Democratic socialism is all the rage across the country. Liberal presidential candidates are stirring up the electorate by proposing entitlements that are not financially feasible. Unfortunately the associated costs of these types of giveaways are never revealed. This essay will address the costs of the largest proposed entitlement- single payer health care.
How much will universal health care cost? Gerald Friedman, an economist at the University of Massachusetts estimates the program will cost $1.38 trillion in the first year. On the high side is Kenneth Thorpe of Emory University who believes the figure will be more like $2.4 trillion. For this exercise I will use the midpoint of these high and low estimates, or $1.9 trillion.
Proponents of universal health care say that it is prudent to assume savings from lower prices the federal government will negotiate with doctors, hospitals and pharma companies.
I would challenge this assumption only by saying that the federal government is not and has never been capable of effectively controlling costs. Certainly it is not more efficient than private industry. Consider the abuses in defense spending and cost overruns for all types of federal projects.
The program being proposed will provide health care coverage to every American, and so, current plans paid for and/or subsidized by companies will end. This will create any number of serious consequences. Some include an inability to choose doctors, waiting for services, poor quality of service and huge start up costs. Additionally thousands of people currently working at insurance companies that are providing health care coverage will lose their jobs.
Assuming efficiencies in a federal government operated system is folly. The program will be bureaucratic and many Americans will be impacted. Moreover increases in the aforementioned costs are indeterminable. Certainly they will increase, so saying that the cost of the program over ten years will be $19 trillion ($1.9 trillion times 10) is a low-ball number.
The Congressional Budget Office and Department of Veterans Affairs indicated the federal budget includes about $1 trillion for Medicare and Medicaid. This cost would be eliminated so that the net impact in the first year on the budget would be $900 billion, excluding startup costs, which would easily top $100 to $200 billion. If the cost of the program increases by 5% annually, the total incremental increase in health care costs would be $12 trillion.
Liberals, too often, suggest major structural changes that include unidentified increases in costs. Why wouldn’t the average American want free health care, or a free house? Naturally when politicians promise more giveaways the electorate is stoked.
But this is only one side of the analysis. One must consider the current level of budget deficits and the total debt of the country. A new entitlement that increases the need to borrow more money is a ridiculous proposal for our country. Kamala Harris and Elizabeth Warren understand this, yet they continue to push their crazy ideas.
Michael Bloomberg and Howard Schultz have said the universal health care proposal is not feasible. The electorate should listen to these knowledgeable men.