Ep. 210 Elizabeth Warren’s Fiscal Fantasies

8 November 2019     |     Tom Woods     |     8

Krugman is impressed by the detail and alleged seriousness of Elizabeth Warren’s Medicare for All plan and how it will be paid for. Bob and Tom, by contrast, are not so impressed.

Krugman Column

“Did Warren Pass the Medicare Test? I Think So” (November 1, 2019)

Contra Columns

Elizabeth Warren’s plan to pay for Medicare-for-all, explained,” by Ezra Klein
Elizabeth Warren Thinks Voters Are Stupid,” by Kevin Williamson

Need More Episodes?

Tom and Bob have their own podcasts! Check out the Tom Woods Show, the Bob Murphy Show, and the Lara-Murphy Report.

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  • Tuppenceworth

    Not so much a joke — “communal feeding” was discussed recently in the UK as an alternative to food banks. Here’s the 1940s version (they were literally branded “kitchens for all”!)

  • Roger Barris

    As usual, good work. Two comments:

    1. Bob makes a good point about the role of the IRS in providing services to Medicare for All (M4A), and how this cost should also be reflected. But the stronger arguments against this absurd assumption by Warren are: a) Medicare does have lower administration costs (as a % of disbursements) than a typical private sector insurer, but the average claim under Medicare, because of the older age of its insured, is several times higher than the average for private insurers and since there are fixed costs to administering claims, this obviously lowers the % compared to total disbursements – this would obviously not be true under a M4A system that would cover everything and everyone, and b) Medicare has a much higher fraud rate than the average private insurer, since they basically disburse funds with very little checking This obviously reduces the quoted administrative costs, but add in the additional losses to fraud and the advantage disappears. As we would expect, properly adjusted, the government is never a low-cost provider of any service.

    2. You rightly point out that, because of the high level of third-party payment, the consumer has very little incentive to monitor costs. However, someone is ultimately responsible for paying these costs – an insurer or an employer – and the question is: Why doesn’t this party manage costs more aggressively? It is therefore important to mention the huge pressures, legal and also reputational, that prevent these parties from doing this. You can just imagine the shitstorm if a private insurer stepped in to deny access to a drug/procedure that did not provide value for money, yet this is precisely what a governmental system – with absolutely no price allocation – is constantly required to do.

    One of the best discussions of these issues is Charles Blahous’ study of Sanders’ proposal, which is the source of the $32tn figure that is often quoted. What advocates of M4A always fail to point out, however, is that Blahous used Sanders’ assumptions on things like administration costs and reimbursement rates, but he makes very clear that he thinks these assumptions are unrealistic and the actual cost of the program will be much higher.

    Here is the Blahous study:


    • Roger Barris

      PS. You might also mention that, in your restaurant analogy (which is exactly the analogy I used when I was campaigning), that the high level of third-party payment also explains why prices are so non-transparent in healthcare. If someone else were paying for your meal, menus would also have no prices – like in the old days when you used to take a woman on a date and only the guy got a menu with prices on it since he was assumed to be paying.

    • Joe Mac

      Great point and information.

  • Verl Humpherys

    I wanna know what Bob’s 2 more things are.

  • davegrille

    One of the the annoying lies that the left proffers is that taxes charged to the wealthy and corporations result free lunch. In reality,there is reduced wages or opportunity, equal to at least a dollar fifty for every additional dollar taxed for working people.

  • Joe Mac

    Why does the country miss the basic Milton Friedman point that any attempt to further consolidate healthcare with the government (Medicare) will only exacerbate the disaster? What has occurred that would give anyone any trust in the ability of government to improve healthcare and decrease costs (FDA, EPA (think Flint Water)). In a deranged manner politicians keep suggesting ways to give the very source causing all the problems more responsibility for being the solution. The Medicare system is bankrupt (kept afloat by the very private plans (subsidies) that it seeks to eliminate) and accounts for current and future huge deficits and necessary tax increases. Cutting admin fees in healthcare by consolidation is just code for more crappy service that you get from the government (no choice, longer waits, less innovative treatment and care). We already have Medicare for All – Medicare has effectively (since the 50s) set pricing (for the private market too) that has driven over-utilization and higher costs (and was only somewhat workable early on because there were more workers than retirees). Why do people not see government intervention in healthcare as the cause of the high US % of income spent on healthcare? People can’t afford healthcare because government/insureres keep pumping more money (like student loans/mortgage financing) into a system that controls supply (med school limits on doctors and other classifications of health care providers). The first private healthcare plans (UAW/Detroit) were designed by hospitals/healthcare providers to get people to spend more on healthcare. What we need is government breaking up monopolies (by the medical profession) and allowing the market to work.
    Look at the UAW model (I’m a Detroiter) and the resulting over-utilization of healthcare (and poor individual health outcomes). The states the UAW effectively gave away great healthcare with zero costs/personal accountability incentivized using it more (low/no deductible plans) and not taking care of your self. What we need in healthcare is a cosmetic model – pay for what you want without the disruption of subsidies and. Give each person a stipend for healthcare and trust them to use it according to their utility curve. Obama care did very little to increase personal decisions that really bend the cost curve.

    What we need is less coercion (i.e. IRS/Medicare) and more efforts to get individuals to understand their decisions and to start managing their healthcare and lives (instead of relying on government and insurance experts).

  • Matt Simonson

    Why can’t I find the podcast on Spotify?