History doesn’t clarify who said it first, Oscar Wilde or Samuel Johnson, but the definition of a second marriage as a “triumph of hope over experience” certainly describes the current romance with single payer health care.
“Single payer” is the euphemism for what used to be called national health insurance or socialized medicine. In theory it could work with a regulated monopoly private insurer or provider, but usually means a government-controlled health care system.
There are certain obvious advantages to a single payer system. The first comes from its very size. If it covers everybody, it doesn’t have the statistical risk factors or the expense of competing for customers. It can reduce the cost, if it chooses to do so, by standardizing forms, claims procedures, and even, to a degree, some routine procedures.
A single payer system can cut expenses by being the only large-volume buyer in the markets for drugs and medical supplies.
Size isn’t only an advantage; it is also, in one sense, the enemy. Medical care is a technology-driven, rapidly changing activity, and large organizations tend to resist change, especially those involving new technology.
The problems with single payer systems, however, go well beyond those inherent in its size.
The first difficulty is that it is run by the government, which has a dismal track record when it comes to managing anything. More specifically, it is a system that will ultimately be controlled by Congress. According to the latest Gallup Historical poll only one person in six thinks that Congress is doing a good job with its current responsibilities. With those odds, what is the likelihood that people will be happy when their health care is in the hands of Congress?
A second difficulty is that a single payer system does not, by itself, address health care costs. Even those possible cost reductions attributable to size and uniformity seem questionable in the face of the government’s history with cost containment. The admirable low level of administrative costs in Medicare, for example, are achieved in no small part by dishing off much of the system’s administrative burden on to the hospitals, clinics, physicians, and others who provide the medical services.
A third problem with the kind of single payer system Congress is considering is structural. Essentially, it comes down to a question: what will happen to the 2.5 million people who currently work in the private health insurance system? The correct answer is, initially, “it depends.” One way or another, though, when the single payer system finally absorbs responsibility for everyone, the private health insurance industry will either disappear or be reduced to a micro-system for the wealthy who can afford it.
The fourth difficulty is one of digestion. We tend to think of Medicare as large, for example, and with annual expenditures of $588 billion, it is. But it is dwarfed by the size of the employer-based private medical insurance industry, where two-thirds of Americans are now covered.
The fifth problem is that a “Medicare for all” and “health care is a right” approaches to health care insurance seriously underestimate their costs to taxpayers. “All,” for example, implies that the system will have to fund the coverage for the 28.1 million people who, according to Census Bureau data for 2016, have no medical insurance coverage.
None of these problems, issues, and difficulties are likely to change the outcome of the political battle over health care insurance. Taking them into account, though, would help us avoid some of the mistakes of Obamacare. Also, by the better picture of what we are getting into, it would help to avoid disillusionment in the system we get.
Ultimately, single payer systems end up rationing health care. Where the system allows private health care facilities to exist, high quality medical care is available on demand for affluent patients. Our current medical facilities are used routinely by foreign patients either seeking latest-technology treatment that is unavailable in their country or simply fleeing the long delays of their systems.
Our current system has some built-in rationing dimensions: limits on expenditures; ailments or procedures not covered, or treatments not approved. At that point, only the wealthy and those with access to the courts or the news media have any options available.
The support for a single payer system is more hope than experience at this point. The underlying truth is that most people like their health care insurance but are unhappy with how much it costs. Until we directly address the cost of health care itself any insurance system we design is bound to be a disappointment.
James McCusker is a Bothell economist, educator and consultant.