By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally published at New Economic Perspectives
A report from the Mercatus Center at George Mason University calculating the “cost” of Medicare-for-all has received much attention recently—first, because Bernie Sanders claimed the report concluded that Medicare-for-all would save the American people $2 trillion over a 10-year period. That claim was still warm when the report’s author, Charles Blahous, told the Washington Post that Bernie’s interpretation of the report’s conclusions were blatantly false. In fact, Blahous told the Post, he posited that savings scenario based on a set of assumptions which he subsequently proved were so highly unlikely as to be impossible.
The real conclusion of his report, Blahous said, was that Medicare-for-all will “raise government expenditures by $32.6 trillion” in the first decade—or, about $3.3 trillion per year. Blahous went on to say this: “For perspective on these figures, consider that doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”
So, there you have it: blown out of the water again. When will Democrats understand they can’t collect enough tax-dollars to pay for Medicare-for-all, or to pay America’s public college tuitions, or to pay for pre-school day-care for America’s working-class families? When are Democrats going to get REAL? End of conversation.
Except it should not be the end of the conversation at all, but rather the beginning of a learning experience to help Americans get it right when it comes to understanding what U.S. democracy can “afford” to do. It turns out the arguments framed by Mr. Blahous are, themselves, based upon a particular assumption which is illogical from the perspective of macro-economic bookkeeping in a modern money system—which is what the U.S. has been operating now for over three-quarters of a century.
To see why this is so, begin with the simple statement that Medicare-for-all will increase federal expenditures by $3.3 trillion per year. The first thing to notice is that this number—$3.3 trillion—represents the total amount of health-care services someone has calculated that Americans are going to need. To digress for a moment, I realize that a large part of the controversy around health-care stems from the belief that Americans are paying for services they don’t require and are paying too much for the services they get. Arguments about how to pay for health-care, then, get entangled with arguments about how to reduce its cost—and the entanglement renders clear thinking and debate difficult. So, for the moment, let’s not even consider whether the $3.3 trillion figure is an overpayment—let’s just accept the fact that it is a number somebody calculated about how many services and procedures American’s will need, and how much each service and procedure is estimated to cost. That total guestimate represents what we could call America’s “health-dollars”—i.e. the dollars Americans are going to spend on health-care one way or another, assuming they get the services they’ve been projected to need.
Here’s the second thing to notice about this $3.3 trillion in health-dollars: If Uncle Sam didn’t write the checks for those health-services, someone else would have to. In aggregate, then, if Uncle Sam pays $3.3 trillion for America’s health-care services, America’s families and businesses save $3.3 trillion in expenditures they don’t have to pay—which could be viewed as the same as “earning” an extra $3.3 trillion each year.
From a macro-economic bookkeeping perspective, then, if the folks who “earned” $3.3 trillion (by not having to spend it) “transferred” their $3.3 trillion windfall to Uncle Sam, they would have, remaining, the same number of dollars as if they had bought the health services. And, if Uncle Sam then uses the $3.3 trillion gained through the “transfer” to buy the health services, the net result would be exactly the same as if the folks needing the health services had paid for them in the first place—i.e. the net bookkeeping result would show this: Uncle Sam would have zero health-care dollars, the health-care industry would have earned $3.3 trillion health-care dollars, and the American people would have received the services they needed.
So, what is the point of this exercise? Why does Uncle Sam have to be involved at all? Why not just have everyone pay directly for the health-care services they need since, from an aggregate bookkeeping calculation, the net results are the same?
The answer, obviously, is because while the aggregate bookkeeping calculation works, the details assumed in the aggregate accounting don’t. Specifically, the $3.3 trillion health-care dollars that are to be spent on America’s services and procedures are not equally distributed amongst the Americans who would need to do the spending. A small percentage of the citizens have a huge surplus of the health-care dollars, while a very large slice of the citizenry has virtually none.
