SEN. BERNIE Sanders (I-Vt.), a Democratic candidate for president, asks his audiences to think big, insisting that only fundamental reform, not incrementalism, will do. He has shown that this approach can attract a passionate following. He has also shown that big thinking quickly turns to wishful thinking without solid details behind it.
Nowhere is this clearer than in Mr. Sanders's health-care plan, which he promises would be a tremendous deal for nearly everyone. A new analysis from Kenneth Thorpe, an Emory University health-care expert who worked in the Bill Clinton White House, finds that Mr. Sanders's proposal would actually harm many working beneficiaries of Medicaid, the state-federal health-care plan for the poor and the near-poor. They already get government-provided care, but they would have to pay more of their wages to the federal government to finance Mr. Sanders's new single-payer system. Mr. Thorpe calculates that about 14.5 million Medicaid enrollees would end up worse off. He says he accounted for the increase in benefits Mr. Sanders is promising them. And Mr. Thorpe's analysis takes the program cost estimates provided by Mr. Sanders's campaign as given.
But there are plenty of reasons to doubt those, too. Mr. Thorpe, who did extensive economic modeling for the state of Vermont when it considered a Sanders-like single-payer plan, found that taxes would have to rise much higher than Mr. Sanders’s proposal admits in order to pay its full costs. The reason is that Mr. Sanders makes overly optimistic — sometimes even nonsensical — assumptions about how much his plan would save. Mr. Thorpe found that Mr. Sanders’s plan would not simply cut payments to pharmaceutical companies for brand-name drugs; it would nearly end them. It would rely on states to pay an increasing share of his health-care plan’s costs, when it may be illegal for the federal government to demand that they pay even what they do now after moving to a new system. Moreover, some of the administrative overhead that Mr. Sanders would eliminate goes to valuable things, such as care coordination and quality control.
The Sanders campaign shoots back that, among other things, Mr. Thorpe neglects to consider that Mr. Sanders would raise the minimum wage along with establishing a new health-care system. The minimum wage increase, it is claimed, would offset the pain that low-income Medicaid beneficiaries would feel. Perhaps, but was not the point of the minimum wage hike to substantially raise living standards, not to offset added taxes? Besides, Mr. Thorpe reckons that many of the potential losers are already making more than the minimum wage, enough that, even if Mr. Sanders managed to pass both major reforms in tandem, there would still be a substantial number of low-income losers. And, remember, that calculation is premised on the notion that taxes would need to go up only as much as Mr. Sanders claims they would have to.
Mr. Sanders needed to show that his “political revolution” could work. Instead, he has shown that grand pronouncements often collide with reality, raising unmentioned complications and trade-offs. By flubbing policy details, Mr. Sanders underlined the importance of getting the specifics right, rather than just pointing in a general direction. Anything else leads to unwanted side effects, unanticipated costs and unintentional losers.
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