In December, a Texas judged ruled in favor of a 20-state Republican coalition, led by Texas Attorney General Ken Paxton.
The ruling highlights growing concern over the future of the nation’s health care system. While Republicans rally against Obamacare, Democrats continue to support the ACA and their single payer model, Medicare for All.
States that have enacted single payer programs have been burdened with rising costs. To fund Vermont’s program, Democratic Gov. Peter Shumlin called for a 150 percent increase in income taxes, which still failed to generate enough funding.
Medicare for All
Medicare for All, a form of single payer health care, would put the government in full control of the health insurance market at the expense of taxpayers says Robert Graboyes, senior research fellow at George Mason University’s Mercatus Center.
“The single payer option is hot political news, but it’s rather cold economic news,” said Graboyes. “First of all, it’s not going anywhere legislatively anytime soon and the economics of it simply don’t add up.”
In his report, “The Costs of a National Single-Payer Healthcare System,” Senior Research Strategist at George Mason University’s Mercatus Center Charles Blahous, found that by conservative estimates, Medicare for All would add $32.6 trillion to the federal budget during its first decade, a projection of 10.7 percent of the GDP by 2022 with costs increasing over time.
“These estimates are conservative because they assume the legislation achieves its sponsors’ goals of dramatically reducing payments to health providers, in addition to substantially reducing drug prices and administrative costs,” the report notes.
“In reality, the actual bill would be far higher, even under those sunny assumptions,” Graboyes said. “It would have to double federal and corporate income taxes just to break even. For any of the finance mechanisms that are available under the federal government, to raise that kind of revenue … you’d very likely tank the entire U.S. economy. Single payer sounds like a lovely idea until you get into the nuts and bolts of it.”
Graboyes says he understands why the Texas judge ruled Obamacare unconstitutional.
“As for the ACA as it now stands, I’m not an attorney but I certainly understand the logic of the ruling,” Graboyes said.
In 2012, the court upheld the constitutionality of the ACA. Congress has virtually limitless authority on taxation, Graboyes says.
“In this latest court ruling the judge takes note of the fact as of last year, when the law and individual mandate penalty was changed, he read it as … you can no longer claim that this is a tax if it’s not collecting revenue. To keep the law going could no longer hold.”
Graboyes says no matter what happens with the Obamacare case, which many expect could end up back on the doorstep of the Supreme Court, the decision has further deteriorated the likelihood that the legislation will remain intact.
“Single payer is not a practical option in the near future, especially not with a Republican Senate and Republican president,” Graboyes said. “The ACA has been on shaky ground for many years. I don’t know that it’s getting any more secure as the days pass, and now it has this legal challenge. It’s my understanding nothing will happen operationally; they will allow this ruling to wind its way upward, first to the appeals court and potentially back to the Supreme Court, and I think from many perspectives prudence dictates you cannot shut down the whole rodeo just because of this; you have to see how this is going to play out in the courts.”
“It’s kind of difficult to imagine big things happening when you have a brand new and very committed Democratic House and strengthened Republican Senate and Donald Trump still in the White House,” Graboyes said. “I don’t know of any major alternatives that are in the works. Even if someone dropped a miracle plan tomorrow, it takes a long time to wind that thing through the process of becoming law. I’m sure on both sides you’ll have a lot of posturing and positioning and lining up with an eye on the 2020 elections.”
Charles Blahous, “The Costs of a National Single-Payer Health Care System,” Mercatus Center: https://www.mercatus.org/system/files/blahous-costs-medicare-mercatusworking-paper-v1_1.pdf