Writing for the Wall Street Journal last week, James Freeman compares Bernie Sanders’ Medicare for All (M4A) plan to the policies of “Venezuela’s Nicolás Maduro, whose mania for wealth redistribution has brought a country to its knees.” Freeman far overstates his case.
It is true that M4A would be costly. Freeman relies on a study by Charles Blahous for the Mercatus Center, which estimates that M4A would cost taxpayers $32.6 trillion over ten years, even after savings in total national health care spending. A more detailed study by Jodi Liu for RAND comes in lower, at about $1.8 trillion a year without cost savings and $1.7 trillion a year with. A trillion here, a trillion there — either way, it’s real money.
But the real issue is whether sharp tax increases are the best way to finance the universal, affordable access to health care that both Republicans and Democrats profess to want. In my view, they are not. Universal catastrophic coverage (UCC), which uses income-based deductibles rather than taxes to ensure that everyone pays their fair share of health care costs, is a better idea.
Using deductibles instead of taxes would reduce the administrative costs and deadweight losses of first levying taxes on upper-income families and then returning that money in the form of health care benefits. It would also mean that all but the poorest and sickest families would have “skin in the game.” They would have an incentive not only to shop carefully but also to pressure their political leaders for reforms leading to greater transparency and competition in healthcare markets.
Proper scaling of the parameters of a UCC plan could make it revenue neutral, or as “progressive,” (in the distributional sense) as Sanders’ plan, or whatever the collective political will of Congress and the electorate decide.
In short, Freeman poses a false dilemma. We do not have to accept a crushing burden of taxation as the cost of reform. The quest for health care for all need not turn us into a Venezuela — a country where an especially noxious brand of authoritarian socialism has ruined both the economy and the health care system.
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