I’d meant to post on this when the news came out but events overtook me. From time to time I’ve posted on Vermont’s plan to inaugurate a single-payer system within the state. Vermont has now shelved that plan:
Vermont under Shumlin became the most visible trailblaze [ed.: for a single-payer system]. Until Wednesday, when the governor admitted what critics had said all along: He couldn’t pay for it.
“It is not the right time for Vermont†to pass a single-payer system, Shumlin acknowledged in a public statement ending his signature initiative. He concluded the 11.5 percent payroll assessments on businesses and sliding premiums up to 9.5 percent of individuals’ income “might hurt our economy.â€
That supports the growing intuition I’ve had about a single-payer system. For decades I supported such a system for the United States (after I’d lived and worked in Europe and gained a better understanding of how their systems worked). But then a little over a decade ago I began to lose faith in the practicality of such a system for the United States.
My intuition is that there’s a relationship among healthcare costs, national production, income, growth, and demographics outside of which a single-payer system is just impractical, both for reasons of affordability and political support. IMO while we might have been able to create a workable single-payer system in the United States 20 years ago, healthcare is just too darned expensive here now, economic and income growth are just too slow, we’re too old, etc. to create a workable system now. That’s why I argued so vehemently five years ago for healthcare reform that reduced costs: that would have expanded the range of possible solutions. Instead, Democrats decided to expand the number of insured persons without meaningful reductions in healthcare costs.
Vermont is a relatively progressive, prosperous, and homogeneous state. It also has one of the oldest median ages which, paradoxically, should make it easier to implement a state single-payer system—a higher proportion of the population is eligible for Medicare. If Vermont can’t implement a state single-payer system, which state can?
I thought some of the outrage in Vermont seemed out of proportion to my understanding that the initial legislation was contingent on finding affordable financing. Looking at the bill, (the relevant section is on pages 101 to 105, it seems like the Governor was required to recommend two revenue plans for “sustainable financing,” one with and one without federal waivers from the ACA.
The considerations the Governor was supposed to make are interesting: optimize federal funding sources, consider future rates of growth in healthcare spending, comply with the ACA, address the need to recruit healthcare professionals to Vermont in response to shortages, and pay the cost-sharing requirements of Medicare on behalf of citizens.
Everybody likes free stuff and that’s what they thought was going to happen. That’s the basic misunderstanding about healthcare: somebody’s got to pay for it. Insurance doesn’t mean free healthcare. It means that somebody else is paying for it.
No state is going to institute single payer without negotiating the prices down, which they can’t do as they don’t have enough leverage. The only way I can see that happening is by empowering Medicare to do so and expanding in phases: doctors can either accept lower fees in exchange for reliable payment or find themselves without customers.
That leaves us to decide what should be done with the private insurance industry.
There are complications. The Congress has shown no willingness to limit physicians’ fees. That’s exemplified by the “doc fix” that occurs every year or so. IMO without the multiple doc fixes there might have been a chance of cost control. That chance was reduced by physician-induced demand. When the price per procedure increases and the number of procedures billed per patient increases, you’ve got to control both in order to control costs.
I don’t think that’s either doable or desireable. That leaves you with fully socialized medicine which is completely politically unacceptable here.
Vermont might be too small for this experiment though. Most of the population outside of the capitol is nested near the borders; and it’s non-ambulatory healthcare services are almost all in Burlington (on NY border), Rutland (20 miles from NY), or Brattleboro (on the NH border, and a few miles from MA).
Cost-control with interstate healthcare providers seems difficult. How much of “necessary medical care” is currently provided in neighboring states? What is to prevent a Burlington healthcare facility from moving some of its medical care to its facilities in Upstate NY.
And these relate to the problem that many citizens work for out-of state companies, who would be exempt from single-payer. And how much of this problem stems from not decoupling healthcare from employment?
The same argument could be made for Illinois. Most of Illinois’s population lives near the borders of other states. What’s to prevent Illinois healthcare providers from moving their operations to Wisconsin, Indiana, Iowa, or Missouri?
