U.S. Senator and popular 2020 Democratic Nominee for President Bernie Sanders reopened the previously sealed can of worms: Medicare for all. On Wednesday, Sanders disclosed his plans to present Congress with a new and improved version of a highly controversial bill.
By Spencer Kellogg | @Spencer_Kellogg
Who saw this coming? Andrew Yang is the dark horse candidate for 2020 and the internet loves him. Hell, as a left of center libertarian – I love him. Though the mainstream media is doing their best to keep him in the dark, Yang is gaining clout and credibility every day.
His laid back demeanor and outsider brand of politics have made him a captivating story that simply cannot be ignored. Namely, his call for a Universal Basic Income and his tech forward platform proves that Yang has a new vision for America that seems both plausible and exciting.
Glenn Verasco | Thailand
The Libertarian-leaning Mercatus Center at George Mason University has recently released a study which concludes that the federal government would have to spend an additional $32 trillion over ten years to cover the cost of a Bernie-Sanders-envisioned Medicare-for-all healthcare program. Conservative and Libertarian media outlets immediately reported on the study’s findings (which match estimates made by a left-leaning think tank from just a few years ago) to persuade their audiences that this plan is too expensive to even consider. Many left-wing and mainstream media outlets have countered this claim by saying that the $32 trillion cost of medicare-for-all could actually amount to overall savings in healthcare spending. The latter outlets are wrong.
The George Mason study only tells us how much it would cost to provide Medicare-for-all if all Americans were using Medicare as their sole means of healthcare financing. What the study does not mention (something we should be able to figure out ourselves) is that 90% of Medicare recipients receive supplemental health coverage from their employers, the private sector, additional federal programs, and other areas. In other words, Medicare does not get the job done. If the $32 trillion were spent on Medicare-for-all, the vast majority of Americans would be spending more on top of that if they actually wanted sufficient healthcare.
However, it is unlikely that supplemental healthcare would even be available. Medicare-for-all would increase the demand for healthcare (when people have health insurance, they use it more often whether they need it or not) without adding any new doctors, nurses, hospitals, medical equipment, medicines, or anything else patients need. When demand increases and supply does not, prices rise. And what do socialists propose when price increases are looming? Price controls! In other words, removing the incentive for doctors and nurses to work harder and doing the same for companies that invest in new medicines and medical procedures (the US is the world’s leader BY FAR in healthcare innovation… Medicare-for-all would cut it down to size).
Finally, if we throw economics and unintended consequences out the window and accept the left-wing line that we’d actually save a few trillion dollars with Medicare-for-all, you have to consider who we is. To pay for Medicare-for-all, doubling income taxes and the corporate tax rate would not even cover the federal government’s costs. And only about half the country definitely pays federal income taxes. This means that a little over half the country’s taxes would be doubled to pay for everyone’s healthcare. Those who pay no federal income taxes would be putting zero skin in the game and reaping all the rewards. With respect to those who are physically unable to provide for themselves, the most productive Americans would shoulder a greater burden while the least productive would have their check-ups paid for.
In short, Medicare-for-all would only save money if everyone accepts the quality of care provided by Medicare now. Americans would also have to accept the fact that alternative options would be in shorter supply, meaning they would be far more expensive. As Medicare-for-all would increase demand for healthcare without increasing the supply of healthcare providers, medicine, or equipment, costs would rise and/or incentives to provide healthcare would disappear (and access would be rationed further than it is now). Lastly, only some Americans would be on the hook to pay for all of this… and it would be a big hook at least twice the size of the one they are on now.
Want a better alternative? Let’s throw out the insurance model altogether. Have health insurance cover only medical expenses in which life or limb are in jeopardy and pay out of pocket for everything else. Let states and municipalities manage Medicare, Medicaid, and other government healthcare programs, so there is more room for experimentation and greater ability for local populations to make changes that work for them. Reduce the FDA’s role in drug approval, so patients and healthcare providers can have more options faster. Knock down trade barriers between American consumers and foreign medical suppliers, so domestic merchants have to face more competition. Legalize marijuana, so it can be used a cheap and non-deadly pain treatment. And lower taxes and spending in general, so Americans can keep more of their money and spend it on healthcare for themselves and their loved ones however they see fit.
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By TJ Roberts | United States
Socialists are jumping for joy due to the fact that a Mercatus Center study concluded that Medicare for All would save the nation $2 trillion over the span of ten years. This twist of the official report stems from Jacobin Magazine, an openly socialist publication, when they claimed that Medicare for All will ultimately save money for the people. This, however, is not the case. Jacobin is vastly incorrect about what this study actually says. If anything, this study concludes that single-payer healthcare will cripple the US economy.
