Why Elizabeth Warren’s health care proposal won’t work

Summary: Elizabeth Warren and other Democrats propose another expansion of the US health care system. A noble goal, but they will do it in a feckless and unsustainable way. There is a better way, a more difficult path, if we have the wit and will to take it.

Health Care Reform

As the Democrats have moved to the Left, socialized health care (aka Medicare-for-all) has become part of their core platform. Paul Krugman gives us the brief.

“On Sunday, Elizabeth Warren said that she would soon release a plan explaining how she intends to pay for ‘Medicare for all.’ …which in the current debate has come to mean a pure single-payer health insurance system, in which the government provides all coverage, with no role for private insurers.”

Even Krugman sees the two big flaws, although he waves them away. First, a large part of America will hate it.

“Not many people love their insurance companies, but that doesn’t mean that they’re eager to trade the coverage they know for a new system they don’t. Most people probably would end up better off under single-payer, but convincing them of that would be a hard sell; polls show much less support for Medicare for all than for a “public option” plan in which people could retain private insurance if they chose to.”

As a good Leftist, Krugman is confident that “most people would end up better off” because …he has ideology! Many people living in the real world fear that it will become like defense spending: a sluice of taxpayer money into the pockets of powerful special interests – in exchange for which we get lousy weapons (from boots to the F-35 and the Ford aircraft carrier). Other than a few nations (e.g., Canada, Britain), other developed nations give their citizens health care choices: they provide inexpensive quality universal care as an alternative (or backup) to private insurance plans.

But our Leftists often despise giving choices to the proles.

Second, there is the question of cost. As a bien pensant Leftist, Krugman waves this away: “She has, with considerable justice, insisted that this is a bad way to frame the discussion.” But even he sees the unpleasant reality.

“An independent estimate from the Urban Institute (which is, for what it’s worth, left-leaning) suggests that a highly comprehensive Medicare-for-all plan, similar to what Sanders is proposing, would substantially increase overall health spending, although a more modest plan wouldn’t.”

Even a “left-leaning” outfit says it will cost “substantially more.” Almost every government program in modern times has cost far more than its initial projections. Medicare had one of the better estimates: the cost in 1990 was 64% over the original estimate (details here). But the health care sector is almost one-fifth of the US economy. A 64% error in estimating the cost of WarrenCare will break us.

By the way, the current Medicare system is, as currently structured, unsustainable over the next decade or so. Its cost will skyrocket as the Boomers age.

But all of these are relatively minor problems compared to the big issue.

Health care as part of the grifter economy

I recently went for an MRI. The hospital was like a temple, shiny and lavish like no other public facility in the region – and like few private ones (e.g. the art museum sponsored by the local rich). The MRI clinic’s office had wood paneling and fresh flowers. Which I paid for, unwillingly: the MRI cost $1,850; I paid $1,136. The mechanics of getting the treatments for this illness were very complex. Getting it done in an administratively proper way was more so (the overhead of our system costs more than the lavish facilities).

In 2016, we paid 18% of GDP for health care vs. an average of 12% in 11 high-income developed nations (including the US). We get nothing for that extra spending. We have the lowest life expectancy: 79 years vs. an average of 88. We have the highest infant mortality: 5.8 deaths per 1000 live births in the US vs. an average of 3.6. We use health care services at the same rate as the others, except for diagnostic tests (we use more, but they don’t help much). See the sad details. See the big picture: a graph comparing life expectancy to health care expenditures by nation. America is in the dunce corner.

How we got here

In the grifter economy, key institutions become tapeworms. We feed them and they grow – but performance does not improve. That is the problem with defense (3.1% of GDP), education (6.1% of per capita GDP in 2015), and health care. Real health care expenditures per capita have more than doubled from 2000 to 2016 (see the graph), growing over those 16 years from 11% of per capita GDP to 14.5%. Moody’s projects that healthcare spending will reach an insane 20% of GDP by 2026.

Reforms pump more money into them, but much of that is burned by these dysfunctional institutions. ObamaCare passed because it fed more money into the machine, with no reforms in exchange. None of the proposals since Truman were so irresponsible; that’s why it passed.

Update: the problem with withdrawal

We can afford Medicare, so far, because it pays health care providers far less than private insurers. Medicare-for-all would either pay at current rates and bankrupt us, or pay all providers at Medicare rates and bankrupt much of the health care system. Bob Laszewski explains the problem. There is no easy solution.