Ultimately, that’s an argument that cost-control must be done at the national level, which is what I’ve been arguing.
BTW, Hawaii doesn’t have this particular problem and they’re backing away from their single-payer plans, too.
Dave–
Who is it who thinks that healthcare is free? Most people with insurance have spent enough time dealing with their providers to know how high the costs are. And as for ‘liking’ not paying for health care services–is that really the word? Over the summer, I was on an antibiotic that required a blood test because of rare whatever with the liver. Because of a coding error, the lab ended up out of network and I was handed a 1K bill for a round of blood tests. Eventually it was sorted out and the bill went way down.
So there’s no misunderstanding going on. Health care costs for basic things are absurdly high. People know this, or most people do. And there’s not much you can do about it as a consumer. Not get sick? Avoid pain and disease? I’m really good shape–do I deserve to not get sick more than the guy eating fried food and forty pounds overweight? Budget-wise, I could have handled the 1K–but it would have been an unexpected expense. I certainly couldn’t handle the cost of an actual emergency on my own without digging deep. And most working people do not have the ability to handle the 1K, not if that’s a regular expense and if they had children.
So yeah–most people are desperately aware of how ruinously high health care is and we want to make it bearable or non-existent because health care does intuitively seem to be a consumer good.
I think the phrase you’re looking for is “public good”. The definition of a “public good” is something that is a) non-excludable and b) non-rivalrous. Healthcare is neither of those so it’s not a public good.
That healthcare is a consumer good is obvious. So are carrots or iPhones.
IMO the reform that we desperately need is reducing healthcare costs. With lower healthcare costs all sorts of things are possible. With increasing costs the realm of the possible becomes increasingly narrow.
I believe that the only way we will actually reduce the cost of healthcare is by changing how it’s delivered. We’ve got to move away from artisanal medicine.
A quick Google of the phrase ‘health care public good’ reveals how far from obvious your pronouncement is. I feel like this is a central problem with the right–a great many educated people disagree and so you paper over differences by trying to claim that the matter is settled.
And I meant to type that ‘health care does not seem to be intuitively a consumer good’, and I think I’m right–people view health care along the same lines as public education and not like iPhones or carrots (if we think of carrots as some sort of add-on to the idea of basic nutritional survival, which in first-world countries is considered by many to be a de facto public good). Now obviously there are those who think that public education is also not a public good, just as they think that no one is guaranteed the right not to starve. We call them libertarians or conservatives.
What is frustrating is that libertarians or conservatives present their argument as based on necessity. Without going to into whether or not it’s possible, I would prefer to live in a world where health care and education are public goods. Overall though I get the sense that conservatives and the more dishonest of libertarians are really reluctant to state their true opinion, which is that the world should be about discipline and lesson-learning, and that this applies even to health care, where some poor slob is getting away and needs to be punished.
My original point was that with health care nobody really thinks they’re getting away. The fear that one’s life may be swallowed by health costs is one reason why polls show how pessimistic Americans are about the economy
Google does not prove that something is true, just that people are talking about it. You can look up my definition of “public good” in any reasonably good economics or public policy text.
There are really only three possibilities for paying for healthcare: a) most people pay for their own healthcare, b) it’s nationalized, or c) its cost is reduced substantially by means other than nationalization. My preferences are c, b, and a. b is just politically impossible in the United States. a is the end condition of the Ryan plan which I think is obviously unworkable.
Dave, I’ve long been skeptical of the U.S. developing a single-payer system. I think our country, given its size and diversity, probably needs to build on a mixed-system where the private sector pays for private healthcare, but the national government has a role in establishing how that market’s terms. I still think decoupling employment from healthcare, and I assume you might think eliminating fee-for-service.
