Joe Biden's deleterious health care plan

While not as prominent an issue during the first presidential debate as racial tensions, COVID-19, and the post-coronavirus economic recovery, both candidates made a point of promoting their health care agendas while criticizing their opponent's.  Trump accused Biden of supporting "Medicare for All" and offering a plan that would "extinguish 180 million people with their private health care."  Biden vehemently denied the accusations and argued that his plan "is not" going to end private insurance and called the president a "liar."

Biden's plan, which he fervently advocated during the debate, would provide everyone with the option of enrolling in a generous public health care option "like Medicare."  While Biden is technically correct that his plan would not officially eliminate private insurance, critics of his proposition worry that Biden's public option would force private insurance companies out of the market.  A cheaper health care option "like Medicare" would undoubtedly attract a myriad of consumers, gaining an extensive market share and subsequently forcing  the vast majority, if not all, of private insurance companies out of business.  Biden's plan would then become, in a sense, Medicare for All.

Offering a public-option "Medicare" to everyone is also not sustainable.  It would have a devastating effect on our health care system and on the quality of patient care doctors and hospitals would be able to provide.

Medicare payments to hospitals are often much lower than payments made by private insurance companies.  For example, a private insurance company will pay a hospital around $37,000 for a knee replacement surgery, while Medicare will only pay around $17,000 for the same procedure.  In fact, the American Hospital Association found that for every $1 American hospitals spent caring for Medicare patients, Medicare paid hospitals 87 cents. 

The current system of partially government-provided health care works because the low payments made by Medicare are offset by the high payments made by private insurance companies, as outlined by Richard Anderson, the chief executive of St. Luke's University Health Network.  Anderson, according to the New York Times, contends that "hospitals depend on insurers' higher payments to deliver top-quality care because government programs pay so little."

Biden's public health care option would result in a steep decrease in revenue for hospitals and the salaries of doctors, forcing hospitals to cut back on many services and expenses necessary for providing top-quality patient care and worsening the current physician shortage.

Biden additionally plans to "protect" and "build on the Affordable Care Act."  The Affordable Care Act, commonly referred to as "Obamacare," however, is, unequivocally, an absolute, unmitigated policy disaster.  Due largely to Obamacare's reckless regulation and subsidization of health insurance, premiums have risen dramatically since the policy's implementation.  Premiums for individual coverage, for example, more than doubled between 2013 and 2017.

This is not a trend isolated to the Affordable Care Act.  Increasing government intervention in health care has generally caused costs to rise exponentially.  Medicare, Medicaid, Obamacare, and the tax code's health care exclusion have all contributed to a system where consumers almost never directly pay for their medical care.  Consumers now, due to government intervention and private insurance companies, directly pay for only around 10% of medical services.  This government subsidization of health care allows consumers to essentially pass on the costs of their services to the taxpayer, artificially stimulating demand, and essentially divorcing market forces from health care costs.  This in turn inflates health care prices, as providers are not subject to market pressures or incentives to lower costs.

The government subsidization and increasing regulation of the health care industry breeds gross inefficiency.  Due to the lacking incentives to cut costs, lower prices, and operate efficiently, as well as the increasing regulatory burden placed upon them, hospitals have grown their administrative staff to absurd levels.  For example, between 1975 and 2010, the number of physicians in the United States grew 150 percent.  However, the number of health care administrators increased 3,200 percent for the same time period.

Given the fundamental failure of governmental regulation of the health care industry, it is astounding that Biden is calling not only to keep all previous regulations in place, but also to expand upon those regulations.

Image: Gage Skidmore.

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