John Maynard Keynes is famous for appealing to “animal spirits” as a driver of human decision-making under uncertainty. The human tendency to respond emotionally and impulsively to certain events implies a “spontaneous urge to action rather than inaction … [which is] not the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.” So perhaps it should come as no surprise that this week the talk of Medicare for All is causing investors to pull out of healthcare stocks. In particular, Bernie Sanders (I-VT) Fox News town hall devoted to Medicare for All and UnitedHealthCare’s CEO David Wichmann’s statement that Medicare for All would lead to a “wholesale disruption” of the U.S. healthcare system, appeared to spook investors. This sent healthcare stocks tumbling and into volatility mode, in spite of the fact that health insurer fundamentals appear to be in good shape.
In January, when former CEO of Starbucks Howard Schultz declared Medicare for All would be unaffordable and un-American some investment analysts and pundits took notice. But, more paid attention when the CEO of the largest private insurer in America, UnitedHealthCare, spoke openly about the disruptive impact of Medicare for All. Obviously, private health insurers stand the most to lose in a government takeover of health insurance.
Is it rational to speculate about the remote possibility of Medicare for All becoming law of the land? Probably not. Even in the unlikely outcome of a Democratic sweep in the 2020 elections, Medicare for All would face very long odds. This is because in the House and Senate dozens of Democratic members, especially in swing districts, are opposed to Medicare for All and in favor of reinforcing the Affordable Care Act (ACA).
Conventional wisdom suggests Democrats won the midterms in the House in part because of their focus on healthcare. This may indeed be true. But, the issue with candidates and voters was about protecting healthcare from a Republican repeal of the Affordable Care Act (ACA), and in particular preserving federal subsidies to purchase healthcare insurance and guaranteed coverage regardless of pre-existing conditions. As such, it was less a push for Medicare for All than a vigorous defense of ACA against perceived Republican efforts to undermine healthcare coverage.
A number of Republicans still seem keen on repealing ACA. But, for now it appears the animus to repeal ACA is waning. In spite of its ostensible support of the Texas judge’s ruling which deemed the ACA unconstitutional, the Trump Administration is punting on reforming healthcare. This may be for good reason, as repeal at this stage is not a winning strategy at the polls.
For Democrats, if Medicare for All becomes the main election theme it would be prudent to draw lessons from 2009 as the debate regarding the ACA was getting underway. The ACA sparked heated discussions on so-called death panels, rationing, and government intrusion. All of this infused energy into the emerging Tea Party.
The 2009 debate was unleashed by a relatively tame proposed reform which would keep the U.S. healthcare system largely intact, namely the ACA. Now, imagine the political discussion next year in the lead-up to the 2020 election if Medicare for All is the focal point. Long odds of passage in the legislature notwithstanding, the talk on the Republican side would likely center around the 150 million people who would lose their private health insurance, and the possibility of a government takeover of healthcare. To be sure, some of it will distort, be fear-mongering in nature, and be outright deceptive. It is after all politics in election season. Yet, the messages about the potential for serious disruption to the healthcare system have a good chance of resonating if 2009 is any indicator.