An Open Letter to the Wall Street Journal on Its Bernie Sanders Hit Piece

by Gerald Friedman, Professor and Chairman of the Department of Economics at the University of Massachusetts. Financial analysis of the costs and benefits of a single-payer national health plan.

Summary of 10-year projections

Because of the nearly $10 trillion in savings, it is possible to fund over $4.5 trillion in additional services while still reducing national health care spending by over $5 trillion. With these net savings, the additional $14.7 trillion in federal spending brings savings to the private sector (and state and local governments) of over $19.7 trillion.

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Misinformation About The Cost of Single-Payer National Health Insurance
Posted by John Geyman MD on Monday, Sep 21, 2015

In a front-page Wall Street Journal article a few days ago, the projection was made that a single-payer national health insurance program (NHI), as part of the presidential campaign of Senator Bernie Sanders (I-VT), would cost $15 trillion over ten years. Accurate though that figure is, this under-researched article conveys disingenuous misinformation to a broad readership that might be inclined to dismiss such a program as too expensive to even consider.

This article is irresponsible in what it doesn't say-- what the savings would be of reining in our current wasteful, overly bureaucratic profit-driven medical industrial complex, and the benefits that NHI would bring to our entire population compared to what we have now or have ever had.

Thanks to a landmark study in 2013 by Gerald Friedman, Professor and Chairman of the Department of Economics at the University of Massachusetts, we have a solid financial analysis of the costs and benefits of a single-payer national health plan. With NHI, $592 billion would be saved annually by cutting the administrative waste of some 1,300 private health insurers ($476 billion) and reducing pharmaceutical prices to European levels ($116 billion). These savings would be enough to cover all of the 44 million uninsured (at the time of his study) and upgrade benefits for all other Americans, even including dental and long-term care. A single-payer public financing system would be established, similar to traditional (not privatized) Medicare, coupled with a private delivery system. Instead of having to pay the increasing costs of private health insurance, so often with unaffordable deductibles and other cost-sharing, patients would present their NHI cards at the point of service without cost-sharing or other out-of-pocket costs. Care would be based on medical need, not ability to pay. (2)

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Mrs. Clinton's ideas tend to lean towards introducing more means testing and need based, welfare elements into existing programs including existing social insurance programs. Part of her current tweak to ACA is to provide an addition $5,000 tax credit to a select group of people based on need to help them pay their ever increasing deductibles, co-pays and coinsurance. This does nothing to reduce the ever increasing cost of insurance or ever increasing deductibles, co-pays etc but only creates another avenue for the government to pick up more of the tab for some.

No, Bernie Sanders is not going to bankrupt America to the tune of $18 trillion

The answer isn't quite so dramatic: while Sanders does want to spend significant amounts of money, almost all of it is on things we're already paying for; he just wants to change how we pay for them. In some ways it's by spreading out a cost currently borne by a limited number of people to all taxpayers.
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... At the moment, total health care spending in the United States runs over $3 trillion a year; according to the Centers for Medicare and Medicaid Services, over the next decade (from 2015-2024), America will spend a total of $42 trillion on health care. This is money that you and I and everyone else spends. We spend it in a variety of ways: through our health-insurance premiums, through the reduced salaries we get if our employers pick up part or all of the cost of those premiums, through our co-pays and deductibles, and through our taxes that fund Medicare, Medicaid, ACA subsidies, and the VA health care system. We're already paying about $10,000 a year per capita for health care.

So let's say that Bernie Sanders became president and passed a single-payer health care system of some sort. And let's say that it did indeed cost $15 trillion over 10 years. Would that be $15 trillion in new money we'd be spending? No, it would be money that we're already spending on health care, but now it would go through government. If I told you I could cut your health insurance premiums by $1,000 and increase your taxes by $1,000, you wouldn't have lost $1,000. You'd be in the same place you are now.

By the logic of the scary $18 trillion number, you could take a candidate who has proposed nothing on health care, and say, "So-and-so proposes spending $42 trillion on health care!" It would be accurate, but not particularly informative.

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The last Selzer poll, widely regarded as the most able to detect whether new caucus-goers are going to show up....

I keep hearing how Clinton is geared up and ready for the attacks destined to come at her from the GOP, which is why she's so electable and Sanders isn't. But, why then, can't she challenge Sanders' health care plan without flinging silly accusations? It's the smell of desperation from the Clinton camp all over again, which does, indeed, bring to mind 2008. It makes her act without thinking it through, behavior we don't usually ascribe to her. And all because of a few polls putting Sanders in contention for Iowa.

She could have challenged his plan point by point, or even just summarized and dismissed it by saying it's not politically realistic with an intransigent GOP in congress. But she didn't. The ill-crafted attacks on Sanders' single payer plan had one result: it netted his campaign $1.4 million in contributions--in just one day.

"His plan would take Medicare and Medicaid and the Children's Health Insurance Program and the Affordable Care Act health care insurance and private employer health insurance and he would take that all together and send health insurance to the states, turning over your and my health insurance to governors," Clinton said. "We had enough of a fight to get to the Affordable Care Act. So I don't want to rip it up and start over."

Clinton's daughter Chelsea got in on the act, too, in an even worse manner, claiming that Sanders wants to "dismantle Obamacare." She said: "I worry if we give Republicans Democratic permission to do that, we'll go back to an era, before we had the Affordable Care Act, that would strip millions and millions and millions of people off their health insurance."

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Chelsea Clinton's attack is even worse, making it sound as if Sanders is like the Republicans who call to "repeal and replace" Obamacare without actually drafting a "replace" plan. As former Obama administration adviser David Axelrod said on CNN last night, "Bernie Sanders is proposing single-payer, universal healthcare. You can hardly say he is trying to take health care away from anyone or retreat from Obamacare. He's trying to exceed it. And so it's not really an honest attack."

But Hillary Clinton doubled down on her daughter's words on Wednesday, saying on "Good Morning America" that Sanders would "take everything we currently know as health care, Medicare, Medicaid, the CHIP Program, private insurance, now of the Affordable Care Act, and roll it together." As she knows, since she is well-versed in health care policy, that's a feature, not a bug of single-payer; the alphabet soup of insurance programs is one of things that makes American health care so confusing and inefficient. Instead of attacking the idea on the merits, she's choosing to make it seem as if Sanders has a callous disregard for people losing health insurance.

What is she so afraid of?  This is the same Hillary Clinton who went after Obama in 2008 because he didn't have a single-payer/universal plan, and now she wants to attack Sanders because he does?  Wants to scare people into thinking that Sanders wants to take away their health insurance?

It smells desperate, and dumb.  She'd have gotten more traction, probably, from demonizing the socialist flavor of Bernie's plan; if he makes any more headway in the polls, look for that next.

Sanders has said repeatedly that he wants to build on the health-care system created under the Affordable Care Act and to expand it to provide health insurance regardless of income or age. It's clear that the provision in his bill to "repeal" ACA state exchanges was not just for the sake of repealing the law, in the way critics who oppose passage of ACA use the term "repeal."
But the language of his legislation -- all three times he introduced it -- clearly stated that existing federal programs would be replaced with a new program that he sought to create. It wouldn't simply increase current levels of coverage but would create a whole new health insurance system with new quality-control methods, a new standards board, and more.