The Non Sequitur in Sanders' Case for Medicare for All

During June’s Democratic debate, moderator Lester Holt asked Bernie Sanders a question about Medicare for All. Sanders replied:

Lester, I find it hard to believe that every other major country on Earth, including my neighbor 50 miles north of me, Canada, somehow has figured out a way to provide health care to every man, woman, and child, and in most cases, they’re spending 50 percent per capita what we are spending.

Taken at face value, the statement is close enough to pass for true by the standards of contemporary political discourse. But as a defense of Medicare for All, it is a non sequitur.

The reason: No other major country offers a plan that is anything like Medicare for All.

Here is a chart, based on data from the Commonwealth Fund, that compares the United States with 10 other major countries in terms of heath care spending and health care performance.

Yes, all countries shown have better health care outcomes than the United States, and all spend less (although more than half as much). But how closely do their health care systems resemble Medicare for All? How broad is their coverage? How centralized are they? What role do they assign to private insurance? What do they require by way of premiums and cost-sharing? Here are some answers, starting with the three top performers. (See here for the full health system profiles of each country.)

Medicare for America: A Health Care Plan That Deserves a Second Look

Last December two Democratic representatives, Rosa DeLauro of Connecticut and Jan Schakowsky of Illinois, introduced a health care reform bill called Medicare for America. At the time, it got relatively little publicity, but now that it has been reintroduced as H.R. 2452, it deserves a closer look.

Medicare for America (or M4Am, for short) is increasingly seen as a pragmatic option for Democrats who want to stake out a slightly more centrist position than the party’s progressive superstars. For those with low incomes and chronic illnesses, M4Am, like Senator Bernie Sanders’ Medicare for All, would provide free first-dollar coverage for a wide range of medical, dental, and vision services. Unlike the Sanders plan, though, it would subject people with higher incomes and lower medical expenses to income-based premiums and cost sharing.

Here are some of the key features of M4Am, followed by some suggestions that could further improve its prospects for support from a broad range of the political spectrum.

Medicare for America and Universal Catastrophic Coverage

Medicare for America belongs to a family of health reform plans known generically as universal catastrophic coverage (UCC). The aim of UCC is to protect everyone against financially ruinous medical expenses though full first-dollar coverage for the poorest and sickest, while requiring income-based cost-sharing from those who can afford it. UCC posits a robust role for the government as a provider of social insurance where needed, while creating adequate scope for market mechanisms where they have the best chance of working.

The Economics of a Job Guarantee

A federal job guarantee (JG) is one of the hardy perennials of American politics. Such a guarantee would offer public-service employment (PSE) to anyone who wanted it, with government at some level or an approved nonprofit organization as the employer.

The idea of a job guarantee traces its roots to the Great Depression, when the federal government created thousands of jobs through programs like the Works Progress Administration and Civilian Conservation Corps. Later, in his 1944 State of the Union address, President Franklin Roosevelt put the right to a job at a living wage at the very top of his “Second Bill of Rights.” In the 1970s, a job guarantee was again proposed as part of the Humphrey-Hawkins Full Employment Act, although it was dropped from the draft before that bill was passed.

Today, the idea is undergoing a revival as part of the Green New Deal, introduced in Congress in 2019 with more than 100 co-sponsors. Some might find the timing odd, with the unemployment at a 50-year low. In reply, however, JG proponents point to three gaps that persist even when official data point to a tight labor market:

• A hidden unemployment gap: A gap between the number of people counted in the labor force and the number who would seek work if jobs were available at a higher wage.
• A pay gap: A difference between what people are now paid and the maximum that their employers would be willing to pay if necessary.
• A public service gap: A large, unmet need for labor-intensive public services that would generate benefits equal to or greater than the cost of providing them.

This three-gap model of the labor market will serve as a convenient device for organizing this commentary on guaranteed jobs.

Joe Biden Commits to Decarbonization but Not To a Carbon Tax

Joe Biden’s climate action plan is a passionate declaration of good intentions. Unfortunately, all the passion is undermined by his failure to openly support a carbon tax, the one policy that would most certainly deliver on his promises.

Politics should be about means, not just about ends. Ends-wise, Biden’s program is a veritable feast. He sets an overall goal of net zero carbon emissions by 2050, matching the goal set by the Green New Deal of his progressive rivals, and he makes a gazillion specific promises along the way:

• 100% electric cars
• advanced biofuels
• carbon free aircraft fuels
• more compact cities with higher-density affordable housing
• grid-scale storage at one-tenth the cost of lithium-ion batteries
• small modular nuclear reactors at half the construction cost of today’s reactors
• refrigeration and air conditioning using refrigerants with no global warming potential
• zero net energy buildings at zero net cost
• using renewables to produce carbon-free hydrogen at the same cost as that from shale gas
• decarbonizing industrial heat needed to make steel, concrete, and chemicals and reimagining carbon-neutral construction materials
• decarbonizing the food and agriculture sector, and leveraging agriculture to remove carbon dioxide from the air and store it in the ground
• capturing carbon dioxide from power plant exhausts followed by sequestering it deep underground or using it make alternative products. 

