Medicare For All Would Wipe Out Jobs, Pensions, and 401(k)s

Medicare For All Would Wipe Out Jobs, Pensions, and 401(k)s

Donald Trump famously made “You’re fired!” a household catchphrase. It may re-enter the American vernacular if the likes of Senators Bernie Sanders, Elizabeth Warren, or Kamala Harris take the White House.

That’s because Sanders, Warren, and Harris — along with Kirsten Gillibrand and Cory Booker, who are also competing for the Democratic presidential nomination — all support a brand of health reform that would wipe out millions of jobs. And that’s Medicare for All.

Sanders introduced a new iteration of his Medicare for All bill earlier this year; Warren, Harris, Gillibrand, and Booker have signed on as co-sponsors. The bill would abolish private health insurance and enroll all Americans in a single, government-run health plan.

A single government-run plan can in theory drive a harder bargain with doctors, hospitals, and other healthcare providers. Medicare for All envisions paying providers at Medicare’s rates, which are generally lower than those paid by private insurance.

But Medicare doesn’t pay hospitals enough to cover the cost of existing beneficiaries’ care. For every dollar hospitals spend on Medicare beneficiaries, they receive just 87 cents from the government.

Healthcare providers currently make up the difference by charging private insurers more. Medicare for All would abolish them, of course. To balance their books, providers would have little choice but to reduce their costs.

That means layoffs — or closing up shop altogether. According to a new report from JAMA, a medical journal, hospitals would eliminate up to 1.5 million clinical and administrative employees under Medicare for All. Dozens of hospitals, especially those in rural areas, would shut down. That would remove the biggest employer from scores of communities across the United States.

The effects would ripple through local economies. All the firms that counted on those hospitals as clients — construction firms, purveyors of cleaning products, food-service operators — would take a hit.

Then there are the hundreds of thousands of people employed by private health insurers whom Medicare for All makes no bones about throwing out of work. Health insurers employ more than half a million people directly, according to the Insurance Information Institute. The industry also supports hundreds of thousands of brokers and third-party administrators.

These jobs pay well — an average salary of $70,000. Medicare for All would destroy almost all of them.

At least Medicare for All’s supporters acknowledge as much. Congresswoman Pramila Jayapal, who has sponsored Medicare for All legislation in the House, recently said, “There’s about a million people we think will be displaced if Medicare for All happens.”

Even those with no apparent connection to the private health insurance industry would be collateral damage.

Many pension plans, mutual funds, and retirement accounts hold health insurance company stocks. CalPERS, the giant California public pension system, owns 2.8 million shares of UnitedHealth Group and more than 1 million shares of Anthem. The current value of those two holdings exceeds $900 million. The New York State Common Retirement Fund — the third-largest pension plan in the nation — owns more than 1 million shares of Cigna, worth more than $150 million.

If Medicare for All puts those companies out of business, then the retirement savings of millions of people could lose billions of dollars in value in short order.

“You’re fired” used to be confined to reality TV. If Medicare for All comes about, that line may become a grim reality for millions of Americans.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.