Wednesday, July 3, 2019

Critiques of Single-payer: Why Did They Take So Long to be Discovered?

It is now routine for Democrats to be asked in town halls, debates, etc. "Who here would abolish their private health insurance in favor of a government-run plan?"  But why did it take so long to pose this question to advocates of "single-payer" health systems?

As a matter of economics, it should be obvious that the health insurance market would not be served by a single seller unless there were tremendous barriers to entry.  E.g., criminalizing any private enterprise that attempts to sell or otherwise provide health insurance.  Without stark penalties, regardless of the details of government plans, there would be gains from trade between private insurers and at least a small segment of consumers if not more.  With private insurers, the market is no longer "single payer" (as long as "single" refers to "one"). 

For this reason, bills in Congress proposing to transform the U.S. market into single payer outlaw private health insurance.  Take Senator Bernie Sanders 2013 (sic) American Health Security Act's "enactment of a Medicare-for-All Single Payer Health Care System" by "Requir[ing] each state health security program to prohibit the sale of health insurance in that state...."

Why didn't Mrs. Clinton ever raise this point when Senator Sanders was campaigning against her for the 2016 Democratic nomination?

Why didn't Joe Crowley raise this point when campaigning against AOC in 2018?

One possible answer is overconfidence in victory.  But overconfidence did not stop Clinton supporters from calling Sanders a socialist during the 2016 primary, or Clinton positioning herself as a defender of capitalism.  Why not make it more concrete to regular people and alert the 180 million consumers of private health insurance that their product would become illegal?

I think part of the answer is that few people actually read the single-payer bills in Congress (I observed the same with the "stimulus" law and with the ACA) or think through the economics of how single payer can operate even in principle.

From the first day I arrived at White House CEA, I told anyone who would listen: "Medicare for All bills in Congress will outlaw the sale of private health insurance and outlaw the provision of health insurance as part of employment."  They thought I was kidding.  Because capable politicians do not give such gifts to their opponents, what I said could not be true.  I began carrying the relevant bill sections in my jacket pocket for the benefit of the doubting Thomases; only after that did the President's speeches (which are preread by EOP staff) begin to include the disturbing and incredible truths about "Medicare for All" (an earlier alarm bell was here).

It turns out that I have a talent for finding rock-solid facts that journalists would vigorously deny (see Jim Acosta here, noting that the President wrote about "the Democrat proposal 'Medicare for All'", which USA today shortened to "Democrats" in its byline).  A few months later, journalists finally stopped denying the plain text of the Medicare for All bill and began querying Democrats as to whether they support the abolition of private health insurance.

(Medicare for All bills also adhere remarkably closely to Marxist theory, but that is primarily of academic interest so I will post on it later.)

[For those interested in the technicalities, Medicare for All outlaws any private insurance (individual or employer) that covers any normal medical service.  Specifically (from page 421 the 2019 Economic Report of the President, referring to the 2017 bills): “medically necessary or appropriate”
  • hospital services,
  • ambulatory patient services,
  • primary and preventive services,
  • prescription drugs,
  • medical devices,
  • biological products,
  • mental health services,
  • substance abuse treatment,
  • laboratory/diagnostic services,
  • reproductive care,
  • maternity care,
  • newborn care,
  • pediatrics,
  • oral health services,
  • audiology services,
  • vision services, or short-term rehabilitative and habilitative services and devices (sections 107 and 201 of the “Medicare for All” Act of 2017 and section 104 of the House bill).
The House bill (section 102) goes further with
  • dietary and nutritional therapies,
  • long-term care,
  • palliative care,
  • chiropractic services,
  • and podiatric care.
The 2019 bills further add to this list. 


TonyLima said...

Welcome back from the public sector. Looking forward to many more posts like this one. And thanks for all your efforts in this administration.

Tony Lima

Pavel Shevchuk said...

Two observations:
1. Yes, surely you need to ban private insurance in order to have a 'proper' single-payer
2. European countries, to which Democrats refer so often do not do that. The public provision crowds out private insurance, but usually it is not banned, and exists albeit in a limited form.
3. On the other hand, many European countries do not have anything resembling single-payer, instead using some combination of compulsory health insurance, subsidies for people who can't afford it, and price regulation

David R. Henderson said...

Yes. Welcome back, Casey. I've very much appreciated your work for our country this last year.