Research & Commentary: Single-Payer Health Care Should Be Dead Upon Arrival

Published June 28, 2019

Almost no other public policy proposal spurs more debate than single-payer health care. Under a single-payer health care system, the financing of health care services and health insurance coverage are overseen by a solitary source: the government. Supporters of single-payer health care claim it is a fair, cost-effective system for providing health care to all citizens. However, despite multiple attempts, no state has implemented an effective single-payer system.

Single-payer systems face major obstacles that make implementation difficult, if not impossible. One of the primary issues that states and the federal government find difficult to overcome is the immense cost of these programs. The total cost of a single-payer system varies depending on how it is designed, the scope of coverage, and the benefit levels it provides.

A federal single-payer plan, such as “Medicare for All,” would impose a substantial new burden on federal taxpayers while creating a huge budget deficit. Charles Blahous of the Mercatus Center argues even “doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”

State-run single-payer plans have also experienced funding problems. In Vermont, a single-payer proposal failed when Democratic Gov. Peter Shumlin discovered it would be too difficult to impose the taxes needed to pay for the program’s high costs. In a University of Massachusetts study commissioned by Vermont’s state legislature, the researchers estimated Vermont would need to raise $1.6 billion in new revenues each year to support Green Mountain Care. In fiscal year 2012, Vermont collected only $2.7 billion in total tax revenues. Vermont’s plan would have required large-scale increases to the state’s payroll or income taxes to survive.

In Colorado, 80 percent of voters rejected a single-payer proposal that would have imposed a 10 percent payroll tax and nearly doubled the state’s $27 billion budget.

One proponent of single-payer health care, Gerald Friedman, an economist at the University of Massachusetts at Amherst, admitted in a 2015 cost estimate of the New York Health Act the single-payer system would cost more than every other function of state government.

Supporters of single-payer plans argue health care is a “right” of all citizens and a government-controlled system would make health care services available to everyone. However, single-payer systems have proven largely unsuccessful when tried elsewhere.

In a report examining single-payer systems, John C. Goodman and Devon M. Herrick, both then at the National Center for Policy Analysis, found, “When health care is made free at the point of consumption, rationing by waiting is inevitable. Government control of the health care system makes the rationing problem worse as governments attempt to slow the use of services by limiting access to modern medical technology. Under government management, both efficiency and quality of patient care steadily deteriorate.”

Under a single-payer model, rationing and price controls are inevitable. Governments are unable to control the demand for services. However, they can (and will) dictate the supply of health care services. This reality leads to rationing of care and artificial price controls, which limit innovation and cut payments to doctors and other medical professionals. Unfortunately, this will only further limit the number of providers willing (and able) to practice.

Americans need only look to England’s National Health Service (NHS) to see how services are often limited under government-run systems. According to a House of Commons Briefing Paper, “84,827 elective operations were cancelled for non-clinical reasons on the day the patient was due to arrive. This is 5% higher than in 2016/17. Of those who had their elections cancelled, 7,158 were not treated within 28 days of their cancellation.” According to the King’s Fund, an English health care charity group, 362,000 patients waited longer than 18 weeks for hospital treatment in March 2017, an increase of almost 64,000 on the previous year.

Waits for critical care are also all too common. According to NHS, 17 percent of patients had to wait more than four months for brain surgery. Even worse, 19 percent had to wait more than two months for cancer treatments.

Another stark example of the flaws of the single-payer model comes much closer to home: the U.S. Department of Veterans Affairs (VA). A single-payer system, such as the one used by the VA, controls its costs based on a budget determined by government bureaucrats, not what patients need and are willing to spend. When resources are inevitably misallocated and run low, single-payer systems simply ration care. It is often difficult for patients in such a system to access specialized services, let alone diagnostic tests. Even when a patient receives care, claims can take months to process. Despite receiving billions of dollars in increased funding annually, the VA continues to run short of money.

The Heartland Institute argues the best way to preserve individual freedom, improve the quality of health care, and enhance the efficiency of the nation’s health care system is to empower individuals by giving them more control over the dollars they spend (or choose not to spend) on health care. Single-payer systems do the exact opposite.

In short, legislators should resist the call to impose single-payer reforms and instead pursue policies that would increase competition and consumer choices across the health care sector.

The following documents offer additional information about single payer health care systems.

Why Single-Payer Would Make Health Care Worse for Americans
In this article, Meridian Baldacci and Robert Moffit of The Heritage Foundation examine many of the claims of supporters of single-payer health care and how their claims are overblown. “Government-run health care cannot deliver on its promises. It would impose unprecedented taxes on Americans, deliver subpar care to patients, and put government in charge of personal health care decisions. Americans deserve better,” wrote Baldacci and Moffit.

The Costs of a National Single-Payer Healthcare System
In this working paper, Charles Blahous of the Mercatus Center examines the potential costs of Medicare for All.

How State-Based Single-Payer Initiatives Crush Economic Opportunity
Avik Roy, president of the Foundation for Research on Equal Opportunity, analyzes the New York Health Act and estimates the bill would “require approximately $226 billion in new tax revenue per year, nearly quadrupling the state’s tax burden and leading, at minimum, to the loss of 175,000 jobs, as high-wage, high-value industries move to neighboring states.”

The Case Against AlbanyCare
In this paper, Bill Hammond of the Empire Center for Public Policy argues against a single-payer system in New York. “Beyond affordability questions, a single-payer system would impose government price control on all health-care services, eliminating any vestige of market competition in a major sector of the state economy. It would also channel billions more dollars through New York’s notoriously dysfunctional state capital, multiplying opportunities for favoritism and corruption,” wrote Hammond.

California’s Single-Payer Health Care Plan Would Cost More Than the State’s Whole Budget
Eric Boehm of the Reason Foundation examines the proposed single-payer system in California and the high cost of maintain such a program. “This year’s state budget in California, by the way, is about $180 billion. That means that implementing a single-payer health care system would require doubling (at least) the state’s current tax burden. The analysis of the health care proposal presented to lawmakers on Monday suggests a 15 percent increase to the state’s payroll tax to provide the necessary revenue,” wrote Boehm.

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems.

Twenty Myths About Single-Payer Health Insurance: International Evidence of the Effects of National Health Insurance in Countries Around the World
Health care experts John C. Goodman and Devon M. Herrick identify 20 myths about single-payer health care and provide evidence single-payer is inferior to our admittedly flawed current system.

Issue Brief: Healthcare & Single Payer
The Ethan Allen Institute examines recent developments in health care reform in Vermont, including the state’s single-payer proposal. The author describes the single-payer program and concludes it may not work the way its supporters claim.

Ten Hard Questions about Single Payer Health Care
The Ethan Allen Institute identifies ten important problems with Vermont’s single-payer health care plan, in the form of ten questions about the program’s structure, funding, and prospects for long-term success.

Vermont Single-Payer Plan Full of Holes
Joshua Archambault of the Pioneer Institute argues Vermont’s single-payer plan has many serious, fundamental problems that should not be lost in the excitement that seems to arrive whenever a state tries something big. “Many of the issues that a single-payer system is attempting to address can be dealt with by greater consumer engagement, a federal tax policy change to delink insurance from employment status, and greater transparency in the health system,” he wrote.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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