The Truth About Medicare for All
There is a hint of truth in Jacobin’s claim: Medicare for All would cut $2.054 trillion in administrative expenses and drug costs. In exchange for this $2.054 trillion dollar cut in costs over ten years, however, the United States would see a significant increase in the cost of healthcare, costing taxpayers $32.6 trillion over the span of ten years (Mercatus 3).
These “savings,” however, do not account for the nationalization of industry. While it is estimated that the US spent $3.3 trillion on healthcare last year (with $1 trillion coming from the federal government), it is important to realize that most of this spending comes from the private sector. If the US adopts Medicare for All, the federal government would assume the burden of all health expenses in the US. With this in mind, the government would entirely nationalize the market for health insurance. The people aren’t actually saving money. Rather, they are being forced to fund a government monopoly on healthcare. As this article will point out, the socialization of healthcare will inevitably lead to even higher costs than we could ever predict. In addition to the increase in costs due to monopolization, quality of care will severely decline. This system will lead to fewer people being treated, and those being treated will be left with subpar quality health care.
Take the current healthcare system where the government provides healthcare through Medicare and Medicaid; the US spent $980 billion per year in 2015. Assuming the healthcare system remains the same as it is today, the US federal government would spend $10-15 trillion in ten years. In other words, Medicare for All adds at least $17 trillion dollars to the expenses to American taxpayers. The costs, however, is far from being the worst symptom of the disease that is Medicare for All.
Medicare for All Will Bolster an Inefficient Government.
The Medicare for All Plan Bernie Sanders introduced is ambitious in its effort to grow the size of the federal government. Not only is doubling all federal taxes insufficient in paying for the cost of this program – “Doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan” (Mercatus 2) – it would nationalize more than one-sixth of the United States economy. The proposal that Senator Sanders has introduced is nothing short of the federal government seizing the entire healthcare industry in the United States. When the government controls healthcare, it claims the power to decide who lives and who dies.
If the US provides a single payer system, it will have to cut costs in some way. One of the ways the United Kingdom has done so allows the NHS to deny treatment to those who smoke or are obese. When the government holds a monopoly on healthcare, people have no other options when the government refuses to treat them. In the market, however, other options exist. Single Payer Healthcare revokes the freedom to choose.
The issue of people going untreated is a natural consequence to socialized healthcare. As Ludwig von Mises points out in “Economic Calculation in the Socialist Commonwealth,” governments cannot determine the value of social resources. In other words, socialism lacks a price system, making it impossible for there to be a profit-loss mechanism. Such a problem leads to misallocation, and ultimately chaos.
The reason why people cannot afford healthcare in the status quo is almost entirely the fault of the illogical and immoral government prohibitions and regulations on healthcare. This gives a special few in the industry a leg up. This crowds competitors out of the market, making it much more difficult to access healthcare. If the nearly $1 trillion the US federal government funnels into healthcare every year is the cause of the current system’s problems, throwing more money at the system will not make things any better. If anything, it will make it worse.
Medicare for All Will Reduce the Quality of Healthcare
Medicare for All will also lead to a decrease in the quality of healthcare. The study that the Left is claiming to praise single payer actually makes it clear that by 2019, hospitals will lose money. As the study says:
“Furthermore, it is not precisely predictable how hospitals, physicians, and other healthcare providers would respond to a dramatic reduction in their reimbursements under M4A, well below their costs of care for all categories of patients combined. The Centers for Medicare and Medicaid Services (CMS) Office of the Actuary has projected that even upholding current-law reimbursement rates for treating Medicare beneficiaries alone would cause nearly half of all hospitals to have negative total facility margins by 2040.25 The same study found that by 2019, over 80 percent of hospitals will lose money treating Medicare patients—a situation M4A would extend, to a first approximation, to all US patients. Perhaps some facilities and physicians would be able to generate heretofore unachieved cost savings that would enable their continued functioning without significant disruptions. However, at least some undoubtedly would not, thereby reducing the supply of healthcare services at the same time M4A sharply increases healthcare demand. It is impossible to say precisely how much the confluence of these factors would reduce individuals’ timely access to healthcare services, but some such access problems almost certainly must arise” (Mercatus 11-12).
Medicare Payment Rates are currently lower than market rates, and Sanders’s Medicare for All plan lowers the current payment rate for hospitals and other medical facilities.