That’s not even the full list. All those ends are laudable, but the proposed means turn out to be just an ad hoc mix of executive orders, restoration of Obama-era regulations, research subsidies, and tax credits.

The trouble is that such a program lacks any way of balancing the costs of decarbonization among the various possibilities. Maybe there will be breakthrough on advanced biofuels that makes liquid-fueled cars just as clean as electrics, and cheaper to run. Maybe direct air capture of carbon will turn out to be more efficient than carbon capture from industrial smokestacks. Who will choose which paths to pursue and which to abandon?

A Shopping Trip to the Past Reveals an Important Truth About Inflation

Inflation has been pretty well contained lately, averaging well below the Fed’s target rate of 2 percent. But could the true rate of inflation be even lower than that? In a recent piece for The Wall Street Journal, Andy Kessler explains why.

Kessler sees quality adjustment as the big flaw in the CPI and other standard inflation. Government statisticians try to make quality adjustments, but, as Kessler says, “by the time the BLS puts something new in the CPI basket, it’s already cheap.” As a result, he thinks, the CPI overstates the true rate of inflation by about 2 percentage points.

Is he right? Even the best econometricians aren’t sure. That’s not because they aren’t good at what they do. Rather, it’s because quality adjustment is fundamentally subjective.

With that in mind, I’ve developed my own purely subjective approach to gauging inflation, based on a fantasy shopping trip to the past. Off you go, into the time machine. All I ask is that you bring back an answer to this question:

If you could choose between shopping today at today’s prices, or shopping in the past at past prices, what items, if any, would you buy from the past?

Although I can’t give you a seat in a real time machine, I can give you the next best thing: An old Sears Catalog. A great website, www.wishbookweb.com, keeps an archive of page-by-page images for these “Wishbooks” going all the way back to 1937. I won’t take you back that far, just to 1962. I pick that year because that was before the “Great Inflation” of the 1960s and 1970s, which tripled the U.S. consumer price level over the next two decades. All prices quoted from the 1962 catalog are the actual nominal prices of that year, with no adjustments for inflation.

Let’s go shopping!

In Search of a Better Measure of Labor Market Slack

Every month we watch for changes in the unemployment rate. Most people cheer when the unemployment rate falls — how can we not like it when more of those who want to work can actually find a job? But low unemployment makes economists and policy makers nervous. Is there enough slack for further growth? Is the economy overheating? Does the Fed need to apply the brakes?

To understand what is really going on, we we need to think more about whether the official data from the Bureau of Labor Statistics are really the right numbers to cheer or to get nervous about. Not necessarily. Here is a short tutorial on how the government measures the degree of slack in the labor market, and how it could be done better.

How the BLS measures labor market slack

The standard unemployment rate counts people as unemployed only if they are not working but have actively looked for work in the previous four weeks. That leaves out two important reserves of willing labor.

Rep. Paul Tonko's Nine Principles of Climate Change are a Call to Action. So Let's Act!

Rep. Paul Tonko, who chairs a House subcommittee on Environment & Climate Change Subcommittee, has published a list of nine principles of climate action. He prefaces his list with these remarks:

Americans are living, and dying, in the path of unprecedented flooding, raging wildfires, and battering storms driven by Earth’s changing climate. Regardless of the origins of our predicament, we have inherited these conditions. It falls to us to set aside past disagreements and rise together to meet this challenge. We agree that climate change is real.

We agree humans are driving it. We agree that we need to build solutions that meet the scale and urgency of the crisis we face. The principles outlined in this document are meant to provide a framework that moves the lines of our agreement forward and helps us build a comprehensive national climate action plan together.

As we assess the ideas before us, no options should be off the table. Rather, I submit that any climate proposal we consider should be measured against the principles enclosed here. They reflect extensive conversations with Members of Congress and stakeholders. I present them to you for your consideration, reflection, and feedback.

As a strong backer of climate action, here are my responses. (Words in italics at the beginning of each section are Tonko’s, either full quotes or slightly edited for length.)

1. Adopt Science-Based Targets for Greenhouse Gas Neutrality by Mid-Century

We certainly need a radical reduction in GHG emissions by mid-century, but full net carbon neutrality may be an overreach. Emissions reduction, like many economic and engineering processes, tends to follow an 80/20 pattern, wherein the first 80 percent of the cleanup absorbs half the cost while the remaining 20 percent costs as much again as the first 80. Even within the last 20 percent, most of the cost is in the last few percentage points. For example, something like the schedule of reductions given in HR 763, a fee-and-dividend approach backed by the Citizens’ Climate Lobby, which calls for roughly an 88 percent reduction by 2050, would be more realistic.