The Single-Payer Illusion

By HENRY RIGSBEE

Support for introducing a single-payer health insurance system, once a fringe position, is now a litmus test for Democratic presidential candidates. Advocates for single-payer, such as 2020 presidential candidate Sen. Bernie Sanders, argue that a healthcare system exclusively financed by the federal government would be more efficient and fair, replicating successes in other countries. 

The notion of “Medicare for All” polls well with the general public — 56 percent supported the idea in a recent Kaiser Family Foundation poll. But favorability plummets to 37 percent if respondents are informed they might have to pay higher taxes or give up their private insurance. 

A 2016 referendum to implement a single-payer system in Colorado was rejected by over 79 percent of voters and failed to carry a single county statewide. While a majority of Americans desire universal health insurance coverage, there are still formidable political obstacles to implementing a new healthcare system that would lead to restricted choices and higher taxes.

Although support for single-payer health insurance has increasingly become progressive orthodoxy, intraparty disputes remain over issues like whether people should be allowed to pay for better services, like in Canada, where the wealthy and well-connected routinely come to the U.S. for medical care. Sanders’ takes this approach, but 2020 presidential candidate Sen. Kamala Harris walked back her support for this policy in a CNN town hall last month after widespread criticism. 

Illustration by Annabel Driussi

Another political landmine for single-payer advocates is whether illegal immigrants should be covered by a single-payer system, as advocated by New York mayor Bill de Blasio, which would incentivize lawbreaking at taxpayers’ expense. Another potentially contentious issue is whether or not a single-payer system should cover abortion (especially late-term and partial-birth), euthanasia, and sex reassignment surgery or permit institutions which morally object to these procedures to opt out of providing these services.

Although Canada is the prototypical example of a single-payer system, and its geographic and cultural proximity make it a natural point of comparison for many Americans, numerous other developed countries provide universal health insurance coverage in ways other than either single-payer or direct government provision. Singapore and Switzerland, which use universal health savings accounts and individual private insurance, respectively, to deliver high-quality healthcare at much lower cost than the U.S., have strong claims to be more market-based than the American system. In between these poles are systems such as those in Australia, France, and Germany, which feature a mix of public and private financing and provision. 

The practical difficulties of implementing single-payer healthcare in the U.S. include its ruinous cost, with a widely-cited Mercatus Institute study estimating Sanders’ bill would cost $32.6 trillion over 10 years, requiring sharp tax hikes for the middle class. Moreover, a single-payer system could harm sectors where the American medical system is a model of excellence. In particular, the U.S. has the highest 5-year breast, colon, and prostate cancer survival rates among large developed countries. 

Americans may also chafe at the waiting times endemic in socialized systems such as Canada, where 29 percent of patients are forced to wait more than two months for a specialist appointment, compared to six percent in the U.S. Imposing strict price controls on drugs might reduce costs in the short term, but would hurt global medical innovation by limiting the ability of pharmaceutical companies to recoup the substantial fixed costs of research and development in the American market. 

Furthermore, the often cited statistic that Medicare has lower administrative costs than private insurance is a myth — Heritage Foundation scholar, Robert Book, reports that Medicare’s administrative costs are actually higher per enrollee (Medicare enrollees have higher average health costs due to their age which artificially depresses administrative costs as a proportion of total expenditures) — and Medicare lost a staggering $48 billion to fraud in 2010 according to the U.S. Government Accountability Office, a loss ratio roughly 10 times higher than for private insurers. Single-payer would not be a panacea to the very real inefficiencies plaguing the American healthcare system.

The proposition that single-payer healthcare would improve “fairness” by promoting a more equal distribution of health and wealth is both practically and philosophically dubious. Restricting the private medical sector in the name of equality would tend to preempt innovations that while initially affordable only for the affluent would benefit everyone — including the poorest, in the long-run. 

Also, why is it considered fair to prohibit people from spending their own money — which in a free market economy is earned by providing ideas, labor, and capital to create products and services which increase living standards — on their own well-being and self-preservation? And why is it fair to restrict the earnings and professional freedom of doctors by forcing them to work for a state monopoly or alternatively leave the profession or the country? 

The single-payer movement’s obsession with equality of outcomes, at the cost of personal liberty and economic progress, reflects Margaret Thatcher’s dictum that socialists “would rather have the poor poorer provided the rich were less rich.” 

Rejecting single-payer as philosophically baseless and practically counterproductive should not mean neglecting the real need for healthcare reform. There are plenty of ways to expand access and restrain rising healthcare costs while encouraging innovation, including detaching health insurance from employment as in Switzerland, encouraging health savings accounts like the Singaporean model, and removing regulations which create barriers to entry and enrich special interests at the expense of the public. 

The entitlement reforms proposed by former House Speaker Paul Ryan, which aimed to expand elements of choice and competition in Medicare and Medicaid, should also be considered in order to reduce the massive projected growth of existing federal healthcare programs. 

While fundamental reform of the U.S. healthcare system is needed, these changes should preserve its excellence and align with our traditions of individual liberty and free enterprise.  

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