In America, this situation poses a profound and conflicting problem. Our foundational core belief is that if a person earns a lot of money through hard work, creative ingenuity, clever dealings, or even sheer good luck, he or she should be able to keep it—or at least keep the vast portion of it after having paid reasonable “dues” (taxes) for the benefits of being an American citizen. The idea of being forced to “redistribute” a portion of what has been hard-earned to others who, for whatever reasons of misfortune, bad luck, or laziness, have not earned enough themselves, is anathema to the American psyche.
At the same time, however, when a human being is suffering or injured, American’s will, by instinct, send the ambulance and open the emergency room doors first—and wonder about payment afterwards. There is a recognition, then, that health-care dollars will get spent no matter what, in any event, either through the front door, or via the back door. There is also a recognition that the general health of the entire population is a collective good that cannot be allowed to falter: communicative diseases do not check the bank balances of their victims.
These conflicting values pose what seems an unsolvable dilemma for American politics. This dilemma causes us to undertake all kinds of subterfuges—like, for example, “health-insurance markets”—to make ourselves believe we are doing something which we are not—or not doing something which we are. And the dilemma is instigated by one key, core-value word: “redistribute.” Implicit in that word is the un-assailed assumption that for Uncle Sam to spend the “health-dollars” Medicare-for-all will require, the dollars will first have to be removed from the bank accounts of the wealthy through taxation. Hence, we have Mr. Blahous’ admonition that even if projected individual and corporate taxes were doubled, it would not generate enough tax-dollars to pay for the health services. It’s simple mathematics.
But why should this surprise us? The fact of the matter is, as it has evolved since the days of Alexander Hamilton, America’s money system has never used tax-dollars to pay for the big-ticket items Congress has deemed necessary for our collective good. To do so has never been a mathematical possibility (as Hamilton himself acknowledged in his 1790 Report Relative To A Provision For The Support Of Public Credit)—nor is it a mathematical possibility today—nor will it ever be a possibility in the future (as most recently pointed out by Mr. Blahous).
But this does not mean that America cannot afford to have big-ticket items for the common good—really Big-Ticket items, in fact. The reality is that America, as a collective society, can afford to buy anything for which the real resources—labor, materiel, human ingenuity—are both available and for sale in U.S. dollars. This is because big-ticket items for the collective good are paid for with new dollars created—as needed—by U.S. treasury operations. Specifically, the operations involve the issuing of U.S. treasury bonds (which are, in effect, dollar-denominated, interest-bearing savings accounts) and trading them for existing currency in the private sector.
We habitually imagine these treasury operations to be “borrowing”—and even tally them up as something we call the “national debt.” But modern analysis and explanation shows that in a sovereign money system the definition of “borrowing” does not apply to treasury operations; the securities created by the operations, themselves, are “money” issued—as needed—by the federal government. Thus, the U.S. government can (and does) pay for anything that Congress deems necessary or desirable—so long as it’s for sale in U.S. dollars—without collecting tax-dollars.
Regarding Medicare-for-all, then, the initial pertinent question is NOT whether we can raise enough taxes to cover $3.3 trillion in new expenditures (that question is not pertinent at all!)—the question is whether the medical services to be purchased are actually available in America. Do we have the doctors and nurses, the hospitals and clinics, necessary to provide the care and procedures? If so, and if Congress decides it is in the interest of the American people to have access to that care, the U.S. treasury can, through its securities operations in coordination with the Federal Reserve, create the “health-dollars” necessary to pay the bill.
We should still ask if the “price” charged for those services is fair—or if some of those services and procedures might be unnecessary for the best health outcomes for American citizens. These inquiries would also include Mr. Blahous’ concern that if health-care is “free” for people to access, they’ll naturally access more of it—which might drive the price up even higher than his calculated $3.3 trillion. But those questions should be part of an ongoing process to imagine and implement the most effective system the American health-industry can operate. They have nothing to do with how many tax-dollars can be collected from individuals or businesses.
