“… [O]ur healthcare system will devolve into a single-payer system…”

Along with Utah Senator Mike Lee, the Republican Senator from Kansas, Jerry Moran, said Monday he would be unable to support the Better Care Reconciliation Act of 2017. The Better Care Reconciliation Act of 2017 is the Senate’s attempt to repeal and replace the Affordable Care Act. As I write this post there are reports that Republicans do not have sufficient votes to repeal the Affordable Care Act  without replacement – the Republican’s fall back plan with the failure of The Better Care Reconciliation Act. This is certainly an unfolding story with the final words of the script yet to be written.

The words that Senator Moran chose for his announcement are very telling.

We should not put our stamp of approval on bad policy. Furthermore, if we leave the federal government in control of everyday healthcare decisions, it is more likely that our healthcare system will devolve into a single-payer system, which would require a massive federal spending increase. We must now start fresh with an open legislative process to develop innovative solutions that provide greater personal choice, protections for pre-existing conditions, increased access and lower overall costs for Kansans.

Moran believes continued federal government control will cause our system will devolve into, a single-payer system. He may very well be correct.

The discussion that we are having about healthcare really is about how to pay for healthcare – not directly healthcare itself. The Affordable Care Act was an effort to control the escalating costs of healthcare. The ACA was destined to fail as will be all Republican or Democratic efforts at cost control focusing on who pays (insurance). In any market, you cannot control costs after the fact. If The Better Care Reconciliation Act passed it would still ultimately fail to achieve its purported goals. If the BCRA was made law of the land we would have been talking about and trying to control increasing healthcare costs again in several years or maybe months. Trying to control healthcare costs through insurance regulation is similar to a attempting a very complex price ceiling. Price ceilings are notorious failures and trying to control health costs after the fact will also fail. Costs must be controlled at the production stage. By far and away the best way to control costs is for the individual producers to see that is in their best interests to make cost and price lower. This could occur if individual healthcare providers had to compete against one another for your business.

Even if we could encourage market discipline in healthcare, the basic product that is sold is very price inelastic. This simply means that when the price of a product goes up you and I are likely to continue to buy the product. We could probably introduce more market logic into less serious health products and services. But less serious medical problems are not what is driving the ever increasing cost of healthcare. It is more serious issues that are causing the increase in the price of healthcare and we are very price inelastic about serious health problems. We will not deny the elderly the best care possible. If one of my loved ones has a serious medical problem cost will not be an important factor in choosing treatment. There is a significant demand side element to the increasing cost in healthcare.

In addition, improving medical technology is very expensive. The very technology that improves our physical standard of living and saves lives is very costly. The supply side of the market drives up cost and price also. Healthcare is going to be more expensive. Unless we radically change our expectations, healthcare costs will continue to rise. If we continue to want and to demand the best healthcare possible, healthcare will continue to be more and more expensive compared to the price of other goods and services. While altering the regulations on third party payment can certainly have some impact, the fundamentals of the healthcare market dictate that costs are going to continue to increase.

Does this mean that we will eventually arrive at a single-payer for our healthcare? A single-payer system is a highly likely eventuality. The federal government would become the single-payer to private medical and health care providers. When I first began to study economics I was taught that the primary difference between a market based economy and a socialist economy was ownership. We also recognize that whoever makes the decisions determines the outcome. With the federal government regulating our healthcare system as a single-payer the outcome would be very similar to out right federal government ownership of all elements of the healthcare market. I am afraid the clocks are going to strike thirteen.

 

 

19 thoughts on ““… [O]ur healthcare system will devolve into a single-payer system…””

  1. appreciate the remarks that current efforts at cost controls is a complex price ceiling mechanism.

  2. The supply side isn’t as simple as what you’ve laid out. Lapdoscopic surgery is a great example, it’s newer technology, lower cost, better results than a traditional surgery.

    On the other side of the issue, people are more likely to survive heart attacks than they used to be, that’s led to a rise in expensive ailments like heart failure.