Doing this would drastically restructure the incentive structures under which hospitals operate, leading to a decline in the quantity and quality of healthcare in America. Mercatus concluded that it is unknown exactly how much worse healthcare would get under Medicare for All, but that it certainly would get worse. Like all price ceilings, however, reducing the payment below the market rate would lead to shortages in healthcare as more people seek a product that fewer producers are willing to purchase.
What Is the Prescription to the Healthcare Crisis?
Now that it is clear that Jacobin’s conclusions about the findings of Mercatus were false, it is important to see what an actual cure to the healthcare crisis may look like. Instead of Medicare for All, we should cut more than just administrative costs. In other words, the federal government should deregulate and privatize the healthcare industry. With a plan like this, one not only saves $2 trillion in tax dollars, but also the remaining $980 billion per year in government healthcare. In other words, the should embrace capitalism for the healthcare industry.
Four Steps to Healthcare Freedom
In “A Four-Step Healthcare Solution,” Dr. Hans-Hermann Hoppe outlines a proposal of how to privatize healthcare in the United States. His steps would save the US far more than just $2 trillion dollars in administrative costs over the span of ten years.
- “Eliminate all licensing requirements for medical schools, hospitals, pharmacies, and medical doctors and other health-care personnel.” Doing so would immediately make it cheaper to become a worker in the healthcare industry. With more production comes more competition. This would lead to a drop in the overall price of healthcare. The market tends to lower prices through competition, not increase prices through monopolization. That is what the government does by regulating and nationalizing industry.
- “Eliminate all government restrictions on the production and sale of pharmaceutical products and medical devices.” This would, of course, lead to the abolition of the FDA. FDA approval is a long and expensive process that is frequently unreliable.
- “Deregulate the health-insurance industry.” This is perhaps the largest problem in the States. When politicians discuss healthcare, they are attempting to find more ways the government can get involved with insurance. One of the biggest problems involves government non-discrimination policies that make it a crime to exclude potential customers. Insurance is ultimately gambling. If an insurance company can’t refuse to cover those at a greater risk, then costs will naturally increase for everyone.
- “Eliminate all subsidies to the sick or unhealthy.” Subsidies encourage the behavior it is subsidizing. If the US eliminates subsidies to the ill, then the need for healthcare will soon diminish as people will be more risk-averse.
Government is not the solution to healthcare. It is the problem. Medicare for All will only increase the size of government, make inefficiency inevitable, and ruin what little quality and innovation remain within American healthcare. Jacobin is wrong; Medicare for All, or more government in general, is not the solution to the current mess. Rather, privatizing the healthcare industry will not only expand human liberty. It will also make healthcare better and more affordable.
Originally published on freedomandeconomics.org.
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By Joshua D. Glawson | United States
What is a Ponzi scheme?
According to Investopedia, “A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. For both Ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around, and the schemes unravel.” In order for the Ponzi to continue, the crook requires more money and/or more people investing into it; without these, the scheme will go bust, which means no more income from this steady stream for the company conducting the Ponzi, and of course no money for those that have already invested.
How does Social Security work?
The Social Security and Medicare program is also known as the Old-Age, Survivors and Disability Insurance Program (OASDI). A total of 12.4% tax is taken from every check split between the employer and the employee. This money is put into US Treasury bonds and cycled through to pay out those that are claiming benefits while annual surplus can be used to pay for other government programs and spending. When Social Security was first made for the vast majority of people to opt-in, the ratio of workers per persons receiving benefits, as of 1940, was 159.4 workers per person receiving. By 2013 that ratio was 2.8 to 1. So, in order to maintain the program, an increase in taxes will be necessary, and/or fewer benefits received depending on the number of people they get to pay into the program.
This could have a major impact on immigration, as well. If Americans are having fewer children, in order to keep the OASDI program alive, it is quite probable that by allowing more immigrants into the country, Social Security will have more funding. If not, it is predicted Social Security will exhaust somewhere between 2027 and 2034. Start investing and saving at a higher rate if you are thinking of retiring during or after that time, just to be sure.
Who is benefiting while Social Security exists?
For one, there has always been some reason to believe that the US government is borrowing funds from OASDI. For example, in 2011, Obama’s budget director, Jack Lew, said within the month of August, they may not have had the funds to payout although the Social Security account was to have $2.6 Trillion USD in it. This is not the first time, nor last, of evidence that suggests the government is siphoning from the reserves.
Equally, the program employs many different people and helps to fund other programs and industries. It also directly benefits the elderly who are continuously more apt to vote than any other demographic. In short, Social Security is plundering from one group of people, i.e. those working, and paying another group, i.e. the retired and disabled. As all Socialist and Communist programs, they are destined to fail from their onset, while robbing from one group to give to another.
