The most recent post at Fixing U.S. Healthcare blog was the first of a two-part review of the best counter-arguments against single-payer healthcare financing. We claimed that all of these counter-arguments are well intended. Some are well taken. Some require hard choices. But some are based on faulty logic.
We grouped the counter-arguments against single-payer financing into five categories:
- 1. Long wait times and other access problems in countries with single-payer systems.
- 2. Other administrative turmoil
- 3. Predictions of other severe secondary consequences
- 4. Cost overruns
- 5. Unaccountable power grabs
Our first post looked at long wait times and administrative turmoil.
In this second part of our two-part review, we will look at secondary consequences, cost overruns, and power grabs. We will continue to draw primarily on the cases made against single-payer financing by Sally Pipes in her 2018 monograph, The False Promise of Single-Payer Health Care and by Chris Jacobs in his 2019 book, The Case Against Single Payer.
Severe Secondary Consequences
Beyond the immediate turmoil caused by transforming the (payment system for) one-sixth of the American economy, Pipes and Jacobs warn of additional never-ending structural turmoil. Some examples: rationing, healthcare labor shortages and displacements, public reporting burdens, rural hospital closures, attracting illegal immigrants. And the perpetual political and ethical conundrum – abortion.
Here is my take on these alarms.
- Rationing: In a previous post, I cautioned that rationing is a term that inflames our discourse on healthcare reform, rather than illuminates it. I also previously reviewed the “accountability for reasonableness” approach described by Daniels and Sabin. Namely, budgeting (“setting limits fairly” to use their terms) should be done rationally and publicly in order to be considered ethical. A moment’s reflection will tell us that everybody can’t have everything, with the cost as no object. The reductio ad absurdum argument about rationing made by Pipes and Jacobs falls flat. Surely, Pipes and Jacobs will agree that responsible budgeting is always wise, whether at a household, hospital, or national health system level. There will always be some services that are of such miniscule benefit that they are not worth the cost. And some services that are so outrageously expensive that they cannot be justified.
(Side note: There is emerging debate about hyper-expensive new gene therapies, such as the new $2 million DNA repair treatment for infantile spinal muscle atrophy. One suggested approach is to eliminate patents on such therapies, and instead to encourage that all research be financed publicly or by other novel means.)
- Healthcare labor shortages and displacements: As previously blogged, some labor shifts are predictable and some unpredictable. And as discussed, this is not necessarily an argument against making a change, so long as the change manager has a level of control sufficient to meet the challenge. The New Medicare – backed by healthcare-industry policy, education policy and labor policy – would have multiple levers to pull. The response to Pipes and Jacobs worry should not be, Don’t change, but rather, Get ready to manage the change.
- Public reporting burden: A public program does indeed have a higher degree of accountability than a private one. So, Pipes and Jacobs are correct: Get ready for more reporting. In my view, this increased reporting burden would be more than offset by an even greater reduction of overall administrative burden resulting from a streamlined integrated healthcare system.
- Rural hospital closures: Currently rural hospitals are at the mercy of forces beyond their control. I presume that an integrated healthcare system, financed publicly, would understand the need to shore up healthcare in remote areas. By the way, rural healthcare could be facilitated by digital infrastructure development, which in turn could allow expedited adoption of tele-medicine technologies. Healthcare policy is inter-connected with other public policy. Single-payer would help, not hurt, rural healthcare delivery.
- Attracting illegal immigrants: This is another example of how healthcare policy is connected with other public policy. However, in this case, the connection is weak. One can favor single-payer healthcare financing while supporting strict immigration restrictions, opposing them, or being undecided. Presumably no one would deny humane emergency care to any human being, as required by the EMTALA law, regardless of immigration status. And presumably, the stronger and more resilient the healthcare system, the better able to handle such emergencies.
- Abortion: I will tackle this thorny issue in a future blog post.
Predicted Cost Overruns
Jacobs cites that single-payer healthcare would cost the U.S. government $32 trillion in additional spending over 10 years. He references a 2016 Urban Institute study and a 2018 Mercatus Center study. Pipes cites the same sources in her recent Forbes article.
In addition, Pipes and Jacobs fear that making healthcare free – and providing access to all – will draw so many more people into getting care that this would offset any small savings in efficiency or monopsony pricing advantage.
The $32 trillion figure cited by Jacobs and Pipes strikes me as alarmist for several reasons.
