Florida Democrats’ Campaign to Abolish Seniors’ Medicare

Full disclosure: I have done paid consulting work for Florida’s current governor, Rick Scott, in his campaign against Democratic Sen. Bill Nelson. And I have provided informal advice to Rep. Ron DeSantis, the Republican nominee for governor. However, neither the Scott nor DeSantis campaigns had any involvement with this article, and my views are—as always—my own.

On Tuesday, Democrats in Florida nominated an unusual candidate for governor, and it has nothing to do with his skin color or background. Tallahassee Mayor Andrew Gillum, who would serve as Florida’s first African-American governor if elected, says on his campaign’s website that the health plan U.S. Sen. Bernie Sanders (I-VT) has offered at the national level “will help lower costs and expand coverage to more Floridians.”

SEC. 901. RELATIONSHIP TO EXISTING FEDERAL HEALTH PROGRAMS.

(a) MEDICARE, MEDICAID, AND STATE CHILDREN’S HEALTH INSURANCE PROGRAM (SCHIP).—

(1) IN GENERAL.—Notwithstanding any other provision of law, subject to paragraphs (2) and (3)—

(A) no benefits shall be available under title XVIII of the Social Security Act for any item or service furnished beginning on or after the effective date of benefits under section 106(a)… [emphasis added].

In case you didn’t know, Title XVIII of the Social Security Act refers to Medicare. Section 901(a)(1)(A) of Sanders’ bill, which he brands as “Medicare-for-all,” would prohibit the Medicare program from paying out any benefits once the single-payer system takes effect. Section 701(d) of his bill would liquidate the Medicare trust funds, transferring “any funds remaining in” them to the single-payer plan.

In other words, Democrats just nominated as a statewide candidate in Florida—a state with the highest population of seniors, and where seniors and near-seniors (i.e., all those over age 50) comprise nearly half of the voting electorate—someone who, notwithstanding Sanders’ claims about his single-payer bill, supports legislation that would abolish Medicare for seniors entirely. Good luck with that.

That’s What ‘Radical Experiment’ Means, Folks

The recent hullabaloo over an estimated budget score of the Sanders plan, which would require tens of trillions—yes, I said trillions—of dollars in tax increases, highlighted only one element of its radical nature. However, as I pointed out in a Wall Street Journal op-ed earlier this year, the Sanders experiment would go far beyond raising taxes, by abolishing traditional Medicare, along with just about every other form of insurance.

Everyone else, which is roughly 300 million people, would lose their current coverage. Traditional Medicare, Medicaid, and the State Children’s Health Insurance Program would all evaporate. Even the Federal Employee Health Benefit Program would disappear.

With those changes in coverage, people could well lose access to their current doctors. As a study earlier this summer noted, medical providers like doctors and hospitals would get paid at much lower reimbursement rates, of 40 percent lower than private insurance. (A liberal blogger claimed earlier this week that, because other payers reimburse at lower levels than private insurers, the average pay cut to a doctor or hospital may total “only” 11-13 percent.)

Doctors and hospitals would also have to provide more health care services to more people, since “free” health care without co-payments will induce more demand for care. If you think doctors will voluntarily work longer hours for even less pay, I’ve got some land I want to sell you.

Déjà vu All Over Again?

In 1983, the British Labour Party wrote an election manifesto that one of its own members of Parliament famously dubbed “the longest suicide note in history.” That plan pledged unilateral nuclear disarmament, higher taxes on the rich, to abolish the House of Lords, and renationalization of multiple industries.

Although Sanders’ bill weighs in at 96 pages in total, opponents of the legislation can sum up its contents much more quickly: “It abolishes Medicare for seniors.” That epithet could prove quite a short suicide note for Gillum—and the Left’s socialist dreams around the country.

This post was originally published at The Federalist.

