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How To Pay For It

How To Pay For It

So a couple of days ago, this tweet from one of the newest members of Congress drew a great deal of attention.

This sounds almost too good to be true: there are enough accounting errors in the defense budget to pay for Medicare for All? Well, that’s because it is too good to be true. As notorious Right Wing rag Vox explained, it doesn’t work that way:

The underlying article by Dave Lindorff in the Nation that kicked this off is an investigative report into the Defense Department’s accounting practices. Lindorff reveals that Pentagon accounting is quite weak, that the department keeps flunking outside audits, that funds are shifted between accounts without proper oversight, and that overall documentation of what’s actually happening with the Pentagon’s vast budget is extremely poor.

Critically, however, the passage of the article that Jordan Uhl quoted in the tweet that Ocasio-Cortez cited does not mean that there is $21 trillion in fraudulent or missing DOD spending between 1998 and 2015. Indeed, there simply hasn’t been $21 trillion in (nominal) Defense Department spending across the entirety of American history.

The $21 trillion figure represents a summation of poorly documented internal financial transfers, so that the same dollar can be transferred back and forth many times over. That’s how you end up with a total amount of mis-documented financial flows that far exceeds the amount of money that’s being actually spent.

Further analysis can be found at the WaPo.

In short, the Pentagon is playing money games to shift funds from where they have been allocated to where they think they are needed. Such shifts can, on paper, amount to more than the original funds. What’s worse is that their accounting practices are so horrifically bad, they can’t really document all of this.

It’s not clear how much of that money is recoverable in any real sense. I suspect federal agencies do this a lot — Congress designates money in a very fixed fashion, but agency needs can vary. But this isn’t the pot of money needed for Medicare-for-All (MFA). It’s not even close to it. You could pay for a lot of things if you slashed the defense budget. But even cutting it in half would provide about 10% of the budget for MFA.

(Of course, it’s kind of ironic watching the Republicans jump down AOC’s throat about this. They’ve become masters of fuzzy math on the budget and the sitting president pulls numbers completely out of the ether. But that’s politics for you.)

Now while Ocasio-Cortez’s misunderstanding is amusing, it’s reflective of a larger problem with MFA supporters and one that AOC herself has been a part of: an inability to articulate how the program is going to be paid for. And the reason they are unable to articulate it is because they know what articulating a payment mechanism would likely do: kill the proposal stone dead.

This isn’t the country’s first discussion of single payer. A few years ago, Vermont had a vote on a single-payer system. It failed because the people rejected the tax hikes that would have been needed to pay for. A similar proposal in Colorado was crushed for similar reasons.

A national MFA proposal, according to most experts, would come with a price tag of approximately $3 trillion a year (and lest you think Mercatus is biased, even the most optimistic left-leaning think tanks have come up with similar figures). By comparison, the revenue brought in by the federal government in FY 2017 was $3.3 trillion. MFA would literally double the federal budget.

(Indeed, this massive expense is one of the reasons I oppose MFA. Such a program would make the United States government the world’s largest insurer and make health insurance the government’s biggest single expense. I don’t trust anyone with that kind of power, least of all someone like Donald Trump.)

Moreover, that revenue would have to come from the middle class. That’s where most of the money is. You could tax the rich 100% and still not cover it. In fact, most countries with universal health care fund it through heavy taxes on the middle class — either through income taxes or value-added taxes. It’s the only way it works financially. But it’s also the only way it works politically. There is fierce resistance among most people to “plundering” other people’s wealth. But with a regressive taxation system, everyone feels like they are pitching in and therefore feels comfortable taking out. It’s why Medicare and Social Security are popular — because we all pay in and we all take out. It’s funded by a regressive tax.

Indeed, Bernie’s original plan — which included funding — endorsed massive across-the-board tax hikes (for some income brackets, this might have resulted in marginal rates exceeding 100%). And even then, many experts believed he was lowballing by about a third.

Given the heavy cost of MfA, supporters have tended to grab onto straws, pouncing on any suggestion that we could pay for the program without enormous middle-class tax hikes. The most common target in recent months has been the Trump tax cut — currently slated to cost a couple of trillion over the next decade. But this is a bad straw to grasp at since: 1) it represents less than 5% of the cost of MFA; 2) the whole problem with the Trump tax cut is that we don’t have the money for it; we’re borrowing it. In this sense, the report of Pentagon accounting was yet another straw to grasp at.

(Another straw has been that the program will supposedly save enormous amounts of money. This seems very unlikely to me. We’re told that Administrative costs are lower for Medicare, but that’s not really true as the program is mostly administered by private insurance companies. Preventative care has been touted as a cost saver, but that doesn’t work either. It turns out it’s cheaper to let someone drop dead of a heart attack than manage their heart health for decades. Decreased ER visits are another supposed cost savings, but ER visits tend to increase under universal healthcare schemes because insured people go to the ER more readily than the uninsured. Bernie’s plan assumes that providers will take a 20% rate cut because … well, because he wants them to. But I doubt any healthcare reform will pass without the support of the providers. In the end, any supposed savings are going to be overwhelmed by the extra cost of insuring so many more people.)

Look, I’m against MFA but I understand that many people are for it. There are various arguments in favor. But paying for it will not be easy. And supporters had best stop trying to pretend that it would be.Photo by LaDawna’s pics How To Pay For It


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Michael Siegel is an astronomer living in Pennsylvania. He is on Twitter, blogs at his own site, and has written a novel.

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106 thoughts on “How To Pay For It

    • Mercatus’s $2 trillion savings requires you make a Bernie-type assumption: that providers will take a 40% cut in their rates. I see no reason to believe that will actually happen and neither did Mercatus.

      I agree the existing system is expensive and not very efficient. But almost all of that will come baked into an MFA proposal. AND you will be adding millions of insured people, most of whom will be among the more expensive.

