Winning a game of Monopoly — assuming players have the stamina to play to the end — depends on some skill to dominate (owning and developing) a color group and a little luck when rolling the dice. The call for “Medicare for All” has re-ignited debate about a single-payer health care system, which progressives see as a blessing but which an array of stakeholders, from pharmaceutical manufacturers and insurance companies to hospitals and organized medicine, view as a curse. The monopolistic power inherent with a single-payer system is arguably the basis of these hopes and fears.
The hopes
Progressives hope that a dominant single-payer system would reduce costs. While some laws may need to change (e.g., Medicare is currently barred from negotiating drug prices), a future single payer might use its purchasing power to negotiate prices with manufacturers and/or reduce reimbursement to providers. The resulting lower costs could, in theory, help to extend coverage to nearly everybody.
However noble the idea of universal coverage may be, there are at least two caveats to this thinking. First, expanded coverage does not necessarily result in improved access. One could have coverage on paper but inferior access to care (witness the difficulties some veterans have had accessing covered care through the VA). Second, a so-called single-payer system is a bit of a misnomer, as it would not be the only system — just the dominant system. In countries with single-payer systems, a private system for those who can afford it operates in the shadow of a public system. As with other services provided by government monopolies, private alternatives (e.g., private schools, private security, private parks) give the rich an escape hatch.
Progressives boldly assert that a single-payer system would reduce overhead, administrative costs, and complexity of a system based on competing payers. Going from an array of insurers to a single insurer may eliminate redundant functions and dollars spent on advertising as well as a profit motive. But a new or enlarged government agency would have its own overhead, administrative costs, and complexity that could neutralize any savings. Further, the larger public agency may have to outsource functions to the very organizations it replaced. Savings based on a switch to a single-payer system are, at best, speculative. Government monopolies like the United States Postal Service typically are not case studies of efficiency — which is not surprising, as governmental structures and processes purposely meant to ensure equity can conflict with efficiency.
The fears
Insurers fear that a single-payer system would downsize them or eliminate them outright. Hospitals and providers worry about how a dominant payer might lower payments and impose costly controls. Manufacturers are concerned about how a government monopoly could negotiate or even dictate lower prices. Objectively, any or all of these fears could materialize if a single-payer system came to pass in the United States.
Beyond the costs to these stakeholders, the total cost to society is not clear. Currently, payers pay for innovation, but belt tightening by a single payer may slow the rate of inflation and, as a result, slow the rate of innovation — fewer breakthrough drugs, devices, tests and procedures that could address unmet needs. Young, would-be providers could choose more lucrative career paths, accentuating staffing shortages and quality issues already plaguing some geographies (e.g., rural and low-income urban areas) and specialties (e.g., primary care, mental health, and substance abuse). Some hospitals and providers could opt out in favor of the private system or limit their participation in the public system.
Consumers’ views on a single-payer system are, unfortunately, less clear. This is because a person’s response to an opinion poll is highly sensitive to the way questions are framed. Nobody knows whether Americans would tolerate the treatment delays common under single-payer systems, even if a delay were medically acceptable. Immediate gratification is rampant in our society, and people are willing to spend more to get faster access to services they want — some of which they may not need. If the tradeoffs associated with a shift to a single-payer system were detached from political rhetoric, accurately described, and fully understood by consumers, then a fair share of the 70% of Americans who say they support a plan like Medicare for All would likely rethink their position.
Policymakers should have other concerns and ask questions: Will a single public payer facing little to no competition invest in new capabilities, such as predictive analytics? Will Congress be willing to cast aside budget neutrality, allowing an extremely large government agency to spend more now in some areas in pursuit of future cost offsets? In the absence of competing payers, will there be fewer payment- and service-delivery demonstrations and innovation?
Playing games
If the United States were to switch to a single-payer system, there is a real potential for market failure to be replaced by government failure. It’s most unclear which allocation of resources would be more inefficient; other countries’ experience offers clues, but there are no comparable analogs, no lessons learned, no best practices for a country switching from many payers to a single payer. Econometric models forecasting a future where Medicare (or some other agency) were the only game in town are no help, as they are fraught with assumptions and often wrong — sometimes very, very wrong. So this debate may be less about well-thought-out economics than about politics.
Our predictably unpredictable political process will unfold and determine our next turn, but it might be easier to solve seemingly insoluble public policy decisions like this with a simple roll of the dice.
No Comments