At RealClearPolicy Yevgeniy Feyman argues that the price of a single-payer plan in the United States would be to reduce the number of people employed by about 10% of the labor force:
When we take Thorpe’s more realistic assumptions and apply the same approach, the fully-implemented plan reduces employment by a whopping 11.6 million full-time equivalent workers. Under these assumptions, the average marginal tax rate would grow from around 22 percent to 42 percent, while the average total tax rate would increase from 11 percent to 31 percent. At the upper end of income, total tax rates would be far beyond 50 percent. And none of this factors in state and local taxes.
Of course, some of drop in employment might be considered “voluntary.†Some would stop working because they no longer needed to be employed to receive health insurance — escaping “job lock,” as House Minority Leader Nancy Pelosi once put it. But others would simply find it meaningless to put in extra hours or look for more lucrative positions when so much of their earnings get sucked away as taxes.
That echoes the despair I expressed in an earlier post. There is no longer such a thing as moderate, practical healthcare reform. Healthcare in the U. S. is just too darned expensive.
It’s too expensive, plus there’s the fact that a threat about the effects of marginal taxation on earnings is not a threat.
Meh. This doesn’t really strike me as the cost of single payer, but rather the cost of insuring everyone. Other countries have single payer w/o it costing so much. If you just take our current costs and translate them to single payer, or really any system, then assume universal coverage the costs will be very high. Also, I find it shocking that a National Review writer would suggest that single payer cannot work and that it would bankrupt us.
I don’t take Thorpe’s work as gospel given his failure to detail how he arrived at his conclusions. Nor does he devote any of the paper to cost reductions via elimination of premiums and deductibles.
I was going to ask a question, but why bother? The current system is due for a big breakdown in the next few years. Who knows what will come it?
So I guess that’s two questions, but since they’re strictly rhetorical I think they should count as zero questions.
So steve, you didn’t really say anything at odds with Dave’s observation that health care costs are (too) high. And Ben seems to think that transferring payment through premiums by insureds to payment by the single payer will lower costs. That will only occur if the prices paid to providers are dictated, or access restricted, by the single payer. Those entail their own set of costs. And I’m not impressed that government, even simply as the financier, is a model of efficiency, adaptability, fairness or effectiveness. I’ll bet what you really end up with is similar to private schools, with the well off providing for themselves privately, and the masses stuck with the new and improved (snicker) low cost care.
“Other countries have single payer w/o it costing so much. ”
That is true, but the problem is that doesn’t mean that single payer will be cheaper here. People who think single payer need to show their math.
The healthcare industry is ready for an automation and mechanized revolution. Sooner than most people in the industry can possibly imagine, the number of people employed will be drastically reduced.
Imaging technology will quickly eliminate the need for human input, and if they do not exist, somebody will create software applications using various lab results, imaging results, medical history, and human input to replace the human decision process. The lab work and medical history / input will also be done self-serve or with lower skilled workers.
Robotics will allow remote surgery. Initially, areas without any surgical facilities will be able to offer surgery, and because it is remote, any surgeon with access to the remote control center could do the surgery. A patient would have access to a larger selection and better quality of surgeons.
Eventually, the entire remote control center could be located off-shore. Rather than trying to navigate immigration red tape, the Indian, Vietnamese, or Nigerian doctors could be located in their home country.
Healthcare workers, like the unemployed that lost their jobs before them, will not believe it can happen to them. They think they are indispensable. Except for the Forbes 500, nobody is indispensable.
(The problem with automation and mechanization is not the advancement. It is the non-advancement of the follow-on jobs.)
“That is true, but the problem is that doesn’t mean that single payer will be cheaper here. People who think single payer need to show their math.”
My point all along has been that there is nothing magical, good or bad, about single payer. Contra Feyman, it would not bring about the Apocalypse. OTOH, it would not give us Nirvana. It probably gives us ab better chance at controlling costs, but that is not certain. It is pretty clear what we have been doing, which is the most market oriented system in the first world is clearly not addressing costs. At any rate, we won’t reduce costs until it is important enough to us to actually do so. At this point the special interests who are not interested in controlling costs are working much harder and more successfully than those who want to address costs. To be clear, this includes some physician groups.