    It’s amazing to me how many people don’t realize that healthcare is largely price inelastic. So do you have a proposal? I do understand your hesitation to single payer. How catastrophic do you believe it will be?

    1. Hi Darth,
      Thanks for stating that we now have less invasive surgery techniques that are less expensive and lead to better results than the traditional methods. All of the various “scopic” surgeries are examples of technological change that are undoubtedly cost-saving. Of course, it is very possible that these surgeries lead to greater longevity which may be expensive. I’m sure there are other examples.
      I do think that our federal government will continue to take over more and more with the decision-making process in healthcare. Costs will continue to rise and we will attempt to “legislate” these cost increases away. Failures at this legislation will lead to a single payer system. So far as the affect on the healthcare industry, innovation will decline so the cost increase should be slower and the demand will be “managed” by the state – there will be fewer services and longer wait times. These changes in healthcare will affect different people differently. The primary general cost to the public is a loss in freedom.

      1. That’s a beautiful explanation. Thank you very much.

        Do you think it’s possible that it could actually be beneficial to have a single payer?

        Let’s say there are x dollars for healthcare available to Ohio, every healthcare provider will have to compete with each other for their slice of that pie, which would involve finding ways to deliver the same care at lower costs in order to remain profitable and offering new services like telepresence medicine in order to increase your area of influence. If there is good information on the quality of care then providers would also have to compete in terms of pace of delivery and quality levels otherwise a patient would visit a different provider.

        Obviously I’m not asking if you believe this scenario, just if you think it’s halfway possible.

  3. Dr. Wheeler,

    Heard an interesting theory recently. It was that Democrats knew Obamacare was going to eventually fail and maybe even intended it to fail. Then they would come to the rescue and institute single payer, which is what many of them wanted in the first place and just didn’t have the votes for. What they did not expect was that Hillary Clinton or another Democrat would NOT be living on Pennsylvania Avenue when it did. Do you think there is any credence to that theory?

    1. Thorin,
      I have also heard that theory. I do not doubt that many Democrats did want single-payer when the ACA was passed. However, I doubt there was enough forward thinking by a significant number for people for this theory to have much credence. I generally do not believe that conspiracy theories hold much water – simply because people do not think that far into the future. The authors of the ACA really believed that it would contain costs. Or, who knows, maybe the Democrats are more forward thinking than I give them credit for!

  4. Personally, I think it is only a matter of time until single payer happens. It has always been the goal of the left and unfortunately, growth of government and its control only ever expands. The stark, brutal, unhappy truth is that whatever the left wants, the left gets. The only question is how long it takes them to get it.

    1. The “Left” does not want poor and working class people to die because they are unable to afford the insurance through which they can obtain health care without financially destroying them. Note that many health care problems and therefore costs are due to being born with pre-existing conditions.

      That said, those who create their own health problems by being irresponsible with the body God gave them do not get much of my sympathy. Few things disgust me more than seeing obese people loading up at the buffet after Sunday worship.

      In this case, the “Left” is the pro-life side. That said, when some on the Left support excessive liberal abortion rights, they lose some of that pro-life quality. Likewise, when those on the Right who oppose abortion rights also have no problem with letting poor people who cannot afford insurance die, they too lose some of that pro-life quality.

      On little sleep. Sorry if the writing is incoherent.

      1. “The “Left” does not want poor and working class people to die because they are unable to afford the insurance through which they can obtain health care without financially destroying them.”

        True. Unfortunately single payer is not the solution for that. And the right DOES have a problem with letting poor people who cannot afford insurance die. Just because they don’t accept your preferred socialistic policies doesn’t make them less pro-life in any sense of the term. Opposing single payer does NOT equal “having no problem with letting poor people die”.”