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      • That our current system does not insure the “millions” that you’re referencing is evidence of its need to be changed. But, back to Mercatus: they did see the need to take the 40 percent rate cut seriously. They emphasized that when they made their argument about how awful Sanders proposal was. But when people realized that cut would end up saving the nation $2,000,000,000,000 over ten years, Mercatus went back to the drawing board and said, “Uhh, what we meant was this other number, over here!” and then insisted that their own number, which they made up out of thin air, needed to be held against Sanders, even though Sanders’ proposal was very clear about what it was and what it wasn’t.

        But even if you take Mercatus seriously – and no libertarian organization, much less one funded by Kochs, should ever be taken seriously when it comes to fixing problems (as its proposed solutions to everything are, “Give rich people more money and everybody else can suffer.”) – you’re getting 30,000,000 more people insured at a cost of $3 trillion over the baseline over ten years, which is an awesome deal and an incredible savings over what it would cost to insure those individuals otherwise.

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        • But even if you take Mercatus seriously – and no libertarian organization, much less one funded by Kochs, should ever be taken seriously when it comes to fixing problems (as its proposed solutions to everything are, “Give rich people more money and everybody else can suffer.”)

          I have come to really appreciate comments like this one, because they let me know that the person making them is more interested in cultivating feelings of moral superiority and righteous indignation than in talking about ideas.

          I do think that it’s pretty funny to single out the Mercatus Center, which has some of the people doing the best work at exploring different economic ideas and not from any explicitly libertarian or ideological perspective. Tyler Cowan may have he most interesting blog on the internet. For the past decade, Scott Sumner has been at the forefront of those calling out the Fed for keeping monetary policy too tight following the financial crisis and urging them not to tighten too quickly now. And Russ Roberts and David Beckworth have two of the more interesting economics podcasts out now.

          I would recommend these to anyone interested in exploring various ideas and perspectives in economics.

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          • “best work at exploring different economic ideas” is certainly one way to describe coupling massive tax cuts for the richest Americans with widespread deregulation for those same richest Americans while cutting benefits that do not benefit the richest Americans. So groundbreaking.

            What the Mercatus Center did with Sanders Medicare For All was publicly try to undercut it by implying that is was an expensive nightmare, when it was, in fact, substantially cheaper than sticking with the status quo while covering 30,000,000 more people. And when that strategy did not work out, its lead researcher intentionally decided to hold numbers against Sanders that Sanders himself had not proposed.

            But sure, Mercatus is engaging in good faith debate and not just advocating for the same old libertarianism.

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            • What the Mercatus Center did with Sanders Medicare For All was publicly try to undercut it by implying that is was an expensive nightmare

              By assuming that health providers would have to take a cut in revenues because of the shift from a payor mix of predominantly private pay insurers, which reimburse at rates up to 40% of Medicare, to a predominantly Medicare payor mix at Medicare reimbursement rates?

              Good for them. Someone needs to show some common sense here. The people at Vox are hopelessly stupid.

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              • Mercatus is welcome to do whatever it wants, but saying, “Actually, Sanders bill will actually cost Y because of Z” is the fallback after they realized saying, “Actually, Sanders bill will cost X” was a cost savings over the current model. Sanders bill is Sanders bill. It would be fine to say, “Well, providers won’t accept these cuts!” but that isn’t what the criticism said. It simply removed Sanders’ numbers, swapped in its own numbers, and then held those numbers against Sanders, despite his legislation clearly not saying anything about that second set of numbers. That’s intentional malpractice.

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                • Sam,

                  I have a different interpretation of events. Where Mercatus is doing is clarifying the assumption that their expenditures are based on a 40% cut on provider rates in order to make the reimbursements currently in line with Medicare rates. I don’t care if it is or isn’t in Sanders numbers and it’s not malpractice to make that assumption. If anything, it tells me that Sanders is woefully uninformed. Big surprise there.

                  This matters because whether the cut to revenues is what Bruenig estimates (apx 11%) or what I estimate (closer to 20%), hospitals and health systems can’t absorb that hit.

                  As a result of the ACA, given the decline in inpatient stays and declining reimbursements, healthcare providers have made significant adjustments to their operating model. This is why you see more freestanding urgent care centers or more multispecialty outpatient facilities. This is why you’re seeing consolidation on physician practices and health systems. This is why many physicians are moving away from independent practice into the employed model.

                  Furthermore, according to this healthcare industry source, and a good one for objective info, the average operating margin for hospitals is currently 3.4%.

                  Even using Bruenig’s conservative estimate, health systems are in the red. Not only are they in the red, but there isn’t much fat left to trim because of all of the changes made after the ACA went into effect. Not-for-hospitals may not be profit-driven but they are balance sheet and credit rating driven. If anyone seriously proposes this kind of legislation, don’t be surprised if Moody’s, Standard and Poors and Fitch issue reports about the potential for significant ratings downgrades based on the changes in fundamentals. This is bad because health systems take credit ratings seriously as it impacts their borrowing costs and since investment-grade rated systems access debt through the tax exempt markets, this is a big deal.

                  It’s also a big deal for me as a healthcare real estate investor that buys on behalf of a public company. There are good reasons that I prefer tenants with a high private pay insurance component in the payor mix. Those practices/asset type that are predominantly Medicare or Medicaid aren’t worth the hassle.

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                  • Dave,

                    I have asked you for lifting advice before. You have given it to me. Suppose you advised me that doing bench work 3x15s at 70 percent was going to produce the return that I wanted. Suppose I came back to you and said, “Okay, I did the squats at 3×10 at 60 percent and I didn’t get the gains I wanted. Your idea won’t work.” You would not take that seriously. But that is what Mercatus did to Sanders, first proving him right (that Medicare For All is, in fact, cheaper than the current worse model), and then, because they are ideologically opposed to the idea of everybody being able to get sick without ending up bankrupted forever, arbitrarily changing his what his legislation would do but then holding those changes against him.

                    Your criticism is a separate thing because you are right, Sanders’s idea might not work. That is fair to say, for all of the reasons you laid out. But what isn’t fair to do is to say, “Sanders bill is actually going to cost this other number that isn’t based at all on what Sanders legislation does.”

