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Why Single-payer is fundamentally flawed and ...

Updated: Jun 3, 2019


Why Single-payer is fundamentally flawed and how the government-run healthcare system left Britain on its deathbed.

As I was chatting with a Co-worker today the topic of “Medicare for All” came up. While I do believe everyone is entitled to healthcare in theory, the solution to providing that has no simple answer. Most people agree, something has to be done, but WHAT? To do so you have to understand how the healthcare systems work. It’s easy to say “Everyone should have access to healthcare” but how do we achieve that and who’s going to pay for it?  The “Medicare for All” plan endorsed by a host of Democratic congressional and presidential hopefuls would increase government health care spending by $32.6 trillion over 10 years, according to a new study. The Study


The study, released by the Mercatus Center at George Mason University, showed the plan would require historic tax increases, the legislation’s federal health care commitments would reach approximately 10.7 of GDP by 2022, and rise to nearly 12.7 percent of GDP by 2031 and those estimates were on the “conservative” side.

The tax hikes would allow the government to replace what employers and consumers currently pay for health care -- delivering significant savings on administration and drug costs, but increased demand for care that would drive up spending, according to the report. The studies found increases in federal spending over 10 years that ranged from $24.7 trillion to $34.7 trillion.

The Mercatus study takes issue with a key cost-saving feature of the plan -- that hospitals and doctors will accept payment based on lower Medicare rates for all their patients. The study found that the plan would reap substantial savings from lower prescription costs -- $846 billion over 10 years -- since the government would deal directly with drug-makers. Savings from streamlined administration would be even greater, nearly $1.6 trillion. But other provisions of the plan are also expected to drive up spending, with coverage for nearly 30 million uninsured Americans, no copays and no deductibles and improved benefits on dental, vision and hearing.


Policy points!

The U.K’s National Health Service

The U.K.’s government-run healthcare system, the National Health Service, (NHS) turned 70 last year. There’s not much to celebrate. Patients routinely face treatment delays, overcrowded hospitals, and doctor shortages. Even its most ardent defenders admit that the NHS is in crisis.


The NHS experienced these problems from the start. In its first year, the service went well over its budget. Prime Minister Clement Attlee even begged citizens not to overuse health services. Staff shortages, caused in part by low pay, have plagued the system for decades. The NHS started recruiting doctors in masses from India, Pakistan, and Sri Lanka in the 1960s to address the issue.


Nevertheless, shortages persist. One in 11 NHS posts is currently vacant. Four in five NHS staff worry that these vacancies jeopardize patient safety. The NHS has among the lowest amount of doctors, nurses, and hospital beds than any country in the Western world on a per-capita basis, according to a report from the King’s Fund.


A simple influenza outbreak last winter plunged the U.K. system into chaos. The NHS canceled 50,000 non-emergency surgeries to make room for an influx of people with the flu. Still, nearly one in five patients had to wait more than four hours in the emergency room.

Simply put, the NHS is unequipped to care for its citizens.


The Problem

Single-payer is fundamentally flawed. It relieves consumers of any obligation to pay for their care, at least directly. If the price of care is zero, then every patient can demand an infinite amount. The supply of care, meanwhile, is limited. And the amount of money the government can spend on health care is finite.


In a functional market, patients would demand care and providers would furnish it at mutually agreeable prices. If prices were too high, patients would demand less care, and marginal providers would exit the market. If prices were too low, patients would demand more care, and new providers would enter the market to supply it.


These basic market-clearing principles cannot operate in a single-payer system. Governments must forcibly cap demand at whatever level they’re willing to supply—that is, to pay for it.


An NHS Improvement survey of data from the first three months of 2018 found that 2,600 patients had waited more than a year for elective treatment—a nearly 75% increase from the previous year. It’s no wonder that about 10% of Britons hold private insurance coverage. They simply can’t count on the NHS to deliver quality care in a timely fashion. To add insult to injury, the new New ‘Medicare-for-all’ bill would largely outlaw private insurance for the citizens in the U.S.!


Further, funding for the NHS is already at record levels. It’s projected to grow an average of 1.2% percent per year through 2020-21, to an annual tab of nearly $170 billion. Overall, government spending on health care has surged from about $340 per person in 1950 to $2,985 per person today.


Synopsis

Despite the crisis in the U.K., some Americans continue to be entranced by single-payer. American progressives want to import this disastrous model. Why? The British experiment with socialized medicine has been a monumental failure. It would be foolish to repeat that mistake here.

American health care has its problems. But the NHS offers 70 years of evidence that single-payer will not solve them. The proof of concept FAILED.

For more information on healthcare and how it works, contact us at www.MonarchBA.com


John J. Marchetti

Managing Partner

Monarch Benefit Advisors


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