To fully understand the implications of such a large undertaking by the federal government it is necessary to start at the top, with macro-economics, not microeconomics from the bottom. I hope I can show the difference between the perspectives and how they impact the decision.
Firstly, From the macro view, we already have a cost to assign as the target to beat. It is the total cost of “all” healthcare presently, much of which is already being paid by our government via Medicare, Medicaid, VA, etc. In fact, in terms of dollars billed, the various governments in America are already paying over half of all billed healthcare costs with insurance covering the younger and healthier, not to mention more affluent, patients.
Separating government subsidies to employee insurance brings the total of actual coverage provided by the insurance industry down in under 40% of total billing, and that is the most profitable demographics for them as well. Most government-provided coverages were implemented to keep insurance even remotely affordable by socializing extraordinary costs to the biggest pool possible, all of us. When one deals with actuarial it is a no brainer to expect lower risk additions to a pool to benefit the total pool in cost terms, so present cost numbers of the higher risk pool automatically decline.
Secondly, much of our healthcare cost is due to the fact that both insured and uninsured patients are treated at hospitals, but not by the same Drs. Very few private practices accept uninsured patients pro bono or offer income adjusted payments, so they end up obtaining treatment at the most expensive facilities possible, the ER. Hospitals then need to recoup their cost and the only way to do that is to cost shift it to insured patients. This accounts for most of the difference between allowable billing between insurance and Medicare/Medicaid. One can hardly expect the government to pick up costs caused entirely by the insurance industry.
This transitions nicely into discussing costs imposed by the insurance industry exclusively that aren’t related to actual care delivery. Administration costs have skyrocketed many times the rate of inflation and now account for as much as 35% of provider staffing, as well as taking up a considerable chunk of time for Drs. I’ve spoken to Drs who verify this estimation and they all make the point that the people they are dealing with to justify treatments or tests have little to no medical background.
The insurance companies have found that just questioning/denying random charges and requiring justification from Drs often results in the Dr just giving up, which goes directly to the company’s bottom line. If your Dr seemed frustrated or distracted at your last visit it may be an insurance company you have to thank for that. This has gotten so bad that larger, multi-Dr practices can increase their bottom line by assigning a Dr to nothing but insurance denials. While this frees up time and attention your Dr can devote to you it also promotes the trend to factory-like clinics that must limit patient-Dr interaction to pay the added cost.
Each insurance company offers several plans with varying coverages for specific treatments, making administration a convoluted nightmare for providers depending upon payment for services already delivered in many cases. This has given us “networks” of coverage for most insurance companies, which is just another way of saying price fixing against providers. What it has done to healthcare availability in rural areas and the single provider office that everyone loved so much should have conservatives in total support of single payer.
The ACA promoted the unofficial and questionable practice of insurance companies dividing up markets between them instead of letting competition decide pricing, which is the purpose behind networks. One can often see widely varying differences within individual insurance plans by simply crossing a state line or other demarcation of territory. It isn’t unusual to find only one or two companies that service a particular region, in spite of populations large enough to support multiple competitors in any other market/product.
Thirdly, we must look at the total picture of funding something so universally needed as healthcare, as well as the impact that negative influences from that can have on our society as a whole. This goes somewhat to central planning which raises red flags for conservatives, but it is simply unavoidable in any modern economy and has been worked out to everyone’s benefit in every other wealthy nation in the modern world. We have to understand that we aren’t even discussing “government run” healthcare, but only replacing the insurance factor for less than half of healthcare “payment”.
Healthcare is not a commodity that one can take or leave according to affordability like one can in a true free market environment. Many times, especially for the uninsured, no choices are possible at the time of need, so market forces simply can’t be price setting. Anyone who thinks that the “free market” is currently working in healthcare should answer why insulin, a very critical life or death product to those who demand it, is now 1000% higher in the US than an identical product by the same manufacturer is in Canada. If the product was not profitable at the price Canadians pay the company simply wouldn’t do business with Canada, so the difference cannot be justified logically.
As the monopoly issuer of the nation’s sovereign fiat currency, the federal government is not revenue constrained, meaning it doesn’t function like a household that must “find” money from some source, earned or borrowed, before spending. It is, however, constrained by real resources available in markets the currency is deployed to or we will see inflation. True monetary inflation, where simply increasing the overall money supply raises prices across the board, is not possible with a fiat currency and individual commodity prices rise or fall according to their scarcity/demand.
I know several well accredited economists who are worried that America’s obsession with deficits and everything being “paid for” may cause us to overlook the macro picture that must include the impact of involuntary unemployment of a large number of insurance company workers that won’t be absorbed by the government that will see its own efficiency gains from unifying its various agencies. They are claiming that only if such “payfors” are directed to those with little propensity to spend can single payer not prove deflationary, even if “NO” premiums or tax increases are included for present insurance customers.
These are the same economists that predicted the recession resulting from Clinton’s surplus budgets and the housing/mortgage fueled crash, so they are not lacking credibility. They, quite accurately, view all “revenue” of government as only a drain of existing currency in circulation/savings and spending in deficit by the federal government as the only net source of currency the private sector has after private bank debt is settled. They believe that eliminating premiums presently being paid to insurance would be a welcome stimulus to an economy suffering from decades of pointless forced austerity to service a mostly meaningless debt, but might not stimulate the economy fast enough to prevent suffering by those now working in insurance.
If we deflate our economy even more than we already have with austerity we may find bigger problems than any deficit spending might provide. We focus entirely too much on CBO predictions that are, by law, restrained to only telling us what impact spending will have on deficits, which is only one half of the total spreadsheet or our economy. Every dollar spent by our government is a brand new dollar (taxes and bond receipts are canceled by the debt that created them and cannot “fund” anything by accounting identity) that becomes someone’s asset in the private sector, not simply disappearing into the ether as the CBO assumes.
A balanced budget, the holy grail of politicians, is a 100% tax rate that effectively steals resources from the private sector and allows no means to store value from commerce. We left the gold standard decades ago, but still manage the economy by its limitations. This simply doesn’t allow for any big initiatives like those which provided our best decades, ie: the new deal, NASA and the race to the moon, interstate highways, etc, that were only made possible by large deficit spending. Single payer healthcare, as well as the energy transformation we must accomplish to remain as a dominant species, will only be possible if we approach them from the macroeconomic “reality” of our economic and monetary system and stop being stuck on stupid that defies all of our prior successes as a society and condemns us to systematic decline of our nation.