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  1. Politicians trying to promote anything are generally going too under sell how difficult or costly something will be. Iraq II or Vietnam with Sand is a prime example from the Right. Americans seem to want Swedish level of social services on third world levels of taxation, so politicians are going to have to say things that will make their policy sound easier to accomplish than it really is. Luckily liberals suffer from a hack gap, so for every liberal politician that says this liberal or progressive policy is so easy and cheap, there will be dozens of wonks correcting the math. Its why Sander’s BEZOS tax proposal got blasted from his own side right away.

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  2. Don’t do Medicare for all. Do Medicaid for all.

    And you can immediately raise taxes by the average amount of medical insurance per tax bracket.

    But keep more or less the same number of doctors in more or less the same parts of town.

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    • There are liberals who argue that it really should be medicaid for all because medicaid is already the largest health insurance program in the United States. I think Medicare for All is the preferred slogan because medicare has not been demonized to the extent that medicare has. Medicaid is associated with poverty and people of color, medicare with good senior citizens that earned their respite for medical costs due to decades of hard work.

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      • Which insurance programs is “long lines” associated with? “Having to go across town to see a decent doctor”? “It’s not fair that rich people get treated fast and right”?

        Because the new system will be more like that than what we have now.

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    • Ugh. Medicaid is … not a good healthcare system. Many doctors won’t take it. And Medicaid hospitals are some of the worst.

      However … it touches on something I’ve thought about. In Australia, my understanding is that Medicare is the basic healthcare system. It’s guaranteed and provided a minimum. You can then buy additional and better care. The system is also paid by patients — you pay and then the insurance reimburses you. So some places will take the Medicare rates — they’re not the best, but they are there. Better hospitals require more money from you or additional insurance. Such a system could probably put together by expanding Medicaid. You would still have to figure out revenue sources, but it would cheaper and probably more palatable to the American public.

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      • Ugh. Medicaid is … not a good healthcare system. Many doctors won’t take it. And Medicaid hospitals are some of the worst.

        Hrm. Maybe renaming them to “Medicare Hospitals” is a better plan.

        You can then buy additional and better care

        Which means that we can deny additional and better care to the people who don’t buy the additional insurance?

        That’s probably a sufficient loophole.

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          • About 1/3 of my fertility clients are in Australia, and 1/3 are in the UK (and several in Canada). They have to wait months to see a doctor and when they get there, the odds are good (just like happens here in the US) that the doctor will say “hmm let’s wait and see what happens, come back in another 6 months”. Additionally they have far more difficulty with their doctors making moral judgements about them and refusing to give them medical care. They’re told “you have enough children” or “you’re overweight” or “you’re too old to get pregnant”. And if their GP refuses to treat them, poor people have no recourse.

            The doctors and midwives have also overlooked some very, very serious situations that were life threatening. This happens in the United States too, but at least here you can go to another doctor and another doctor till someone listens to you. In the UK it is taking so long to get in to see a GP that they can’t easily get one doctor appointment then another doctor appointment if the first doctor misses something.

            Anyone who can afford it scrapes the money together to see a private doctor. Those who can’t are using a black market system of trading information and medication online because they are not getting adequate health care.

            There is an interesting dichotomy in the UK and Australia – those in the UK often will go to Spain for medications and are treating themselves, or to Cyprus to be treated by doctors who in many cases are little more than quacks, while in Australia they don’t have that option, so they go to naturopaths who are frankly appalling – they are dosing people with massive amounts of dangerous herbs.

            It is not universal health care. It is a “let’s play pretend” version of universal health care where rich people are still treated better, faster, and more thoroughly and poor people still are not getting access to the care they need. And bureaucrats are in charge of deciding who “deserves” medical care.

            There are so many unintended consequences that people don’t stop to consider even aside from how to pay for it all.

            Thanks for a great piece, Michael.

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            • The long waits to see a GP happen here in the US too. If you live in a metro area, you can go from doc to doc (though waits for specialists can still be long, and with certain kinds of insurance you’re still constrained by a ‘gatekeeper’ GP who gets to decide if you should get a referral to a specialist). If you live in a more rural area, you are stuck with the docs available there unless you can drive several hours to go see someone else.

              And that is true even for health issues that are serious. (I can sympathize with people struggling with infertility, but it is something you can live with, unlike like cancer or COPD).

              So, I don’t know the answer, but our system isn’t working any better.

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      • Medicaid varies by state, but there is some controlling federal law. Medicaid care cannot be substandard or of any less quality than private pay. In an impoverished state like WV, a provider who does not accept Medicaid would go out of business. And a provider who gave lesser care to Medicaid patients than to private pay would be committing Medicaid fraud and go to jail.
        What do you consider a “Medicaid hospital” ? I have never heard of a hospital that exclusively takes Medicaid, and, as I’ve said, if they take private pay they cannot give lesser care to Medicaid patients.
        There undoubtedly can be access issues and difficulty finding providers who will accept it in some places but the quality should not be an issue. If it is, that is a bad acting provider who should be reported to the state’s Medicaid Fraud Control Unit.

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        • I grew up in Atlanta and almost all the top tier providers would not take Medicaid. Most Medicaid patients ended up going to Grady Memorial, which was known for poor quality of care simply because they were overwhelmed and Medicaid pays very low rates. You may remember King’s County in NY, here a woman died on the floor of the psych unit. King’s also takes a lot of Medicaid patients. And while their trauma center is excellent, their standard of care elsewhere is poor (they are responsible for about one-third of the malpractice claims in the area).

          In theory, Medicaid provides equal care. In practice — at least in urban areas — you are not getting the best care. Medicine is like everything else: you get what you pay for. Medicaid pays poorly.

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          • Then, as I said, they are criminally violating the law. Any doctor who provides poor care because of lower payments should be stripped of their license as well.
            And these types of situations are investigated and pursued- in fact, that’s my job.

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            • If I’m understanding Michael correctly, I don’t think the issue is the same provider providing a different level of care based on insurance — it’s that the lower reimbursement rate naturally results in fewer providers accepting Medicaid patients at all, and those will tend to be the less-in-demand providers.

