'Medicare for All' policy overkill; universal health care works without it

Gordon L. Weil

When it comes to health care, Democrats may try to do the right thing, but they may be doing it the wrong way.

The party's presidential candidates support a health insurance system for all Americans. They believe health care is a right.

President Obama's Affordable Care Act is the closest the country has come to that system, but it has fallen short. Many people are still not covered and savings have been disappointing if not sometimes invisible. Republicans jeopardize the ACA by trimming it back and challenging it in court.

Meanwhile, the U.S. government operates Medicare, a tax-financed health insurance program for senior citizens. It is costly, but it insures all seniors and has displaced private insurance for their basic coverage. Most seniors buy added insurance to cover costs the system leaves to them.

Sen. Bernie Sanders asserts that the time has come to replace profit-driven private insurance with government, non-profit coverage. Because Medicare is so well-known, Sanders proposes expanding it to cover everybody – "Medicare for All."

Under Sanders' plan, government would be the "single payer" for insurance covering hospitals and doctors. Its buying power would allow it to control costs, higher in the U.S. than in any other developed country.

Financing "Medicare for All" would require massive federal funding. Sanders would raise taxes on wealthy taxpayers and big business. This transfer of funds would also reduce the growing income gap between average people and the rich.

Employers and individuals would no longer buy health insurance. While they would pay higher taxes, these costs would be offset by the elimination of insurance premiums. Government could lower total health care costs by supporting preventive care and controlling runaway costs.

That's the theory, but the proposal worries many people. Theories tend not to work out as planned. The added taxes would be enormous. If you like your current insurance plan, often provided by your employer, why be forced to give it up? "Medicare for All" would bring big changes.

To promote her candidacy and appeal to Sanders supporters and others on the left side of the political spectrum, Sen. Elizabeth Warren adopted "Medicare for All." As she gained credibility as a potential Democratic nominee, she faced demands to go beyond promises and come up with a cost estimate.

Warren's attempt to be specific may have harmed her candidacy more than it helped. Her proposal involves a major change in American politics, allowing a bigger role for government in helping people, financed by higher taxes.

Massive taxes, even offset by insurance and cost savings, increase the role of government and raise, incorrectly, charges that the Democrats favor "socialism." Though the GOP has no plan, it exploits the cost of Democratic proposals. Even if people want universal coverage, they dislike higher taxes.

What Warren really seems to favor is a national health insurance system that covers everybody. But she may have wrapped that appealing idea in the wrong package. If that is her party's goal, other ways exist to achieve it that are less politically vulnerable.

There's the so-called "public option," which Obama failed to win. It would be a non-profit insurer, available alongside traditional insurers. Everybody would be required to have insurance or pay a heavy tax penalty. A non-profit providing better preventive care, the public option would offer lower premiums.

The public option would attract consumers, putting competitive pressure on other insurers and driving premiums down. It could drive out high cost insurers.

This is not pure theory. Maine had the highest worker's comp rates in the country until the state created a mutual insurance company, a non-profit competitor owned by employers and workers. It now insures 60 percent of the market, insurance rates have fallen sharply, and worker safety has improved.

Or, the government could follow the example of Switzerland, a country with a conservative economic tradition similar to the U.S., unlike Scandinavia. Swiss are required to buy health insurance, whose costs are subject to some regulation. For those who cannot afford premiums, the government provides a premium subsidy.

The Democrats could also propose utility-style regulation of drug prices, allowing manufacturers only their costs (without advertising) and a reasonable profit. Drug prices are regulated in many countries. In Europe this year, I bought the same med, produced by the same drug company, for less than 10 percent of its U.S. price.

Even with today's reform fervor, before candidates espouse "Medicare for All," they should combine innovation with caution. After all, it's still true that "politics is the art of the possible."