First, projections of the cost of Medicare-for-all or any single-payer system will vary widely according to assumptions built into the projections. This will be evident upon even cursory perusal of several comparative reviews in the New York Times, Kaiser Health News (covering the April Congressional Budget Office report), or the Urban Institute report itself.
Second, one cannot decide whether $32 trillion price of single-payer is a bargain or a boondoggle without knowing a comparative projection done without factoring in single-payer. For example, Centers for Medicare Services projects that cumulative total 10-year national health expenditure – under the current system — will be $47 trillion. By comparison, here are my calculations under single-payer, based on the Congressional Budget Office projections:
Projected U.S. government major healthcare spending, 2020-29: 17.6 trillion
Projected additional U.S. government spending under single payer: 32 trillion
TOTAL (National Health Expenditure under single payer) 49.6 trillion
As you can see, not much difference between $47 trillion under the current system and $49.6 under single payer. I would say this is a bargain, given that Medicare-for-all would cover the 28 million additional currently uninsured persons. And, under some versions, would include vision, hearing, dental, and long-term (nursing home) care – all for approximately the same cost!
True, the $32 trillion will come out of our pockets in the form of taxes. But taxes could be structured progressively, more from the very rich, less from the middle class, and none below a certain income level. And arguably for many groups the taxes would be less than what they currently pay out-of-pocket in premiums and copays for private commercial insurance.
Furthermore, this blog maintains that under single-payer, there are savings to be had eventually by eliminating waste, needless administrative complexity, and marginally non-beneficial care – that is, by unrigging the system. See, for example, post and post. This blog claims that only the full faith and clout of a government-financed single-payer healthcare system could root out exorbitantly rigged prices and waste, and could stand up to the vested interests, eventually to bend the cost curve.
One last comment: The irony will not be lost on readers of this blog that Pipes and Jacobs are using cost as an argument against changing to a single-payer healthcare system, when it is the current fragmented and rigged system – with its monopolies, gaming by professionals, and massive unaccountable power – that is responsible for exorbitant pricing and relentlessly ballooning national health spending!
Unaccountable Power Grabs
Single payer would invest [sic] the federal government with enormous power, even compared to its current sizable influence. The legislation would incorporate trillions of dollars of new spending into the federal sphere, and give unelected bureaucrats the power to write new rules affecting every corner of the healthcare market. With health care currently comprising 17.9% of the economy, and rising, single payer would give federal officials command and control over a vast swath of our society.
Almost by definition, this new federal authority presents an invitation to corruption of all kinds. Fraudsters would seek to make a quick buck by submitting claims for improperly provided goods and services, as they do in the current Medicare and Medicaid programs.
Under single payer, every doctor, hospital, drug manufacturer, and other medical provider would have an even greater incentive to hire lobbyists to increase their reimbursements from the government.
Jacobs eloquently articulates the key ideological issue underlying the debate over healthcare reform – whom do we trust? Libertarians trust only free individuals and free markets. Progressives trust only institutions, not individuals. The American people don’t trust anyone!
Fixing U.S. Healthcare blog has tried to appeal to conservatives, liberals and libertarians. This blog has also referenced the Founding Fathers. These wise men never lost sight of Lord North’s admonition that “power corrupts.” Accordingly, they constructed our Constitution with separation of powers and with checks and balances.
This blog lands with the Founding Fathers’ idea of constructing our reformed healthcare system within the Constitutional framework of our national government. And accordingly this blog takes Jacobs’ point about the potential for abuse of power. Thus, this blog agrees that whatever healthcare reform is undertaken, there must be accountability, public transparency, and solid checks and balances.
Fixing U.S. Healthcare blog makes its appeal to the American spirit of optimism, ingenuity, and practicality to proceed boldly, but with prudence and circumspection at every step.
Changing to single payer would be an ambitious undertaking, as warned by critics. But America has the talent and know-how to manage this change. In this regard, it is notable that the federal government already finances 40% of healthcare spending. Scaling up would not be as difficult as it might appear at first glance. Governance and accountability are already well understood, and could be recalibrated to meet the challenge of a national single-payer system. Single-payer would bring the advantages of streamlining administration, standardizing processes, and aligning incentives to promote health, not just profit.
Now, take action.
Jacobs, Chris. The case against single payer, Alexandria, VA: Republic Book Publishers, 2019
Pipes, Sally C., The false promise of single-payer health care, New York: Encounter Books, 2018
Title: La scuola de Atene
By: Raphael (Fresco in the Apostolic Palace in the Vatican)