Medicare for All

Simon Johnson, of the MIT Sloan School of Management and an “informal” advisor to Progressive-Democratic Party Presidential candidate and Senator Elizabeth Warren’s (D, MA) presidential campaign, thinks her Medicare for All scheme is the cat’s meow.  It would, he claims

cut costs by reducing inefficiency, eliminating predatory pricing (for example, for prescription drugs) and using the purchasing power of a single-payer system. Her plan would also constrain the growth rate of underlying medical costs.

This, of course, is utter nonsense.  While Johnson correctly notes that our present health care burden hangs around the neck of every company in America, and this dead weight gets heavier each year, government intervention only makes things worse, as each of the points he makes, ostensibly in support of his contention, illustrate clearly. Medicare for All schemes—not only Warrens, but all of them—only and severely exacerbate that government intervention and increase the costs heavily.

First, there is the onerous contribution most companies are required to make through employer-sponsored insurance. Every business owner wants employees and their families to have health insurance, but the cost rises inexorably.

Labor market competition and labor unions are the source of this “requirement,” and the government-mandated restrictions on businesses’ ability to band together—unless they’re in a narrowly defined “similar” business—denies them the market power to negotiate effectively.

Second, companies cannot by themselves easily constrain health-insurance premiums. They need healthy workers who are not ruined financially when a family member is rushed to the emergency room. In most competitive markets across the US, if an employer cuts back on health benefits (or raises deductibles, copays or out-of-pocket expenses), it raises the burden on employees and increases the risk that the best will leave.

See above regarding labor market competition, union power, and government-mandated limits on businesses’ negotiating power.

Third, the unpredictable nature of health-care costs makes it significantly harder to start and run a company. Every year, entrepreneurs and managers hold their breath while insurance companies decide what to charge them.

Again, see above regarding businesses’ government-mandated limits on negotiating power, now in contrast with the unpredictability of realized health care needs.

Nor is Medicare for all damaging only fiscally: such schemes eliminate choice; in fact, their proponents say that we Americans are too stupid to make our own choices; each of the plans’ proponents would throw the millions of us who have private health coverage, coverage better tailored to our individually determined needs, from one source or another off those plans.


Further restricting our choice—our right to decide for ourselves on what we’ll spend our property, our money, is Medicare for All’s requirement that we buy that one-size-fits-all government insurance—even though we judge ourselves healthy enough to not need a coverage plan or to not need Government’s dictated plan, or we just choose to run the risk and spend our money on our own needs and wants.  After all, these Progressive-Democrats Know Better, so by their fiat, we are to be denied.


Then Johnson sneers at efforts to switch to competition, but as the political economist should know, the failures here are failures of Republicans and failures of Progressive-Democrat obstructionism. The failures have nothing to do with competition.

Finally, the health care coverage costs—which are apart from health care needs—exist and burgeon by government fiat at the State level as well as the Federal, and the costs inflicted have little to do with health care provision or cost of provision, nor are they related to the likelihood of any particular health care need. Businesses—and we consumers—are not allowed to trade across state lines, and State insurance commissions set the range of premiums health care coverage entities are allowed to charge.

Obamacare made that even more explicit at the Federal level: the coverage plans carried coverages for matters we consumers neither want nor need and at fixed prices that are by design independent of the likelihoods of those mandated coverages. Beyond that, Obamacare forced millions of consumers off our privately held plans that we preferred and forced us to buy from the Federal government’s “market.”

Medicare for All is just an extreme version of Obamacare. In every respect. At trillions of dollars of higher cost.

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