“The healthcare industry is ready for an automation and mechanized revolution.”
I want a flying car. (We can’t even get EMRs that work well. I have spent many hours over the last few months on this as we have implemented EPIC, and it is not a great product, barely, almost mediocre at best, but at least it cost us $100 million.)
Drew- You could also cut out unnecessary procedures. You could cut costs, like we are doing, on a lot of stuff you are already doing. Have I mentioned our geriatric program and costs we have cut? Still, single payer, as you point out, has its own issues. I think you can a good case it might be better than what we have, but it still might not be good enough.
Steve
@steve
For some reason, more educated workers are less able to comprehend their eventual obsolescence. Here is a free bit of advice: When you hear Google has started looking into the healthcare industry, get your resume in order. You may want to practice saying, “Would you like fries with that, or paper or plastic?”
Diagnosing problems is nothing more than filling in a matrix of weighted factors. The computer is just an adding machine that can run through matrices faster than any human can imagine. Google will add value by applying business intelligence/analysis and data mining to the amalgamated and anonymized patient data.
Most data can be obtained without human interaction, and what human interaction is needed can be dumbed down to the illegal immigrant level. Eventually, most of these will be eliminated if the humans become too much trouble.
Image analysis is well beyond anything that seems possible. The agriculture and food processing industry uses imaging to automate quality control, and face recognition technology is the beginning of an entire new area of automation possibilities.
Industry robotics only need to be miniaturized and have the quality improved, and they will be ready for remote use. There will need to be software, secure network connections, and user training, but the US Military’s use of drones should indicate what can be done and how fast.
TB- I have been hearing this for over 20 years. Remember how lasers were going to change everything? Didn’t happen. Anyway, I think what you are projecting will happen eventually, but we are nowhere near close to it. We do lots of robotic surgery. It isn’t going to spread much further very quickly. Too expensive and lots of limitations. It takes many more people to do robotic surgery than regular surgery. When the tech gets better it probably changes, but it will be a while. My bet is that there will some unexpected breakthrough which will have a lot more impact than the things you have suggested which are mostly improvements upon current tech.
OTOH, maybe we don’t find good replacements for antibiotics and medicine all goes down the toilet. Who knows.
Steve
Right. Health care in the USSA is way too expensive, for which reason we need to make healthcare dollars, whether Obamacare, Medicare or Medicaid payable in Cuba, Brazil, Argentina, Costa Rica and Mexico, for starters. Abortion has been available and performed inexpensively in Cuba for decades, where even Texas women could find an escape from compulsory breeding.
@Jimbino
It will never work. There are transportation and lodging costs. There is a language barrier. There is the problem of locating an equivalent doctor. The last two may be overcome, but the first cannot.
The only way to outsource healthcare is through lab work, analysis, diagnosis, and robotics.
@steve
Everybody believes he/she cannot be replaced even as they are training their replacement, and as the level of education increases, this belief becomes more firmly entrenched.
Medical diagnosis are even simpler than chess. They consist of decision trees and matrices of weighted factors/variables. A computer can plow through these faster and more accurately than any human can imagine. The days of misdiagnosis will be over. The computer doctor will know the aggregate medical knowledge of every doctor.
In addition, a central database will allow business type analysis using heuristic techniques to probe for connections no human could never find. There would need to be some humans to check the new findings, but once these were added to the diagnosis logic, it would be simply arithmetic done by a really fast adding machine.
Humans are worthless when rules and exceptions can be quantified, and they must be followed. When true randomness is involved, few computers can match the human brain, and even then, it is more like an insect’s brain, at best. Human intuition and free-will are randomness because there are no rules or exceptions that can capture them. Any rule or exception can be broken, and it can be broken in multiple ways.