Surely, people can opt out-out then, right?
As researched by investment author Troy Segal, “Certain religious groups, students, U.S. citizens who decide to forfeit their national citizenship, employees of foreign governments and self-employed workers who make less than $400 annually are all examples of taxpayers who are not responsible for paying Social Security taxes.” So, it is very difficult to get approval to opt-out of Social Security and Medicare. Perhaps you can pay into it, but choose not to receive the funds and benefits.
Social Security is “good,” though, right?
This is key to what makes Social Security and Medicare, along with many other tax-funded programs, so bad. Nearly everyone that works is coerced into paying into the destined-to-fail program with no guarantee of receiving the money back or the expected benefits. A typical Ponzi is voluntarily coordinated, while the Social Security Ponzi is by force, all in the name of “what is for your own good,” and “to help the elderly, retired, and disabled, because without this program they have nothing.” Never mind that an individual should be making the best determination for what is best for themselves; and if someone is forced to do what is “good,” whatever “good” they are doing is only out of coercion and no longer a good deed done. ‘Good’ must be voluntary.
Well, at least Social Security is a ‘right,’ correct?
According to a 1936 US Social Security pamphlet issued by the government, on the first page it stipulates, “The checks will come to you as a right.” Yet, in 1960, the Supreme Court determined in the case of Flemming v Nestor that Social Security benefits were not a right, even though Mr. Nestor had paid into the program for 19 years and was already receiving benefits. He was denied benefits because he was a member of the Communist Party, and according to a law passed in 1954, Social Security benefits were to be denied to persons deported for, among other things, having been a member of the Communist Party. Quite ironic that a Socialist program would be denied for Communists. Of course, today, one’s political affiliation would not be grounds for denying Social Security benefits although the Communist Control Act of 1954 was never officially repealed, but the Nestor case proved that the US government can change their side of the contract at any point with a simple vote or court case affecting everyone else.
Social Security is a sound investment because the US government has top-level economists that say so, right?
Well, let’s take a look at what the Social Security Trustees Report says, specifically:
- “As indicated in the 2009 Trustees Report, the 75-year shortfall projected under intermediate assumptions for the OASDI program could be met with benefit reductions equivalent in value to a 13 percent immediate reduction in all benefits, an increase in revenue equivalent to an immediate increase in the combined (employee and employer) payroll tax rate from 12.4 percent to 14.4 percent, or a combination of these two approaches.”
- “Projections of cost and income for the OASDI program are inherently uncertain. This uncertainty is thought to increase for more extended periods into the future.”
- “With the average worker benefit currently at about $1,000 per month, 3.3 workers would need to contribute about $300 each per month to provide a $1,000 benefit. But after the population age distribution has shifted to have just two workers per beneficiary, each worker would need to contribute $500 to provide the same $1,000 benefit.”
- “Thus, in order to meet increased Social Security costs, substantial change will be needed. The intermediate projections of the 2009 Trustees Report indicate that if we wait to take action until the combined OASDI trust fund becomes exhausted in 2037, benefit reductions of around 25 percent or payroll tax increases of around one-third (a 4 percent increase in addition to the current 12.4 percent rate) will be required. Past legislative changes for Social Security suggest that the next reform is likely to include a combination of benefit reductions and payroll tax increases.”
- “Social Security’s total cost is projected to exceed its total income (including interest) in 2018 for the first time since 1982 and to remain higher throughout the projection period. Social Security’s cost will be financed with a combination of non-interest income, interest income, and net redemptions of trust fund asset reserves from the General Fund of the Treasury until 2034 when the OASDI reserves will be depleted. Thereafter, scheduled tax income is projected to be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2092.”
Are there any solutions to the problem besides adding more people or taxes to Social Security?
Most financial advisers have noted that the average return on investment in the stock market is around 8% annually. The best bet is to not only vote for ways of completely ending Social Security through a transition period allowing those already on it or about to be on it to receive their benefits, but also simply investing in the stock market, although I am not a financial adviser and you may invest at your own risk. The Cato Institute proposed allowing people to roll over the money they already put into it towards a private investment fund such as a traditional IRA that would be tax-free.
Once Social Security is ended, it will strengthen communities because people will be more conscientious of their spending, saving, and investing, while families and friends will see the positive impact of voluntarily helping those in need. The more we put between ourselves and those in need, such as through government programs, other people, etc. the less we are concerned with those in need. In the end, the best solution comprises of personal responsibility and allowing those that wish to voluntarily give and help to do so without imposition.
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