It is reassuring that on some levels the Democratic party establishment is shifting significantly leftward on health care policy, but there is one aspect where nearly the entire left is inexplicably small “c” conservative: almost everyone from the center to the left is focused on making sweeping health care reform budget neutral according to the Congressional Budget Office (CBO).
In response to my analysis of the Center for American Progress’s Medicare Extra for All plan claiming its cost sharing is too high, CAP Senior Fellow Topher Spiro admitted, “On AV, I want to go higher if the math works.”
This obsession is shared on the “true left,” where my own MICA plan was criticized by staunch single-payer supporters for not being fiscally conservative enough since I didn’t meticulously try to balance all potentially projected spending with new revenue.
Similarly, Physicians for a National Health Program (PNHP) President-Elect, Adam Gaffney, criticized the CAP plan claiming, “Without big [administrative] savings, how do we afford *fully* universal coverage? We probably don’t.” Gaffney claims the budget is “not at all my primary concern. I want single-tier, universal, comprehensive, no cost-sharing coverage. But that does cost real money, and at some point there will be a CBO score.”
Consider for a moment that both CAP and PHNP believe they can convince a majority of Democrats to stand up to the most powerful industry lobbyists in the country and deprive them of billions in revenue, but that convincing Democrats not to worry so much about the CBO’s educated guesses is too big of a political challenge.
There are four reasons why this shared obsession with fully paying for universal health care is both bad politics and bad policy.
The American health care system is a fat, wasteful, inefficient tapeworm. We actually use fewer health services than most countries. The sole reason the system costs dramatically more than anywhere else is the degree to which the industry is allowed to rip everyone off.
Much of health care in the U.S. is dominated by useless paperwork, which exists solely to justify or hide absurd price gouging and bloated salaries. Large parts of the industry are nothing more than scheme to hide their legalized extortion from the public.
Health care reform is rather unique among policy proposals because it would make our entire economy dramatically more efficient. It is more about using our current resources more efficiently than it is about creating anything new.
American labor would be more competitive internationally without this burden of paying for employee’s ever rising health care costs. It would also enable the whole economy to stop wasting so much time and money on a paperwork for a health care industry endlessly trying to come up with new ways to rip people off. This energy could be redirected to something actually useful.
If I had to choose between a country with a higher debt but a very efficient economy or one with a lower debt but a bloated, out of control, corrupt health care market, I would choose the former every time. Future taxes are relatively easy to implement when you have a good economy; fixing what is broken after allowing the rot to grow and fester is not.
Everyone should agree that either Bernie Sanders’s Medicare for All bill or CAP’s Medicare Extra for All bill, if implemented, would dramatically improve our system and get costs under control. That is why the industry will hate them. The only real question is how much these reforms will improve things—and no one has a great idea.
The CBO is a group of helpful analysts, not magical prophets. Their estimates are often conservative and frequently wrong by significant amounts. In 2014, they dramatically lowered their projections about the long term cost of government health care programs by 15%, which equates to trillions of dollars. In addition, for all we know, in the next decade someone could invent a cure for diabetes or Alzheimer’s, which would completely change our needs.
Given the nearly unimaginable amount of corruption in the system and changing technology, a universal system could slow health care growth to just 4 percent or actually cause the growth rate to become -2 percent a year. After just a few years, the difference in overall savings between those two paths would be over $2 trillion a year.
Elected Republicans don’t care. They didn’t care if either the Bush tax cuts or the Trump tax cuts were paid for. They didn’t care that the wars they started weren’t paid for. They didn’t care that the CBO said Medicare Part D would add to the deficit. Importantly, Republicans were smart not to care because voters don’t care.
Democrats spent months making painful compromises to get the CBO to project that the Affordable Care Act would reduce the deficit. Yet, in 2013, polling found 65 percent of voters thought the law would increase the deficit, and just 7 percent thought it would decrease it. Besides elected Democrats in Congress, apparently no one knows, cares about, or trusts what the CBO has to say about health care budgeting.
When you create a great policy, people will love it. If people love a program, they will figure out how to pay for it later.
Focusing on the financing first and the benefits second is a recipe for political disaster. The drafters of the ACA focused more on getting a budget score than immediately delivering benefits. They implemented new taxes on high income earners in 2013, a year before the major benefits started. The coverage was made insufficient to keep the score low. As a result, the ACA only barely survived the political process, cheating death on multiple occasions.
The better example is probably the Medicare Catastrophic Coverage Act. It frontloaded the cost with taxes and backloaded the benefits. That law was quickly repealed.
I’m not saying the government should spend an extra 17.9 percent GDP with zero revenue sources; that would likely cause real inflationary problems. But that isn’t going to happen.
Between Medicare, Medicaid, Federal Employees, the Affordable Care Act exchanges, the employer insurance deduction, increased contract/grant sizes that cover bloated health care costs already, etc., our government is already spending more per capita on covering part of our population than countries like Sweden, Canada, Denmark, and the UK spend to fully cover everyone. There is theoretically already enough public funding.
This is not to say a plan should not include new taxes. Something like a payroll tax, employer mandate, or a mandatory premium of roughly 6% is a reasonable way to replicate part of what people currently pay in employer provided premiums without making most people worse off. But if redirected current spending and a reasonable new tax fall short by a few trillion in the CBO’s projections, that shouldn’t be seen as a problem.
Given the level of uncertainty, we are likely going to need to revise the funding plan in the future anyway, so for political reasons we might as well base any new taxes off the most optimistic projections and revise upward later, if needed. Getting voters to pay for Medicare for All after they fall in love with it will be way easier than getting people to pay for it beforehand.
If the only way to get a good bill passed by 2021 is to appease the misguided deficit obsession of a few Senate Democrats, or to use stupid budget tricks because Democrats insist on contorting the bill to the nonsensical rules of reconciliation, I would definitely take that deal. I’m already working on ways to game the CBO score if that is what it takes. It always makes sense to have a plan, a back up plan, and a back up to the back up plan.
The weird insistence that every dollar of universal health care must be fully accounted for in the CBO’s likely inaccurate estimate is bad politics and will get in the way of good policies. Using reconciliation to pass a bill instead of just eliminating the filibuster is a nonsensical, self-imposed restraint that will make everything worse, and it will not win over a single regular voter. More people of the left, including myself, should make clear early on that these would be stupid deals and we should take time to explain why they are stupid.
When the time comes, I’m prepared to make some concessions to Democratic legislators who insist on making bad choices but we have at least three years to move the conversation. Instead of pre-conceding these points, let us try to change minds. I understand this behavior from CAP, but there is no need for the whole left to simply accept this deficit obsession.
More than anything, this is what is most needed on the left when it comes to health care. At some point in 2021, 2025, or whenever we get a chance to do health care again, the CBO is going to come back with some unexpected scoring problem. This is going to send Democrats scrambling to either cut benefits, delay the rollout, or find unpopular revenue sources.
At that moment we are going to wish the intellectual groundwork had been laid for groups to push the message: “Don’t worry about a perfect score if it is good policy. The CBO estimates are likely to be significantly off anyway, and we can adjust later when we know how much it actually costs.”
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