The actual macro-economic bookkeeping for Medicare-for-all, then, is this:
- Uncle Sam spends $3.3 trillion to pay for America’s health services;
- S. families and businesses save $3.3 trillion by not having to spend it for their health-care;
- The health-care industry earns $3.3 trillion by providing services;
- The U.S. financial sector owns $3.3 trillion in treasury bond “savings accounts.”
That is a proper way to calculate what America’s social democracy can do.
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If AG Sessions gets his way, the $3.3 trillion budget can be funded by the proceeds of Civil Asset Forfeiture.
But seriously, the article is written from the premise there should be an ‘all or nothing’ type of solution. My experience, having lived and worked within different countries and different different health care systems is that this is never the case. There is typically some sort of mixture of basic public health care and private sector health care. Clearly there is a need for private investment into health care that an ‘all or nothing’ purely public sector approach does not address.
Also implementing a ‘one-size-fits-all’ national health care system for a country the size of the United States has never been done before. Even Europe, whose members could be considered the progenetors of public health care, would not attempt to undertake such an impossible task.
Alt’s “all or nothing,” “one-size-fits-all” solution (your terms, not his) is a simplification his macroeconomic arguments to make them widely understandable and thus politically useful. Every western European medical care ecosystem — even the most “socialized” — includes a variety of private medical services and private insurance to cover them for those who are demanding and wealthy enough to purchase them.
This does not negate Alt’s macroeconomic argument, as long as the bulk of a nation’s medical care is provided in quantities that do not starve supply and under conditions that do not unnecessarily inflate demand (maybe copayments, maybe inconvenience, maybe [horrors!] individual patients’ and providers’ responsibility). AFAIK, every western European nation has managed to do this without reaching the US’s amazing combination of grossly unfair distribution and world-record-breaking costs. (Yes, many European governments now struggle with rising costs due to aging populations and significant refugee and east European in-migration, but most are managing it OK.)
I think any extant western European system (UK excluded, since its government is doing their best to wreck it) combining string state regulation and a combination of state and private care providers (individual practitioners and/or private clinics) could work in the US roughly as economically effectively as Alt states (sure, he may be off by 5-10%, but that doesn’t falsify his argument). I have used the German, Italian, and French systems, each of which appears to me to deliver medical care more effectively (and more easily for both providers and patients) than the US’s so-called “health care system.”
BillC, part of the reason that some Eurozone countries are struggling with their health systems has to do with the neolliberal framework that has been imposed. Without that, they would be better able to cope. That they cope as well as they do is a testament to them. The US’s health care system is appalling. If I may quote a line from Predator, I wouldn’t wish the US health system on a broke back dog.
Or to quote the former Wrestling Gov from Minnesota:
‘I aint got time to bleed.”
Which means that 3.3 Trillion Dollar Mark is a few hundred billion off.
I know ive always avoided healthcare whenever possible. I can (mostly) take care of myself.
Don’t forget the Euro- the EU doesn’t have sovereign currency like the US.
The premise that Washington should be in charge of a ‘one-size-fits-all’ health care system for 50 states and 350 million people is complete nonsense. I would argue that the US healthcare system is a disaster because Washington is already too involved. Concentrating such power in the hands of just a few is just what the lobbyists want. The more centralized health care, or anything else for that matter, the more easily it will be corrupted.
In Europe, for example, there is no way the Germans would want Italian health care, or the French would want British health care, or the Dutch would want Spanish health care. Each country has it’s own system according to its local needs.
The challenge for the US healthcare system, in my opinion, is to find a framework that encourages decentralization and cost competition. Centralized funding (and therefore centralized control), that is the underlying premise of Alt’s interesting analysis, is not the answer, unfortunately.
At the very least the end result of such a system is that Washington would use it as a political tool to reward and punish according to political affiliation or to bribe the voters.
Well, since the current system isn’t working, why not try this one to see if it works? Doing nothing is not going to work either and the “problem” has been studied to death. Time for new approaches and this is better than any neo-liberal plan out there.