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              • I find the notion that only crappy doctors take Medicaid to be very dubious in general (along the lines of public defenders being the bottom of the barrel for of lawyers). And in states with large Medicaid populations you would be hard pressed to find a doctor who didn’t take Medicaid- they are not bad providers.

                If Medicaid was expanded, then naturally the Medicaid population would increase and doctors would necessarily have to reconsider their “no Medicaid” stance.

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                • I find the notion that only crappy doctors take Medicaid

                  This isn’t the problem. The VA has a similar stereotype. After years of interacting with the VA, I can tell you that the truth is not that the doctors are crappy, it’s that they are exhausted. Every VA doctor I’ve ever seen was competent and dedicated, but was severely over-worked, both by patient interactions, and the amount of bureaucratic load they had to shoulder because the system doesn’t pay for assistants and administrative professionals to take that off the doctors and nurses.

                  I imagine the Medicaid system has a similar issue.

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          • There are plenty of providers at the doctor level who do not accept Medicare, either (hospitals don’t get a choice). Colorado has entire rural counties where there are no docs that will accept either Medicare or Medicaid.

            As my thinking has evolved, I have come more and more to the conclusion that the most important aspect of single-payer as that term is used elsewhere in the world is that docs get a binary choice. They can choose to see insured patients, or not. There’s no picking and choosing based on whether the doc likes or dislikes different insurance plans. If they choose not, then they’re operating a boutique practice for the 2% of the population that is wealthy enough that they can pay without insurance. In practice, that means that almost all docs will see insured patients.

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            • This, exactly. I’d love to see that in the next revision to ACA, but I’m not sure if we could pass it in the US since I’m sure there would be massive lobbying against it.

              However, I think we could put a dent in the problem by making it a requirement for receiving govt guaranteed student loans for med school. Maybe require that until the debt is repaid, Medicare/Medicaid must be accepted. Or perhaps receiving some other assistance or forgiveness of debt in exchange for agreeing to accept Medicare and Medicaid patients for X years after graduation.

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                • For practical purposes, all hospitals accept Medicare. If you show up with a ruptured appendix, they have to care for you — better to get what they can from Medicare than to take their chances on getting more from you.

                  Medicaid is a different story. Pre-ACA expansion, you simply might not be poor enough, or fail one of the other state requirements. (If you’re a non-disabled male in Texas, IIRC, you can’t qualify.) Signing up for Medicare is almost trivial — my wife and I did this year, and it’s on a par with selecting a plan at work. Signing up for Medicaid is more difficult, and lots of people just. Don’t. Do. It. Well before the ACA, Colorado did its own Medicaid expansion*, with the full cooperation of the state hospital association, and allowed the hospitals to sign you up if you qualified as part of the admission procedure.

                  * Bit us in the butt in hindsight. We have to pay 50% of the costs for those patients in our own expansion. If we hadn’t done it, all of those people (and more) would have qualified post-ACA, and we would only have had to pay 10%. OTOH, some of the hospitals, particularly the rural ones, might have gone out of business due to the cost of charity care.

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                  • We have to pay 50% of the costs for those patients in our own expansion. If we hadn’t done it, all of those people (and more) would have qualified post-ACA, and we would only have had to pay 10%.

                    Madicaid reimbursement at the state level is seriously screwy in this country, and it’s basically a race to the lowest point. Basically, the _less_ a state was willing to help their own people, the _more_ the Federal government stepped in with money, producing completely idiotic incentives at the state level. Often, it appeared the Federal government was very bad at bribing states ‘Well, we were going to pay 40%, and you wouldn’t take it, how about 60%? No? 75%? 90%?’

                    I’m half convinced that, at this point, whenever Democrats next end up with enough control, they’re going to ‘fix’ the ACA by extending the subsidies all the way down, so that people in states without the Medicaid expansion can get on it. Which sounds reasonable, until you realize that means the Federal government will be paying _all_ the costs, and the states that let their people have no health insurance for years will win yet again, whereas responsible states that took the expansion, or even expanded _earlier_, keep paying for it.

                    At this point, I’m in favor of replacing Medicaid with an entirely Federal program, because this is complete bullshit. Allow states to put in additional money if they want, some sort of _additional_ coverage that can even be part of the same thing, but have some sort of basic program that the states have no control over at all.

                    It makes way more sense than trying to shove more and more money at the states to get them to operate programs they clearly aren’t interested in.

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                    • At this point, I’m in favor of replacing Medicaid with an entirely Federal program…

                      Ted Kennedy was once asked if there were political decisions he had made that he regretted. Teddy’s answer was along the lines of, “Reagan offered me a deal: he would support making Medicaid a purely federal program if I would support making cash welfare a purely state program. I turned him down. I regret that choice every day.”

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                    • “Basically, the _less_ a state was willing to help their own people, the _more_ the Federal government stepped in with money, producing completely idiotic incentives at the state level. ”

                      Although it’s worth remembering that there was a big court case about this just a couple years ago, centering primarily on whether the word “state” meant “state” or “state”, and whether we should take the guy who wrote the ACA not seriously or not seriously at all.

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                    • IIRC, the federal matching percentage (FMAP) for traditional Medicaid is determined by a fixed formula that compares average per-capita income and poverty rates in a state vs the national average, and can’t be lower than 50%. Don’t recall if there’s an upper cap. Mississippi and New Mexico get matches at >70% because they’re poor. Wyoming and Massachusetts get matches at 50% because they’re not. Neither how many people the state chooses to cover, nor their provider reimbursement rates, have anything to do with it.

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                    • DavidTC: Madicaid reimbursement at the state level is seriously screwy in this country, and it’s basically a race to the lowest point. Basically, the _less_ a state was willing to help their own people, the _more_ the Federal government stepped in with money, producing completely idiotic incentives at the state level. Often, it appeared the Federal government was very bad at bribing states ‘Well, we were going to pay 40%, and you wouldn’t take it, how about 60%? No? 75%? 90%?’

