In the latter, Wall Street executive Steven Rattner tries to assert that a nation whose citizens already pay more in healthcare-related taxes than people in any other country cannot possibly afford to switch to a proven system used in every other major country on earth.

First off, Rattner (who is a loyal Dem, a former member of the Obama admin, it should be said, not just a Wall Street Guy) is right. There are things in the US system that are so fucked up that there’s simply no way a Medicare for all would actually work, at least not for a cost that anyone would find reasonable.

Secondly, you’ve made a factual error — developed countries tend NOT to use a single payer system like the UK, Canada, and Australia do. Most universal care systems are dual-payer, where a heavily regulated private insurer sits between the patient and the government. This lets the expert in pricing risk — the private insurer — set the rates, while the government (who is NOT the expert in pricing risk, and who is liable to price based on political influence rather than actuary science )— simply pays the bills.

There are three benefits from this. The first is, as stated, the experts price the risk, somewhat insulated from politics. The second is that the insurers are very good at fraud prevention, while the government is not. The third is that if the government fucks up risk-pricing or fraud (kind of inevitable, since the bozos we elect tend to appoint other bozos to run the programs), their only solution is to throw taxpayer money at it. (It’s nice to have a third party in the middle to insulate the taxpayer from government effups, as we learned in 2008).

In the US, the government prices Medicare premiums ($135 a month means tested to $185 a month for upper middle class patients and above) at approximately 1/10th of what the actual price would be, if those patients had to go out on the general market to buy their coverage.

How does it get away with that? Well, there are two offsets. The first is that the Medicare payroll tax we all pay currently has a large surplus which is used to lower the rates…..but that surplus is rapidly dwindling in the face of lower birth rates, higher retiree rates, and higher medical care costs. The surplus is currently projected to be exhausted in 2028, at which time benefits will be cut (through some mixture of higher premiums, larger copays, etc) by just shy of 30%, which is the point where what is coming into the Medicare trust fund will reach equilibrium with outflows. (This is what is meant when the US conservatives refer to Medicare as “going bankrupt”. BY LAW, it cannot access the US Treasury’s general fund, it can only extract money out of it’s own trust fund account.)

The second offset is referred to as “cost-shifting”, where the provider, who is limited by law as to what they can bill the patient (and those limitations are not sufficient to keep the providers in business, it must be realized) solves the problem by OVERbilling individuals with company-provided plans. (The obvious problem with THAT is is that with “Medicare for All”, there is suddenly nobody to cost-shift to. :-( )

It’s quite easy to look at this matter from afar, see all the money (% of GDP) which is spent on health care in the US, and say “hey, just reroute that money to a more efficient government-run plan.” Unfortunately, the problem is that doing so does not eliminate anywhere near enough inefficiency, and does not address the cost-inflation problem.

I’ve said this in other posts on Medium: The US does not have as much of a coverage problem (even before the ACA, 17% of Americans were without coverage; and this is why the ACA is failing, as it addresses coverage far more than cost), it has a cost-inflation problem, where historically (and unaffected by the ACA, it should be said) health care costs inflate at approximately 2X that of the core inflation rate of goods and services.

No “system” can survive for long in the face of that inflation rate. Eventually, you end up sacrificing your standard of living at the altar of health care.

Whatever the US does, and I agree that they must do something, it MUST force the individual patient to become cost-conscious in their care choices. Without cost control, it really doesn’t matter what plan the US decides to adopt; any plan adopted would amount to nothing more than rearranging the deck chairs on the Titanic while it sinks.

Hope that helps.

Written by

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

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