Bernie Sanders’ health care revolution would come with a lot of question marks.
Sanders has staked his campaign for president on a platform of converting the U.S. health care system into a $14 trillion single-payer program run by the government. His opponent for the Democratic nomination, Hillary Clinton, has criticized the cost and the political feasibility of his plan, but Sanders makes it sound simple: If Europe can do it, so can we.
Experts say it’s not so simple, in part because no large free-market country, not in Europe or even Canada, has ever tried what Sanders is proposing — to socialize an industry that accounts for nearly one-fifth of the national economy.
“It is not just a problem of the politics,” said Sherry Glied, dean of the Wagner School of Public Service at New York University. “The devil truly is in the details in designing single payer – you have to define what you are going to give up, the trade offs, and once you do that [single payer] isn’t a simple elegant thing anymore.”
Experts say Sanders’ plan might decimate the health-insurance industry and force hundreds of thousands of Americans to find new jobs, or it might simply force insurers and their employees to cater more to the rich. It might bust the federal budget and stall economic growth, or it might supercharge the economy. It might give Americans the best, most affordable health care in the world, or it might sentence them to long waits, substandard care and a system that works much better for the wealthy than everyone else.
The plan’s likely effects on the federal budget are just as murky. Analysts at the Congressional Budget Office started but never released an estimate in 2009 when Democrats were pushing for a single payer option to be considered alongside the Affordable Care Act. The details of that report are confidential, but it is generally very hard to know with any certainty what a policy upheaval like socializing health care would actually do to the government’s bottom line, said former CBO director Doug Elmendorf.
Sanders voted for the Affordable Care Act (ACA), but he criticizes the law for continuing to leave millions of Americans without health coverage.
“There is only one way that I know of that you can provide universal, cost effective and comprehensive health care for all of our people,” Sanders said in 2009 while ACA was being debated in the Senate. “That is a Medicare for all single-payer system.”
Sanders has not yet offered key details about what such a system would look like if he were to enact it, such as how much it would pay doctors and what treatments would be covered. Those details could all significantly change how people use health insurance and how much it would cost the government.
The lack of detail makes it very difficult to estimate how his plan would change the economy. So does the lack of any comparable historical precedent for what he is proposing.
The trend in capitalist countries since the 1970s has been to liberalize previously state-run industries, such as airlines and telecommunications providers. Sanders would do the reverse, putting a full government umbrella over a health care industry that is nearly 16 percent of the U.S. economy.
Other Western countries, such as Denmark, the United Kingdom and much of continental Europe, all launched their government-administered health systems before a large private health insurance sector could take root.
The National Health Service in the U.K. was born as the country struggled to recover from the destruction of World War II. Many of the country’s doctors were spread out and working in service to the government during the war and it was an easy and seamless transition to a system that would grow to provide nationalized health care for more than 64 million British citizens.
Canada is the best and most recent example of a country attempting a health care plan similar to the one Sanders’s proposes, Glied said. The Canadian system evolved over decades from a universal plan that started in a single province in the 1940s.
In the absence of details and analogues, experts are left to guess at the effects of Sanders’ plan. The Sanders campaign has embraced a forecast of the plan’s potential effects produced by Gerald Friedman, an economist at the University of Massachusetts-Amherst, which some liberal economists have criticized as unrealistically optimistic.
Friedman predicts Sanders’ proposals would speed U.S. economic growth to as fast as 5 percent per year – up from a post-recession average of 2 percent – in part by dramatically increasing incomes and spending power for the middle class.
In an email interview, he predicted the plan would produce “losers as well as winners” in the American workforce. “Health insurers would either fold or be dramatically scaled back,” he wrote, as would companies providing billing services to health-care providers. Pharmaceutical companies would see their profit margins shrink, he said, though they would still be profitable.
Friedman estimates 600,000 workers could lose their jobs across the economy, but that 98 percent of them would find new employment within two years.
The winners, he said, would include health care providers who no longer would need to worry about some patients never paying for services; employers outside the health sector, whose savings from no longer providing health insurance would outweigh new taxes to help fund the program; and workers who will pay less for care and potentially earn more as employers pass some health spending savings on in the form of higher wages.
Other economist say the effects would be more complicated, depending on how much the single-payer system pays for patients’ care.
If a typical single-payer benefit is not much more generous than basic Medicare benefits, said Timothy Layton, an economist at the Department of Health Care Policy at Harvard Medical School, “I don’t think the entire health insurance industry would disappear.”
Instead, he predicted, the industry is likely to cater to higher-income Americans who can afford supplemental insurance coverage, or who seek treatment from health providers who decide not to accept single-payer benefits at all.
Higher-income consumers in Europe and other areas with single-payer plans are increasingly buying such supplemental coverage, said Scott Atlas, a doctor and health care researcher who is a senior fellow at Stanford University’s conservative Hoover Institution think tank. Under an American single-payer plan, Atlas said, health care “will be driven toward two parallel systems with even more inequality” between rich consumers and everyone else.
Layton said some workers who lose jobs in the transition to supplemental care could find work in the federal government, administering the new single-payer plan, or for health providers themselves. They could also find work, he said, “in a large industry of firms that help providers game the system and extract as much as they can from the government.”
Government estimates of the cost of health care spending also have a history of being completely wrong. Early studies of the cost of Medicare were off by billions of dollars and the Obama administration continues to grapple with shifting ACA budget expectations.
Elmendorf, the former budget office director who now serves as the dean of the Kennedy School of Government at Harvard, said one challenge for economists in assessing universal Medicare has been trying to separate public spending and private spending in the current health system.
Private hospitals are often paid with public funds from Medicare and Medicaid patients, public and government hospitals accept all forms of insurance and millions of people receive state and federal tax subsidies to buy private insurance.
It’s also hard to project if Sanders’s tax proposals would raise enough money to pay for the new spending. The non-partisan Tax Policy Center recently estimated Sanders would raise $15.3 trillion by increasing tax rates on all income brackets, raising the tax rate on investment income and introducing new taxes on carbon emissions and electronic stock trades.
Combined, those changes would lead to some of the highest U.S. tax rates outside of war time, said Tax Policy Center Director Leonard Burman. The center’s study said those high tax rates could reduce incentives for businesses and individuals to save and invest and could cause a jump in interest rates.
His campaign discounts those criticisms and likens Sanders’ proposals to sweeping policy changes of the past, such as when President Franklin D. Roosevelt introduced Social Security during the Great Depression.
“If establishment economists had been advising FDR in the 1930s on his economic plans,” said Sanders campaign policy director Warren Gunnels, “if they had their macroeconomic models going on they would have tried to discourage FDR from doing the great things he did back then.”