Elizabeth Warren’s Health-Care Chimera
David Catron
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Economist Jonathan Gruber famously attributed the passage of Obamacare to “the stupidity of the American voter.” The MIT professor’s assessment of the electorate’s collective intelligence is clearly shared by Democratic presidential candidate Elizabeth Warren if she expects us to take her “Medicare for All” funding plan seriously. She wants us to believe that she can expand a program already verging on bankruptcy — Medicare for the elderly will go broke in 2026 according to the most recent Trustees report — to cover every American without raising middle-class taxes. Not coincidentally, she enlisted one of Gruber’s Obamacare accomplices to cobble together a document supporting her absurd claim:

This analysis was led by Dr. Donald Berwick, one of the nation’s top experts in health care improvement who ran the Medicare and Medicaid programs under President Obama; and Simon Johnson, the former Chief Economist at the International Monetary Fund and a professor at MIT.

Warren leaves out a few details about Dr. Berwick. If you have forgotten, he was installed by President Trump’s predecessor as administrator of the Centers for Medicare & Medicaid Services (CMS) by virtue of a recess appointment. He was forced to resign a year later because the good doctor is a longtime advocate of health-care rationing. Berwick once praised the ruthless rationing methods employed by Britain’s National Institute for Health and Clinical Excellence (NICE) thus: “The decision is not whether or not we will ration care; the decision is whether we will ration with our eyes open.” This is the character Warren turned to for a cost analysis. So, what exactly is Senator Warren promising?

Every person in America — all 331 million people — will have full health coverage, and coverage for long-term care. Everybody gets the doctors and the treatments they need, when they need them. No more restrictive provider networks, no more insurance companies denying coverage for prescribed treatments, and no more going broke over medical bills.

Warren claims her plan would cost the country about $52 trillion over a decade, roughly equal to the amount our current system is projected to cost over the next 10 years. OK … then why go through the agony of converting to Medicare for All if aggregate costs will remain at about the same level? Because, she says, her plan includes $20.5 trillion in new federal spending without which 24 million people will remain uninsured and 63 million will have substandard coverage. Moreover, in the absence of her plan, Americans will pay $11 trillion in out-of-pocket costs on premiums, deductibles, copays, and the price of expensive medical equipment. But that extra $20.5 trillion will cure these ills.

You are by now anxious to know where the extra $20.5 trillion is going to come from. Warren’s answer to that question may cause your BS detector to go off. Her plan repeatedly claims that this stupendous amount of money includes “not one penny in middle-class tax increases.” There will, of course, be taxes on the Left’s designated villains, including “the financial sector, large corporations and the top 1 percent of individuals.” There will be additional taxes paid by “ultra-millionaires and billionaires,” as well as an additional employer tax the plan styles a “new Employer Medicare Contribution.” It goes without saying, of course, that there will be a substantial cut in what she calls the “military slush fund.”

Part of the $20.5 trillion will allegedly come from “savings.” The savings scheme that will get your attention involves the loss of your employer health insurance. It’s going away whether you like it or not. How will that save money? “As the experts I asked to evaluate my plan noted, private insurers had administrative costs of 12% of premiums collected in 2017, while Medicare kept its administrative costs down to 2.3%.” This is fiction. Medicare’s overhead costs aren’t lower. They are just hidden in the budgets of other agencies such as the IRS, the Social Security Administration, and HHS. The Warren plan also double-counts certain savings, as Charles Blahous of the Manhattan Institute writes:

The Warren plan also credits itself for an additional $2.9 trillion in savings from provider payment reforms.… This Warren campaign is basically double-counting these savings. At best, these reforms might make some of her proposed provider payment cuts more tolerable, but her campaign has already taken credit for those cuts elsewhere. These savings can’t be counted again.

Most reputable studies of Medicare for All project an increase in federal spending by at least $32 trillion over a 10-year period. As Blahous puts it,

The Warren campaign memorandum provides a cost estimate of $20.5 trillion over ten years, much lower than the accepted analytical consensus which includes my estimate as well as others from the Urban Institute, the Center for Health and Economy, the Rand Corporation and Ken Thorpe. In short, the Warren proposal simply assumes away more than one-third of the cost of M4A.

Even at $20.5 trillion, the projections published in Warren’s Medicare for All plan are simply too low to be taken seriously. There are only two realistic ways to hit that number — double the taxes paid by the middle class or resort to rationing. We have seen how swiftly the liberal voters of California and Vermont rejected the necessary tax increases. This is why Warren exhumed rationing advocate Donald Berwick to cobble together a superficially credible program that she can brandish during the next Democratic debate and shout, “I have a plan for that.” But many Democrats are afraid the voters aren’t as stupid as Professor Gruber and Sen. Warren believe them to be. They’re right.

David Catron
David Catron
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David Catron is a recovering health care consultant and frequent contributor to The American Spectator. You can follow him on Twitter at @Catronicus.
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