Feel the Bern: Sanders’s plans unrealistic for many reasons

Yesterday we took a look at some of the major ways Obamacare has not lived up to President Obama’s promises. At least those writing the Obamacare bill were somewhat cognizant of political, financial, and societal limits. Sen. Bernie Sanders proposes massive new spending programs that go far beyond government levels that Americans would be comfortable with. Sanders wants “Medicare for all,” free college, higher Social Security benefits and a host of other programs that will cost trillions.

Liberal economists are hitting back at Sanders’s proposals, saying the real costs are much higher than he admits:

“The increase [in the size of the federal government] could exceed 50 percent, some experts suggest, based on an analysis by a respected health economist that Mr. Sanders’s single-payer health plan could cost twice what the senator, who represents Vermont, asserts, and on critics’ belief that his economic assumptions are overly optimistic.”

Those economists estimate that Sanders’s spending proposals would cost between $2-3 trillion a year. The federal budget today doesn’t quite crack $4 billion. That’s a huge expansion. Even more galling, Sanders’s plans rely on some absurd assumptions: “minimal health care inflation, economic growth reaching 5.3 percent and, in that heated-up economy, no action from the Federal Reserve to apply brakes.”

As George Will points out, the Obama-era’s average annual growth is 2.2 percent. 5.3 percent under Sanders is a pipe dream, but that level of growth at a minimum would be necessary to generate the revenues needed under Sanders’s scenario, even using the rosiest of assumptions.

One of those assumptions is that health care inflation will be very low. Especially under a “Medicare for all” proposal, it’s hard to see how that would be true. The famous 1986 Rand study on health care cost sharing showed that the group with no deductibles or co-pays racked up 32% more in health care costs than the group that did.

When something is “free,” it is utilized more, obviously. The Sanders plan would have to rack up massive savings to offset higher utilization. More realistically, a government-run health care system would be like other countries with such systems. You can pay for health care two ways: with money, or with time, i.e. waiting for procedures.

Sen. Sanders must truly believe his hoped-for revolution is coming and that he will face vastly different political conditions than President Obama. Obamacare is a much more modest program (now that’s saying something) than the Sanders plan, yet it squeaked through Congress during a time of large Democratic majorities. The political price was quickly losing those majorities at the next election.

At the very least, the real-life results of Obamacare should give pause to anyone promised by Sanders that “A family right in the middle of the economy would pay $500 more in taxes and get a reduction in their health care costs of $5,000.” Hey, that’s double the $2,500 savings Obama promised. I wonder if this new promise will be worth twice as much.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.
  • Bryan Smilth

    As a small business owner, I have no healthcare insurance at this time. The costs are prohibiting me from buying insurance. So instead, as a small business owner, I pay for others healthcare insurance subsidies through my taxes and the penalty for not carrying healthcare insurance

    Is “now” the time when we look to the outcome as the intentions?

  • Bob Smith

    When attacking assumptions, be wary of your own.

    > Those economists estimate that Sanders’s spending proposals would cost between $2-3 trillion a year. The federal budget today doesn’t quite crack $4 billion.

    The current federal budget is $3.8 trillion and Obama’s most recent proposal is $4.1 trillion. I don’t know where you get $4 billion, but that figure is 3 orders of magnitude off.

    > 5.3 percent under Sanders is a pipe dream…

    This article mostly attacks his plan for free healthcare, but quotes a figure that relies heavily on his plan for a huge investment into our infrastructure and education of our workforce, which any fiscally responsible conservative should also support. This number may or may not be realistic, but it is irresponsible to ignore the context in which it derives from.

    > When something is “free,” it is utilized more, obviously.

    That is an assumption that is worth looking into as closely as Sanders’ budget. Is there any statistics or research that back this up? My initial reaction is that if healthcare was preventative and widely available, less expensive operations and drugs would be required in the long run.

    On a more general note, Sanders has made it clear that these policies will cost money, and that he will raise taxes in order to fund them. The reality is that he could steeply raise the taxes of most of the wealth in America and the vast majority of American families would not notice a difference in their paycheck. What they would get is the services that is already provided by any other modern nation.

    One quick example is that the company I work for (which I will not name) has billions of dollars sitting overseas that will never be taxed, and will also never enter the American economy. This is only one company that is of moderate size.

    • Mar

      McKenna said: “The federal budget today doesn’t quite crack $4 billion.”
      You said: “The current federal budget is $3.8 trillion and Obama’s most recent proposal is $4.1 trillion.”
      So what is it that you’re correcting that’s supposedly three orders of magnitude off?