Last week’s Democratic debates revealed Bernie Sanders and Elizabeth Warren engaging in the art of deception. They engaged in class warfare — banks, insurance and pharmaceutical companies, Amazon, oil companies, and the like are all evil and ripping off the American public. Sanders and Warren would use the tax axe with a vengeance against these unscrupulous corporations and the super rich to pay for Medicare for All. The Sanders-Warren model is Canada.
The late Ross Perot, when he was running for president, use to say let’s lift the hood and see what’s under it. In the case of the Sanders-Warren tax and health care schemes, what’s under the hood resembles what was behind the Wizard of Oz’s curtain. Nothing!
No one can deny that corporations and special interest groups game the health legislative and regulatory system in Washington and state capitals. It’s a classic example of the Bootlegger and Baptist theory of public choice. But insurance and pharmaceutical companies are aided and abetted by members of Congress and state legislators. One way to make this gaming more difficult is to require total transparency in political contributions and more information on lobbying.
Sanders and Warren claim that they will pay for Medicare for All by taxing corporations and the top 1 percent or 10 percent. The 2017 reduction in corporate tax rates was intended to bring rates in line with global competitors and to repatriate more than $2 trillion being held overseas by U.S. companies. Raising tax rates to the levels Sanders and Warren want will simply encourage a flight of capital and offshoring business.
According to the Tax Foundation, the top 1 percent and 10 percent of taxpayers paid a little over $538 billion and $1 trillion in 2018 on adjusted gross incomes of $2 trillion and $4.7 trillion. Simple arithmetic shows that taxing the rich would require almost confiscatory rates to make a substantial contribution to the cost of the Sanders-Warren folly.
Analysis of the Medicare for All by the Mercatus Center concluded that its 10-year cost would be more than $32 trillion. None of the advocates attempt to explain how they square this cost with addressing a dangerously large national debt. Attempting to put the burden on the wealthy doesn’t come close.
Sanders and Warren model their health plan after Canada’s. While Canada’s health care program — according to the Commonwealth Fund-Ranking — ranked slightly better than ours, it was still near the bottom. An article by Nadeem Esmail of the Fraser Institute summarized Canada’s health care system this way, “The reality is that the Canadian health care system is not free — in fact, Canadian families pay heavily for health care. … That high price paints the long wait times and lack of medical technologies in Canada in a very different light.”
The U.S. health care system is dysfunctional. It costs too much, it lacks competition, it is exploited, is too complex and under delivers. Instead of scrapping the Affordable Care Act, Congress should reform it to better reflect the Switzerland health care model. It is similar to ACA but actually works. Everyone has to purchase a plan from one of 92 competing insurers — nonprofit and profit.
Employers don’t provide insurance, so costs are transparent and people are free to seek coverage that meets their needs. Regina Herzlinger, a Harvard Business School professor, has studied the Swiss model and concluded, the “system is superb: consumer-driven, cost-effective and equitably distributed.”
Sanders, Warren and the other advocates of Medicare for All should know these facts. There can be only one reason they are promoting such a flawed system, to centralize even more power in the federal government. This is hucksterism writ large in the tradition of P.T. Barnum who gleefully deceived the public for his own gain.