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Debt Con

Medicare for All would cost 50 trillion

Sally Pipes, 2020, False Promise: The Disastrous Reality of Medicare for All, Pipes is the President & CEO, Pacific Research Institute .

Medicare for All would be not just disruptive but expensive, too. A study by Charles Blahous, a scholar at the Mercatus Center, estimated that Medicare for All would add between $32.6 trillion and $38.8 trillion to the federal budget over its first 10 years. The total cost to the federal government could run between $54.6 trillion and $60.7 trillion over its first decade, according to Blahous.27 Research from the left-leaning Urban Institute has arrived at similar numbers.28 It’s hard to fathom how big those figures are. The entire federal government is on track to spend a grand total of $57.8 trillion over the next decade. That means Medicare for All would increase total federal spending by more than 55 percent.29 Even doubling individual and corporate federal income tax receipts would be insufficient to cover the cost of Medicare for All.30 To finance his bill, Senator Sanders has floated several ideas, including a new 4 percent income tax for families, hikes in payroll and estate taxes, and new fees on major financial institutions.31 Sanders, Jayapal, and company are well aware of these estimates. That’s why they haven’t bothered to release detailed financing plans for their bills. Instead, they claim that a 14-figure price tag is a deal. They say Medicare for All would reduce the country’s health bill by $2 trillion over 10 years by empowering the government to drive a harder bargain with pharmaceutical companies and reduce administrative waste in our current multi-payer system.32 But the multitrillion-dollar estimates that Sanders and friends decry are almost certainly low. The Mercatus Center report, for example, gave Medicare for All the benefit of the doubt—and assumed its proposed payment cuts would go off without a hitch. Blahous told the Washington Post that “to lend credibility to the $2 trillion savings number, one would have to argue that we can cut payments to providers by about 40 percent at the same time as increasing demand by about 11 percent.”33 It’s improbable that hospitals, doctors, and other providers would agree to do more work and receive less money in return. But that’s the assumption behind Medicare for All. The bill’s purported administrative savings are unlikely to materialize, either. Cheerleaders for government-run care cite the current Medicare program’s purportedly low administrative costs—just 1.1 percent of total spending in 2018.34 But that figure is misleading. For starters, other government agencies help administer Medicare. The IRS collects the taxes that fund it. The Department of Health and Human Services pitches in with office space and accounting help. The money those agencies spend helping Medicare doesn’t appear on the program’s balance sheet. Second, Medicare’s current beneficiaries are seniors and a small number of disabled individuals, who generally have much higher health costs than the general population. So by necessity the program devotes a much larger share of its expenses to medical claims than a private insurer with a person of average health might. This reality doesn’t tell us whether Medicare is more efficient than private insurers. It just reveals that the program spends a lot on medical care. Third, Medicare is beset by fraud. In 2017, the agency made $52 billion in “improper payments.”35 That’s about 7 percent of the program’s total expenditures that year.36 Reducing administrative costs is pointless if it allows health care providers to submit fraudulent claims with impunity. In addition, many of Medicare for All’s supposed administrative “savings” will simply be offloaded onto providers.37 Hospitals today spend close to $40 billion a year complying with federal rules and regulations. In 2016 alone, the federal government produced nearly 24,000 pages of regulations governing hospitals and acute care providers.38 Medicare for All would require providers to regularly submit reams of additional data to the feds, including “annual financial data, the number of registered nurses per staffed bed, and spending on health IT.”39 Then there are the costs associated with the destruction of the private health insurance sector. Jayapal acknowledges that about 1 million people who currently work in the insurance industry could lose their jobs.40 She proposes setting aside up to 1 percent of her national health budget to assist these workers.41 That’s billions of taxpayer dollars. Further, the government would have to hire scores of employees to run Medicare for All. Finally, single-payer health care’s advocates ignore the ugly fiscal history of federal health care programs. Medicare suffered massive cost overruns almost as soon as it launched in 1965.42 Hospital costs increased 21.9 percent in the program’s first year and continued to grow an average of 14 percent in each of the next five years.43 Two years after Medicare opened for business, President Lyndon Johnson had to promise in his State of the Union address that he’d tackle runaway medical price inflation.44 Pipes, Sally . False Premise, False Promise (pp. 20-21). Encounter Books. Kindle Edition.

High debt levels hurt the economy

Thomas Grennes, Emeritus Professor of Economics, North Carolina State University, 2019l, New Evidence on Debt as Obstacle to US Economic Growth,

High debt levels will have serious consequences for the future of the US economy. However, the country’s current debt is not just a looming problem—it is hurting the economy now. This is the case made by Thomas Grennes, Michael Fan, and Mehmet Caner in “New Evidence on Debt as an Obstacle to US Economic Growth.” Debt levels are already reducing the rate of growth by more than 1 percentage point a year and, absent major fiscal reform, will continue to do so. Past increases in US government debt have generally occurred during times of war and have subsequently reverted back to prewar levels. Since 1968, however, debt relative to the size of the economy has increased continuously. In 2017, for example, US debt amounted to 105 percent of GDP This study addresses the following issues related to US debt levels: How debt is currently hurting the economy. Growing empirical evidence shows that US government debt has now become so large that it is having a significant negative effect on economic growth. This debt has been reducing annual growth since 2008.