The problem is that US healthcare is unbelievably inefficient and inexpensive. The US already spends more public money per capita on healthcare than any other countries in the world except for Norway and the Netherlands. So we should already be most of the way to a “Medicare for All”. http://www.visualcapitalist.com/u-s-spends-public-money-healthcare-sweden-canada/
Countries like Canada which have a Medicare for All type of system actually implement it on a provincial basis which allows for local experimentation and tailoring. Ottawa sets general parameters and helps equalize funding. People who moan about how bad the Canadian healthcare system is should understand that the per capita total private and public spending in Canada is half of the US – so if Canadians want to improve the system they have lots of rope to play with before they even come close to US expenditures.
The massive failure in the US healthcare system has been the complete inability of the private and public sector employers to get the insurers and providers to provide cost-effective healthcare. So the “free market” approach in the US has been an abject failure at controlling costs. Americans need to take a serious step back and re-assess healthcare and do a detailed evaluation of how the rest of the developed world delivers universal health care with better outcomes at a fraction of the cost. There are lots of models out there that appear to be working fairly well but picking “None of the Above” to date has not been successful.
To the extent that privatization hasn’t been diminishing the systems, what countries with successful universal healthcare have in common are a uniform system that applies to everyone within that country; non-profit financing (private not-for-profit insurance, public insurance, or the elimination of insurance with a public health system); and universal, largely comprehensive coverage.
If your hypothetical trade of systems has any meaning, the question would be whether a country that provides universal healthcare on those terms would trade systems with another country that also provides it on those terms; or would they rather trade their system for the US system.
Decentralized, “competitive” (hah!) for-profit insurance doesn’t work. Original Medicare, again where privatization hasn’t been diminishing the system, has worked well and provides a functioning administrative framework for a system that’s uniform, not-for-profit publicly financed, and universal.
The term ‘competitive’ does not necessarily carry with it a profit motive. Non-profits and co-operatives can also be competitive and also work to the best interest of their members, or customers, for example. Purchasing pharamceuticals can be done in a competitive manner.
My point is that we have to start thinking outside the box and look for new solutions that will work into the long term.
With respect to European health care systems, some systems may become unsustainable because there are simply not enough people paying into them anymore. So the traditionaly concept of Socialized Medicine, even within Europe, will experience a major transformation in the coming years. New models are needed for effective health care delivery.
>Non-profits and co-operatives can also be competitive and also work to the best interest of their members, or customers, for example.
Or not. Let me introduce you to a little outfit called UPMC.
In any case, I don’t really know what you’re getting at. This system doesn’t work but you can foresee all other systems won’t work either? Wow, impressed. I guess we should just euthanize everybody then.
I guess you missed the point about “we don’t need to collect taxes to support a free health care system”. We just don’t need to collect taxes to pay for this. Congress and the Treasury can pay for free health care without collecting taxes. It’s a benefit for both – the consumer and the government.
Wake us up when those new models come in – thanks.
Any multi-payer system is going to have system wide inefficiencies, because you have to create a large administrative, legal and financial apparatus to manage that complexity. If you are saying that there are actual resource shortages, not enough natural resources, medicines, doctors and nurses, to take care of the population, that can be an issue, although you could have a society prioritize basic needs and not resources going to luxury consumption to deal with some of that. However, if the issue is simply how to distribute money and not actual resource shortages, that is solvable through the political process and may just require state action. Why is the assumption that radical changes are needed within universal multi-payer or single payer healthcare systems? Maybe we need radical changes as to how our economy operates, as well as our political system. After all, we do have an environmental crisis, right? Most environmental impacts don’t have market values, so relying on markets as we have to this point doesn’t seem sustainable. We are dealing with absolute limits to resource consumption and in regards to pollution generation, and yet the financial and monetary parts of the economy don’t know any limits to growth, and don’t have to deal with limits like that. That too will require pretty radical changes. And how exactly do we reach a particular endpoint in regards to aggregate resource consumption and pollution generation without some type of national planning and coordination? Anyone that has studied complex systems has to know that a decentralized and chaotic system like capitalism cannot be expected to address that. I realize this has nothing to do with healthcare, but radical changes are coming as is in our society one way or the other, or it all comes down quickly.