A path to a better future

We have the wealth and power to provide excellent care to all Americans. We lack only the will and wit to made the necessary reforms. Now we have the lowest quality and least efficient health care system among our peers. Even Britain’s is better by many metrics (of course, conservatives natter on only about Britain’s, ignoring the more successful systems). We could learn much from their generations of experience running superior health care systems. But our arrogance and hubris prevent this.

Our current system is an expensive mess. Reform is an essential part of coverage expansion. But its massive funding gives it fantastic institutional and political power. Reform will not be easy.

More broadly, the health care system shows how the forces of disorder are winning in America. Our institutions are falling like dominoes. America is descending into Clownword. This is not a propitious time for deep reform. But, as the ancient adage says, needs must when the Devil drives.

For More Information

Ideas! For some shopping ideas, see my recommended books and films at Amazon.

Please like us on Facebook and follow us on Twitter. For more information see all posts about health care, about ways to reform America’s politics, and especially these …

  1. Hidden truths about American health care.
  2. The core truth about our health care system — It’s quite mad.
  3. What does the health care debate reveal about us, and our future?
  4. Why do so many new-born babies die unnecessarily in America, the City on a Hill?
  5. Single-payer healthcare is coming to America. It’s inevitable.
  6. Urine tests show America’s wealth being pissed away.
  7. Campaign 2020 ignores the big threats to America.
  8. A candidate can win in 2020 with popular proposals.
Crisis in U.S. Health Care: Corporate Power vs. The Common Good
Available at Amazon.

A book explaining this vital issue

Crisis in U.S. Health Care:
Corporate Power vs. The Common Good

By John Geyman, MD (2017).

Geyman is a professor emeritus of family medicine at the U of Washington School of Medicine). See his website, with bio and articles about health care. From the publisher…

“The debate over U.S. health care – where to go next to rein in costs and improve access to quality health care – has become bitterly partisan, with distorted rhetoric largely uninformed by history, evidence, or health policy science. Based on present trends, our expensive dysfunctional system threatens patients, families, the government, and taxpayers with future bankruptcy.

“This book takes a 60-year view of our health care system, from 1956 to 2016, from the perspective of a family physician who has lived through these years as a practitioner in two rural communities, a professor and administrator of family medicine in medical schools, a journal editor for 30 years, and a researcher and writer on health care for more than four decades. There has been a complete transformation of health care and medical practice over that time from physicians in solo or small group practice and community hospitals to an enormous, largely corporatized industry that has left behind many of the traditions of personalized health care.

“This is an objective, non-partisan look at the major trends changing U. S. health care over these years, ranging from increasing technology and uncontrollable costs to depersonalization and changing ethics in medicine and health care. This book points out some of the highs – and lows – of these changes over the years, which may surprise some readers. It also compares the three basic alternatives for health care reform currently being debated.”


24 thoughts on “Why Elizabeth Warren’s health care proposal won’t work”

  1. The MRI cost $1,850; I paid $1,136

    Yikes. I had a non NHS shoulder MRI this year and paid £350 + another £220 ($700 total?) for the visit to see the consultant surgeon post MRI. Decided not to even attempt an NHS appointment because of the wait and that, at 63, the NHS considers me to be one step from the grave and not worthy of an MRI. My MRI was in a mobile unit that’s in a truck, absolutely no frills. But it did the job and was cheap.

    The problem with private medicine when it’s left to run rampant off the back of insurance, is that it gets to fund wood panelling, flowers and all that jazz. The problem with completely state medicine is that it’s a political football, almost always underfunded and lurching from one crisis to another.

    The best systems in Europe manage to combine state and insurance but the state also accepts that it had a funding burden. Also interesting to note that compared to the US most EU countries are penny pinching, but that extra money isn’t buying you better outcomes.

    https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20181129-2 and https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-average-wealthy-countries-spend-half-much-per-person-health-u-s-spends

    1. Steve.

      Thank you for the comparison with Britain of MRI cost! My MRI cost 2.6 times yours – and I am in Iowa. My MRI would have been more expensive in a big city, and much more so in one of the most expensive cities (e.g., NYC, San Francisco).

      1. Larry,

        If you’re looking for comparative costs, in Portugal my MRI cost 370 euros + 100 euros for the subsequent appointment, but I only paid 140 euros and my insurance paid the rest.

