Tulsi, Be Careful With Your Plans For Medicare For All

Here is a potentially very dangerous statement from Tulsi Gabbard’s web page.

“If you look at other countries in the world who have universal health care, every one of them has some form of a role for private insurance.”

As I have mentioned before, any role for private insurance has to be very carefully structured. There is a well known insurance industry problem called adverse selection. It is a situation that private insurance companies try to prevent happening to them. They would love to use it against any government insurance plan (against any government plan of any sort, really)

Unless severely constrained, this is how it could work in competition with Medicare For All. The private insurance company would provide plans similar to medicare, but for much lower prices. The private insurance companies could afford to do this because they would only insure healthy people. As soon as one of their customers were to get sick, the private insurer would cancel the policy and force the sick person to “opt” for Medicare. Soon Medicare would be the insurer of all the sick people, and the private insurers would insure all the healthy people.

After this shift in customer base, Medicare would be paying much more in benefits per person than the private insurers would have to pay. The people who favor privatizing of government services would point to this disparity to explain that private business is much more cost-effective at providing services than the government is. How do you think so many government services have been privatized over the last 40 or 50 years?

Private companies pay massive amounts of money to their executives and shareholders that government run enterprises do not pay. How can private corporations possibly do things at lower cost than highly efficient government programs like Social Security and Medicare? Private companies make profits by abusing employees, suppliers, and their own customers.

Progressive politicians had better learn about and start talking about adverse selection – ASAP.

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