering the hundreds of policy implementation and management questions that Medicare-E would entail. The biggest problem with Medicare-E is how to finance it from people who will be made significantly worse off. People with high incomes are highly likely to already have better than Medicare insurance through either work or the Exchange. Not pissing this group of people off is critical to building a winning political/legislature coalition. Not pissing this group of people off will either involve unicorns shitting bricks of gold out of their ass, or some seriously odd plumbing. A simple slogan does not address this critical blocking problem.
What is the solution?
Assuming Professor Thorpe is correct, most people would be worse off by the Sanders plan either through higher net taxes or lower actuarial value of coverage. Even more importantly, the people who will benefit the most are less likely to vote in general and less likely to be single issue voters on the matter of health insurance financing reform than people who will be screwed by the plan.
How does this work?
And back to Vox on the different assumptions being made:
Sanders assumes $324 billion more per year in prescription drug savings than Thorpe does. Thorpe argues that this is wildly implausible. “In 2014 private health plans paid a TOTAL of $132 billion on prescription drugs and nationally we spent $305 billion,” he writes in an email. “With their savings drug spending nationally would be negative.” (Emphasis mine.) The Sanders camp revised the number down to $241 billion when I pointed this out…..
Sanders assumes $160 billion per year in savings relative to Thorpe because, they argue, he includes elective procedures like plastic surgery, which single-payer wouldn’t cover. Thorpe disputes this: “Cosmetic surgery, really? That’s $12 billion a year and in the second decimal of rounding.” In other words: There’s no way excluding plastic surgery can give you $160 billion of savings.
These types of things are hard. It is a proposal to rejigger 17% of the US economy. It should not be easy. But if the proposal is to be credible, the people behind the proposal have to do their homework and avoid the WTF errors.
Projecting a prescription drug saving greater than total private sector prescription drug spend is a WTF error. It is a lazy error and does not advance the argument that Sanders wants to make.