Free Healthcare and Free Money for All?

Presidential Candidate Bernie Sanders calls for an expanded version of Medicare for All, and Andrew Yang calls for a Universal Basic Income. But how realistic are these proposals?

Free Healthcare?

While I see basic healthcare as a right, I see reasons to distrust Bernie’s version of Medicare for All (M4A). He wants an expanded version of Medicare to cover everyone with no insurance premiums, deductibles, co-pays, or out-of-pocket costs – essentially free. He also wants to include additional benefits for dental, hearing, and vision.

M4A Cost – Proponents argue that M4A would save money overall, even as it costs more in federal spending. That’s because of less administration overhead and lower prescription drug costs. Others dispute that claim, but I don’t. I just don’t think M4A goes nearly far enough to reach its potential – cutting costs in half to match what other advanced nations spend for their better outcomes. We can do better. One view of the cost of a national single-payer healthcare system was proposed in a study by the Koch-funded Mercatus Center at George Mason University. That study estimated a cost of “$32.6 trillion during its first 10 years of full implementation.” Bernie was quick to call that a $2+ trillion savings. Since we paid $3.65 trillion in 2018, a 10-year estimate would be $36.5 trillion, and that’s without costs increasing with inflation, or faster as they have been.

Not Enough – Isn’t a single-payer system just another way to pay for care, with nothing to improve care delivery or reduce the need? M4A does set the stage for more-effective reforms, but this question is why I say, Medicare-for-All is Not Enough.

Ripe for Abuse – If health consumers have no skin in the game, they will likely overuse the system. Lonely old ladies may even come in every week, because want to see that nice doctor. And with no worry about financial risks, risky behavior and sports activities is likely to skyrocket.

Basic Care Only – I have no problem using public funds to cover medically necessary care, but I’d want strong regulations to ensure that we aren’t paying for elective procedures such as cosmetic or transgender surgery. Determining the rules of what is, and is not, necessary will take time, but I prefer that be done by a government agency for everyone, rather than having dozens of private insurers decide that, as we do today. The financial incentive for private insurance companies is to charge premiums as high as they can and deny as many payments as they can. At least M4A would fix that.

Fixing Healthcare – The U.S. has the most expensive health care system in the world but ranks near the bottom in efficiency, equity, outcomes, and longevity. The primary cause of this broken healthcare system is our broken politics, and the extreme inequality that fuels it. To unbreak this system, we must go beyond just paying for it differently. We must know Why American Healthcare is So Expensive in the first place.

Free Money?

Universal basic income (or UBI) is a key part of Andrew Yang’s 2020 presidential campaign. His UBI vision is shared by Tesla CEO Elon Musk, Facebook CEO Mark Zuckerberg, and other visionaries, and the concept is being tried now all around the world. As a retired IBM technologist and futurist, I share their concern that automation and artificial intelligence will impact global employment and make large parts of the population unemployable. I understand the objectives of providing dignity and basic needs, and having workers share in the nation’s created wealth, but I worry about the negative effects UBI could have.

UBI Cost – The cost of funding UBI is not my greatest concern, because there are many ways we can save trillions per year to fund it. Those include progressive tax reform, healthcare reform, military cutbacks by eliminating perpetual war, and more. The proposed reforms from progressive Presidential candidates have so much savings potential many wealthy industries are worried about reduced profits. That causes me to predict that 2020 will be the most expensive political campaign of all time.

UBI Funding – Yang proposes a new value added tax, but like a sales tax or any consumption tax, it is inherently regressive and hurts low-income people the most. People living paycheck to paycheck spend almost all of their income just to get by, while wealthy Americans can’t even spend their capital gains as fast as it comes in.

Buying Your Vote – When a politician offers free money in exchange for your vote, isn’t that a form of bribery? Isn’t it like the campaign contributions politicians get from lobbyists and special interests? Both seem morally wrong to me.

Inflationary – When the market is flooded with money, and consumers have more, they will spend more. That’s good in one respect, but it’s also inflationary and encourages companies to increase prices just because they can. This unexpected impact could quickly wipe away any benefit that UBI promised.

Incentives – A common argument against UBI is that getting money for free, with no work requirement, would make people lazy, like the Axioms in the Pixar Movie, Wall-E.

Not Enough – On the other hand, UBI might eliminate financial worry and free people to do what they want: invest in their education, retirement, travel, or start a business. But to do that, the money must be enough to live on. $1,000/month is not enough.

Growing Inequality – An extra $1,000/month will have little effect on the extreme inequality of wealth, opportunity, and political influence, and the corruption of our democracy. That’s why I wrote America Broken, a serious critique of Capitalism, Healthcare & Politics.

Sustainability – Once a benefit is offered, and the public grows accustomed to it, it becomes very difficult to remove. If that benefit is then jerked away by some new administration, the economic impact on those depending on it would be severe.

UBI Alternative – Like the Bible says, I’d rather teach people to fish than just give them fish. That’s why, instead of UBI, I’d rather a federal jobs program. I’d rather fund preschool, college, and lifelong learning opportunities. I’d rather provide affordable public housing and daycare so people have time to learn new things. I’d rather encourage entrepreneurship with grants, subsidized low-interest loans, and incubator programs. To qualify for these programs, I’d require two years of public service, military or otherwise. If we eventually do start a UBI program, begin with those who did their public service, much like soldiers get VA benefits. And to address extreme inequality, explore a maximum wage and not just a minimum wage. Make the objective reducing the difference between executive and worker incomes.