The demographics of an aging population is common to most developed countries, including the US. Other than putting the elderly on an ice float, it becomes largely a societal funding problem that will impact both Europe and the US (US already spends more per capita of public money than most European countries).
So they may change systems, or they may just put more money into their system. The US has the same option, but is already spending far more money.
Canada, although with a much lower population than the US, has an extremely varied health delivery geography, population, and cultural landscape. Extreme urban to beyond rural into empty wilderness. Decentralized into provinces, it’s still one big very similar system. Improvements always welcomed, but it works.
good points, all.
As I understand the Canadian system, it’s actually a number of systems run by the individual provinces, not run centrally.
The fact that the mercatus report is being talked about so much shows how much ideological power it carries. After all the kochs and their economists have done, america still treats a report released by them as important.
A useful primer on the George Mason epiphenomenon from Nancy MacLean, Democracy in Chains.
Amen to that…an essential read, IMHO.
Most amazing to me is the framing: Rich people (including slave owners) are the victims here! The government arbitrarily can seize their property! Dang!
BTW, Fred Koch, the current Koch’s father, was a very clever chemist who patented his processes to refine crude oil, and built refineries with Koch Industries all over the world, including for Hitler and Stalin. That is the foundation of the Koch fortune.
The Rockefellers (of Standard Oil) started using Koch’s processes, but declined to pay patent royalties. Koch sued…and lost! A few years later, it was revealed that Rockefellers bribed the judge, so Koch re-sued and won, but retained a lasting disdain for government as the nexus of corruption, which he passed down to his kids…and can you blame him?
I don’t know the background behind your short exposition, but yeah – I can blame him.
Patents are enforced by the government. If the elder Koch’s government had been “drowned in a bathtub”, he would not have any patents to fight over. So what exactly was his problem? He never had a manager, a foreman, a VP that was anything but pure and noble? And thus he expected the government to also somehow not be have a any fail able people?
That’s like striking out once and condemming baseball.
Yup. This article is testimony:
http://theweek.com/articles/791236/fact-checkers-have-medicareforall-problem
Delete 4.
The issue of bonds is not necessary for a sovereign currency issuing monopoly with a floating exchange rate.
http://bilbo.economicoutlook.net/blog/?p=31715
Yes
True, but to paraphrase Mark Blyth, the bonds are there to get the rich to play nice and accept the system.
Both bonds and currency appear on the Fed’s books as liabilities, just as savings and checking accounts appear on banks’ books as liabilities. I’d suggest bonds exist to withdraw spending power from those who might otherwise have currency. I think Alt agrees (see Diagrams and Dollars…which I think is available online for free too, but can’t find it now)
” the U.S. treasury can, through its securities operations in coordination with the Federal Reserve, create the “health-dollars” necessary to pay the bill.”
The core of this party’s argument isn’t about health care- it is about creation of dollars on an unlimited basis and can it go on for – any amount forever?
You can apply the same logic to paying the air conditioning bill for the poor as illustrated last week or education loans or UBI – all of which are consumables like medical care.
while there are some that can benefit from an education, for example, for the vast majority, it is a waste of time and money, same for the rest of the proposals.
when you create dollars to build new assets (not inflate old asset values) you can possibly create more value added over time – positive PV. Not so with consumables especially for those with limited IQ, marginal health induced by food / drugs – no value added, just perpetuation of useless eaters until they overwhelm and swamp the system.
Yeah! Like the Walton family!
PS as the article says, healthcare doesn’t really fit the model of your ‘consumables’:
PPS Nor does education. Who decides beforehand which brains are not worth developing thru education and which are being underutilized thru withholding of education? You?
“America, as a collective society, can afford to buy anything for which the real resources—labor, materiel, human ingenuity—are both available and for sale in U.S. dollars. “
But there ia no surplus medical labor available in the U.S. at the moment, so the author’s MMT talking point is irrelevant. Like most MMT’ers, he can only repeat talking points.
