The Left Also Wants to Repeal and Replace

by John Goodman, NCPA,  July 17, 2013

There is stirring on the left.

Now that the odds that ObamaCare will crash and burn have ticked up a notch or two, the words “single payer” are being heard more frequently.

[For those who have been living under a rock, "single payer" is what we used to call "national health insurance," and before that "socialized medicine" and before that "government-provided health care," by people who today call themselves "progressives" but used to call themselves "liberals" and before that "socialists" in some cases — all in the hope that continual re-labeling will make the ideas actually seem sensible.]

Take Dennis Kucinich. The other night on Fox News he announced that the Affordable Care Act was a bad idea from the get-go. “Everybody should be in Medicare,” he said, and “We should get for profit companies out of health care.”

My problem with people on the left is that they are so obsessed with “public” rather than “private” and “non-profit” rather than “for-profit” that they become oblivious to basic facts, including these:

• Most government health care programs are mainly managed by private companies — for-profit companies more often than not.
• One in four Medicare enrollees is actually in a private insurance plan and almost all the rest of Medicare is being managed by private companies (Blue Cross, Cigna, etc.)
• 70 percent of Medicaid enrollees are in private plans — a number that is expected to grow — and I believe all the rest are mainly being managed by private companies.

More importantly, THERE IS NOT A SINGLE MAJOR PROBLEM IN OBAMACARE THAT WOULD BE SOLVED BY MOVING EVERYONE INTO MEDICARE. And any minor problems that might be improved by universal Medicare could have been easily solved by tweaks to ObamaCare as well.

Paying for the expansion. Sometime back, the NCPA calculated that we could pay for national health insurance with a 15% VAT tax. But if it were easy to impose such a tax the Democrats would have financed ObamaCare that way. Bottom line: the easiest way to fund universal Medicare is the same way we are funding ObamaCare. That means:

Individual mandate. For the very same reasons that ObamaCare made insurance mandatory, universal Medicare would also have to be compulsory. Otherwise, people would only join when they are sick. To make the budget balance, people would have to pay a premium that, on the average, equals the expected cost of their care. Just like ObamaCare, there would have to be subsidies for lower-income families. Since no one on the left believes in charging buyers a fair price for almost anything, the healthy would be over-charged and the sick would be under-charged. Incentives to game the system would be monumentally destructive without a mandate. Note: none of the problems with the individual mandate have gone away.

Employer mandate. For people at work, there would be enormous pressure to pretend that employers pay for fringe benefits rather than workers themselves. So employers would have to buy their employees into Medicare. That would raise the issue of exempting small business, exempting part-time workers, etc. Note: none of the problems of the employer mandate have gone away.

Cuts in Medicare Spending on the elderly and the disabled. Almost half the funding for ObamaCare comes from reduced spending on current Medicare beneficiaries. Since the money will still be needed, these cuts will not go away.

New taxes on everything from tanning salons to pacemakers to wheelchairs and crutches. Obviously, these are not going to go away.

Managed care. Doctors on the left hate managed care every bit as much as doctors on the right. The problem is that current third-party payment practices give everyone perverse incentives; and when they act on those incentives they make costs higher, quality lower and access to care more difficult than otherwise would have been the case. The Obama administration is experimenting with Accountable Care Organizations and other reforms to deal with this problem. Of course, nothing the administration is doing is working, but that doesn’t change anything. Under universal Medicare, we can’t change the rate of growth of health care spending unless we change the way providers are paid.

Actually there is one place where the Obama ideas for reform are working — though not in the way Washington bureaucrats have planned — in the Medicare Advantage plans. These plans are not going to go away under universal Medicare for the same reason they are not going away under ObamaCare.

The exchanges. If the truth be known, what the left hates the most about ObamaCare is the idea of competition. That’s because of their fundamental dislike of the economic model of medical care delivery. I have been critical of the exchanges because they are managed competition rather than real competition and they create perverse incentives for everyone who participates. The left dislikes the exchanges because they dislike the idea of competition as such.

But for reasons given above, we have no alternative to the economic model if we want to control costs.

Medicare already has an exchange: it’s how enrollees get into Medicare Advantage plans. And if employers get involved, it’s almost certain people will want to enroll in their employer plans as an alternative to traditional Medicare.

Here’s the upshot: In moving everyone into Medicare, we will not have solved a single problem of any importance that we started with in ObamaCare.

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