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Sure Medicare For All Would Be Cheaper – By Cutting Doctor And Nurse Salaries By 25%

Bernie Sanders has his idea of Medicare for all as a method of cutting the costs of health insurance in the United States. Or perhaps the plan is simply to increase the influence of government over the population, always difficult to be certain with the Progressives. And dependent upon how you do the sums it looks like it might actually be cheaper overall. Not that getting government to do something usually is cheaper but then sums, assumptions and so on. However, the way it makes things cheaper, if it does, is interesting. Because it just starts by saying that we’ll cut what we pay doctors by 25%. And more likely nurses and others in health care some 40% less.

Well, yes, OK, cutting wages is a way of making something cheaper, we find that’s a fairly usual outcome of corporate crushing of unions for example. Something the progressives complain about bitterly as it happens. Which is why it’s such an interesting proposal really. Let’s make health care cheaper by cutting everyones’ wages. Shrug, OK. Let’s make burgers cheaper by cutting the minimum wage then, why not? And if that’s not enough, why not make health care cheaper by cutting all the wages without having the Feds take the whole system over? We can do that too you know. By crushing the unions of course.

The point can be followed here:

Medicare for All is no longer just a left-wing pipe dream. With polling increasingly in its favor and a record number of Democratic senators and representatives onboard, the idea of expanding Medicare—a government health insurance program for people 65 and older—to all Americans seems like a viable proposal. The case for it was bolstered recently, albeit inadvertently, by a working paper last month from the libertarian, Koch-funded Mercatus Center, which concluded that Senator Bernie Sanders’s plan would save the American public more than $2 trillion over a ten year period.

This point originally being made by Matt Bruenig and as is usual with comments from that source he’s got the numbers but not considered the implications:

The US could insure 30 million more Americans and virtually eliminate out-of-pocket health care expenses while saving $2 trillion in the process, according to a new report about Medicare for All released by the libertarian Mercatus Center.

In the report, Charles Blahous attempts to roughly score Bernie Sanders’ most recent Medicare for All bill and reaches the somewhat surprising (for Mercatus) conclusion that, if the bill were enacted, the new costs it creates would be more than offset by the new savings it generates through administrative efficiencies and reductions in unit prices.

OK, how is this done?

From there, he adds the costs associated with higher utilization of medical services and then subtracts the savings from lower administrative costs, lower reimbursements for medical services, and lower drug prices.

Well, yes. “Lower reimbursements” means lower wages for everyone in health care. In the report itself this is the right line:

To offset the substantial cost increases created by stimulating additional consumer demand for
and utilization of healthcare, the M4A bill would constrain expenditures by subjecting healthcare
providers—including hospitals, physicians, and others—to Medicare payment rates.

For physicians that’s some 25% off current market rates, for medical care as a whole, some 40% off. And yes, a very large chunk indeed of health care costs is the wages of those who provide health care. So, that’s what’s going to fall, the wages of health care workers.

– provider payment cuts – $384 billion

Actually, those cuts in rates are more like $4 trillion over a decade than $2 trillion. That is, the entire reduction in costs comes out of the paychecks of health care workers – and more.

Well, OK, maybe nurses are paid too much. I’m not the guy with the magic book stating how much everyone should be paid, that’s more a progressive vice. I’m the guy who does say that pay is set by supply and demand. It’s the progressives insisting that CEOs are paid too much, burger flippers not enough, so if they say doctors and nurses are paid too much then who are we to argue with them?

They also tell us that union power must be rebuilt so that the workers get a fairer and larger share of the revenue. The AMA, the associated nursing unions, they are very powerful – Milton Friedman raged for decades about that market power of the AMA. Which does lead to an amusement, no? Unions actually gain market power, manage to increase wages, so now we need the Feds to take over an entire sector of the economy to screw wages back down again?

It might be simpler to take St Milt’s advice and remove that union market power over those wages. Reduce the barriers to people becoming doctors and nurses, limit licensure that is, and watch as wages and health care costs fall.