                      That’s not correct.
                      FMAP (Federal Medical Assistance Percentage) for traditional Medicaid is and always has been determined based on the average per capita income of the state. The lower the per capita income, the higher the FMAP.
                      The minimum FMAP is 50%, average is closer to 60%. The highest for FY19 is Mississippi at 76%.
                      For those newly eligible under the expansion, it is much higher- it started at 100% and phased down to 90- but that does not vary by state.

                      Source, if you don’t want to take a government health care lawyer’s word for it:
                      https://www.kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

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                      • Uh, you’re right in that I was exaggerating, in that it’s happened _once_. (The perverse incentives really are from other things. For example, states have an incentive to not raise income, because then their average income goes up, and they get less money. Likewise, they have an incentive not to enroll people.)

                        But limiting the talk to ‘traditional Medicaid’ is a really good way of pretending it didn’t happen, because, of course, it happened with the Medicaid expansion, not traditional Medicaid. The US government stepped in with a 90% reimbursement, higher than _any_ existing one, and certainly higher than the states that had previously spent the time and effort to expand the program _voluntarily_.

                        States that had expanded early were punished. There are states out there playing 50% of all their Medicaid costs, and covered as many people as possible. And there are states out there that were only paying 30%+ of their costs and they offered the ability to cover many more and only pay _10%_ of that cost…and they _refused_. (In fact, they somehow refused when refusal was not allowed under the law.)

                        This is completely absurd.

                        If the problem is that those states actually cannot pay for these things, they should be happy the government is stepping in and taking it off their hands.

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                • I said make a dent, not solve the problem.

                  Also I’m not a familiar with large mult-doc practices, but requiring that accepting one means accepting the other, might help. I’d say that they will need a large base of people who don’t have Medicare to stay in business, and for a lot of specialties you can’t cut out a huge chunk of retirement age patients and stay afloat.

                  Also, how many large multi-doctor practices are there in rural CO? Wouldn’t the approach at least help there?

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            • They can choose to see insured patients, or not. There’s no picking and choosing based on whether the doc likes or dislikes different insurance plans.

              Yeah, I honestly find myself baffled by people who, apparently with a straight face, point out the percentage of doctors who take Medicaid-level payments and think that somehow means something under a single-payer based on Medicaid. The weird thing is, I don’t think people are trying to be misleading so much not actually thinking this through.

              So…all the existing doctors just…quits doctoring? Or just sits in their office quietly to see the two patients a month who _aren’t_ using their insurance? Obviously not. If 99% of people are using a payment system that gives Medicaid-level payments, then doctors will take those payments, because there…aren’t other patients, at least not enough of them.

              I mean, there is a vaguely plausible problem that, in the future, we might find it harder to _get_ doctors. But…we’re already in that situation, due to the grip the existing medical profession has on licensing, and weirdly the countries that have more people insured, and pay doctors less, seem to have less of a problem. I think a lot of our problem here is how were _overpay_ doctors, actually because we keep creating an artificial scarcity of them to jack up prices, and perhaps this sort of shake-up is needed to actually fix things.

              But that argument can go the other way, and it’s possible ‘If we pay doctors less, we will get less of them in the future’, and sure, that’s a possible concern, although the people worrying about that probably should worry about it _anyway_ because we already have a shortage…but it’s hardly going to result in less of them _immediately_. Doctors won’t just…wander off into their wilderness with their medical degree if we’re only paying them 75% of what we were before.

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              • Doctors won’t just…wander off into their wilderness with their medical degree if we’re only paying them 75% of what we were before.

                Might need to pay off their student loans if we aren’t paying them as much. But that would be a transitional cost, provided something was done to break the artificial scarcity.

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                • Might need to pay off their student loans if we aren’t paying them as much.

                  I dunno, that seems a weird societal benefit we don’t give _anyone else_. Are we supposed to think this is different because it’s government policy vs. just reduced demand?

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                  • If the cost of the education goes down, the need to pay so much goes down. If you start paying less before you figure out how to get the cost of the education down, you are going to have a lot of doctors driving for Uber when they should be sleeping, just to make the loan payments.

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              • Margins gonna margin.

                It seems to me that the main question that should be asked about any medical policy at this point is “does this make it easier to be a doctor?” (or “easier to be a nurse?” or “easier to be a phlebotomist? ” or what have you) and if the answer is “no”, then it won’t help the current crisis.

                If it only makes it a little more difficult to be a doctor, then, sure, you can ask “what? what? Are they gonna quit?” and merely be a little surprised when only a very few do (you know, retire a year earlier than they were planning, that sort of thing) and be only a little surprised when there are fewer doctors graduating med school than you expected.

                Because it was only a little more difficult to be a doctor (or whatever).

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                • The dirty secret of american healthcare costs is that it’s not the insurance company that makes healthcare unaffordable.

                  The benefit of M4A is not going to come from some magic insurance power, it’s going to come from cost negotiation with a customer who has 350 million payers.

                  Which is, really, a restatement of “well maybe they don’t take Medicaid patients NOW, but what about when EVERYONE is a Medicaid patient?”

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                    • As I said the last time we had a big argument about medicare-for-all, the big benefit of M4A is not going to be improvements in health outcomes, or even a big reduction in costs; it’s going to be second-order improvements in mobility and the ability to negotiate with employers. It’s not that I’ll pay less for doctoring; it’s that if I quit my job and move somewhere to get a better one, my doctoring won’t cost more.

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                      • If you’re somewhat bound to your job for the health insurance, then it would mean a bigger improvement in job mobility, maybe freedom to choose entrepreneurship, and little by way of health outcome improvements for you.

                        For others who aren’t fettered to their employee’s insurance because they haven’t got any, the improvement would be in health outcomes.

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                          • As a Canadian, I have something that (maybe? I’m not sure) matches an American “Medicare for all”. We even call it Medicare here.