Study Contradicts Claims of California’s Obamacare “Success”

Liberals have cited California as the prototypical Obamacare success story for years now, but a new study puts that assertion very much in doubt. Five years ago, even before Obamacare’s exchanges went live, The New York Times’ Paul Krugman claimed California would prove that “a program designed to help a lot of people can, strange to say, end up helping a lot of people — especially when government officials actually try to make it work.”

Reporters have chimed in with similar stories about Obamacare’s supposed success in California. During the presidential campaign in 2016, the Los Angeles Times reported that “California is emerging as a clear illustration of what the law can achieve.” The article quoted several insurers saying the state “did it right,” and had created stable insurance markets.

Emergency Rooms Are Getting More, Not Less, Use

The study, conducted by the California Health Care Foundation, examined emergency department usage over the ten years from 2006 to 2016. While the report, perhaps quite deliberately, didn’t highlight this conclusion — it mentioned Obamacare once, and only in passing — the data indicate that emergency department usage since Obamacare has not only not decreased, it has accelerated, rising at a faster rate than in prior years.

One chart tells the tale:

The study indicates that ER usage accelerated in the years immediately following Obamacare’s implementation, just as it shows Medicaid patients comprised a larger share of ER visits. From 2006 through 2016, Medicaid patients nearly doubled as a share of ER visitors, while ER visitors with private insurance and no insurance both declined:

Unfortunately, this chart does not reveal data for the years immediately before and after Obamacare implementation in 2014, making it tougher to draw direct conclusions. However, the 20 percentage point increase in ER visits by Medicaid patients (California calls its Medicaid program “Medi-Cal”) more than outweighs the 9 percentage point decline in self-pay and uninsured patients and the 4 percentage point decline in patients with other forms of coverage.

While private patients’ ER usage held relatively flat over the decade, the nearly 4 million increase in ER visits by Medicaid patients swamped the combined 863,000 fewer visits by self-pay and uninsured patients and patients with other coverage.

To put it bluntly, the raw data from the California study suggest the state has less of a problem with an overall increase in ER visits and much more of a problem with an explosion in Medicaid patient ER visits. That inconvenient truth might explain why the California Health Care Foundation didn’t highlight the impact of Medicaid, or Obamacare’s expansion of it, in the report itself.

California Study Echoes Oregon ‘Experiment’

In 2016, a group of economists released an updated analysis from Oregon, which concluded that ER usage increased, not decreased, by 40 percent for participants in the Medicaid expansion. The increased ER usage persisted for at least two years, making it unlikely that it existed solely due to “pent-up demand” — i.e., individuals using their new insurance coverage to have lingering but previously untreated problems examined.

Contrary to the conventional wisdom that giving patients a more normal source of coverage would decrease ER utilization, the Oregon study found that usage of health care services increased across-the-board, including emergency department visits.

The California study did not reveal whether access problems resulted in the 170 percent increase in ER visits by Medicaid patients. The state has notoriously stingy payment rates for Medicaid providers, which could impede patients from accessing primary care, forcing them to use the emergency room instead.

At minimum, however, the study once again demonstrates how Obamacare has failed to deliver on its promise to lower the cost of health care by providing that care in a more timely fashion and at the most efficient location. The increase in ER usage by Medicaid patients also raises questions about whether an insurance card provides access to actual health care.

Five years ago, I wrote about how Krugman’s claims of California’s Obamacare success echoed The Mamas and the Papas: little more than California Dreamin’. Last week’s study reiterates how liberal claims that the state represents an Obamacare “success story” remain nothing more than a pipe dream.

This post was originally published at The Federalist.

How Single-Payer Supporters Defy Common Sense

The move to enact single-payer health care in the United States always suffered from major math problems. This week, it revived another: Common sense.

On Monday, the Mercatus Center published an analysis of single-payer legislation like that promoted by socialist Sen. Bernie Sanders (I-VT). While conservatives highlighted the estimated $32.6 trillion price tag for the legislation, liberals rejoiced.

Riiiiiigggggggghhhhhhhhhttttt. As the old saying goes, if something sounds too good to be true, it usually is. Given that even single-payer supporters have now admitted that the plan will lead to rationing of health care, the public shouldn’t just walk away from Sanders’ plan—they should run.

