Health Care – The Problem with Single Payer

Controversy continues to grow over Obama’s proposed revamping of the health care system. Much of it centers on the proposed “government option” and the fears that it will lead either by design or by accident to a single payer system. As with most political controversies, there are a lot of charges and counter charges, and often more heat than light. Still at its core, the controversy is not simply about competing options, but one of fundamental direction. For decades, Liberals have been pushing for a single payer health care system. Obama and many others have supported it, though often they have said it would take an incremental process in reaching it. Still single payer has been the ultimate goal.

The arguments for single payer range from providing universal coverage, a simpler system leading to saving through reduced administrative costs and unified billing process, improved health care for patients, reduced cost for employers, and equality of access, just to name a few. These all sound wonderful. After all who wouldn’t want better health care at a cheaper cost?

In fact, supporters are often so sure of their case that they see some sort of devious reasons behind the lack of its immediate and overwhelming acceptance. As one supporter put it, “The obvious conclusion is that our government does not serve the people who elected them. Rather, our elected government officials serve the special interests of the health insurance industry and other corporations who make massive campaign contributions.”

What does not seem to occur to such supporters is that, rather than the corruption of special interests it is doubts about their claims that have led to lack of support for single payer. That is certainly what is behind my opposition.

The problem with so many of the arguments for single payer is that they contrast the best assumptions and hopes for single payer with the worst realities of the current system. Therein lies the first of their major problems, for they commit the fallacy of False Choice, as there are more than just two options here. It is not the current system or single payer. Even if we do conclude the current system is flawed and needs replacing, the question simply becomes what should we put in its place? I would certainly agree that the current system is badly in need of reform. But the reform I advocate would be in a completely different direction than single payer.

This takes me to my second and in many respects more serious problem with single payer. I simply do not believe that the underlying assumptions supporters make are true. In fact I believe history is pretty clear that they are not.

When people talk of a single payer, they really mean the government. Single payer health care is government run health care. True, some supporters claim that single payer is merely “a health care financing mechanism,” but such claims are hard to take seriously. What government pays for, the government will control. In addition, the claim that it is merely a financing system is contradicted when the very same supporters then claim “The strongest economic argument for single payer is that it can control costs in a coordinated fashion because of the centralized nature of its administration.”

So while supporters claim that this is its “strongest economic argument,” I would argue that this is its biggest flaw. Most of the claims in favor go back to this general belief, the efficiencies that come from centralized administration, and thus centralized planning and control. Such arguments are not new. In fact, many of the political battles of the last 150 years have been fought between those who have argued for such centralized planning and control and those who have argued for more market based approaches that stress choice and competition.

At first glance, there is a sort of logic to centralized planning and control, but it is a siren song that has led many astray and caused untold suffering. Supporters often contrast such planning with what they portray as the chaos of the market. Thus for the payment of claims, “a fractured payment system, preserving the chaos of multiple claims data bases, would subvert quality improvement efforts.” Having one source would be so much simpler and therefore better.

As I layout in detail in chapter three of my book Preserving Democracy, there are at least two fatal flaws in such thinking. The first is the simple fact that the larger the enterprise the harder it is to control and manage. Something like single payer health care for a country as large as the United State would be so large as to be completely unmanageable in such a top down approach.

Again this is not merely theory, but has been demonstrated time and time again. Government is simply not a good manager. Claims of supposed improvements in efficiency consistently turn out to be false. After all, if government could effectively manage a national Health Care system, why is Medicare going broke, even though many doctors must limit the number of Medicare patients they see, for Medicare simply does not pay enough. Yet supporters of single payer ask us to believe that a government that is failing at providing health care for a portion of the public should be given control of the entire system.

The second fatal flaw behind such centralized planning and control is its disconnection between those who pay for the services, and those who receive them. Whenever this happens costs rise until some sort of costs control places limitations on service. Thus the when one looks at the government systems around the world they find either extremely high costs or some form of rationing of service. Often it is a combination of the two.

The real solution to current problems of our health care system are not to be found in centralized planning and control, but rather in increasing choice and competition, an approach that has repeatedly been demonstrated to work in many areas.

Let me be clear about this, the current system is NOT based on choice and competition as both are severely restricted. Even though there are over 1300 companies providing health insurance in the U.S., for those who have health insurance, their choices, if they have any at all, are limited to the few offered by their employer. In addition there is already significant government involvement in health care, through Medicare and other programs and regulations which are negatively impacting the system and driving up costs.

Real positive reform would increase choice and competition. It is simply a matter of numbers and freedom. If 1300+ companies are actively seeking better ways to provide health care, and customers are free to choose those who do the best job, than we are much more likely to see better health care at a lower cost, than waiting for one entity, the government, with a proven track record of inefficiency and mismanagement, to come up with an improved system.

After all, with choice and competition if you don’t like your current provider you can change to some else. With single payer, if you don’t like your current provider, well there is a reason it is called single payer…