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| David Cay Johnston |
A local celebrity among Rochester’s elite is David Cay
Johnston. He won a Pulitzer during his
days working for the New York Times and has taught economics at a local
university. People here speak of him in
awe. Many claim to know him, including,
I am sure, those who have merely touched his sleeve once.
Like many economists, Mr. Johnston occasionally shares his
thoughts in our Op-Ed pages. And, just
as I wrote in “When Economists Write, It’s Not About Economics,” he shares with
his adoring public his political opinions rather than fact-based analysis.
In his recent rebuttal of a guest essay in Rochester’s
Democrat & Chronicle, Mr. Johnston outlines his case for Medicare for All
(M4A). He makes several strong points in
its favor, including the reduced bureaucratic burden on small businesses,
improved access for all and improved medical outcomes.
In making his case, Johnston cites a conservative source,
the libertarian Mercator Center. He
claims that a recent report by Mercator outlines a savings of $2 Trillion over
10 years as a result of adopting M4A.
Driving his point home, he asserts that such savings would save enough
money that families with less than $500,000 in annual income could be relieved
of having to pay Federal income taxes. This
last point reflects Mr. Johnston’s challenges with long division. It would require $2 Trillion savings per year
to provide tax relief on that scale – not over 10 years.
Citing a conservative source to make a liberal argument is
an effective technique (as would be the opposite). There’s only one problem: that’s not what the report says. It’s available on the Mercatus website and
actually says: “M4A would add approximately $32.6 trillion to federal budget
commitments during the first
10 years of its implementation...”
The report is authored by
Charles Blauhaus who served as a public trustee of Social Security and Medicare
during the Obama administration and deputy director of the National Economic
Council during the Bush administration.
The $2 Trillion savings cited by Johnston would be the result of
reducing fees paid to physicians by 40%.
This is an important discussion
and I am not trying to dismiss Mr. Johnston’s argument out of hand. Indeed, my
own health insurance is provided via Medicare.
It has provided piece of mind and financial relief from my days as a
mid-50’s independent contractor with pre-existing conditions. I am simply suggesting that we should
approach the challenges of our healthcare system with facts not partisan
punditry.
The challenges are not only
real but also urgent. The economists at
ITR Economics, who boast a 94.7% accuracy rate in their forecasts, predict
another Great Depression around 2030, the result of rising national debt and
the depletion of the Medicare and Social Security trust funds unless the
systems are reformed.
However we decide to pay for it
– whether M4A, the current hodgepodge of bureaucracies or something else – the
underlying cost structure must be addressed.
In passing, Mr. Johnston refers to our current system as “sick care” and
he is correct. The “Fee-for-Service”
model we’ve employed since mid-twentieth century drives up costs and offers no
incentive for better medical outcomes. From an economist’s perspective, if you
provide a financial incentive for doctors to perform medical procedures, the
will perform more procedures – especially when there is a bottomless pit of
government money available to pay for them.
That’s not how to achieve lower costs and better outcomes.
If Mr. Johnston had bothered to
poke around the Mercatus website a bit more, he might have found a report
titled “Fortress and Frontier in American Healthcare.” It outlines how entrenched interests have
blocked the kind of innovation that has transformed other industries from
telecommunications to manufacturing.
Such innovation, if applied to our “sick care” model might yield the
lower costs and improved outcomes that we all would like to see. Let’s address those issues before we decide
how to pay for it.
We need reasoned argument based
on factual information rather than cherry-picked data on this topic of extreme
importance. In our hyperpolarized political environment, Mr. Johnston’s essay rather
seeks only to inflame the passions of those who already support M4A.
We deserve better from those
who pretend be leaders in our community.
WHO WILL LEAD?
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