National Versus Federal Health Spending

Sanders’ claim arises because of two different terms the Mercatus paper uses. While Mercatus emphasized the way the bill would increase federal health spending, Sanders chose to focus on the study’s estimates about national health spending.

Although it sounds large in absolute terms, the Mercatus paper assumes only a slight drop for health spending in relative terms. It estimates a total of $2.05 trillion in lower national health expenditures over a decade from single-payer. But national health expenditures would total $59.7 trillion over the same time span—meaning that, if Mercatus’ assumptions prove correct, single-payer would reduce national health expenditures by roughly 3.4 percent.

Four Favorable Assumptions Skew the Results

However, to arrive at their estimate that single-payer would reduce overall health spending, the Mercatus paper relies on four highly favorable assumptions. Removing any one of these assumptions could mean that instead of lowering health care spending, single-payer legislation would instead raise it.

First, Mercatus adjusted projected health spending upward, to reflect that single-payer health care would cover all Americans. Because the Sanders plan would also abolish deductibles and co-payments for most procedures, study author Chuck Blahous added an additional factor reflecting induced demand by the currently insured, because patients will see the doctor more when they face no co-payments for doing so.

Second, the Mercatus study assumes that a single-payer plan can successfully use Medicare reimbursement rates. However, the non-partisan Medicare actuary has concluded that those rates already will cause half of hospitals to have overall negative total facility margins by 2040, jeopardizing access to care for seniors.

Expanding these lower payment rates to all patients would jeopardize even more hospitals’ financial solvency. But paying doctors and hospitals market-level reimbursement rates for patients would raise the cost of a single-payer system by $5.4 trillion over ten years—more than wiping away any supposed “savings” from the bill.

Finally, the Mercatus paper “assumes substantial administrative cost savings,” relying on “an aggressive estimate” that replacing private insurance with one single-payer system will lower health spending. Mercatus made such an assumption even though spending on administrative costs increased by nearly $26 billion, or more than 12.3 percent, in 2014, Obamacare’s first year of full implementation.

Likewise, government programs, unlike private insurance, have less incentive to fight fraud, as only the latter face financial ruin from it. The $60 billion problem of fraud in Medicare provides more than enough reason to doubt much administrative savings from a single-payer system.

Apply the Common Sense Test

But put all the technical arguments aside for a moment. As I noted above, whether a single-payer health-care system will reduce overall health expenses rests on a relatively simple question: Will doctors and hospitals agree to provide more care to more patients for the same amount of money?

Whether single-payer will lead to less paperwork for doctors remains an open question. Given the amount of time people spend filing their taxes every year, I have my doubts that a fully government-run system would generate major improvements.

But regardless of whether providers get any paperwork relief from single-payer, the additional patients will come to their doors seeking care, and existing patients will demand more services once government provides them for “free.” Yet doctors and hospitals won’t get paid any more for providing those additional services. The Mercatus study estimates that spending reductions due to the application of Medicare’s price controls to the entire population will all but wipe out the increase in spending from new patient demand.

If Sanders wants to take a “victory lap” for a study arguing that millions of health care workers will receive the same amount of money for doing more work, I have four words for him: Good luck with that.

Health Care Rationing Ahead

I’ll give the last word to, of all things, a “socialist perspective.” One blog post yesterday actually claimed the Mercatus study underestimated the potential savings under single-payer: “[The study] assumes utilization of health services will increase by 11 percent, but aggregate health service utilization is ultimately dependent on the capacity to provide services, meaning utilization could hit a hard limit below the level [it] projects” (emphasis mine).

In other words, spending will fall because so many will demand “free” health care that government will have to ration it. To socialists who yearningly long to exercise such power over their fellow citizens, such rationing sounds like their utopian dream. But therein lies their logic problem, for any American with common sense would disagree.

This post was originally published at The Federalist.