This Is the Strongest Argument Against Medicare for All

A deep-blue state’s failure to enact a single-payer system shows why a national version is unlikely to succeed.

It was in Vermont that Senator Bernie Sanders learned to love single-payer health care — what he now calls Medicare for All — and it was in Vermont that American single-payer faced its greatest test so far.

Under Gov. Pete Shumlin, a Democrat and avowed supporter of single-payer health care, the state worked to create a groundbreaking plan, called Green Mountain Care, to cover all its citizens. 

Following the Affordable Care Act’s 2010 passage, state lawmakers enacted legislation intended to put Vermont “on a path to a single-payer system.” No state-based single-payer effort ever made it as far, and Mr. Shumlin positioned the plan as a test case for the nation.

Yet despite strong support from the legislature and the governor’s office, not to mention Mr. Sanders himself, the effort failed.

That failure demonstrates why any similar project undertaken at a national scale is unlikely to succeed as well. In fact, it is the strongest argument against Mr. Sanders’s single-payer plan.

The first problem for any single-payer push would be political support: Mr. Shumlin campaigned on a promise to build a single-payer system in Vermont, but the public never quite bought in. An April 2014 survey showed 40 percent support, 39 percent opposition and 21 percent undecided — a lukewarm result for such a major undertaking. That year, Mr. Shumlin barely won the popular vote against an anti-single-payer Republican. As John E. McDonough of Harvard wrote in a perceptive New England Journal of Medicine analysis of the plan’s collapse, “a clear public mandate” for Mr. Shumlin’s health care agenda “was nowhere in evidence.”

One reason the plan lacked strong support was lawmakers were cagey about how to pay for it. The 2011 proposal included no specific financing mechanism, because Mr. Shumlin’s team worried that might kill its chances.

Initial cost estimates were far too optimistic. A 2011 study led by William Hsiao of Harvard found that single-payer could reduce state health care spending by 8 percent to 12 percent immediately and more in later years, resulting in about $2 billion in savings over a decade. But by the time Mr. Shumlin ditched the plan, internal government estimates showed a five-year savings of just 1.6 percent.

The reduced savings were partially a result of several decisions, made under political pressure, to expand the offered benefits by paying for a larger share of an individual’s average costs and covering out-of-state workers.

Lower savings, in turn, meant higher tax rates. Initial estimates foresaw that businesses would have to pay additional taxes equal to 9.4 percent of payroll, and families would pay a little more than 3 percent of income, supposedly costing a typical household $370 less per year overall.

Yet by 2014, Mr. Shumlin’s own estimates found that employers would have to pay taxes equal to about 11.5 percent of payroll, while families would have to pay as much as 9.5 percent of their annual income to make the financing work. The plan would have nearly doubled the size of the state’s budget. For both political and economic reasons, the cost was deemed too high.

There were other complications: Public outreach was weak. And in 2013, the state started an online insurance exchange under the Affordable Care Act that was plagued by technical failures, which the state struggled to fix. As the Cornell Policy Review noted in a 2017 post-mortem, the mix of higher-than-expected costs and administrative problems “fostered an atmosphere of uncertainty and distrust in the state government, turning a politically steep climb into a politically insurmountable one.”

And so, at the end of 2014, Mr. Shumlin admitted defeat. “I have learned that the limitations of state-based financing, the limitations of federal law, the limitations of our tax capacity and the sensitivity of our economy” make single-payer “unwise and untenable at this time,” he said. “The risk of economic shock is too high.”

The Vermont plan was done in by high taxes, distrust of government and lack of political support. Any effort by a Sanders administration to enact a single-payer system at a national level would probably be doomed by similar problems.

Like Mr. Shumlin, Mr. Sanders is a devout single-payer supporter who has campaigned aggressively on the idea. And like Mr. Shumlin, Mr. Sanders has so far declined to lay out a plan for fully financing his Medicare for All system.

But while some polls show majority public support for single-payer, that support declines substantially when faced with trade-offs like the elimination of most private coverage or higher taxes — two components of Mr. Sanders’s plan.

Similarly, Medicare for All supporters argue that single-payer would reduce the nation’s overall health spending. But savings are heavily predicated on the assumption that the new government-run system could pay Medicare rates, which are typically lower than those of private insurance, to providers across the board.

Legislators in Washington State started with the same assumption when they attempted to design a state-managed insurance plan, and it proved wrong. The plan passed only once rates were increased. Yet even a plan with lower rates would still represent an enormous increase in total government spending.

A Sanders presidency would have to overcome a deep trust deficit born of both lingering frustrations with Obamacare and the generalized cynicism and ineptitude of the Trump administration and the current Congress. And unlike Mr. Shumlin, Mr. Sanders would be faced with both a public and a legislature that is not nearly as friendly as in left-leaning Vermont. Even if Democrats somehow took both chambers of Congress, influential Democrats in the Senate, where legislative details would be hashed out, are still wary of pursuing a full-fledged single-payer system.

It’s true, of course, that there are differences between state and federal budgeting, and true that the president has political clout no state governor could ever hope to match.

But if it couldn’t work in Vermont, with a determined governor, an accommodating legislature and progressive voters, Mr. Sanders will have a tough time explaining why it will somehow succeed on a vastly larger scale. Vermont represents a practical failure on friendly turf, and that is what makes it such a powerful counter to Mr. Sanders’s proposal.

“If Vermont can pass a strong single-payer system and show it works well, it will not only be enormously important to this state, it will be a model,” Mr. Sanders said in 2013. 

As it turns out, it was a model. But instead of showing us how it would work, it showed us why it would fail.

Informational Source