        In Portugal we have a single-payer public system, which is not free but very low cost (and free for people with low income). So, for my MRI + appointment I would have paid 20 euros in a public hospital, but waiting times can be long (not life-threatening long, though).

        Like other people, I take an extra insurance because the private system is faster. But I think that the private system keeps its costs low since it has to compete with the public system. Also, family members with serious health problems usually opt for the public system; they’re better equipped to deal with “non-profitable” patients, and they don’t need to worry about their insurance running out.

        Per capita GDP (PPP) in Portugal is about half of the US, but the prices are still cheaper than what you report even when you take this into account. They’re similar to Steve’s, although I made mine in a real clinic near Lisbon. I guess that in Britain, private healthcare costs are also kept low because they compete with a free public alternative.


      2. “Also, family members with serious health problems usually opt for the public system; they’re better equipped to deal with “non-profitable” patients, and they don’t need to worry about their insurance running out.”

        I suspect that this is one reason why private insurance in Europe is so cheap. If I recall correctly my US insurance has an annual cap of $1 million. I also have dental insurance, which has an annual cap of $1500. A couple of crowns and you’ll probably hit the cap.

      3. Frank,

        I think European insurances in countries with public healthcare systems are cheap because they have low annual caps. My insurance costs 430 euros/year with an annual cap of 30 000 euros. But if that ever runs out, I’ll still have the public system for as long as I need it (but I do pay taxes for that).

        Other countries have mandatory private insurance schemes, closer to what is being discussed for the US, and the prices are higher, but they have unlimited caps. When I was in the Netherlands, my mandatory Dutch insurance cost me 1200 euros/year, and I had to pay 100% of healthcare costs up to 500 euros/year; but any healthcare beyond that was 100% covered and with an unlimited cap. Note that low-income people have their insurance costs covered by the Dutch state.

    2. In the US, what you will pay out of your own pocket depends quite a bit on your insurance. Many people here are stuck with what we call “high deductible” plans, where the deductible can be $5000 or higher. Which means that you have to pay the deductible out of your own pocket before the insurance pays a single penny. My brother has an “HD” plan, so if he needs an MRI or a CAT scan, he shops around. Some places will charge you a lot less if you pay cash upfront.

      But if you need emergency care, you don’t have the luxury of shopping around.

      1. Frank,

        Many of those high deductible plans were little more than scams by insurance companies – people paid much but got little (massively profitable to the insurance company). People do not have the ability to evaluate complex financial products. These were rightly regulated by Obamacare.

      2. My wife recently had cataract surgery, the kind where the surgeon replaces the lens in your eye. A google search shows that getting that done outside the NHS in the UK costs about the same as in the US.

        That said, I think it’s inevitable that we will end up with a dual system in the US: a single payer system for the majority, with long waits and possibly never getting the treatment you need and a private system via expensive insurance for the top 10-20%.

      3. Oh, I know those HD plans are a scam. You don’t save much on the premiums at all. We’re in “open enrollment” where I work, and an HD plan ($3000 deductible) is offered. The premium savings are minuscule vs. the $400 deductible plan. Where my brother works the crummy HD plan is the only option offered.

      4. Support for what Frank K said:

        I had emergency cataract surgery (long and annoying story as to how I got there) and had to pay $2,000 up front for it. The surgeon muffed the job and I needed follow-up visits (fortunately no surgery) and new lenses in my glasses, which the surgeon’s company told me they’d pay for in compensation for the surgeon’s mistake.

        They DID pay for the lenses and then turned around and charged me for them WITH A SURCHARGE!!! But by then I had insurance (thank God!). The EOB (Explanation of Benefits) showed that the medical company wanted me to pay $2,200 AFTER paying $2,000 for the surgery where they made the initial mistake.

        The insurance company cut them off at the knees, paying $700 and only allowing them to charge me $7.43.

        As EVERYBODY else here has said, THERE MUST BE A BETTER WAY. But, as FM said, none of the candidates are proposing a sustainable path to get there, they are all going with something dramatic sounding (but unrealistic) or ducking the issue. Sigh.

        As I’ve said before, the best candidate for both the Democrats and the Republicans is “None of the above.”

      5. Pluto,

        “the best candidate for both the Democrats and the Republicans is “None of the above.””