                            I also have supplemental medical insurance through my employer. It’s not that big of a deal. I mean, it’s nice to have and all, but the list of reasons I stay at this job are, roughly in order
                            – I like the work
                            – I like my salary
                            – I like the stability of the job
                            – working downtown is convenient for me
                            – they’re accomodating of my schedule
                            – I like my colleagues
                            – the pension plan is good
                            – my cubicle is by a window
                            – we just got an employee gym and bike lockup in the building
                            – there’s a nice bakery a few minutes from my building
                            – there’s a grocery store on the way home
                            – the supplemental medical insurance
                            – the library is close to the office

                            Tell you what though – for triple my salary I wouldn’t move to the USA.

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                            • “I also have supplemental medical insurance through my employer.”

                              Ah. So your answer to “how to pay for it” is “the basic care is funded through taxes, and useful extra care is paid for by me”.

                              Which isn’t a bad way to do it–I mean, it’s really the only way that makes sense–but it’s important to note that you do, in fact, choose to pay more money to get a more-than-basic service.

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                              • I mean, from what I understand, “basic care” in most non-US First World countries includes things like pregnancy, cancer, and fixing broken legs for close to $0 cost to the patient at the hospital, while supplemental insurance gets you a private room at the hospital and dental service.

                                Hell, even in Switzerland, which is the closest system to ours, the highest deductible is a total of US $1,500 a year and the maximum a premium can be is 8% of income.

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                        • So, not much improvement at all then, because the strongly-average person either has health insurance through their job, is covered through Medicaid or an ACA policy, or doesn’t have the kind of health problems that insurance would solve.

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                          • I dunno. I only have experience of the Canadian medical system.

                            My wife has friends and family in the states though, and the financial hardship some of those folks have gone through – despite having what’s considered good quality medical insurance – just from co-pays, or wrestling with the insurance companies to get them to actually pay up, or whatnot – are shocking to me.

                            Something like half the campaigns on GoFundMe, even now, are Americans trying to raise money to pay for medical treatment.

                            Meanwhile, when my friend here who very definitely does not have any kind of supplemental medical insurance (he and his spouse run a two-person landscaping company – not the sort of outfit with a benefit plan) was fighting cancer, the only community call-out they did was for help with childcare and meal prep.

                            The same goes for friends here vs. my wife’s friends in the US who’ve had complicated childbirths or children in the NICU – there it’s “we might lose the house”, here it’s “can someone drop us off some lasagna or something we’re too exhausted to cook”

                            So, I mean, if Medicare-for-all would be “not much of an improvement” – then Medicare-for-all is probably inadequate. Because the current situation certainly seems that way.

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                • If it only makes it a little more difficult to be a doctor, then, sure, you can ask “what? what? Are they gonna quit?” and merely be a little surprised when only a very few do (you know, retire a year earlier than they were planning, that sort of thing)

                  There’s this weird idea where people supposedly work more if they’re paid more, and less if they’re paid less, when in reality it seems exactly the opposite. Literally, the complete opposite. People work to have enough money to live off of, and they work as long as they think it will take to support themselves in retirement. No one says ‘Well, I’m not earning a lot anymore, better cut back on my hours’.

                  The reason that doctors are retiring is that they have enough money to retire.

                  and be only a little surprised when there are fewer doctors graduating med school than you expected.

                  It doesn’t matter if less people want to be doctors right now. The bottleneck is the amount of slots in the educational programs, which are all completely full.

                  As long as more people want to be doctors than are allowed to train to be doctors, the amount of doctors produced will not vary.

                  Of course, we desperately need to fix this gatekeeping, so in some ideal world we would have to worry about less doctors showing up if there’s lower pay…but in that world we’d probably have enough doctors anyway.

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                  • There’s this weird idea where people supposedly work more if they’re paid more, and less if they’re paid less, when in reality it seems exactly the opposite. Literally, the complete opposite.

                    I’m not talking about getting paid (though getting paid is nice). I’m talking about it being easier to be a doctor. Are you creating hassle or removing it?

                    This could probably go either way. It might be nice to have to hire fewer administrators whose sole responsibility is to work with insurance companies, for example.

                    If these are replaced with the exact same number of people who have to work with Medicare, it’s a wash.

                    Unless, of course, it’s more of a hassle to work with Medicare than Insurance companies.

                    It doesn’t matter if less people want to be doctors right now. The bottleneck is the amount of slots in the educational programs, which are all completely full.

                    Well, so long as the number of people who need health care also stays static, no problem.

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            • If they choose not, then they’re operating a boutique practice for the 2% of the population that is wealthy enough that they can pay without insurance. In practice, that means that almost all docs will see insured patients.

              2% assumes no one changes their actions after we’ve given out massive incentives for them to do so.

              My company self insures (I think most companies over a certain size do).

              Assume “Medicare for all” really does try to cram down a 40% pay cut on doctors and try to make it up in volume (i.e. over work them). Service goes down and it to take months to get a doc… and things suck for everyone who was fine in the current system.

              The happy alternative is for my company to hire an in house doc or five. They treat us employees, and only us… and we’re pretty healthy. So the doc’s get more money for less work, we get more service for what we’re paying now, and the rest of the system is missing five or so docs.

              There is absolutely a path to a two tier system if the powers that be screw this up. I can easily see all fifty of the Fortune top 50 companies going for this just like I assume all fifty of their CEOs have private jets. It might even be that this is unavoidable if we try “medicare for all”.

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    • Which aspects of Medicaid are you going to keep that are different from Medicare? State share of the funding? State setting the provider reimbursement rates? Half the funding for the elderly going to long-term institutional care? Tell me which of those you want to incorporate into your Medicaid-for-all, and I’ll tell you why it’s a bad idea.

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        • No vague cop-outs, JB. There are distinct differences in the programs. Pick the ones that you think Medicaid has (that Medicare doesn’t) that are important. As for the long-term institutional care for the elderly, the question is, “If government paying for such care is extended to everyone, rather than just the poor, how much more expensive did the program just get?” Lots.

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          • Hey, all I know is that Medicaid is the one associated with poor people that everyone is embarrassed by and Medicare is the one associated with old people that keeps growing.

