Medicare for All: a Critical Look

Bill Hammond gave a talk on this to the Capital District Humanist Society. He’s the Empire Center’s Director of Health Policy, and is critical of the single payer concept. CDHS members being mostly well to the left, Hammond was received like a skunk at a picnic.

He started by quoting Bernie Sanders that “Health care must be recognized as a right, not a privilege.” Which Hammond said nobody really disputes; but Sanders and his fans equate it to a “single payer” system. (The “single payer” — seems they’re afraid to say this plainly — would be government, responsible for all health care.)

Hammond noted that a “right to health care” would have been unintelligible to our founders. Health care itself was not even a concept; he described how George Washington was really killed by the medical “care” he received. We’ve advanced a lot since. But meantime they saw “rights” as things the government should notget involved with, whereas for Sanders backers a right means an entitlement. And his “Medicare for All” plan goes even beyond a “universal access” model (e.g., schools, libraries, and indeed existing Medicare), with only government being allowed as a payer for health services.

Hammond also saw equality of access as a big part of it; the idea that people should get the same care regardless of income. This, he said, is a kind of extreme egalitarian moral reasoning we don’t apply in any other sphere (for example, food).

He presented some figures illuminating the status quo. Private insurance penetration is 67%, the bulk of that employment-based. Most of the rest is public coverage — Medicare and Medicaid. Medical costs are paid roughly half from private sources and 42% from taxes. Nine percent is self-pay and charity care.

Major flaws in the existing landscape include millions uninsured; out-of-pocket costs too high even with insurance; a fragmented, poorly integrated delivery system; and health care is 17% of our economy, an excessive burden far above other countries’, with no corresponding benefit in health outcomes. Hammond said “single payer” would not tackle the latter two problems.

He also cited some misconceptions. First, that our private insurance model is the cause of high costs, with too much profit. One audience member, a friend of mine, insisted no one should be allowed to profit providing something as vital as health care. I would turn it around: why should anyone be forced to provide her with any service (let alone one so vital) without compensation? People get paid for their work (she does). Those who expend effort to set up, invest in, and operate health care systems surely deserve compensation in the form of profits too.

But are they excessive? Hammond presented numbers showing that while compared to other countries, our health care overheads, including all administrative costs, arehigher, they’re only about 8% of total outlays, with the bulk of the cost difference being what we actually spend on care. And that’s not for more or better care but, rather, in the prices paid for care — mostly due to much higher salaries for medical professionals than in other advanced countries.

It’s also often asserted that all other advanced nations have single payer systems. Not so. Most actually have mixed systems (which ours is), but are more tightly regulated (hence their lower price levels). Obamacare was a step toward convergence with those other countries. But Hammond noted that even in Britain, which does basically have a single payer system, you’re still allowed to buy private insurance, which many Brits do. Sanders (and Warren) would disallow that.

Another notion is that their plan would merely be an expansion of the existing and successful Medicare system. Hammond pointed out that existing Medicare actually entails a lotof cost sharing; it’s far from free*, and there are out-of-pocket costs at point of service too.

He also discussed the proposed New York Health Act, seemingly on the verge of passage. In Hammond’s telling, this would be a “Medicare for All” plan on steroids; a “carte blanche” with the state simply paying allhealth related costs for all residents. He presented various studies attempting to estimate the costs. While there might be some cost savings, increased demand for health services would likely raise overall spending levels. Total taxation would have to double or triple. Hammond acknowledged that a majority of New Yorkers would probably come out ahead after higher taxes are set against lower health bills. But this would require richer people paying dramatically more. (A notion garnering vocal approval from attendees; but it was pointed out that rich people could simply leave the state.)

A comparable federal plan would, he said, entail similar ramifications. [Though presumably richer people would be less apt to leave the country than the state — FSR.] Hammond cited an Urban Institute estimate that over ten years, $34 trillion in higher federal taxes would be required, replacing $27 trillion in current outlays.

Questioners from the audience gave Hammond a rough time. My own question said I agreed with him about single-payer, but that we’re a rich country and can afford to somehow make sure every citizen gets a minimum level of basic care. (This elicited applause!) Hammond responded that actually this can be achieved with modest tweaks to our existing system. In particular, the Medicaid program already aims to do it for low income people; a problem is that many of those eligible simply don’t sign up for it. [Also, Medicaid requires money from states; red state Republican regimes hate it and try to limit it — FSR.]

Hammond concluded with a story about Fidelis Care, a New York health insurer run by the Catholic Church, which received a $3.75 billion buyout offer. Long story short, Gov. Cuomo figured out a way to get control of $2 billion of that, which he used as a kitty to hand out goodies to favored entities in the health care industry; in return for which he glommed unprecedently large political contributions.

Hammond said that single payer advocates seem to imagine that having the entire health care industry under government control would be a good thing. They idealize government. But the Fidelis story is a cautionary tale about how things really work; tending to be run for the benefit of insiders; and big players in this industry have tremendous clout to make it work for them.

After his talk, Hammond was taken outside, where he was tarred and feathered.

* My own monthly Medicare payments were high enough that I opted out.