One more amusement. We’re told that there’s monopsony in low end wages. There are so few large corporations determining low end wages that the employers have market power, can determine what those wages are. That’s why we need a higher minimum wage to beat that single buyer market power. Our solution here in health care runs on the same logic. We’ve got to have a single buyer determining all prices in health care so that we can reduce the wages of doctors and nurses. The Feds must have monopsony power over medical wages so as to lower them that is. An odd thing for a progressive to be arguing but there we are.

To that basic truth of the proposals again. Bernie’s Medicare for all plan is indeed cheaper but only if we slash the wages of doctors and nurses. We do that by crushing union power in health care and having the Feds as the single, monopsonistic, buyer of health care in the country. Well, OK, I guess, if that’s what everyone wants. But has anyone else pointed this out as yet? And anyone asked the doctors and nurses?

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Rhoda Klapp
Rhoda Klapp
5 years ago

Can’t wait til he tells us his plan for the drug companies, and how they will use their power in the lobby, with his colleagues, to cut prices. Ha ha.

5 years ago

Are we going to fall for this again? The existing Medicare program is perennially budgeted assuming “lower payments to providers.” Of course, providers to this single-payer program for the elderly have lobbyists and always turn aside laws to do so, before their effective dates. Obama-care (Medicare for all under the illusion that we are merely compelling you to buy your own policy) was brought in under its cost target (“will cost less than Bush’s war in Iraq”) by the fantasy that we would take it out of the hides of doctors and nurses. This never took effect either. We are… Read more »

5 years ago

Isn’t Medicare contribution-based? It’s an insurance scheme. So, if more people want to buy in, let them, insurance gets cheaper the more people are in the scheme.

And isn’t something like this something that the States should have sovereignty over? If a state wants to own an medical insurance scheme, if a state wants to own a bus company, if a state want to own a chain of liquor shops, surely that’s states’ business, not federal.

5 years ago
Reply to  jgh

(1) Medicare “contributions” don’t come close to paying the cost of the program. There are token charges but it’s essentially free health care for the elderly on the grounds that being elderly is pitiable. We are losing a dollar a cookie and we cannot make it up on volume! (2) Allowing state-by-state experiments might devise the best plan without risking bankrupting the entire nation. That is the essence of federalism. And there’s nothing in the Enumerated Powers about Washington providing health care or health insurance. Not that it would be a good idea for the states. I live in a… Read more »

Richard M
Richard M
5 years ago

We have a growing number of Doctors that do not accept Medicare and Medicaid patients any longer because they lose too much money on them because the Govt keeps lowering the rates they will pay. There is already a shortage of Doctors and Nurses here in the US, I can only imagine that the shortage will get much worse if the Govt starts cutting their wages. I can only imagine the quality of care we will end up with as all the good medical workers opt-out or move on to something else and we are left with what is left.… Read more »

5 years ago
Reply to  Richard M

Predictions of US shortage of surgeons augmented in newest report: Cal Thomas’s doctor emails him to explain why he is quitting the practice: Becoming a doctor once meant acquiring near-complete knowledge of the body’s function and being trusted to devise the best solution for each patient. Apart from pay, it now involves minimal trust and growing duty to execute against a rulebook, including to detect public-health problems such as gun ownership. For an ignorant but self-righteous politician tasked to “reduce the cost” of something or other, it is simple. Get a cost breakdown and focus on the biggest-ticket… Read more »

5 years ago

Major flaw in the reasoning. It will cost less because medical staff will be paid less. Really? We do have evidence from history. You think it will be any different because it is 2018 not 1948 and the USA? ‘Bevan was pragmatic enough to know that he could not run the NHS without consultants, doctors and nurses. Faced with the threat of a BMA strike, he conceded that GPs would retain the freedom to run their practices as small businesses. The consultants were given more money, and allowed to keep their private practices. In Bevan’s own blunt words: “I stuffed… Read more »

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