Single Payer vs. ACA
I’ve been thinking for a while that even a single payer system would be better than the ACA, because at least everybody is guaranteed SOME level of care. Here in MA where we have lived under “RomneyCare” for several years now, even though 98% of the population have health insurance, some people can’t afford to use it. I can confirm, anecdotally, that this is true for many people. One of my co-workers, who gets his insurance through his wife’s work, is in this position. Myself, I am in this position as well, although I’m still rather young and healthy, so it’s not a huge problem for me (other than having to pay the extra thousands of dollars a year for far more coverage than I need).
Well, while stumbling around the internet recently I came across a blog post at Kids Prefer Cheese on this very subject, from someone far more learned than I:
A number of people have written to express surprise that I “favor” single payer health insurance. Not sure that’s accurate. I would prefer personal responsibility, and a competitive market in health care. Modeled after the very successful, constantly cheaper, constantly better quality, service in Lasik surgery and other “elective” surgeries. If someone, anyone, would even consider going in that direction, that would be fine.
Insurance would be for major problems, big surgeries, accidents. You might have an annual deductible of $5k or more. Doctors would advertise prices (yes, PRICES) of standard surgeries.
Does any of that sound familiar? I didn’t think so. Instead, we have something really bad. Single payer would be better than what we have. Single payer is also better than ACA, by the way, which is why I am not happy about the decision yesterday.
What we have is this (more below the fold):
1. Effectively zero competition. It’s partly ideology, partly simply price-fixing, enforced by government regulations. You have no idea what the price is going to be, and in fact no one can tell you. What you know is that it will cost about 5 times what it “costs,” at the margin, to provide the service. Your bill will be unbelievably huge, after a surgery. But “you” don’t “pay” it, if you have insurance. Except that YOU end up PAYING, because you also pay for everyone else.
2. Fully socialized medicine. No hospital or emergency room can turn away a dying patient, though any primary care physician can turn away a healthy patient who can’t pay. So, suppose I have diabetes…but don’t know it. I don’t go to a doctor, because it’s really, really expensive and I don’t have insurance. After a couple of years my toes look funny and they tingle. Then I lose feeling in one foot. Then the end of one toe, after I stub the toe but don’t notice the cut, starts to turn black, I finally go…to the emergency room. They diagnose my diabetes…after they remove most of my foot, to save me from the rapidly spreading gangrene. I pay NOTHING for the emergency room visit, the surgery, or the disability benefits I receive for being crippled. All free. All fully socialized. All really, really STUPID. I go from being a productive member of society, with a job, to being a cripple on the dole. All because we have this bizarre idea that we won’t pay for health care, UNTIL THE PERSON IS DYING AND NEEDS SURGERY AND WILL NEVER FULLY RECOVER. Then, we are happy to pay, and in fact pay 100% of the costs.
3. Zero cost controls. Rates of increase of health care costs are going up, not down. Health care costs will hit 18% of US GDP this year. Since nobody actually pays, because everybody pays, we have an industry run by rapacious large insurers and drug companies. Many small insurers can’t afford to write policies and are getting out of the business. Even though premiums are super high, and rising, small insurers are disappearing very fast. The insurance industry doesn’t work, because insurance has to cost at least as much as the care it insures. Without cost controls, it’s not clear we can actually afford insurance. But the greater the cost of medical care, the more we all MUST HAVE insurance.
4. In the last 20 years, real wages have gone up about 20%, less than 1% per year compounded. But total compensation has gone up by nearly 90%. In other words, total compensation has almost doubled. Are workers better off? No, they are not. Their wages are stagnant, and they have health care. It doesn’t benefit them much that their compensation has nearly doubled, because health care has gobbled up all the increase. All the productivity gains, all the innovations of the last two decades were just poured into the gaping maw of health care. That might be okay, in some sense, but those costs are real on the employer side. I think one of the most important drags on the economy is that wedge between what employers pay and what workers receive. Health care costs, paid by employers, are a huge drag on new hires, and also make employers substitute part time or contract workers to avoid having to pay.
5. Of course, it’s worse than that. By tying health care to jobs, and forcing employers to provide health care, we are distorting the wage-benefit mix workers receive. Of course, we also do that through the fact that medical bens are tax-free, but that is not the whole problem. Suppose I am a low-skill worker. My employer is forced to offer health care, which has a certain fixed cost per employee. That means that the worker is able to receive only a much smaller wage from what is left over of the total amount the employer is willing to pay. For me, with high wages, I’m happy to like me some “free” health care. But the worker just starting out has his wage artificially depressed because so much is taken out for health care. (Don’t mean literally taken out, because the employer “pays” it. But the pay is wage + compensation, and more compensaton means less wage, no matter who writes the check.) The worst thing is that if you combine the effects of minimum wage laws and mandatory provision of health insurance by employers, it is IMPOSSIBLE for poor people to find jobs. And if they do find a job, they would prefer more pay and self-insure. But they don’t have that option under current system OR under ACA.
6. Finally, 25% of Americans have limited or no health insurance. Yes, half of those are by choice, maybe more than half. But 10%, about 30 million, want health insurance but can’t afford it. One can say “They can’t afford it because they would cost more than they would pay in premiums.” And that is likely true. The problem is #2, above. That person who doesn’t have insurance, whom we could insure for $5k per year, is going to cost us $25k in surgery, and then $20k per year in disability, for the rest of their lives. How’s THAT for “costing more than they pay in,” pumpkin?
So, my claim is that single payer is better than the current system, described in 1-5 above. And ACA has many of the same flaws, because it is still focused on employer-provided care. That is NUTS, people. The only things that ACA solves is #2 and #6, and I’m not sure even that will work.
ACA makes #3, #4, and #5 worse, possibly MUCH worse. There are no cost controls, it’s employer based, and workers are basically invited to bail out and pay a “tax.” But they STILL WON’T HAVE ANY G**D****D INSURANCE! We will still use the emergency room for our “free” socialized medicine provider.
I think that these are all valid, practical points. As Ron Paul has noted, third parties, whether government or corporations, distort the free market:
Likewise, supporters of Obamacare are willfully ignorant of basic economics. The fundamental problem with health care costs in America is that the doctor-patient relationship has been profoundly altered by third-party interference. Third parties, either government agencies themselves or nominally private insurance companies virtually forced upon us by government policies, have not only destroyed doctor-patient confidentiality. They also inescapably drive up costs because basic market disciplines — supply and demand, price sensitivity, and profit signals — are destroyed.
It’s been said before, but the ACA is the worst of both worlds: socialized liability, high cost, and poor care. While the government has proven itself, over and over, to be incapable of managing nearly everything, even THAT is preferable to the ACA. How very depressing.