It seems a person can find articles augmenting their POV, anywhere on the net. There are pieces, for instance, asserting how the PPACA is lowering health care costs. Other’s, though, refute such claims, pointing to the sluggish economy, coupled with higher deductibles, causing fewer people to even seek medicare care, creating real reasons behind some of the said decreases noted in health care costs. Added to these variables are the greater numbers of people independently resorting to concierge services and/or simply paying out-of-pocket, for each malady, to physicians who have opted out of accepting all insurance or government program plans.
Consequently, it seems that the narrowing of personal health care choices, along with stringent changes in medical insurance coverage, mandated under the PPACA, have discouraged or made it more difficult to participate in the health care services many people used to have or want now. Supposedly, this will only worsen, as apparently the CMS is proposing a new rule allowing this government agency to carte blanche re-enroll people into a health care plan they chose, should the person neglect or decline to go back and re enroll themselves. Some wryly say this is one way to keep those enrollment numbers steady — by the government doing it for the people.
Yep, this is the new American way….
From the mid-1970s until just about 15 years ago, I thought the U. S. would be able to implement a single-payer system. Healthcare spending has so far out-stripped incomes and economic growth at this point that I don’t think such a thing is workable any more.
MM: If you can point me to a progressive analysis of how/why Vermont’s single-payer system was shelved, I would find it interesting. But what I read, and the source of my initial comment, are healthcare activists complaining about the character of the Governor. He was told to do something, (which appeared to be complicated), and can there be no reason that he couldn’t find “sustainable financing” other than he is a bad person.
I’ve now run across the Governor’s Address, which is interesting reading.
I think one of the less-mentioned issues is that healthcare reform stumbles on the inability to reduce the benefits of those with good healthcare insurance coverage. An 80%AV “Gold Plan” was deemed unacceptable, so a higher plan, equivalent to state workers. I suspect popular support here is based upon charity principles — people will donate old clothes to the needy, but don’t want to sacrifice their own ability to buy new clothes or donate something they cannot afford for themselves.
Maintaining the employment-healthcare insurance nexus makes it difficult to deal with small businesses, many of which have dropped less expensive coverage options as unaffordable.
Regulatory uncertainty exists from the federal government even with a favorable Administration.
Poor economic growth in the state has led to cutbacks in Medicaid funding. Governor makes this a higher priority.
Poor state exchange rollout has reduced confidence in government.
Makes four proposals to deal with before enacting single-payer, starting with cost containment:
That’s something that Uwe Reinhardt touched on WRT to changing healthcare in the U. S.: the general unwillingness to relinquish choice or formally accept different levels of care.
“The only way I can see that happening is by empowering Medicare to do so and expanding in phases: doctors can either accept lower fees in exchange for reliable payment or find themselves without customers.”
And what happens when the government finds out they’ve only got half as many doctors as they need?
“That leaves us to decide what should be done with the private insurance industry.”
I’m inclined to say, “Who cares what happens to the private medical insurance industry?” A large part of it is just administration of self-insured organizations. Even if the government were to administer things more efficiently, a lot of those jobs will continue to exist. And those that disappear can be chalked up to creative destruction & making the overall economy more efficient.
“And what happens when the government finds out they’ve only got half as many doctors as they need?”
That’s an excellent question, ice.
Vox has a write-up that doesn’t do much for me; too much about the promise of single-payer and not what happened. Interesting claim though that globally half of all single-payer plans don’t work out. A little too much assumption that a single-payer plan can be made affordable by eliminating waste, fraud and abuse in the insurance system. I don’t find this very convincing when Republicans claim they can significantly reduce the cost of government without reducing benefits either.
I find Avik Roy’s critique from the right at Forbes more informative: (a) Governor choose to provide highest quality healthcare insurance, necessarily driving up costs; (b) loss of federal insurance subsidies; (c) requiring care givers to accept Medicare reimbursement rates created opposition; (d) poor economic growth had prevented state from spending as much on Medicaid needed to maximize federal reimbursement; (e) not true single-payer system given layer of federal law (Medicare, Medicaid, Tricare, etc.) and significant commuter issues; and (f) reduced administrative costs weren’t possible because Vermont only has three insurers, all of which had already been forced to reduce administrative costs.