Impeach, Impeach, Impeach… Healthcare

Many Democrats really want to impeach President Trump. According to a Pew Research poll conducted after the latest round of Democratic debates, 40% of Democratic respondents said that beating Donald Trump was the number one issue in the upcoming election. It’s not domestic policies, not foreign policy, not protecting any class of people, but simply making sure that, come January 2021, his name is not on the White House door.

Obviously, this goes far beyond wanting one’s political party to win. I’m not going to list out reasons why. We’re all well-versed in the current political battles. But focusing on removing him from office either before or during the election leaves precious little time to discuss national issues.

Healthcare Is Number Two

Whether the next president is Donald Trump or someone else, the sun will still rise, as the earth will still rotate. And we’ll still face a host of problems that we can’t outrun or outgrow. On the financial front, healthcare is at the top of the list.

While almost half of Democrats listed booting Trump as number one on their hit list, healthcare came in second. And it was the most important issue to all voters in exit polls after the 2018 elections. It’s easy to see why.

The federal government just announced that Affordable Care Act premiums for 2020 will fall an average of 5%, after dropping a modest 1% last year. That’s great, but it comes after premiums shot up 78% from 2013 through 2018.

The Kaiser Foundation reports that overall health insurance premiums have increased 54% since 2009, and now stand at $7,188 for single coverage and $20,576 for family coverage.

That’s a lot of money, and explains why a single-payer system (Medicare for All, or some variant) has gained support over the last few years.

So, What’s the Plan?

Just over 50% of voters say that it’s the government’s responsibility to make sure everyone has health coverage, but there’s not much consensus on how to pay for it.

Elizabeth Warren took heat in the last debate for not having a detailed proposal to provide coverage to everyone in the nation. Bernie Sanders clearly tells people that his plan will include a tax hike for almost everyone, while Warren claims she won’t do anything that raises costs for middle-income families.

She later issued a statement that her campaign is working diligently to draft a proposal. That’s probably political speak for “it’s going to be so incredibly expensive that I haven’t figured out how to sell it yet.” Sanders estimates Medicare-for-All will cost an additional $13 trillion over 10 years after accounting for savings elsewhere. Others have estimated the cost as high as $36 trillion.

But all these estimates have one thing in common: They assume that if the government provides healthcare coverage directly to consumers, then companies will immediately shift their health spending dollars to wages. If a company pays $3.50 per hour for a worker’s healthcare insurance, the company will immediately raise that worker’s compensation by $3.50 if it no longer has to pay for healthcare. This is why Warren and others talk about net costs to consumers: They balance out increased taxes with higher incomes.

Call me Skeptical

Most workers pay at least part of their healthcare premium, so their potential pay bump wouldn’t be equal to the full tax hike if the two numbers were equal. And how do you demand that a company comply at all? Peer pressure or shame might work for large companies in the public eye, but small firms? Do employees threaten to quit en masse if they don’t get a commensurate pay hike? And what about employees who choose different levels of coverage? Do they all get an “average” pay bump that rewards some but punishes others?

And what about year two?

It’s likely that healthcare costs will jump in subsequent years because so many more people would be covered with almost zero deductibles, which will drive up use of the system and strain healthcare resources. Our healthcare tax, or whatever mechanism is used to collect the funds to pay for it, will increase, and there won’t be a company standing around ready to take the fall for higher prices.

None of this supplies an answer, but it raises a lot of questions that we should be debating in the public square ahead of the next election. Boomers are getting older. Healthcare costs are taking up bigger chunks of the paychecks of Millennials, who then can’t afford to reach milestones in life. We need to figure this out before healthcare crowds out more spending from our national budget and our personal pocketbooks.