In the long term, we might ought to address the supply side of the problem — induce more students to study medicine, build more teaching hospitals, more med schools, etc.. But even if we did all those things, new doctors are 8+ years down the road. How do we take care of the uninsured in the meantime?
So we need to ration. The market is a type of rationing, it’s just not a moral type of rationing.
“Our foundational core belief is that if a person earns a lot of money through hard work, creative ingenuity, clever dealings, or even sheer good luck, he or she should be able to keep it.”
That seems to be part of MMT’s foundation, but it is not part of my foundation. My foundation is that no person should have more power than another person — and money is very much a type of power. Maybe MMT should re-examine its foundation?
There is plenty of slack. Doctors spend as much if not double the time on paperwork as with patients. This is more billing related than anything so single payer would massively cut the paperwork. (This is not to say more health care workers aren’t needed, but there is a lot of slack in the system)
The author specifically says in the article:
That’s the whole point, that the real limitation is the resources available and not the dollar supply, whereas the orthodox assumption is the reverse.
Now, I don’t know enough to speak to whether or not we have a medical labor shortage, but if we do I know of a good, immediate way around it: lessen the board restrictions on those who went to medical school out of the country. Of course, that won’t happen because the top 10% are sheltered from free trade globalization’s economic dislocation.
In addition to the substantial slack in the system on account of single payer and ending insurance co. involvement, it is not necessary to go in all at once. Expand Medicare coverage in steps, say three years down every year from 65, and up ten years/year from the bottom, everybody covered in five years and young kids covered immediately.
This also means a five year period for ins co. Workers transition to other work, some will go into health, a few into Medicare bureaucracy. Helpful, of course, if gov also begins massive infra building, given the large surplus of labor.
With 90% covered now this means a 2% expansion of the system per year, actually quite gradual. The big problem might be hospitals, takes time to build them, but we’re only talking about a 10% total expansion.
“But there is no surplus medical labor available in the U.S. at the moment, so the author’s MMT talking point is irrelevant.”
If that is the case, maybe it is but I would like to see data, can we not hire trained doctors from elsewhere, especially those that have worked in similar systems? We do this with tons of other professions. Can doctors not use the time they will not be spending on paperwork and working through this complex system to focus more on being doctors?
“So we need to ration. The market is a type of rationing, it’s just not a moral type of rationing.”
The market is a type of rationing to be sure, but one that ignores massive amounts of information, and the market itself (its limitations, the missing information) is a key reason why there is an environmental crisis, and why we make decisions without taking into account lots of social impacts that fall outside the market economy. Since markets do ignore information, the ability of people to create non-market costs and then pass those costs off onto others is an issue power dynamics.
“My foundation is that no person should have more power than another person — and money is very much a type of power. Maybe MMT should re-examine its foundation?”
Explain. I don’t know why power differentials would cause a re-examination in MMT foundations, maybe the scope of MMT could incorporate other factors, but maybe I am missing something. Seems that there are many political, ecological and institutional economists that do incorporate power dynamics into their work. Seems to me that their insights can easily be incorporated into an MMT framework, but again, I could be missing something.
It would be nice if the Mercatus Center understood the basics of Monetary Sovereignty. It would even be nicer if the public understood. And it would be nicer yet, if Bernie understood.
The cost of Medicare for All is irrelevant. Someone has to pay for health care: The public or the government.
When the public pays, dollars are transferred from the sick to the wealthy (doctors and hospitals).
When the government pays, new, economically stimulative dollars are created. So which is better?
The federal government never can run short of dollars. Is this all so difficult to understand?
Lol, apparently yes to the Media.
But ordinary Americans have enough common sense to connect the dots.
We all know the rich fs are ruining our Country and exploiting the World for cheap Labor.
And with the bargaining power of everyone in one risk pool, prices will go down (if the pool advocates for the people, not the providers). Administration costs will go down. Costs to employers and employees will go down. Etc.
