Why Medicare for All Would Damage our Republic

Jay Cost:

Bernie Sanders remains the hot ticket in Democratic politics these days. He is hocking a “Medicare for all” program that presidential aspirants are tripping over themselves to endorse. Given the ideological trajectory of the party’s base over the last 20 years, it probably will not be long until Democrats formally call for a single-payer system in their presidential platform.

Single-payer is a very old idea; Harry Truman proposed a version of it back in 1945. It is a testament to the self-conceit of the Left that it fancies itself “progressive” while simultaneously endorsing an idea that has been around for generations. And let us be clear: This is a really bad idea. Even the Washington Post editorial board — no bastion of conservative economic thought — strongly criticized it, saying it would have “an astonishingly high price tag.”

The economic arguments against single-payer are well known by now: It would impinge on individual liberty, negatively affect health outcomes for many, and, yes, cost more than anybody can possibly imagine.

I wish to call attention to the civic consequences of single-payer. It would elevate the medical-services industry to a dangerous height in our government and undermine the republican principle that the people, rather than special interests, should rule.

As a Medicare-style program, single-payer is socialized medicine in the sense that the government, acting on behalf of society, takes responsibility for the health of all, but not in a strictly Marxist sense of the term. The government does not control, to use the Marxist term, “the means of production” under single-payer. That is similar to the arrangement in the VA health system, where the government actually owns the hospitals and employs the doctors. Instead, under Medicare-for-all, medical-service providers would remain private contractors and go to the federal government — instead of insurance companies or individuals — to collect their fees.

Medicare for all utilizes a strategy of mediation — the government employs some private group as mediators for its public purpose. This sort of arrangement is not uncommon in the United States, although the scope of Sanders’s proposal far surpasses any previous endeavors.

Under such public-private partnerships, factions coordinate with the government, not out of the kindness of their hearts, but because the state makes it in their interests. The groups, in other words, derive a profit from their dealings with Washington, D.C., which in turn means that the feds are responsible for maintaining their bottom lines.

In the private economy, this is really no problem. It is merely the exchange between two independent actors of goods or services for cash, which happens billions of times every day. The problem is that the government is not independent. Far from it. The government is open to be influenced by the very factions that it is contracting with. Flush with the cash they received from providing services to the government, these factions have the resources to pull the policy needle in their direction.

In other words, public subsidies are a pathway to political influence, creating “special” interests that are often able to guide government policy at the expense of the general interest.

The history of American self-government gives us many examples of how these bargains can go awry. All the way back in 1790, Alexander Hamilton sought to use public creditors as the basis for creating a national currency. He succeeded, but he made the government so dependent upon the speculators that he was forced to bail them out not once, but twice, in 1791 and 1792.

In the 1830s, Andrew Jackson tussled with the Second Bank of the United States, whose managers and stockholders became so powerful because of their public charter that Bank president Nicholas Biddle could force an economic recession in 1833 to teach Jackson and the country a lesson.

To build the railroads, the government offered vast loans and tracts of lands for private companies, creating the mighty combines of the late 19th century, which wielded such substantial influence that they could lobby Congress out of forcing them to pay back their debts.

The protective tariff was intended to grow the industrial base of the nation, and by the end of the 19th century, it had helped achieve this outcome. But Congress did not finally abandon protectionism until the Great Depression — in large part because high tariffs benefited industrial magnates, who in turn built up powerful political constituencies in the government.

Franklin Roosevelt’s first New Deal was basically a disaster, because the president wrongly thought he could create a grand bargain among labor, corporations, and consumers to manage the economy. In truth, he gave enormous power to corporate America, which drafted production codes to benefit itself while small businesses suffered.

After World War II, President Dwight Eisenhower worried about the “military-industrial complex,” a network between Defense Department bureaucrats, military contractors, and members of Congress that was able to dominate foreign and military policy according to their own ends, rather than the good of the nation.

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