      2. Jeff,

        Your comment was coherent enough :o). While I do think you have a point – I do not think that to compare abortion to lack of healthcare is a good comparison. I have heard it before, but I do not think “Pro-Life” and lack of healthcare is an appropriate comparison. If life does begin at conception, then to exterminate the life is not parallel with failing to receive the best treatment if faced with a life threatening illness. The sick person can make a choice to find some treatment – the baby cannot. I may not be able to have a private jet available to fly me to Tennessee to have a transplant – butI do have options. Those with a lower income may not have the opportunities I have, but there are options for care. Medicaid does provide options. I am certain there are people in the US who have not received the best medical care and have died. The issue you are addressing is a lack of compassion – we see a lack of compassion on both the Right and Left.

  5. Why couldn’t it devolve into a system through which basic health care is available free to all, but that premium health care (i.e short waits, more experienced physicians, perhaps) is available only at an extra cost?

    1. That’s one possible way of single payer playing out, but it’s still single payer.

    2. Hi Jeff,

      I know you know that healthcare will never be “free” in the larger sense of the word. We could have a system where there would be no or very little cash payment (There is always some opportunity cost to a physician’s visit.) at the time of the delivery of the service or good and where they would not be any subsequent out of pocket payment after-the-fact. If we could arrive at an equitable tax scheme or system to collect revenues to pay for the healthcare, your system is one option. I do not think that we could have a premium (the wealthy pays for faster, better service) because of the class nature that it entails. One of the major problems with today’s health system is that it produces results so segregated by income. I do not think we could pass a proposal that is so upper and lower class. In a shorter timeframe (~ months), I do not think that what you are proposing cause major disruptions. The main problem I see is a concentration of power (political and economic) in the federal gov’t (I mean nothing exceptional by identifying “gov’t” – what I mean is concentration of power to people without adequate separation of power). We do not want “experts” calling the shots in a political context on who receives treatment and when. The outcome in the longer run (greater than ~ months) will be the “experts” using political + economic power to benefits themselves an their friends and cronies. This will turn nasty very quickly. There are also efficiency issues with a single payer, but I fear the real problem is loss of freedom.

      1. What about Great Britain’s plan? I know that plan has been criticized, but doesn’t it have something like I suggested?

        Sorry, Dr. Wheeler. Not an expert on European health insurance.

    1. :o) – I saw that comment earlier today.

      Just think, a minimum wage worker in Seattle could purchase the plan with less than an hour’s worth of time!

      1. He obviously misspoke, he thinks you can somehow get insurance for $12 a month, his previous comments show.

  6. “Your comment was coherent enough :o). While I do think you have a point – I do not think that to compare abortion to lack of healthcare is a good comparison. I have heard it before, but I do not think “Pro-Life” and lack of healthcare is an appropriate comparison. If life does begin at conception, then to exterminate the life is not parallel with failing to receive the best treatment if faced with a life threatening illness. The sick person can make a choice to find some treatment – the baby cannot. I may not be able to have a private jet available to fly me to Tennessee to have a transplant – butI do have options. Those with a lower income may not have the opportunities I have, but there are options for care. Medicaid does provide options. I am certain there are people in the US who have not received the best medical care and have died. ”

    Like all analogies, the one I mentioned has holes.

    But I do think they are comparable issues. Both involve the use of governmental power to force a citizen(s) to give of resources for the health and life of another person. I consider a fetus a person and accept that others do not agree.

    I also am a vegetarian.

    I see life as a gift from God. I try to follow that principle consistently.

    1. “But I do think they are comparable issues. Both involve the use of governmental power to force a citizen(s) to give of resources for the health and life of another person. I consider a fetus a person and accept that others do not agree.

      I also am a vegetarian.

      I see life as a gift from God. I try to follow that principle consistently.”

      When stating that abortion and a lack of adequate healthcare were not comparable, I was not thinking about it from the standpoint of the government using its power to force people to use their resources one way or the other. I was thinking about the two actions in terms about that was actually happening and what the outcomes are. Taking the life of an innocent person is very different from lacking the very best healthcare. That is all I was saying. I do see what you are saying from a more narrow, more exclusively politically economic, perspective.

      My daughter is a vegetarian and also pregnant with our second grandchild. I would like to argue her into a diet that more easily provides protein :-).

Comments are closed.