Paying for Medicare for all?

We’re currently witnessing an idiotic exchange of arguments about “Medicare for All”, that magic potion concocted by Sanders, embraced by Warren and rebutted by Biden. Among other elements, it shows that none of the Democratic candidates has a basic understanding of the subject they all talk about.

To start, let’s say that the entire healthcare in America amounted to $3.5 trillion in 2017. Without inflation an extra expensive medical services, one could say that a total expenditure over 10 years would be $35 trillion, right?

This is precisely what Biden said that the original plan, sketched by Warren late summer, would cost. Well, this makes sense, because that would be the same amount of money currently spent on healthcare except that everyone would be able to enjoy it, right?

So it’s merely a question of deciding how this sum will be distributed, who’ll pays how much, between insurance companies, Big Pharma, constituents and government? Right. Now, if we contrast to these numbers the annual cost of Medicare (including Medicaid) and covering some 46 million people we’d get to $582 billion in 2018. This brings the cost to $12,652 per participant, a pretty hefty one! Of course, caring for old people like Medicare members isn’t cheap!

If we now go back to the total, national cost of healthcare in 2017, we would get a for a population of 326 million, we’d get down to $10,736 per capita. Okay, let’s say that in 2019 this would cost $12,000 per person. For 330 million Americans, this would translate into $4 trillion of a $21 trillion GDP. This wouldn’t include the savings from health insurance profits and renegotiated drug costs, but still it shows that Elizabeth Warren’s $2.05 trillion a year is woefully underestimating the real cost and is merely a tool to become the nominee.

Instead of a prudent phasing-in of a public plan, Warren advocates a shock therapy that would scare the bejesus out the business community, plus all independent voters, and by so doing secure her loss against Trump if she were to receive the Democratic nomination. Warren means well, but lacks pragmatism and practical development experience.

Let me explain: She builds her plan on an ultra-optimistic, best-case scenario that can’t possibly happen if she wants America to go “cold turkey” on her new plan. In budget planning, my rule number one was always to minimize receipts and increase expenses, thus creating an indispensable “buffer”.

Obviously, she should think incrementally, offer Medicare first to motivated parties, i.e. early retirees, independent contractors and folks that don’t receive employee coverage. She should fund that first phase with a fairly aggressive progressive income tax increase for all, she should – as she advocates - put the IRS back to work and go after tax evaders, change capital gain taxes, negotiate lower pharmaceutical prices and start chipping out at hospital and healthcare providers’ fat incomes.

This alone would be a tall order and a fabulous one if she could put it in place during her first term, in spite of foreseeable strong “push-back” from the opposition. What’s even more amazing is that all of the other primary candidates show no visible grasp of the matter and numbers involved with healthcare. If they did, they would have long rebuffed Biden and Warren.

This said, Elizabeth Warren’s current plan is pure wishful thinking and she needs seriously retool it if she wants to become the Democrat nominee and the next president of the United States…