        That’s operationally useless advice. Wishing won’t help. Not voting won’t help.

        The regime the Founders created requires our participation. That we no longer do so means that we are the problem. Complaining isn’t participation.

        See my reply to Kingfisher for a simple demo.

      6. FM, I AM participating and that’s been a continuing source of frustration. I’ve joined a political party, regularly attend party events, speak for common sense, and am getting buried in a pile of BS. When I point out the BS, I get slammed for “lacking party unity” or being a spy for the other political party. Then I get a bunch of people afterward who say to me, “Thanks for voicing my concerns.”

        When I ask why they didn’t speak up on my behalf while I was being buried in BS, they turn pale and say, “I could NEVER do that!” As you say, we are weak and easily misled. I continue to fight the good fight for the cause but my sensible wife asks when I’m going to throw in the towel. It’s probably going to be sooner than you’d prefer. I can’t find anybody who doesn’t completely lose their brains when we talk about anything above the Governor level. It’s all Party Unity or Die!”

        I’m not going to run for political office because I’m an economic policy nerd, not a person who would attract votes and it’s too late in my life to learn that subtle art. I’ve encouraged other people who I thought would govern well but nobody I’ve suggested has stepped forward yet.

        As you’ll recall from my post on evolution vs. revolution about a week back, the republic is going to tip over into revolution and NOBODY can possibly know how that will turn out.

        We’ve been lucky in the past to get people like Lincoln and FDR who had some understanding of the consequences of seeking absolute power and mostly avoided it (Lincoln far more than FDR). Nixon kind of, sort of, reached for absolute power under the covers and paid for it with his political life (ironically he did most of the damage to himself while trying to cover it up). It was a good thing that Ford turned out to be the sort of man we needed to heal.

      7. My wife was more fortunate, as her lens replacements went without any issues. She had one eye done first, then three weeks later the other. What was nice was that the new lens made up for her myopia, which was pretty strong (-6 diopters). She now has 20/20 vision, though she needs reading glasses now.

        Per the insurance statement the procedure was $1600 per eye. What blew me away is that it takes under 10 minutes in the operating room. He would bounce from OR to OR, A nurse told us that the surgeon was performing TWENTY SIX of them that morning. I can only imagine how much money he made that day. I’m guestimating $10,000.

  2. This graph says it clearly… https://ourworldindata.org/the-link-between-life-expectancy-and-health-spending-us-focus The US was like other developed countries in 1970 and has move WAY out of the pack in terms of cost effectiveness. Both parties lie blatantly about it and it’s another contributor to small wonder that Americans are so angry now (though they seem easily mislead as to the proper target of their anger).

    Every time you check your wallet, you realize you’ve been robbed…. but you can never quite figure out who did it.

    Iowa, eh? Just north of you in Minnesota.

    1. kingfisher,

      That says it all! But why can’t we reform?

      One clue: every one of these posts links to a page about ways to reform our politics. That lists 130 posts about specific things we can do, from simple and small to large-scale. Almost nobody clicks on it. Posts about ways to reform get far below-average pageviews.

      Our politics are a grade-school food fight because that is what we want. I’ve written scores of posts about this, the central problem. The tagline for the FM website is “helping to reignite the spirit of a nation grown cold.” Unfortunately, I have been unsuccessful at this. Until this happens, not only will reform remain impossible – but conditions will grow worse.

      The capacity for revival is an inherent aspect of the spirit. But it does not come when we need it. Only when we want it.

  3. Costs aside.

    Here’s a compare and contrast,

    CDCR the state prison system of CA had a bunch of private clinics reserved to treat inmates, ie. if inmate loses an eye in fight, he goes to a clinic to get treated, first aid in prison but ER/Urgent care outside of prison, usually local area hospital. then afterwards, he gets fitted for a fake eye, in another private facility that works with the state.

    Same with dialysis, i heard that was like $2,000 a pop, at 3 times per week, holy molly! and most would be lifers, murderers, etc. old aged inmates. Needless to say, these private clinics charge the state a buttload of money. Inmates don’t get a say where they go, but they get great universal healthcare w/out out of pocket to them.

    Blue Shield, they give you a list of medical groups. And you get your health care needs taken care of, locally. Imagine a triangle, Blue Shield , then whatever Medical Group you picked, then you. All vying for profit, you wanting to profit from what amount you put in. it’s usually the local Medical Group that’ll try to fleece you. So you have to be pro-active and reach out to Blue Shield mothership if you have something big like cancer or a serious disease that needs to be taken seriously.

