Yes, it can get worse, much worse.
Washington’s deficit spending has fueled punishing inflation, but self-styled “progressives” in Congress remain fully committed to ratcheting up federal spending and debt even more.
Vermont Sen. Bernie Sanders recently chaired a Senate Budget Committee hearing on his “Medicare for All” proposal. Like his earlier version, the Senate bill would abolish virtually all private and employer-sponsored health insurance, eliminate Medicaid and even Medicare itself, and establish a “single payer” system of national health insurance.
Most House Democrats are co-sponsoring similar legislation. Their basic proposition is that their legislation, which will upend coverage of 90 percent of the population, will guarantee higher quality care for all at lower national and personal costs.
The Sanders bill, like the House Democrats’ companion bill, is especially notable not for what it contains but for what is missing: the crucial financing provisions.
Without specifying the kind or the size of taxes required to fund the program, neither the Congressional Budget Office nor independent economists can score the bill and provide anything close to a precise estimate of its effect on the federal budget, the economy or taxpayers. The economic effect is mostly left to educated guesswork.
Educated guess-workers exist. Testifying before the Senate Budget Committee, CBO Director Phillip Swagel reported that the agency had not analyzed Sanders’ bill but had previously conducted an analysis of five versions of the “single payer” universal coverage program.
Replacing current programs with any of the five “single payer” options would, according to the CBO analysis, require massive taxpayer subsidies: between $1.5 trillion and $3 trillion in 2030 alone. Moreover, new demand would outstrip the limited supply of medical services, resulting in “congestion” in the system and “delays and foregone care.” Curious what that looks like? Check out Britain and Canada.
Americans will be left poorer, too. Whether the government health program is financed by an income tax or payroll tax, according to CBO, America’s gross domestic product, the nation’s total production of goods and services, would be “approximately 1 percent to 10 percent lower by 2030” than under current law.
Why? Says CBO: “The net reductions in GDP would occur primarily because of the effects of increased taxes on labor and capital income. Taxes on labor income reduce after-tax wages, so they reduce the return on each additional hour worked. … In CBO’s assessment, therefore, higher labor taxes tend to reduce the number of hours worked in the economy. Higher taxes on capital income, such as dividends and capital gains, lower the average after-tax rate of return on private wealth holdings (or the return on investment), which reduces the incentive to save and invest and leads to reductions in the capital stock. Those effects lead, in turn, to lower income.”
Printing money to cover the cost is a dead end. Says CBO: “Perpetually financing any of the single-payer systems CBO analyzed through increased borrowing —…