“Single-payer healthcare is socialism!” – Why That’s Wrong & Wrongheaded

There are two technical reasons that the “socialism” claim is wrong: First, single-payer does not mean government-single-owner. Second, single-payer is best understood as a public-private hybrid, which is fundamentally different from socialism.

This blog has avoided over-politicizing the healthcare reform debate. It has, in fact, cautioned Americans to steer clear of inflammatory loaded words like socialism and has focused instead on substance, values, and pragmatism.

But now in this election season, politicians – including the President – are claiming that “single-payer government-run healthcare . . . is dangerously closer to socialism.”

This blog admonishes that invoking socialism is the wrong way to frame the debate on healthcare reform. Here I am speaking technically only. I am not, in the first instance, taking sides on the political issues. There are indeed salient underlying political choices that must be made (see below). But these have nothing to do with socialism.

Let’s drill down.

Medicare Is A Public-Private Hybrid

Today’s Medicare contracts with commercial insurance companies (oft times with local Blue Cross/Blue Shield companies) to process patient benefits. Medicare sets performance standards as well as payment rates (including for drugs). It enrolls Medicare beneficiaries. It then monitors compliance by providers and insurance companies.

Medicare does not own hospitals, clinics, or diagnostic equipment. It does not employ doctors and nurses. It does not issue insurance policies or process claims. In these regards, it differs from the truly socialist British National Health Service.

Thus, Medicare as it currently exists is not socialism, because the government does not own or control the means of production (healthcare services). Wayne Caswell, author of the respected blog mHealthTalk.com, uses the term “public-private hybrid” to better describe Medicare.

Medicare (along with Medicaid and other federal programs) currently accounts for 41% of healthcare spending in the U.S. Thus, I would further clarify that Medicare etc. is a “partial” or “41%” public-private hybrid. This hybrid preserves the private commercial healthcare delivery system while providing government administrative oversight. The “partial” hybrid in its current form also preserves the commercial health insurance system.

Medicare-for-all would be a “complete” hybrid. It would preserve the private commercial healthcare delivery system but would eliminate the commercial health insurance system. (Actually, Medicare-for-all would transform health insurance companies either into publicly contracted “carriers” or alternatively bring the claim processing function directly under the Centers for Medicare and Medicaid Services. Most analysts would expect substantial streamlining, efficiency, and cost saving for claims processing from this move.)

So, in summary, single-payer Medicare-for-all would be a public-private hybrid, fundamentally different from socialism.

A Public-Private Hybrid Is Not Socialism

To clarify this difference further, let’s look at a model for understanding the spectrum of economic systems. I draw on a presentation by Lawrence Cahoone PhD, and the work of Milton Rokeach.

Dr. Cahoone identifies 8 distinct historical prototypes spanning the spectrum from libertarian free-market capitalism at one extreme to socialism at the other, as depicted in this diagram. The degree of economic equality in each system is displayed on the vertical axis, and degree of government control on the horizontal axis.

At the top (#8) is socialism, with all industry owned and operated by the state and high degree of material equality, such as existed in Lenin’s Russia and Castro’s Cuba.

The next lower example (#7) on the spectrum is state ownership of all major industries but some low-level free markets for consumers. An example would be Mao’s China.

Next lower is mixed (#6) with state ownership of most industries but some in private hands, with resulting inequalities. China under Xi fits this example. (Update: According to Branko Milanovic (London School of Economics), China represents “political capitalism,” under which the boundary between public and private ownership is blurred. This permits market- and profit-driven economic decisions, but with central political control.)

Next is social democracy (#5), first described by a politician and critic of Karl Marx named Eduard Bernstein. Its purest form consists of the cradle-to-grave welfare state, with industry still in private hands and with free markets but with heavy regulation. This form exists in modern European countries in varying degrees. (Note: This type of “social democracy” is not to be confused with the Social Democrats of America, who advocate for a complete socialist revolution or transformation to bring about #7 or #8.)

Starting now at the bottom of the spectrum diagram, the opposite extreme is libertarian capitalism (#1). In its purest form there is private industry with minimal government interference, free markets, free trade, and unfettered individual liberty. Extreme libertarianism was described by Robert Nozick. It has never actually existed in this pure form, but perhaps was closest to Jefferson’s agrarian utopian ideal. Significant disparities of wealth are accommodated under this type of system.

Moving up the spectrum at #2 is laissez-faire capitalism, which existed in 19^thcentury England and Holland with minimal government interference in industry and with free trade but with some state involvement in education and anti-vice laws.

Next is economic nationalism #3 with minimal government involvement in the domestic economy, but protectionism in foreign trade. This was the system envisioned by Hamilton, who favored the national bank and tariffs.

The next is the progressivism of Theodore Roosevelt (#4). While he left some domestic industries untouched, Roosevelt introduced trust-busting, regulations, and union rights provisions targeted at industrial “robber-barons” and anti-competitive monopolies. His safety-net programs aimed at mitigating economic disparities.

According to this 8-fold schema, Medicare’s partial public-private hybrid currently fits into the mid-range of progressive category #4. Introduction of single-payer Medicare-for-all would move us incrementally to the border with #5 (social democracy safety net), but not radically into true socialism #7 or #8, or even into #6 mixed socialism.

Other Public-Private Hybrids in U.S. History

American’s historical narrative glorifies “rugged individualism” and “entrepreneurial ingenuity.” We lionize innovators, inventors, and industrialists.

But according to historian Jon Meachum, the truth is that “the public sector has always been integral to making the private sector successful.” He cites the Homestead Act, which promoted settlement of the Great Plains, and the Pacific Railroad Act, supporting the first transcontinental railway. Other examples of public-private hybrids have been

Colonial era turnpikes and canal systems
Military technology
Healthcare and pharmaceuticals
Higher education
Moon shot

Seen in this context, a single-payer healthcare system would not be a departure from our American traditions. On the other hand, this kind of public-private hybrid could be a solution to the very real and practical problem of runaway healthcare spending, though not the only option.

What Are the Real Issues?

So, if socialism is not the real issue, what are the real issues?

What is the mission of healthcare? See post.
How can we balance market justice with social justice? See post and post.
What are practical options for reining in exorbitant healthcare spending? See post and post.

Americans cannot afford to sidestep these issues any longer. Now, Take Action.