Mises Wire

The Real Cost of Medicare for All is in Lives, Not Dollars

Mises Wire Tho Bishop

A recently released study by the Mercatus Center has placed renewed focus on the fiscal costs of Medicare for All. The study finds that the proposal — increasingly popular with the Democratic Party — would “add approximately $32.6 trillion to federal budget commitments during the first 10 years of its implementation (2022–2031).” The authors of the study also specify that this is a conservative estimate, assuming that “the legislation achieves its sponsors’ goals of dramatically reducing payments to health providers, in addition to substantially reducing drug prices and administrative costs.”

Though this study suggests that Federal tax dollars would have to more than double in order to afford this new entitlement, advocates like Bernie Sanders are claiming this study vindicates their position. Why?

As Matt Bruenig at Jacobin explains, if you compare the projected price tag of Medicare for All against projected total healthcare spending in the United States, you see a net decrease of around $2 trillion over the decade.

Of course, in promoting this conclusion, Sanders and his allies out the true aims of their proposal: the outright nationalization of the US healthcare system.

While Sanders and others usually try to avoid being honest with this aim, others on the left are more transparent. This is why the description of “Medicare for All” is fundamentally dishonest. With Medicare, not only do you have an increasing number of Americans opting for the privately managed Medicare Advantage programs, but you always have the option of seeking treatment outside of the Medicare program. This would not be true in the future envisioned by Bernie Sanders and his supporters.

Without this flexibility beyond government programs, we would see the same outcomes that have plagued countries like Canada and the UK: higher mortality rates and increased rationing of medical services. At the end of the day, the focus on comparing the dollar costs of Medicare for All to the current medical system (made unnecessarily expensive by government) overlooks the reality that we are not comparing equal goods. Government-controlled healthcare will lead to more Americans dying from disease than they do today.

After all, this is precisely what we have seen in the American healthcare system that comes the closest to resembling socialized care: the VA. Once promoted by economists like Paul Krugman as a great model for the rest of the healthcare, the VA has been bogged by inefficiency and scandal. Veterans neglected by this government-managed system have resorted to lighting themselves on fire outside of clinics in a desperate attempt to highlight the absolute failures of the system.

Further still, the complete bureaucratization of healthcare has perverse effects on practice beyond the obvious examples such as wait times and supply restrictions. As Dr. Michel Accad has explained, the reliance of medical coding — required for doctors to receive government payments — necessarily moves the focus of healthcare away from the patients and toward paperwork.

In 1992, with the passage of the Medicare Fee Schedule, use of this coding system became mandatory. From then on, clinical care would be spoken in the lingua franca of CPTICD, and E/M codes, and the term “documentation” would take on a bitter significance for doctors.

But translating the what, how, and why of local medicine into cryptic ciphers for remote bureaucrats does not make the business of health care any more intelligible to the central planner, regardless of whether the codes are transmitted by an archaic fax machine or digitized and made immediately accessible by means of mandatory electronic health records systems.

Codes and data, of course, are not knowledge. Hayek’s shipper engaging in tramp trade can make a judgment about the significance of empty spots on a boat because the context associated with that information elicits meaning based on which he acts.

In contrast, a CPT code 99204-21 (new patient visit, E/M coding level 4, prolonged service) associated with ICD-9 code 786.50 (chest pain, unspecified) hardly conveys any real knowledge and cannot possibly be a basis on which relevant decisions can be made or value established. These codes cannot help determine the needed supply of doctors, nor that of drugs and other material necessities. The only tangible effect of the coding scheme, then, is simply to require a massive influx of administrators charged with “interpreting” and acting upon its obscure data signals.

So at the end of the day, while there is value in discussing some of the potential fiscal costs of socialized medicine in America, it is important to not overlook that we are not even talking about the same services. For all the many issues that exist today with American healthcare — all the direct result of government — at least there is freedom to explore options outside of the Federal bureaucracy.

By their own admission, this is precisely what the advocates of Medicare for All want to eliminate.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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