Sanders' Medicare-for-All: here's why Republicans want to attach it to Democrats

I am a huge fan of Medicare and the quality of CMS leadership. I write and speak frequently about the genius of Medicare Advantage. I appreciate fully why people love the phrase "Medicare for All."

But whatever you think of the concept in the abstract, Senator Sanders' Medicare-for-All bill is a terrible piece of specific legislation -- ill-conceived, badly written, and dangerously flawed. It fails to provide answers to the essential questions of healthcare reform, suggesting either ideological rigidity or cynical manipulation -- or both.

First, Sanders ignores the very best thing happening in Medicare, which is the extremely productive "coopetition" between "original" or traditional Medicare, and private-payer Medicare Advantage. This public/private hybrid is the reason why Medicare costs are growing more slowly than any other healthcare sector, with the highest consumer satisfaction. Medicare today is precisely the union of Fee-for-Service Medicare AND Medicare Advantage. Either alone would be vastly inferior to the current system.

Second, the bill fails to address how to fund its Universal Medicare program, hand-waving critical questions of cost control and, in particular, the cost of "trend" -- the seemingly inexorable rise in healthcare expenditures. While the bill advocates two sensible and overdue tools -- a universal national medical ID, and government negotiation of drug purchases – it completely ignores the impact of "no cost sharing" on consumer behavior, the difficult process of how to decide what to reimburse, and the program's sheer cost. These gaps make the bill's fundability a complete mystery.

Third, in a bill designed to overhaul one sixth of the economy, Sanders fails to provide even a sketch of an implementation plan. The bill offers very few substantial ideas, other than the state takeover of a uniform benefit package to be funded by the government and designed by an empowered Secretary of HHS. It is an insult to the many thoughtful, dedicated health policy people in and out of government, in both parties or no party, who have struggled mightily to conceive of reforms that could actually move us from today's patchwork to a better national solution -- maybe even one that could be called "Medicare for All."

There are many good reasons why everyone in the U.S. should have healthcare coverage -- moral reasons, to be sure, but equally strong economic arguments based on workforce productivity and national competitiveness. "Healthcare for All" is a goal almost all Americans say they support, but the devil is in how to provide it and how to pay for it.

The Sanders answer is a statist answer. The bill would consolidate remarkable power in the Secretary of HHS, with virtually no focus on how that power is to be managed or mitigated. All budgeting, all administration, all contracting, all disbursement would be planned and executed by the Secretary in support of an apparently uniform coverage plan. A huge part of the healthcare ecosystem -- the insurance industry -- would essentially be vaporized, left to offer only a skim coat of specialty coverage that would not be allowed to overlap with the rich list of essential benefits offered by the Universal Medicare program.

It is the bill's superficial and cavalier approach to this state takeover of healthcare that is both deeply flawed and a trap for all Americans.

Today's U.S. healthcare system is undeniably a messy patchwork of direct and indirect government funding, a kaleidoscope of provider institutions, and hundreds of insurance products. But the ultimate villainization of insurance providers -- vaporization, really -- implies strongly that Sanders believes insurers add no value and are no more than an expensive redundant administrative layer.

This is simply not true, and Sanders knows it. The hundreds of thousands of employees who do actuarial analysis, benefits design, medical management, utilization management, call center customer support, fraud prevention – their work is needed and real and it's not going away. In Sanders' insurer-free world, in which the government is not only the ultimate risk-bearer but the operator of health care, most of these functions would have to move into the government as government jobs. The staggering cost, cultural implications, and inevitable politicization of such a decision will probably keep the bill from ever being adopted.

The Sanders approach pretends that innovation will spring from government control, a fantasy debunked repeatedly in statist economies. Of course, unregulated capitalism hasn't generated the necessary innovation either. But it is the American genius to innovate based on regulated collaboration between government, industry, and individual citizens exercising market power.

Fee-for-Service Medicare alone will not drive the virtuous circle of innovation we need to overcome the underlying cost pressures of the aging baby boomers, nor the rise of expensive molecular therapies, nor the need to tailor benefits to populations, nor the need to incentivize personal responsibility, nor the need to distribute and share financial risk and accountability for outcomes.

Perhaps the bill is intended merely to stand up for universal coverage. But bad policy and bad politics are not a good way to present a good idea. The Sanders bill is a bad bill -- read it!