In Healthcare,Freedom or Entitlement – Choose One

Deane Waldman, MD MBA - 07/12/19

How did 13 small colonies of the globe-spanning British Empire become the leader among nations in less than two and a half centuries? Answer: Freedom and its resulting “can do” culture. Freed from government controls and released from class constraints, the “new Americans” believed they could do anything and everything, and then . . . they did. In1825 U.S.A., Alexis de Tocqueville observed that the federal government was not involved in the daily lives of Americans. Entitlements did not exist.

Before 1776, Americans were entitled to whatever the British aristocracy gave to its subjects. In 20th century Union of Soviet Socialist Republics, comrades were entitled to whatever the Central Committee decreed. Have Americans reverted to become subjects of a new aristocracy–the federal professional political class? Are we a resurrected proletariat subservient to a totalitarian state? Will we replace freedom and capitalism with socialism and entitlement? If the Democrats manage to enact their single payer plan, Medicare-for-All, H.R. 1384, the answer would be an emphatic yes!

My analysis shows the following effects of Medicare-for-All on Americans. Sections 107 and 614 seek to eliminate the profit motive in healthcare, which supporters believe is the culprit for healthcare system failure. Section 202pointedly rejects all forms of personal responsibility such as cost-sharing and work requirements.

Per sections 102, 103, 601, and 611 through 614of H.R. 1384, freedom of choice, private property, and free market forces would be replaced by universal entitlement and central economic planning, along with price and wage controls just like communist Russia. With Medicare-for-All, Americans’ options for both care modalities and choice of providers would be determined by Washington, not by We the Patients.

Some supporters of Medicare-for-All claim it will save money. They point to other nations with single payer systems who spend less per capita than the U.S. by wide margins. Countries like Great Britain and Canada accomplish their savings by medical rationing: refusal to authorize expensive treatments and limiting allocations so that there are insufficient facilities such as operating rooms and burn units.

Patients in single payer systems like the proposed Medicare-for-All experience “death by queueing,” succumbing to treatable disease while waiting in line for care. Americans need not leave the U.S. to observe this phenomenon. Both the VA system and Medicaid have reported death-by-queuing, including the front page news and quite preventable demise of 12-year old Deamonte Driver from a dental cavity.

While patient care is undoubtedly the first priority for any healthcare system, dollar efficiency is the second. Rather than focusing on reduced spending, the U.S. should seek to acquire requisite value for monies expended. Since the desired value is timely, quality medical care, dollar efficient spending would devote the most dollars to care and the fewest dollars wasted on non-care activities such as federal bureaucracy.

Will Medicare-for-All save money? Will it be dollar efficient? No, and highly doubtful.

Official federal watchdog agencies such as the CBO have notyet scoredH.R. 1384. Cost projections are available from Democrat Senator Bernie Sanders and Professor Charles Blahous of the Mercatus Center at George Mason University.

Senator Sanders’ latest estimate puts the Medicare-for-All price tag at $40 trillion. Professor Blahous calculated a cost of $32.6 trillion. To put these amounts in perspective, Obamacare cost $1.76 trillion and the entire US GDP in 2018 was $20.5 trillion. To pay for Medicare-for-All, Professor Blahous estimated that every American’s tax bill would double.

To achieve the price of only $32.6 trillion over ten years, Professor Blahous had to include a 40 percent cut in payments to physicians. This will of course exacerbate the physician shortage and further increase already unacceptable wait times.

Medicare-for-All is likely to bankrupt the U.S. There is no evidence that it will be dollar efficient. In fact, there is a high probability, based on past performance, that federally controlled healthcare will be extremely dollar inefficient. Long before the ACA, a 1999 study showed that federal administration, regulation and compliance consumed 31 percent of healthcare spending. Over the past twenty years, the bureaucracy has expanded greatly so that today, the cost of federal administration, regulation, and compliance is likely to approach 50 percent of all healthcare spending.

In 2018, the U.S spent $3.5 trillion on healthcare. If half went to bureaucracy, $1.75 trillion was expended inefficiently—it produced no care. If Medicare-for-All became law, the U.S. would spend at least an additional $3.26 trillion a year on healthcare. If the cost of bureaucracy remained at 50 percent, we would then be wasting $5.2 trillion a year on healthcare bureaucracy. For comparison, the third most productive nation on earth, Japan, had a GDP in 2018 of $4.9 trillion.

Citing Medicare-for-All as a test case, do Americans really want to trade our freedom and our capitalist success for entitlement and socialism to become Venezuela or the now-defunct U.S.S.R.?

The answer for healthcare is to treat the root cause of system failure: federal control of healthcare. Get Washington out of healthcare and let the people in their states decide. I call this StatesCare in the new book, “Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.” Furthermore, released from federal one-size-fits-all, people could choose the healthcare they want. The book contains proof that market-based medicine, which reconnects patient and doctor without a third party in between, is a preferable alternative to any form of federal healthcare.