Bernie Sanders remains the hot ticket in Democratic politics these days. He is hocking a “Medicare for all” program that presidential aspirants are tripping over themselves to endorse. Given the ideological trajectory of the party’s base over the last 20 years, it probably will not be long until Democrats formally call for a single-payer system in their presidential platform.
Single-payer is a very old idea; Harry Truman proposed a version of it back in 1945. It is a testament to the self-conceit of the Left that it fancies itself “progressive” while simultaneously endorsing an idea that has been around for generations. And let us be clear: This is a really bad idea. Even the Washington Post editorial board — no bastion of conservative economic thought — strongly criticized it, saying it would have “an astonishingly high price tag.”
The economic arguments against single-payer are well known by now: It would impinge on individual liberty, negatively affect health outcomes for many, and, yes, cost more than anybody can possibly imagine.
I wish to call attention to the civic consequences of single-payer. It would elevate the medical-services industry to a dangerous height in our government and undermine the republican principle that the people, rather than special interests, should rule.
As a Medicare-style program, single-payer is socialized medicine in the sense that the government, acting on behalf of society, takes responsibility for the health of all, but not in a strictly Marxist sense of the term. The government does not control, to use the Marxist term, “the means of production” under single-payer. That is similar to the arrangement in the VA health system, where the government actually owns the hospitals and employs the doctors. Instead, under Medicare-for-all, medical-service providers would remain private contractors and go to the federal government — instead of insurance companies or individuals — to collect their fees.
Medicare for all utilizes a strategy of mediation — the government employs some private group as mediators for its public purpose. This sort of arrangement is not uncommon in the United States, although the scope of Sanders’s proposal far surpasses any previous endeavors.
Under such public-private partnerships, factions coordinate with the government, not out of the kindness of their hearts, but because the state makes it in their interests. The groups, in other words, derive a profit from their dealings with Washington, D.C., which in turn means that the feds are responsible for maintaining their bottom lines.
In the private economy, this is really no problem. It is merely the exchange between two independent actors of goods or services for cash, which happens billions of times every day. The problem is that the government is not independent. Far from it. The government is open to be influenced by the very factions that it is contracting with. Flush with the cash they received from providing services to the government, these factions have the resources to pull the policy needle in their direction.
In other words, public subsidies are a pathway to political influence, creating “special” interests that are often able to guide government policy at the expense of the general interest.
The history of American self-government gives us many examples of how these bargains can go awry. All the way back in 1790, Alexander Hamilton sought to use public creditors as the basis for creating a national currency. He succeeded, but he made the government so dependent upon the speculators that he was forced to bail them out not once, but twice, in 1791 and 1792.
In the 1830s, Andrew Jackson tussled with the Second Bank of the United States, whose managers and stockholders became so powerful because of their public charter that Bank president Nicholas Biddle could force an economic recession in 1833 to teach Jackson and the country a lesson.
To build the railroads, the government offered vast loans and tracts of lands for private companies, creating the mighty combines of the late 19th century, which wielded such substantial influence that they could lobby Congress out of forcing them to pay back their debts.
The protective tariff was intended to grow the industrial base of the nation, and by the end of the 19th century, it had helped achieve this outcome. But Congress did not finally abandon protectionism until the Great Depression — in large part because high tariffs benefited industrial magnates, who in turn built up powerful political constituencies in the government.
Franklin Roosevelt’s first New Deal was basically a disaster, because the president wrongly thought he could create a grand bargain among labor, corporations, and consumers to manage the economy. In truth, he gave enormous power to corporate America, which drafted production codes to benefit itself while small businesses suffered.
After World War II, President Dwight Eisenhower worried about the “military-industrial complex,” a network between Defense Department bureaucrats, military contractors, and members of Congress that was able to dominate foreign and military policy according to their own ends, rather than the good of the nation.
The housing bubble and the Great Recession have their origins, at least in part, with such entanglements. Fannie Mae and Freddie Mac were public-private agencies that made an enormous profit thanks to their public charters. They reinvested just a portion of their funds back into the political process, to ensure that government regulation affecting them would remain lax.
Even Medicare itself — which Sanders wants to expand — has been deeply troubling on this front. Shortly after its enactment, it was widely acknowledged to be a runaway program, as the government could not control the reimbursement rates for providers. While Uncle Sam has gained some leverage over the last 30 years, the industry wields incredible influence in determining how much the government pays it.
This is a very diverse array of policies, but they all exhibit a similar flaw. When the government wishes to accomplish some public purpose that it does not have the means to do itself, it contracts with private parties to accomplish the end. In exchange, the state promises, in effect, to guarantee the private parties a profit from the arrangement. The interest groups gladly accept and then use their public bounties to build a political power base, ensuring that their ends are secured, even if they are not in the public interest.
Factions that are blessed by the government come to dominate it, to the detriment of the general welfare.
What Sanders and the left wing of the Democratic party aim to do is to top all these previous endeavors — committing to pour trillions of dollars into the medical-services industry for the sake of public health. They assure us that the government will be able, under such an arrangement, to negotiate a better deal for the taxpayer. But this assurance only demonstrates that they do not understand how our government functions in practice. History has shown that precisely the opposite has happened, again and again. Factions that are blessed by the government come to dominate it, to the detriment of the general welfare.
“Medicare for all” would be like creating a fearsome new Pretorian Guard. These elite soldiers were tasked with protecting the life of the Roman emperor, but their rarefied position gave them extraordinary influence over the affairs of state, to the extent that they sometimes assassinated emperors they opposed and set up new ones more to their liking. If the federal government commits to giving trillions to the medical-services industry to protect the lives of the American people, expect that industry to wield dangerously inflated influence. And it would be dreadful for the republican quality of our system.
— Jay Cost is a contributing editor of The Weekly Standard and the author of A Republic No More: Big Government and the Rise of American Political Corruption.