In a credit backed monetary system, productivity is achieved by eliminating costs, and the largest cost is the human worker. It refuses to work 24 hr/day, 7 days/yr, 365 days/yr. It gets tired and sick, and it wants breaks and days off. If it does not get its way, it will stop working, but most importantly, it cannot produce a consistent product which is perfect. The only use for highly paid workers is their ability to borrow, and once they are fully indebted, they are worthless.
It all comes back to money, and as ye sow, so shall ye reap. It is quickly becoming financially advantageous to the financial industry to get healthcare cost under control, and as with driverless trucks, doctorless clinics will occur faster than you can say “jack rabbit”.
OTOH, maybe healthcare is in some type of safety cone regarding the offshoring, downsizing, automating, and mechanizing trend that every other industry has experienced over the last 30 to 40 years. Who knows.
I don’t think any such thing about single-payer. I’m simply responding to a blank page in the middle of Thorpe’s work; one where he makes a series of assumptions about tax rises without discussing reduced costs for households in other areas.
Eliminating the need for private insurance almost cannot help but deliver greater efficiencies. The industry is purely extractive of rents, standing between health care provider and patient collecting flows of income. It provides not one doctor, bed or procedure that does not exist without the industry.
I agree with that. Unfortunately, I don’t think that the efficiencies are quite as great as proponents believe. The most recent comparison I know of on administrative costs (including insurance) between Canada and the United States found that administrative costs in the U. S. were 30% of the total costs of healthcare while in Canada they were 15%. Based on that it would seem that the reasonable level of savings would be around 10%.
That would still leave per capita U. S. healthcare spending at a much higher level than anywhere else in the world and at the rate at which spending is increasing savings from going to a single-payer system would be eaten up in just a few years.
Other than savings in administrative costs there are no automatic saving to be derived from single-payer or even a full-on system of national health like Britain has. The reason that Germany, France, et al. have lower healthcare spending is that they started controlling costs when the costs were at a much lower basis than ours are now. My conclusion from our experience with SGRs is that we’re not willing to control costs.
Personally, I think who pays is less important than the structure when it comes to controlling costs. The piece-work model of the fee-for-service system is one major thing that needs to be changed. The medical lobby works hard to deconstruct the practice of medicine to generate more billable codes. You may remember the “death panels” controversy from a few years ago. That wasn’t actually about “death panels” at all, but was an attempt to create another billable event that providers can charge for (ie. end of life counseling). This trend toward slicing-and-dicing the medical profession into discrete billable events complicates everything else down the line and creates lots of opportunities for providers to pad their incomes at someone else’s expense. Just as one example, a few years ago a good friend’s child had liver cancer and had a liver transplant. The entire bill was in the six figures. One item on the bill was post-operation physical therapy. The problem is the therapist always came around when the boy was sleeping so most of those sessions never happened. Not according to the bill! Insurance (Tricare) paid for all of it and my friends didnt’ see the bill until long after. There’s no way for the insurance company to know if the service was actually provided or not. I have to wonder how often this kind of thing happens?
Anyway, to sum-up, I think the big savings won’t be found in the difference between private and public insurance – it will be found by fundamentally changing the way medical providers are compensated.
If there are “big savings” to be had, I think they will be realized by a combination of changing the way providers are compensated and changing patients’ expectations of care. People who only seek palliative care at the end of life generally end up spending a lot less than people who seek “heroic measures”.
It used to be the case that as a society we did not think that care would allow us to live forever.
1) People who enter hospice care rather than seek heroic measures, on average, live longer, are more functional, are happier and their families are happier.
2) Fee for service, at least with Medicare, is taking major hits. As usual, Medicare is leading the way, but I expect the private insurers to follow. We are involved in a bunch of bundled payment pilots. I think at least three of them are beyond the pilot stage. The trend is heading away from everyone creating a billable event.
This has, BTW, made things interesting. For example, insurers basically do not pay for efforts to control pain in hospitalized patients, or for those who have recently left the hospital for that matter. As it turns out, you can save a lot of money by aggressively treating pain. The problem has always been that insurers will not reimburse us the expense of treating pain, even if it means they would save money in the long run. Now that payments are bundled we have to sit down and figure out what is cost effective. Spending $300 to treat pain and avoid $1000 it costs then makes sense. It also gives better outcomes.