            I know nothing more about the differences between the two except that one is low-status and one is high-status.

            And it strikes me as likely that if we try to move the high-status one to a National Program That Covers Everybody, it’ll be a lot more like a low-status one than a high-status one.

            And that’s seriously the extent of the logic that I’m using.

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            • Traditional Medicaid just keeps on growing as well, and is a slow-motion disaster for state government budgets. The miserable provider reimbursement rates that others have mentioned are the only way states can afford to stay in the program. If the CMMS were to ever start enforcing the clear language in the statute — that reimbursement rates must be high enough that Medicaid clients have the same range of provider choices as those with private insurance — the program is effectively dead. The only states that could afford to stay in are the ones whose eligibility standards were so stringent prior to the ACA that almost no one could meet them.

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              • If the CMMS were to ever start enforcing the clear language in the statute — that reimbursement rates must be high enough that Medicaid clients have the same range of provider choices as those with private insurance — the program is effectively dead.

                The Gods of the Copybook Headings might need to explain a handful of things to us again.

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  3. We talked before about the problem with crying wolf.

    Since long before any of us were born, we have been hearing these same arguments made about Social Security, Medicare (“Our children will look back on the day when America was free“), and the ACA.

    And we never, ever, have this discussion about the Defense budget. Its funny when you go back and look at the money that we somehow found to burn in the Mideast and at home since 9-11,(somewhere in the neighborhood of 4 thousand billion dollars and counting), I just can’t find these “how will we pay for it” arguments convincing.

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  4. I don’t trust anyone with that kind of power….

    Every president since WW 2 has had access to a nuclear arsenal. There are checks on that kind of power, and I imagine checks could be built into MFA, as well.

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    • True. But this is the kind of power that’s easier to abuse. For example, Trump is already easing off the requirements for birth control coverage in ACA and it hasn’t been noticed. If Pence were to take over, how long would it be before he banned a Medicare for All for paying for any birth control? Ten seconds?

      But let me give you a different example of how trusting politicians with this power can go wrong (less an example of abuse than ignorance).

      In recent years, the utility of routine mammography has been called into question. There is little evidence that it catches tumors that wouldn’t be caught otherwise. And there is evidence it provokes unnecessary surgeries for benign lumps. We have now had two giant meta-studies that have concluded that mammography should only be routine for women with family histories of breast cancer.

      But the reaction from women was less, “Great, I don’t have to get my breasts squeezed between cold metal plates” and more “this is insurance companies trying to kill women”. So Congress immediately passed a law mandating coverage for routine mammography. IF — and it’s still if — those studies are correct, that’s billions of dollars being wasted, thousands of unnecessary surgeries and zero improvement in women’s health.

      The more control we give to politicians over healthcare, the more those decisions will be made based on these kinds of political twitches (as it is in socialized systems like the UK). Insurance companies aren’t *great* at this and it is sometimes a struggle to get them to pay for stuff. But their power is more limited.

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  5. Gosh golly…there are a bunch of good models for HC out there. One of the most successful has been the german/swiss model with heavily regulated private insurers providing uni coverage with people able to buy more coverage if they wish. If only we had started some sort of system that could have led us in that direction.

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    • This. There are lots of ways to skin the health care cat. Many of them work very well, and, since they exist, they must be affordable. I don’t care which of the many reasonable ways we go. Let’s pick one and do it.

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  6. I concur with Chip. There is also an asymmetry here. Democrats are always expected to have the methods of paying for everything up front. Republicans never are. They never need to figure out how to pay for tax cuts first. They never need to figure out how to pay for military budgets or adventurism.

    Yet anytime Democrats propose anything like Medicare for All or low to free college tuition, the payments need to be figured out and perfect up front.

    It’s almost as if there are lots of bad-faith actors who fear that the payment method is going to be closing off corporate tax loop holes, more taxes on the wealthy and corporations. Why don’t corporations and the wealthy press Republicans for their military budgets?

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  7. Re: some commenters above

    Yeah, the military budgets never seem to be under the same scrutiny, but the modal Democrats also wants to the US to deter the PRC and Russia from mucking around with their neighbors too much.

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  8. I’m confused by the initial question – “How do we pay for it?” – myself. Some quick googling indicates that in 2016 health care expenditures in the US totaled $3.3 trillion, and we paid it. $3 trillion is less than $3.3 trillion …. Hmmm. So the issue isn’t “how we pay for it”, but something else.

    Add: I mean, it’s obvious that since we paid $3.3 trillion in 2016 we *could* pay $3 trillion in 2019, right?

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    • And even if we accept that some added tax was needed.

      If starting in January, you had to pay another 1% of your income towards health care, what would happen? Would anyone starve, go bankrupt or riot?

      Why, when private health insurers raise rates, we don’t see that as a civilization ending catastrophe?

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    • The $3 trillion we currently pay for healthcare comes from a broad variety of sources.. Fair or not, the political implications of taxation are different than paying for it privately. There’s also that you would be raising taxes on *everyone* which makes it even more politically thorny. You also start running into problems where the return on rising levels of taxation stars diminishing. Honestly, the only way you could pay for MFA would be a value-added tax and that would face stiff opposition.

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      • Fair or not, the political implications of taxation are different than paying for it privately.

        There are political implications in rolling back the war on drugs, too, yes? Yet you don’t surrender to the collective political will as expressed in Congress on that issue. I’d like to think that the argument against Medicare for All isn’t that the proposal is merely *politically* DOA, that there are arguments relating to funding (the topic addressed in the OP) showing that it’s economically impossible/unsustainable. Personally, I’m not a big fan of Medicare for All (for at least one reason you mention) but I also think critics of the proposal aren’t being honest when they focus on the politics of enacting it rather than the mechanics of implementing it.

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        • The OP doesn’t say we can’t pay for it, it says that raising the requisite taxes to pay for it, since it will need to be across the board (not just a hit on the wealthy) will be a political non-starter, which is why AOC (and others) keep trying to find ways to avoid that ‘across the board’ tax hike they would need to do.

