As the Affordable Care Act – more commonly known as Obamacare – launches insurance premiums into orbit, fails to attract the buyers its exchanges desperately need and repels many insurance companies, a prudent consideration of alternatives to President Obama’s frighteningly disastrous health insurance reforms is overdue. Thankfully, the marketplace of ideas has been offering the American public a plethora of solutions – from increasing insurer competition by breaking regional monopolies to granting families tax deductions for their expenses. But, as always, political discourse has produced some fallacious quick fixes to America’s health insurance problems.
Single-payer health care proposals have finally reared their heads in mainstream American political discourse, a fact enabled by the dramatic rise of Bernie Sanders and the subsequent resurgence of populist leftism in America. The idea, as presented, sounds like a brilliant way to solve America’s key health care crisis: that of cost. As the average Sanders supporter will surely tell you on comments sections and chatrooms, Europeans supported by some form of single payer fork out far less for drugs than Americans do. Those same individuals will also argue that single payer be applied to the U.S. Their reasoning often plays out as follows: you don't pay any fees or copays - the government covers all costs. Meanwhile, the emergence of a single, national entity negotiating with health care providers (hospitals, doctors, and pharmaceutical companies, etc.) will drive down medical costs. The result will be a system where you, the average American, will pay next to nothing for health insurance. In what context this is accomplished, whether it be a public/private delivery system (see the Canadian model) or the total nationalization of health care (see the British model), will largely depend on the progressive one is speaking with. The one constant: a top-down easy fix to an admittedly flawed health insurance system.
While it may seem to be a smashing plan at first glance, there are a variety of reasons why the application of single payer would turn out to be disastrous for America. The original sin of single payer – its most basic and fundamental flaw – is that of its sheer cost. Take Bernie Sanders’ ‘Medicare-For-All’ Plan. Even when accounting for the supposed savings caused by drug price cuts, the Sanders campaign estimated that its plan would have cost 1.38 trillion dollars per year – increasing the American budget by around 36%, based on a current budget of $3.77 trillion. This massive increase in spending – something that analysts such as Kenneth Thorpe of Emory University actually conclude to be an underestimate of single payer’s true costs – would pose a broad variety of challenges to the affordability and quality.
In order to analyze how this is true, we must consider the ways through which the federal government could finance a progressive healthcare agenda. First, single payer’s cost impositions would be destructive because the government could simply choose to underfund American healthcare, which would undermine the quality of care. This is especially true in light of the fact that even the group Physicians for a National Health Program (hardly a right-wing propaganda group) suggests that Canadian wait times and care rationing are caused by the Canadian government not spending an adequate amount of money on its ‘Medicare’ system. If we leave it to the US Federal Government – an entity already confronting a budget deficit nearing $500 billion and a debt approaching $20 trillion– to determine the quality of our healthcare in the offices of budget bureaucrats and wonks just when it might be trying to prevent an impending debt crisis, then we risk reducing the sheer availability of American healthcare.
Secondly, the ways through which some progressives propose to cut potential medical expenses are either infeasible or immensely problematic. Relying on an incredibly high reduction in pharmaceutical costs in America wouldn’t be very wise – while prices would surely go down under single-payer, they can’t such that the budgetary impacts of a national healthcare scheme would be minimal. What the government could do instead is cut the paychecks of American doctors to ensure that the cost of single payer can be at least slightly contained. But this would, of course, be an utter disaster for a broad variety of reasons. First, by reducing medical salaries, America's hospitals and clinics would see doctors either exit the profession or retire early. This is not a speculative forecast – as Dr. Robert Book of the Heritage Foundation explains, low Medicare and Medicaid payouts induce doctors to drop those patients covered by the two public plans in favor of the privately insured. Under a single payer system, the fact that there would be no private alternatives means that doctors might have no choice but to leave their field if they are frustrated by lowered salaries. Meanwhile, the deterrent effect caused by reduced physician pay would mean that many talented individuals – confronted with a plethora of lucrative career opportunities and the arduous process of earning a medical degree – may simply opt out of becoming doctors in the first place. In the short term, this would harm patient access to their doctors of choice, cause a ‘brain drain’ of experienced and trained doctors, and reduce the time doctors spend on individual patients by decreasing the supply of medical professionals. But more dangerously, a reduced pool of medical professionals and a cut profit incentive would cause reduced focus on and investment in advanced medical equipment and research projects. This would not only mean that specialized and cosmetic care would be hindered under a single payer scheme, but that the rate of treatment and cure discovery would be slowed. Therefore, single payer may not only cost Americans their favorite doctors, but it will also cost lives by slowing medical research.
Finally, tax increases to pay for single payer may end up inflating the actual cost of healthcare. As Thorpe states in his analysis of the Sanders plan, whether one looks to a payroll tax’s depreciative impact on middle to lower class wages (calculated at around 6.2%), to a 40% increase in taxes on those households earning $250,000 or more, single payer ends up forcing 71% of Americans to pay more and not less for their healthcare. Indeed, an average 20% tax increase (when accounting for payroll and income taxes) would defeat the purpose of single payer, while harming the American economy. After all, as Americans’ disposable income is lowered, so too are the positive effects of consumer spending and the proceeding multiplier effects. As such, it's very clear that single payer’s fiscal problems could cause massive health care disruptions alone.
With those potential harms in mind, I believe it is important to note that all of single payer’s potential benefits can be achieved through a variety of other measures. First, the notion of price-setting being unique to single-payer is simply inaccurate. This is especially true when we examine the broader context of European healthcare models. While most European countries achieve good health care for a minimized cost, most European countries do not practice true single payer. Indeed, from France to Germany to Sweden, the government does not exist as the single insurance provider. Multiple entities all operate under a legal framework where prices are set by governments. In this sense, you don’t need a top-down, nationalized healthcare system to set prices – you really only need a law or regulation to do that. But beyond this very simple alternative, one can easily increase the bargaining power of insurance companies through a model called “all-payer rate setting.” As Ezra Klein of the Washington Post notes, such a model would mean that insurers cooperatively negotiate the price of care down. As such, the real achievement of most universal healthcare schemes in Europe (reducing costs), is simply non-unique to single-payer – if you don’t like the price of medicine, you don’t need Bernie to swoop in with Medicare-for-all. Second, one can achieve universal coverage without single-payer. There are plenty of other systems that achieve this goal in Europe - such as those of France and Germany. And while single payer could accomplish this goal, the harms single payer would beget are simply not necessary. Other models– from drug-pricing to regional monopoly busting – could work toward universal health care without making the Federal Government the sole provider of health insurance. In closing, the proposal of a single-payer system would lead to a nightmare scenario for Americans. Just like many other progressive designs to solve complex issues, it would attempt to achieve worthy aims only to make matters worse in both the short and long term. Saying that the government should pay for everyone's healthcare may sound appealing at a campaign rally, but it'll always look bad on your tax returns when the election is over.