3) TB- Still at this? Ok, of many of the really expensive diagnoses, we really don’t need a computer. Obesity, diabetes, COPD, asthma and a bunch of others really won’t be helped. In fact, in studies when you use mid-levels and computer algorithms, it sometimes costs more to generate these diagnoses. The fact is that people use algorithms for a lot of what we do now. We could save some money if people followed them more closely, I think. In order to save money on diagnostics, we mostly need better tests.
But the real costs for most of this is in treatments. Computers aren’t going to save costs of personal intensive elder care. They don’t change diapers. You will still need a ton of people if you want to do trauma care or run pediatric ICUs. Anyway, in the very long run tech has good answers I hope, but right now it adds to costs about as often as it reduces them. You have obviously never been in a robotic OR or you would be less inclined to believe what you do.
Steve
@steve
What I know is that the last thing a person being replaced by automation or mechanization believes is that he/she can never be replaced. In a financialized economy, you are only worth paying a large amount of money because you can assume a large amount of debt.
There is no conspiracy. It is how the system works.
The few healthcare jobs that will require an actual human are either very low skilled or highly creative. I have no intention of attempting to convince you. One day you will find that everything has suddenly changed.
If you are ever curious, you can look at the VA. They are light years ahead in many areas, but it is still crude. If you think creatively, you can see where it is headed, and if you think a little more, you can envision data mining and business analytics being applied to an aggregate patient database.
Five years a self driving car was a fantasy, and in another five years, truck drivers and taxi drivers will learn that they were not indispensable.
Nonetheless, you are correct. Healthcare workers are immune from the automation, mechanization, offshoring, and illegalization of jobs that almost every other industry has experienced, and unlike all the other industries that thought they were exempt until they learned they were not, healthcare is. Got it.
Without any cost controls, I guess healthcare costs will continue to rise even though they will exceed the US annual GDP. Healthcare is so important it cannot be constrained by anything as mundane as reality.
Wait, I get it. We will have jobs with negative wages. Like negative interest rates, the pay rate is what the employee pays the employer for the privilege of having a job. It turns out that you are a genius. A man before your time. When the Europeans hear about your idea, they will build monuments to you. You may even get a Nobel Prize over this little scheme, and why not? If a warmonger gets awarded the Peace Prize and an Alien Invasion advocate is awarded the Economics Prize, why not you?
I actually follow health care literature, including policy and economics. As I keep saying, in the very long run you are probably correct. However, if you follow what i actually happening, nearly everything you describe has actually resulted in higher costs, often requiring more people. We would need huge jumps in AI to do a lot of this, and if you follow computer science you would know we have pretty disappointing results along those lines.
Steve
Without being too self-revealing, I have been a member of the design team of a CAT scanner and several other significant pieces of medical equipment. I can speak with some authority on the subject.
I don’t think that your assessment is quite correct, steve. Physicians are the gatekeepers for medical devices and the standards they have established have kept progress at bay for decades. Products were developed 40 years ago that were better than anything on the market today but they would have displaced physicians so they were never approved.
It’s not just physicians, of course. There are plenty of other culprits. But keep in mind that physicians prevented serious healthcare reform in the United States over a period of well over a half century and today’s healthcare system is one devised to please physicians.
@steve
You will probably miss this.
… We would need huge jumps in AI to do a lot of this, and if you follow computer science you would know we have pretty disappointing results along those lines.
Does computer science mean circuits as in the engineering realm, or code as in the programming realm? It does not matter. I have both covered, but I am a little rusty on the hardware side.
I am not referring to Artificial Intelligence. I mean plain old dumb decision making using a really fast adding machine. Google’s search or Apple’s Siri are not magic or intelligent. They are mathematical algorithms. They use variables in equations to determine the most likely answer. They work because people ask the same type of questions over and over.
As I have stated multiple times, true AI requires a Random Number Generator that is really random, but this will allow it free will. Otherwise, it is not intelligent, and it is not thinking.