          Side question: Has anyone looked at how much employers and citizens pay to insurers annually for health insurance? How close to $3T is that number?

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  9. I pay for health insurance out of pocket every month for four people. I’m pretty clear that we could pay for it. And if we need to make the taxation system a bit more progressive – I’m all for it, even though that’s probably going to increase my tax bill. I have it good, and even with higher taxes, I’ll still have it good. I only pay those taxes because I make money. If I didn’t make money, I wouldn’t owe the taxes.

    And an attitude of “Well, I’m not going to make any money just to spite you so you don’t get any taxes” to be nearly brain-dead.

    “How are we going to pay for it?” is ridiculous. We are paying for it. Every month.

    That said, I would have preferred Obamacare, with strong subsidies for lower incomes. But for some reason that I will never really understand, Republicans decided that they hated it and were gonna try and destroy it. So this is where we are. I don’t find “Medicare for All” (which is a slogan, not a policy), anathema, just option B.

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    • I agree that “How are we going to pay for it?” is a silly question, if it’s posed as a rhetorical one with the implicit answer of “We couldn’t possibly!”

      If it’s posed in terms of an opportunity – you are already paying for it, but restructuring how healthcare is handled presents an opportunity to restructure at the same time how the money to pay for it is collected – then it’s valid. Are there segments of society that are paying so much for healthcare that they’re suffering? Now’s an opportunity to change that. Are there Pigouvian taxes that could help pay for healthcare, where if the consumption of the good went away, the resultant healthcare costs would cover the lost tax revenue (e.g. taxes on cigarettes and alcohol)?

      But yeah, the wealthiest nation on earth agonizing over how unrealistic it would be to do the thing that every other first world nation does right now, is kind of weird.

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    • I’m pretty clear that we could pay for it. And if we need to make the taxation system a bit more progressive – I’m all for it.

      I think the point is that the taxes needed to pay for it would be less progressive, either a VAT or a new payroll tax, which is how other countries tend to fund their health care systems.

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    • I mean, the Austrailaian Healthcare System is basically, “Most of Medicare for All, But Pay If You Want a Better Hospital Room or Faster Access to Your Doctor for Non-Emergency Stuff or Dental Care.”

      https://international.commonwealthfund.org/countries/australia/

      Speaking as a dirty social democrat, I’d be over the moon if we had Australia’s system. Which of course gets me back to my core point – make a wheel. Put a list of countries on it – Western Europe, Japan, Canada, Scandinavia, Austraila, Singapore.

      Spin it.

      Whichever we land on, even if it isn’t perfect, will be enormously better than the current American system. Hell, even the Swiss system, which is the 2nd most expensive system compared to ours would be called socialism by many if President Klouharibrand pushes for it in 2021.

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  10. I mean, if we learned one thing from Obamacare, is that the politics actually do matter, maybe the most important thing that matters, if you actually want to get something done.

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  11. The how to pay for it conversation is interesting. You want to get even more interesting? Google Modern Monetary Theory (MMT). In a nutshell this is the theory that the government can spend all it needs and simple fund it by issuing more debt, because the market’s demand for US government debt is almost unlimited and any inflationary effects from drastically increasing the money supply can be countered by raising taxes. MMT is he framework that DSA types want to move towards to find universal healthcare, guaranteed jobs programs, and whatever drastic expansions of the welfare state they have in mind.

    All of this back and forth is … again, interesting, but at the end of the day the math will overwhelm the rhetoric. We have three choices:

    1. We can drastically expand the stock of government debt and hope that the MMTers are right

    2. We can raise income taxes across the board and/or adopt a VAT or some other kind of regressive consumption tax

    3. We can drastically cut the level of government expenditure, which means drastically cutting the level of goods and services that we expect the government to provide for us

    Some combination of the three will happen. The only question is whether they will happen under a well-designed set of purposeful policy changes or they’ll happen as reactions to having liabilities that overwhelm our ability to fund them.

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    • because the market’s demand for US government debt is almost unlimited and any inflationary effects from drastically increasing the money supply can be countered by raising taxes.

      There is a difference between “almost unlimited” and “actually unlimited”, and if you listen to the Modern Monetary Theory people you will learn the difference the hard way.

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  12. My only quibble with this post is the reference to “the middle class.” That term is almost always used in an overbroad way and I fear this post does the same thing. But I also realize everybody else does it.

    That said, it’s only a quibble. I support government-assisted/government-assured universal health care, although I’m not sure it needs to or ought to take the form of medicare for all.* But I realize it requires a lot of money and it’s not only the people who make more than $250,000 who should have to pay more, but most people.

    *By that I mean, maybe a single payer system isn’t right for the US. Maybe something like Obamacare, but with some major fixes. I’m not sure what that would look like.

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  13. My only quibble with this post is the reference to “the middle class.” That term is almost always used in an overbroad way and I fear this post does the same thing. But I also realize everybody else does it.

    That said, it’s only a quibble. I support government-assisted/government-assured universal health care, although I’m not sure it needs to or ought to take the form of medicare for all.* But I realize it requires a lot of money and it’s not only the people who make more than $250,000 who should have to pay more, but most people.

    *By that I mean, maybe a single payer system isn’t right for the US. Maybe something like Obamacare, but with some major fixes. I’m not sure what that would look like. In the meantime, I’ll take Obamacare as the best that is politically possible but want to fix some of its more difficult features.

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  14. So I’m looking at my pay stub this morning and I’m getting dinged $165 every week for health insurance. This doesn’t include the deductions for FSA or the dental and vision plans. $165 x 52 = $8580. From my W-2 last year I know my employer is kicking in another ~$12k / yr. So I’m currently paying (for myself and a spouse) > $20,000/yr before either of us ever sees a doctor. And of course when we do incur expenses we have to cover the deductible and the 30% copay.

    Point being, my taxes would have to go up a LOT, like at least 10X, before a MFA or similar deal would come even close to being a net loser for me. These OMG! How do we pay for it??!!! arguments always seem to be implicitly framed as new spending, as if we aren’t already paying a metric buttload.

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