Indianapolis has been pretty much shut down this week by weather. A retreat I was supposed to attend was cancelled today, giving me the unexpected gift of a whole work day with nothing on the schedule. I planned not to blog, but to focus on other things. A number of excellent articles* changed my mind. One was by Ezra Klein, entitled “What Liberals Don’t Get About Single Payer.”
I have written and spoken on single payer many times. I even appeared on the Colbert Report to talk about it. But I have come to believe, over time, that many single payer supporters are not prepared to make the necessary next steps to reduce spending.
Single-payer is a phenomenal way to increase access. You get full universal coverage without breaking a sweat. But single payer doesn’t reduce spending growth, in and of itself. It may have some one-time savings in administrative costs, but reducing spending growth requires more. You need to do unpopular things:
“Single payer isn’t a panacea,” said Uwe Reinhardt, a health economist at Princeton University. “The magic they have is setting rates. But neither Medicare nor Canada has done anything innovative on the delivery side. Taiwan is trying a little bit but not a whole lot. By and large they just pay bills.” The limitations of single-payer systems became clear during the health-care debate, when the Congressional Budget Office projected that premiums for a public option would be higher than premiums for private insurance — unless a public option could avail itself of Medicare’s pricing power.
A health-care system that followed international best practices would direct the government to set rates. Or it would let insurers band together and negotiate rates collectively — a practice called “all-payer rate setting.” But it wouldn’t need to eliminate private insurers. It’s good for consumers to have a choice of insurers, who have real incentives to innovate and devise better ways to keep customers healthy and costs down.
We’ve written about all-payer before. We even have a podcast on it. Today, Austin and Nicholas wrote about reference pricing. I’ve written about how other systems have more government involvement like price controls. These are the things that will get a handle on pricing and spending. But they will hurt the bottom lines of pharmaceutical companies, the medical device companies, and health care providers. That will make them unhappy.
We have a single payer system in the US today**. It’s Medicare. There are plenty of people who worry that spending in our single payer program is rising too quickly and is unsustainable. It’s not the single payer aspect that makes those worries better. It’s the unpopular stuff that you need to add to it. Or, we could add it to the private side.*** Either way, you’re not going to fix this problem without some bad-tasting medicine.
*If you’re interested in what the other articles were, you should be following me on Twitter. I tweet those kind of things all the time.
** Also, purists will claim that Medicare is not really “single payer”. There’s Medicare Part D, Medicare Advantage, Medigap, etc. I concede the point. But Medicare is what many single payer advocates identify as single payer in this country, and many want “Medicare-for-all”. Additionally, everything I said holds even if we eliminated the private aspects of Medicare and made it all like “traditional” Medicare.
***None of this should be taken to mean that I don’t think single payer is a completely viable way to reform the health care system. It will result in universal coverage and could allow us to make further effective reforms. It’s just not sufficient to fix all the problems, nor the only way to accomplish our goals.