Warren’s healthcare plan relies on big assumptions

Democratic presidential candidate Elizabeth Warren’s plan for universal healthcare rests on an assumption she can radically change an industry the size of Germany’s entire economy without new costs for the average taxpayer.
On paper, the plan by the senator from Massachusetts to use government bureaucracy to create a more efficient healthcare system gets credibility from the fact that most rich nations, including Canada and France, already do just that.
But the specifics of her proposal, released last Friday as Warren seeks her party’s nomination for the 2020 presidential contest, reveal the scope of an overhaul that would be one of the largest economic experiments in modern history.
By trying to cut costs aggressively across a $3.5-trillion healthcare sector that makes up nearly a fifth of the US economy, Warren would hit the finances of enough people to create major political blowback.
“The plan makes a lot of assumptions about how seamlessly this could be enacted and implemented,” said Larry Levitt, a health policy expert at Kaiser Family Foundation, adding that there was no precedent for such a large overhaul.
Not only would medical businesses large and small resist decisions by the government to pay less for drugs and services, the plan could paradoxically underfund an expanded health insurance bureaucracy, said Linda Blumberg, an economist at the Urban Institute’s Health Policy Center.
Warren would largely scrap the private health insurance industry, whose profits and high administrative costs are a factor behind Americans spending about twice as much on healthcare as their peers in advanced countries — while getting similar quality services.
In its place, Warren would make the United States’ Medicare federal health insurance programme, which currently covers people over 65 and the disabled, into a “Medicare For All” universal benefit.
But economists say the transition to a system guided less by market economics and more by the government might be difficult.
Warren, who is a leading contender to be the Democratic Party candidate taking on Republican President Donald Trump in the November 2020 election, said her plan would not cost the middle class “one penny” in taxes.
As part of its bid to do that and lower costs, Warren’s plan puts such strict limits on Medicare administration spending that the government might not have the resources to do a good job at setting prices for vital services, Blumberg said.
“You don’t want to overly disrupt the healthcare system,” Blumberg said. — Reuters

Jason Lange and Amanda Becker