    Then there’s in-house, like Kaiser-Permanente, where everythings in one place. so just you and K-P, which is great for records, since everything under Kaiser is accessed by everyone taking care of you there, they all can pull up your charts. But still requires some pro-activity because most of their doctors they hire straight from the 3rd world, India and Nigeria mostly i’ve noticed are where the doctors are from, with nurses mostly hailing from the Philippines. 3rd world doctors are used to not being questioned,

    me doctor, you patient, me know all, you shut up.

    the VA is something like all three above, CDCR its a big bureaucratic gov’t institution; Blue Shield in that you can seek outside care, especially if no VA facilities near you; K-P in that it’s all under one roof, they keep records pretty good. and its FREE just like CDCR, closest to universal healthcare, especially if you’re poor veteran and/or have service related issues.

    My point, whether CDCR; Blue Shield, Kaiser or VA , you have to be pro-active. For example, CDCR will always get high grade chemo treatment for inmates because the state’s paying; but say a retired teacher with Blue Shield, getting her chemo in some small clinic will have the least expensive chemo. So stuff like that you have to contact the mothership Blue Shield and ensure that whatever clinic you’re using is giving you the good stuff, not some generic crap.

    Costs aside, you have to be pro-active. Do your research, challenge the doctors; ask about what you’re getting, Google that, ask around some more. be the squeaky wheel always. because you’re dealing with 3rd worlders, youre dealing with companies wanting to make a profit, and youre dealing with faceless bureaucracies, so it’s up to you to make it personal.

  4. Larry,

    You blew it! Could have flown to Japan, spent the weekend, had the MRI for the same price! (https://en.wikipedia.org/wiki/Magnetic_resonance_imaging) (200 for the MRI, 700 for the plane, another few hundred for the room and meals…)

    For a family of 3 in Connecticut, as a self-employed person, our silver Obamacare plan is subsidized 95% if we show an income of $82,500. If we show $82,600 of income, there is no subsidy. There’s economic incentive for ya!

    Broke my wrist this past winter. So far out of pocket just about 15 grand. Emergency room: faulty diagnosis, cheap splint: $3900. . First surgery: surgeon wanted $7500, insurance company paid him $1200. Hmmmm.

    Haven’t been sick in 7 years, and my long time doctor retired in the mean time. Found this for getting my own blood work done: http://www.privatemdlabs.com/lab_tests.php?view=all&show=2158&category=24&partnerid=S61search=#2158

    I just got the male athletic anti-aging panel and plan on doing it each year and running the numbers past a doctor friend. He’s always asking me about garden advice, so why not?

    Enjoy the blog. Keep up the good work.

    1. FM might have only had to drive 100 miles to get a cheaper MRI. But we are all busy people, and who has the time to compile a list of MRI providers and call them to find one that will give you a good price? My brother did, but he can be stubborn that way.

      1. Frank,

        This area is quite cheap. The nearest other facilities are in larger cities which tend to be more expensive. Everything to the east is IL, in which everything is more expensive.

        More important, I can only use facilities covered by my insurance network.

        So, your are almost certainly wrong. Confident, but wrong.

      2. My brother lives in North Carolina and he found there was a significant variation in prices, as in some places charge as little as a third of what others charged. In his case he was going to pay the whole price, no matter where he went. Of course if the provider was out of network it wouldn’t have counted towards his $5000 deductible.

    2. “Emergency room: faulty diagnosis, cheap splint: $3900”

      I am fortunate, my ER copay is $100. But yeah, if you’re on an HD plan, a trip to the ER can be a budget wrecking experience and a lot of people are on HD plans (40%+ per the CDC)

      “First surgery: surgeon wanted $7500, insurance company paid him $1200. Hmmmm”

      This fries my bacon. If you pay for it yourself but don’t haggle, the system will rip you off. And how can you possibly know what the prenegotiated insurance rate is?

  5. Re: high deductible / low premium plans

    That wasn’t always the case. I had to provide my own health insurance as a young man, so naturally I took the lowest premium plan out there. The chances of needing expensive care was quite low, and I could easily save the deductible after less then two years. After ObamaCare landed my premium quadrupled.

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