Only if the risk pool is kept large. In PA, the legislature obligingly allowed the pool to not be all subscribers in the state, but just the employees of each business taking out a policy. A fellow worker gets lung cancer? Ka-ching! Up go the rates!
Single payer/Medicare for all puts everybody in one pool. That’s everyone.
Well put… One further conclusion: In the perverse (Calvinist?) U.S. version of morality, sick people are morally reprehensible. (So let’s put our mentally ill in prison!)
These sick people must be punished, or at least deprived of dollars. Watch…the subtext of the opposition will imply the sick deserve what they get.
It’s pretty astonishing…but I’ve heard it often enough now, even from medical professionals, to anticipate it.
No, that’s easy.
What the rich fear more than war is inflation… a poor person with no money, not so much. It’s the rich that run the country thru their donations, so their lackeys in Congress, many of which are also wealthy, dutifully fear inflation. And the media, controlled by the same lot, persuade the public to fear, too. First thing they talk about is always Weimar Republic and Zimbabwe, and now Venezuela.
The missing discussion is inflation, that high inflation, whether under a gold or fiat system, always begins with shortages of real goods such as food or fuel, and that money printing does not lead to high inflation so long as it is spent on readily available goods or labor.
“What the rich fear more than war is inflation”
How does implementing a less costly system lead to increased inflation? Less money would be spent on healthcare aggregately because of making a horribly inefficient system far more efficient. This system is an inefficient nightmare, and the fact that so many put off needed procedures until health ailments (and their costs) have grown results in lots of costs and resources going to things simply not found in single payer systems. Administrative waste, profits, marketing and lobbying costs, massive executive pay, among other things. Cuba is a poor country, and it struggles to deal with diseases that have advanced as a result. So, how have they kept aggregate costs down and how are health outcomes often just as good as they are here in many ways? By focusing on preventative care, catching things early. It seems that inflation would be a logical concern if single payer systems costs more, not less, than this one.
“First thing they talk about is always Weimar Republic and Zimbabwe, and now Venezuela.”
I would love to hear these rich people you are describing explain why inflation happened in the Weimar Republic, Zimbabwe and Venezuela, and I would doubly love to hear them explain what those situations have to do with the modern US. In fact, I would love to just hear their ideas on inflation. I would imagine that they argue that government creating money necessarily leads to inflation? It doesn’t seem to dawn on these folks that the NHS in Britain and Medicare in Canada hasn’t resulted in hyperinflation?
It seems that those in power are throwing everything against the wall and are seeing what sticks. Now, we are having discussions in regards to absolute resource shortages, and of course, no data or logic to justify the situation. I think being rich is great. You can be ignorant of so many things, and your ignorance can be a foundation for our discussions on policy.
The 1970s would disagree with you about inflation “always” resulting from shortages of goods. While there was an oil shock, that era’s inflation was tied to labor COLA and full employment policies feeding back into inflation through price hikes. Yes, the rich fear inflation, as the wage related inflation demolished profits. Since then, the system is geared to fight inflation, to the point where $13+trillion bank bailouts resulted in virtually no inflation and very low interest for treasuries (indicating no dollar devaluation).
So a shortage of goods is one way to generate inflation, but not the only way.
The math is not difficult. We currently spend approximately 18% of GDP on healthcare. Most countries can provide universal healthcare (via private and public methods) for around 10% of GDP. We have bad regulations and unenforced antitrust laws. At worst, we should be able to provide universal care at zero net cost. A diligently run and regulated system should save us 1% to 5% of GDP. With a $20 trillion economy we can save $200 billion to $1 trillion per year on net. So Sanders is using a conservative estimate of savings.
Most of these studies are intellectually dishonest and propaganda for a faith based view of how markets truly work.
Fortunately the Pentagon Spend Trust Fund never has a shortfall.
