Questions About Single-payer Healthcare

Federal involvement in healthcare has certainly had its sad aspects, and the unhappiness continues with the current round of talks in Congress, which I’ve already commented on. Regardless of what the Republican Congress decides, it seems clear that eventually the US will join the rest of the world and migrate to some version of a single-payer health care system.
I’m skeptical about single-payer, for two reasons:

  • I have the same misgivings as any conservative/libertarian about government services. Briefly, they’re messy and immoral.
  • I see the prospect of more freedoms lost, and wonder what the rules will be (what rights do I lose?); and is the plan really to make everyone follow the same rules?


Does single-payer really work?

Yes. It’s the standard way to pay for health care in most countries of the developed world.

What are the pros and cons?

lower administrative cost
increase in preventive care
rate consistency
lower per-person cost
everyone is covered
ends the discussion over how to cover pre-existing conditions

taxes will increase
scope of government control will increase
less incentive to lower cost and innovate
overall quality of care will drop
increase in wait times, and shortages of doctors and equipment

Is everyone included?

That’s the idea. We’ll see. I doubt that ‘everyone’ will include for example: the military, Congress, cabinet secretaries, Supreme Court Justices, the President, and so on. Obviously the military is exempt. I wish it would include everyone, outside of the military. It will not.
I’m fascinated to see who gets the Cadillac coverage not available to the rest of us.

What procedures are included?

TBD. The idea is that the legislation will define a ‘basket’ of services to be covered. Outside of that basket will be services like elective cosmetic surgery and AddADick2Me surgeries (I hope). Within the approved basket your primary care provider decides what is appropriate (or not) for your symptoms, and you wait in line with everyone else.

What medical services will I be able to buy?

Interesting issue. This is the flip side of “what procedures are included”. Probably some doctors and clinics will continue to operate on the private market, but they’ll only be allowed to deliver services not included under single-payer, like high end cosmetic surgery in Beverly Hills. You will not be allowed to buy procedures and services that are covered by single-payer.
This aspect is one of the things that some on the left love. They call it “jumping the queue”. Buying services and procedures (capitalism) is jumping the queue, and is strengstens verboten under single-payer.

How will care be rationed?

Rationing will occur at two levels:

  • First, not all services and procedures will be covered. Presumably, Congress will be unwilling to pay for EVERYTHING, so they’ll have to decide what not to cover. If you want a service that’s not covered presumably you’ll have to pay cash for it, or there will be supplemental insurance available to cover it.
  • Second, there will be queues. Your doctor will approve you for knee surgery, but you’re going to wait in line for it behind a lot of other people. Waiting times are one of the top complaints in Canada and the UK, both of which use a single-payer system.

Of course, many on the left point out that our current system also rations health care — by income.

What are the opportunities for bypassing the system?

Oh, I wouldn’t really know about that <g>. Seriously, some of us have already experienced some of the nonsense involved with this. If you have Medicare or private medical insurance and want to bypass the checks and limits your insurer has in place, try paying cash for a service or procedure.
Under a single-payer system there may be doctors in your community who remain in the private pay economy, but they will likely only be allowed to deliver those services that are not covered by single-payer. One of the escape valves for Canadians has been that the US is nearby. If Canadians don’t want to wait nine months for a rotator cuff repair, they drive across the border into the US, pay cash and get treated immediately. So, for us in the U.S. I guess there’s always Mexico, Thailand, or Taiwan.
High tech employers like Microsoft and Amazon use generous medical insurance as a perk to compete for employees. Under a single-payer system companies will probably still offer health insurance to employees, but this insurance will not cover services provided by single-payer.

Will there be a doctor shortage?

Probably. That’s why wait times are a characteristic problem with single-payer systems – if there were sufficient doctors there would be no wait times. Congress will try to hold down costs by lowering doctor payments, while at the same time it increases demand by paying for services. Supply and demand is like gravity. Inescapable. An opinion piece in the New York Post described the consequences experienced in Canada:

Our northern neighbor’s health-care system is plagued by rationing, long waits, poor-quality care, scarcities of vital medical technologies and unsustainable costs. … the average Canadian has to wait 4½ months between getting a referral from his primary-care physician to a specialist for elective medical treatment — and actually receiving it. … Canada’s wait times are certainly growing: That average 18-week delay for “elective” referrals is 91 percent longer than in 1993.

There’s also a severe shortage of essential medical equipment. Canada ranks 14th among 22 OECD countries in MRI machines per million people, with an average wait time to use one at just over eight weeks. Canada ranks a dismal 16th in CT scanners per million people, with an average wait time of over 3.6 weeks.

The United States ranks second in MRI machines per-capita, and fifth in CTs.

Will drug prices go down?

Probably, since group buying power will allow the government to negotiate lower prices. However, we’ll then probably see fewer new drugs developed. Why? Supply and demand.
The U.S. economy is about one quarter of the world’s total in size, but the top three (and six of the top ten) pharmaceutical companies are based in the US. If their revenue is choked off by price controls, where do they go? With less capital available for R&D, it seems inevitable there will be fewer new drugs developed.

What happens to the insurance companies?

Some on the left salivate at the prospect of the insurance companies going under, while they engage in schadenfreude over the fate of those companies’ employees. I doubt the big insurers are going out of business. A 2013 article in USNews listed the biggest 125 medical insurers in the US. These were the top five:

  • UnitedHealth Group Inc (UNH)
  • Kaiser Foundation Group (non-profit)
  • Anthem Inc (ANTM)
  • Aetna Inc (AET)
  • Humana Inc (HUM)

Four of the five are for-profit corporations with shares trading on one of the major stock exchanges. Presumably they’re watching what’s happening and will diversify into other lines of business as single-payer approaches.

The bottom line

Here’s a definition of the law of supply and demand, courtesy of “the price charged for a product is determined by the level of demand and the quantity available.”
Single-payer health care creates an increased demand, while maintaining or lowering prices, without increasing supply. Over time, there will be problems.