In a piece at Bloomberg Noah Smith complains that reducing costs is the sine qua non of health care reform:
Why is it so hard to agree on a health-care plan? One obvious possibility: Reform plans feel as intolerable as the status quo while lacking the promise of lowering costs. The U.S.’s uniquely dysfunctional hybrid public-private system has resulted in the country devoting a much higher share of its output to health care than its rich-world peers…
Advocates of single-payer plans tend to assume that switching to national health insurance will reduce costs. This assumption features in both Warren’s and Sanders’s proposals. There is some justification for this. Health care in Canada, which has a single-payer system, costs much less; if the U.S. spent the same percent of its gross domestic product on health care as its northern neighbor, it would save more than $1.34 trillion a year.
I’ve been arguing that the foremost objective of health care reform should be to reduce spending for the last ten years now. Welcome to the fight, Mr. Smith.
Note that nobody has proposed that we adopt Canada’s system or, indeed, anything resembling Canada’s system. What has been proposed are systems with greatly expanded coverage, less “skin in the game” for patients, and overblown estimates of the savings from lower administrative costs.
Canada spends about half what we do on the administration of their system but everything in Canada’s experience tells us that economies of scale are fully realized at fewer than 50 million people covered and our knowledge of bureaucracies is that their costs increase exponentially with size.
Dare I mention that Canada is tremendously demographically different from the United States? We haven’t been as homogeneous as Canada since the 19th century if ever.
Here in the United States we spend more on infrastructure, defense, and education than anybody else, too. That’s not because we have a fragmented hybrid system.
What we don’t have is the one thing most needed for health care reform to reduce spending: a commitment to cutting spending. Politicians don’t want it, patients don’t want it, and providers don’t want it.