The government-run health care program supported by Bernie Sanders, Elizabeth Warren and a bunch of other Democrats would give every American regular access to doctors and hospitals. Problem is, there wouldn’t be enough of either.
Medicare for all, as it’s known, would replace the current patchwork system of private and public insurance programs with a single government program, similar to Medicare, that covers everybody. Most doctors and other caregivers would stay on private sector payrolls, rather than go to work for the government. But for the plan to work, the government would pay caregivers and hospitals less than most private sector insurers pay today. That would force hospital closures and drive doctors out of medicine, at the same demand for health care is surging.
“It would cause massive disruption,” says Kenneth Thorpe, chairman of the health policy department at Emory University. “Some physicians would be so frustrated they’d probably just fold up shop. You’d have waiting lines, absolutely.”
Bernie Sanders’ Medicare for all plan—which fellow presidential candidate Elizabeth Warren supports—would eliminate most private insurance and enroll everybody in a government plan. Private analyses estimate it would require at least $3 trillion per year in new federal spending. That would require new taxes, along with major cuts in what the nation spends on doctors and hospitals.
Hospitals and doctors would lose money
The Sanders proposal says the government would pay health care providers at current Medicare rates. That would lower payments to doctors by about 30%, and payments to hospitals by about 40%. “The proposed cuts to providers now working through private insurance would be severe,” writes health economist Charles Blahous of George Mason University’s Mercatus Center.
Medicare, for instance, pays hospitals about 90% of their costs on average, which means hospitals lose money on Medicare patients. They make it up, and then some, on patients covered by private insurance, which pays hospitals about 145% of their costs. If all patients were covered under Medicare, every hospital in the country would lose money, on average. Some analysts worry about hospital closures under Medicare for all, especially in rural areas.
There are about 1 million physicians in America. Primary-care doctors earn $237,000 per year, on average, while specialists earn $341,000. Most people might think doctors could take a 30% or 40% pay cut and still be doing fine. But medical school costs as much as $250,000, and new graduates often spend years working at low-paid residencies. The expectation of high pay in the future is one reason medical students and young doctors grind it out. Nobody has estimated the number of doctors who would quit under Medicare for all, but it’s normal for any profession to become less popular as financial incentives decline.
This would happen as demand for health care rises by 10% or more, since uninsured people would now have coverage and the underinsured would be able to get more care, cheaper. There could be a particular shortage of primary care doctors, already scarce in some areas. “Primary care would be in serious jeopardy,” says Thorpe.
Changing the system’s financial structure
Some analysts assume that if Congress ever passed Medicare for all into law, it would have to have higher payment rates than Medicare does now, to prevent a shortage of doctors and hospitals. But then it would cost more, and the idea becomes less compelling the more it costs. As it is, Medicare for all would necessitate large tax increases on both workers and businesses. The higher those taxes go, the less popular a single-payer program will become.
Many other countries have single-payer, government-run health care that costs less than the U.S. system on a per-patient basis, and delivers comparable or better results. If they can do it, why can’t we? The answer is a quirk of history. In most of those countries, the health care system began as a public benefit program decades ago, and the cost of medical school is usually heavily subsidized by the government. Doctors work for less because they spend less to become doctors in the first place.
In the United States, by contrast, the health care system developed after World War II as a private-sector employee benefit, subject to the profit motive and other vicissitudes of capitalism. Medicare for all might make better sense if you were starting a health system from scratch. But transitioning from a private-sector system that’s been in place for decades to a public system with a completely different financial structure is prohibitively difficult. Sanders, Warren and the others insist the nation would end up better off, on the whole. But they probably won’t be the ones waiting for a doctor.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: email@example.com. Encrypted communication available. Click here to get Rick’s stories by email.