If only the Pentagon didn’t need so much.
https://www.truthdig.com/articles/the-pentagon-cant-account-for-21-trillion/
and from Forbes
https://www.forbes.com/sites/kotlikoff/2017/12/08/has-our-government-spent-21-trillion-of-our-money-without-telling-us/
(Note, after Mark Skidmore began inquiring about OIG-reported unsubstantiated adjustments, the OIG’s webpage, which documented, albeit in a highly incomplete manner, these unsupported “accounting adjustments,” was mysteriously taken down. Fortunately, Mark copied the July 2016 report and all other relevant OIG-reports in advance and reposted them here. Mark has repeatedly tried to contact Lorin Venable, Assistant Inspector General at the Office of the Inspector General. He has emailed, phoned, and used LinkedIn to ask Ms. Venable about OIG’s disclosure of unsubstantiated adjustments, but she has not responded.)
it’s not economics, it’s political economy; of course the US can “afford” universal health care; but what happens when the National Nurses Union goes on strike for higher wages? Will the AMA have even more political power? Ever visited a US Post Office? Ever ridden Amtrac?
the post office that was starved of funds?
>Ever visited a US Post Office? Ever ridden Amtrac?
Um, yes on both counts. I don’t remember a bad experience – a little annoying that the Amtrak train had to pull into sidings to let freight trains go by, but I don’t think that was Amtrak’s fault.
(PS: I kin alzo speel Amtrak korektly)
I think using MMT here just muddles things up. To understand how we pay for it on a basic level you just need to say that, 1) right now the average American spends x dollars on health care and 2) under Medicare for all you just pay the government in taxes instead of the health insurance corporation in premiums. So there’s no extra cost to the average American.
There are a number of complications with this. First and foremost is that most Americans get their health care as a benefit. If taxes go up but employers are able to keep wages flat and pocket the benefit they no longer have to pay, then the average worker will be worse off. Given the current dynamics of the labor market, that is a real possibility.
Other issues might include whether or not it is funded progressively or via a flat tax like social security, and how the government will ration care vs. how insurers ration it currently.
But whether you are MMT or not is irrelevant – all programs should be budgeted. When designing a specific policy like this, costs should be projected and plans to raise revenue should be made accordingly. If later on down the line we find there is ample capacity in the economy to lower taxes or raise spending, then we can do so, but that should be the domain of macroeconomic policy, and not a part of health care policy.
Spending $3 Trillion of additional dollars into the economy certainly increases the spending power of consumers who don’t have to pay for healthcare and so risks inflation if the spending hits and exceeds the productive capacity of the economy. Inflation is controlled by fair and equitable taxation, perhaps temporary increases in:
* Income Taxes,
* Sales/VAT taxes, and
* Asset Value Taxes.
That will cool things down pronto. But these are not dollars to “pay-for”. They are just a tool to manage inflation.
The country has the ability and money to make it work, but apparently not the character.
Q: (for the author’s summary of money flows)
When the financial services sector owns the x trillion if bonds, wouldn’t they also be selling those to the citizens? Or whoever?
Here’s another simple way to figure out the cost of Medicare for All:
Take total health spending – $3.162 trillion (2014)
Subtract the amount that can be saved on middlemen/overhead/billing compared to Canada (approx.
$476 billion)
Subtract the amount that can be saved on the excess cost of drugs compared to VA/Europe ($115 billion)
Savings Total ($591 billion)
Increase spending on uninsured to equal 100 percent of spending by insured by age + $144 billion
Increase spending to eliminate 80 percent of out of pocket costs and to
add coverage for dental, long-term care, vision, and to increase Medicaid payment rate + $199 billion
Add transition costs + $51 billion
Increase Total +394 billion
$3,162 billion – $591billion + $394 billion = $2,964 billion
Saving about $200 billion in the first year.
Medicare for All saves more than $200 billion in each year after implementation because it contains effective tools to contain costs (a major advantage over the current system, demonstrating that the only way to protect and expand Medicare benefits for the elderly is actually to expand benefits to everyone).
For details see:
This is five years old now but for the purpose of seeing how to calculate the cost of Medicare for All it still works.