You can’t get there from here: path dependency and public health care

California just costed the proposed Medicare-for-all system. It came to about $400 billion. $200 billion would come from existing federal spending. The remainder could be financed by a 15% payroll tax (or something else). Of that $200 billion, $150 billion would displace employer-provided costs around $150 billion. The remainder would either replace out-of-pocket spending or represent the cost of getting the small remaining number of uninsured Californians into care. 

$400 million is nonetheless a huge number. It is a little more than $10,000 per person. The Canadian public sector, in contrast, spends about $3,200 (U.S.) per person. (Total spending was C$6,299 in 2016, according to the Canadian Institute for Health Information; about 70% of that was public.) 

And therein lies the rub. The United States has seen years of runaway health care costs, driven by our odd hybrid system. That means that whether you like Canada on the left, or Singapore on the right, any sort of transition will be very expensive.

Which is why, at the end of the day, I favor making Obamacare work. The Dutch have shown how: automatic sign-ups, direct deductions, and high penalties. And more subsidies to push up affordability. At the same time, slowly expand Medicaid eligibility while reducing the Medicare age. It is incremental and messy ... but anything else would require a big bang at big cost, as California just discovered. 

Comments

[Dave K]

"automatic sign-ups, direct deductions, and high penalties."

For punitive and coercive measures, the political cost is probably not worth what's politically feasible.

"slowly expand Medicaid eligibility while reducing the Medicare age."

This is the path of least resistance. I'd also float the idea of expanding Medicare eligibility to children as a large and politically rewarding move.

[Noel Maurer]

I agree on high penalties, but I'm not as sure about automatic sign-ups and direct deductions. (Let's assume for discussion that neither Congressional action nor executive inaction wrecks the program before 2020.)

[Dave K]

I think automatic sign-ups with an easy opt out could be politically possible (same for direct deductions). That's probably too marginal to remedy the cracks in the system.

I don't think strict coercion without an opt out is politically feasible. At least not in the long run.

[Noel Maurer]

Well, right now the only cracks in the system are developing because the Trump administration is playing games with the subsidy payments. Take that away, and all you need are tweaks.

The easiest one, politically, is to jack up the level of subsidies. In fact, it was stupid of the Democrats not to start with a bigger program --- more middle-class buy-in means more support later. AFAICT, the reason that didn't happen was a combination of a fruitless hunt for GOP support and Joe Lieberman.

A simple non-partisan take:

https://fivethirtyeight.com/features/the-obamacare-marketplaces-arent-in-a-death-spiral/

[Dave K]

The cracks in the system were there at the start. The level of subsidies required to save markets in most counties were not political realistic in 2010 and probably won't be politically feasible in the next several years. It's probably unrealistic to assume the marketplaces are healthy in 2020 without those unlikely increases in subsidies.

Moving forward it makes more sense to expand entitlements rather than sinking more political capital into propping up easily sabotaged public-private programs.

[Gareth WIlson]

If every American who's registered for Selective Service was drafted for eight hours, would they be eligible for veterans' health benefits? Yes, you'd have to raise taxes to pay for this, but you have to support the troops...