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John Hood: Dems' left turn will help GOP

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John Hood

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BY JOHN HOOD

Sunday, January 27, 2019

The promise of “Medicare for All” polls well. But if Democrats endorse the concept in large numbers, and make it or some other large-scale expansion of government health plans a centerpiece of the party’s brand going into the 2020 election cycle, Republicans will be among the prime beneficiaries.

How can a popular idea be politically damaging? Because it’s only popular in the abstract. A 2017 survey by the Kaiser Family Foundation, for example, found that 54 percent of Americans favored a single-payer plan for financing health care. The phrase “Medicare for All” polled even higher, at 62 percent.

Once voters heard some of the details, however, support dropped. When told that a single-payer plan would dislodge the role that employers play in sponsoring health plans, 17 percent of respondents switched sides, raising opposition to 60 percent. When told a single-payer plan would require higher taxes, 23 percent switched sides, raising the opposition to 66 percent.

Politicos who spend lots of time debating the finer points of public policy need to remember that most Americans, focused on their own private affairs most of the time, do not necessary hear what the politicos mean to say. According to the Kaiser poll and others, significant percentages of voters believe that even if the country adopts a single-payer system, they will be able to keep their private health plans.

North Carolina politicos who favor Medicaid expansion face a similar challenge when it comes to interpreting public opinion. If a survey question presents Medicaid as a cost-free way to extend services to the poor, you may get a favorable response.

That will change when voters learn that 1) we are talking mostly about childless adults, not poor children and their parents (although some of the latter will also benefit); 2) many advocates either refuse to require these new enrollees to work for Medicaid benefits, or plan to subvert any work requirements that may be included in expansion; 3) emergency-room usage is likely to go up, not down, as Medicaid expands; and 4) North Carolinians will end up paying higher state taxes or receiving fewer educational services in the long run, as the extravagant promise of near-complete federal funding of Medicaid expansion gives way to fiscal reality.

Progressive Democrats reject several of these premises. They argue, for instance, that a Medicare-for-All plan can be financed merely by taxing the super-rich, so average folks won’t get taxed more. Their math is faulty and their assumptions are dubious.

Consider the recent proposal to slap a 70 percent federal tax rate on income in excess of $10 million. The Tax Foundation recently estimated that such a marginal tax rate would raise about $300 billion over 10 years under the most favorable of assumptions, and would actually cost the federal government $64 billion over 10 years if one assumes that rich people will hire smart accountants, lawyers, and advisors to restructure their capital-gains realizations and otherwise shelter investment income from confiscatory tax rates.

Even the Panglossian number, $300 billion, would fall far, far short of paying for some sweeping new health program. It would only modestly reduce the projected deficits already baked into the federal cake.

In 2016, Donald Trump won the presidency despite the fact that he was deemed unqualified, unprincipled, and untrustworthy by a solid majority of Americans. Why? Because he was running against Hillary Clinton, about whom a similar share of voters had pretty much the same unflattering view. Both candidates lost support from voters who had previously voted the other way. Trump’s losses were disproportionately in places where he was going to lose anyway (e.g. California) or going to win anyway (e.g. Texas). But Clinton’s losses were disproportionately in Midwestern battlegrounds, producing a defeat in the Electoral College.

In the 2020 cycle, Trump and the GOP again face strong headwinds. But elections are comparisons, not plebiscites. If the Democratic Party makes a sharp left turn, on health care or other issues, it will lose winnable races. Republicans will gladly pocket those victories.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation.

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