Blog

February 11, 2020

Mayor Pete’s Health Care Plan Is a Joke

by Matt Bruenig

Originally appeared in Jacobin on Feb. 10, 2020.

Photo by Gage Skidmore (via Flickr)

The health care debate has popped back in the news again, as Pete Buttigieg attempts to gain ground in the primary by attacking Medicare for All. Buttigieg’s health plan has mostly avoided scrutiny in the debate so far, which is a shame because it is so bad that it borders on comical.

Impossible Enrollments

In the first part of Buttigieg’s plan, he says he is going to automatically enroll the millions of uninsured people with incomes low enough to already be eligible for free insurance:

Over half of people with no insurance are eligible for either free insurance or an affordable insurance option. Anyone eligible for free coverage in Medicaid or the public option will be automatically enrolled, and those eligible for subsidized coverage will have a simple enrollment option.

Upon reading this, you should wonder to yourself: how on earth is the bureaucracy going to be able to automatically determine, in real time, who the low-income people are that are eligible for free insurance?

Remember, the people he is talking about here are not people who come into the welfare office and fill out forms recording their income information. These are the people who, despite being eligible, never come into the system at all. And so to automatically enroll them, you have to somehow find them. But how would you go about doing that?

When you follow Buttigieg’s citations, you wind up at a Third Way report that says “an estimated 14.2 million people . . . are eligible for free coverage” in our current system but don’t sign up for it.

When you follow Third Way’s citations, you wind up at a Kaiser Family Foundation report that used the Current Population Survey (CPS) and county-level exchange data to determine that around 14.2 million uninsured people are poor enough to either be eligible for Medicaid or a premium-free bronze plan.

But the CPS data they use does not provide real-time data on when people become eligible for these plans. Instead it samples a small percentage of US households many months after the end of the year. You can use the CPS sample to retrospectively estimate how many people must have fallen into this category, but you cannot use it to prospectively identify individuals in this category and automatically enroll them.

When you keep going in the Third Way report that Buttigieg cites, you eventually get linked to the Pathway to Universal Coverage Act of 2018, which is apparently supposed to be the way we administratively tackle this automatic enrollment challenge. The problem here is that the bill doesn’t actually provide any way of identifying eligible people for automatic enrollment. Instead it proposes granting money to states so that maybe they can innovate a way to do this.

Nobody has any idea how you could possibly identify people in real time who slip into eligibility but never go to the welfare office to fill out the forms. This is because it is not possible. Income information is not reported in real time. Household changes are not reported in real time. For as much as the Left gets dinged for its belief that the bureaucracy can accomplish great things, it is really highly targeted centrist plans that reveal the most insane levels of optimism in the capabilities of the bureaucracy.

This is, in a nutshell, what is wrong with “technocracy” as it has come to be known in the discourse. What masquerades as technical competence and a light touch is, more often than not, really science fantasy delusions about what a state can actually successfully administer.

Enormous Individual Mandate

After his administratively impossible proposal to automatically enroll everyone with incomes low enough to get a free plan, the second prong of Buttigieg’s universal coverage approach is to retroactively enroll everyone else who is uninsured. The plan is vague about how he will do this, saying only: “A backstop fund will reimburse health care providers for unpaid care to patients who are uninsured. Individuals with no coverage will be retroactively enrolled in the public option.”

By itself, this text raises more questions than it answers. It tells us clearly that uninsured people who show up to health care establishments will be cared for and that the government will pay for it. Then it tells us uninsured people will be retroactively enrolled.

But does this mean only people who went to the doctor that year will be retroactively enrolled? In that case, it would never make sense for anyone to buy insurance because they could always wait and see if they needed it and then get retroactively enrolled.

Or does it mean all uninsured people will be retroactively enrolled, in which case this is just a sly way of saying Buttigieg’s proposal is a supercharged version of the wildly unpopular Obamacare individual mandate?

Jeff Stein at the Washington Post got to the bottom of this question in December and reported that it is the latter: the Obamacare mandate on steroids. Under Buttigieg’s plan, rather than paying a $695 fine at the end of the year if you are uninsured (as in the now-repealed Obamacare mandate), you could pay a fine as high as $7,000.

This sort of lump-sum shock would wreck most of the households hit with it and be even more of a political disaster than the much more modest Obamacare fine, which was itself a bit of a political disaster.

More Expensive Than Medicare for All

Buttigieg’s own effort to defend his plan is to make big-number claims about how Medicare for All (M4A) will cost $30 trillion or $50 trillion. The suggestion of these attacks on M4A is that his plan is much cheaper. But in fact, it is clearly more expensive, at least when we look at what matters: total national health expenditures.

The right-wing Mercatus Center released a report in 2018 that showed that Sanders’s Medicare-for-All plan actually costs $2 trillion less (between 2022 and 2031) than our current system. This is because lower drug prices, lower reimbursement rates, and lower administrative expenses more than completely offset the higher number of insured people and higher amount of health care utilization.

Buttigieg’s health plan is too vague to score in any kind of precise way, but it is clear enough from its text that it will cause national health expenditures to go up, not down. This is because it insures thirty-plus million more people but does very little to lower unit prices. The increase in the insured population and resulting utilization increases should more than overwhelm his puny cost-cutting measures, meaning that the total health bill under ButtigiegCare is actually higher than the total health bill under M4A.

So when you put it all together, what we have with Buttigieg’s plan is a proposal that combines administrative impossibilities with an extremely unpopular mandate and then delivers a system that provides less coverage at a higher cost than Medicare for All. In short, a joke.