Tuesday, August 4, 2009

From Public Option To Single Payer: In Which I Reveal Our Secrets To Republicans

I see that my Republican friends Tigerhawk and Pejman Yousefzadeh have both linked or posted a video in which Barack Obama talks about his plans for gradually moving us towards single payer health insurance. It's been kind of a hit in the GOP blogosophere -- Michelle Malkin had it up a couple days ago.

Because I'm not Michelle Obama, I don't know how much the president sees the legislation currently forming in Congress as a way of getting us to single-payer health care. But the message of the video is certainly right in that a lot of Democrats hope that it'll move us in that direction. And I'd like to fill in my Republican friends on exactly how we get from the public option to single payer, because I think they'll like it.

One big problem facing Democratic health reformers is that for all the problems with the current system is that it's really easy to scare people about what could happen to them under any other system. Even though people in other countries with government-run plans are very happy with them -- lots of countries have voted themselves from a private system to a government-run system, while no democracy has ever gone the other way -- Americans don't have firsthand experience with the wonders of, say, French health care. Medicare, which is basically single-payer insurance for old people, only kicks in at age 65, so most people don't have firsthand experience with how good it is.

This is why in the post-1994 era, Democrats have opted for proposals that allow them to say "If you like your insurance as it is, you can keep it." The plans currently making their way through Congress allow them to say this. The "public option" of a government health care plan that looks a lot like Medicare is just an option. If you don't like it, turn it down and stick with your current plan.

So how do we get from the public option to single-payer? Here's the nifty part: we do it using consumer choices in a free market. We Democrats are confident in the ability of the government to provide a health insurance product that will beat the private market on price and quality. Old people love their Medicare, and it's held down costs better than private insurers. So we're pretty sure that if we give American consumers the choice between private insurance and a public option that's basically Medicare, they'll choose Medicare of their own free will. On price and quality, it's a better deal.

If enough people do that over a fifteen-year period or so, we could end up with a situation where the vast majority of Americans have individually decided that government health insurance is what they want. And then when we propose offering everybody free coverage funded out of tax revenue, kind of like how everybody in a city has free fire department coverage funded out of tax revenue, it'll get majority support. It eliminates a lot of bureaucracy and hassle if people don't have to individually contract for fire protection. Similarly, the administrative efficiencies that come out of giving every American a single basic health care plan funded out of tax revenue will make expanding it to everyone a good fiscal move. We'll have gotten over the big political barrier to setting up French-style health care today -- the fact that people don't know how good it is. They'll know how good it is, because they chose it in a free market and are enjoying its benefits.

Here's what I hope Republicans will like about this: The crucial step in the grand liberal plan to set up single-payer insurance happens in a free market. We give consumers a choice between a government-run plan and a private plan. If the private plan offers a better deal, people will choose it, we won't get a critical mass of Americans on a government plan, and we'll never get to single-payer. But if the public Medicare-like plan offers a better deal, people will choose it and the move towards single-payer will begin. We're confident that the economics of health care works out so that the government can offer individuals a better deal than corporations can. You may think otherwise. We propose that the matter be decided according to your market-based ideology: by letting individual consumers decide.

(One thing that's kind of annoying us right now is that the public plan has to compete with a hand tied behind its back. According to the House bill, it won't even be available to large employers via the health insurance exchanges for at least two years, maybe more. We're hoping for a plan that allows for a level playing field, and whether we get it will be the outcome of Congressional negotiations.)

As far as the eventual health care utopia goes, we don't want to ban private insurance -- in my years as a lefty blogger, I haven't come across a single American explicitly advocating for something like the old Canadian system where you aren't allowed to contract with someone else for private insurance. If you want some additional insurance on top of your government-guaranteed Medicare, feel free to call up the AFLAC people or whoever and they'll sell it to you. But since the government has out-competed them across most of the market, private insurance companies will be a lot smaller than they are today. (A lot of people who use the words "single payer" really mean "Medicare for All" even though it's likely that you'd get some additional private add-on insurance vendors on top of the government plan.)

Minor personal note: As a former John Edwards volunteer, I really like telling people about this, because this whole idea came out of his campaign. The idea that the public option could slide us into single-payer through individual consumer choices actuallyshowed up on his campaign document laying out the proposal. I spent a lot of the last primary campaign winning Democrats to the Edwards side by telling them about this strategy. Of course, the whole Edwards thing didn't go very well in the end, but the health care plan was so good that it survived into the present. Now I get to tell Republicans about it! Still fun.

PS -- Here's one simple chart showing the superiority of government-run health care systems over the current US system. Everybody else spends a lower percentage of GDP on health care than we do by running a government insurance program. Most of them get universal coverage, while we don't even manage to cover our entire population for that exorbitant cost. Figures like this are part of why Democrats are confident that a government-run insurance option will outperform private insurers and eventually move us to single payer.


Anonymous said...

Don't forget to talk about subsidies. There seems to be some fear that because the public plan is public it will end up being subsidized, like Medicare and Medicaid, and so will have an unfair advantage over private insurers. But the fact is the subsidy that the bill provides for is to be used for any insurance bought on the exchange, regardless of whether it's public or private, so there is not in fact any unfair advantage for the public plan in that respect. It is actually very analogous to the private school vouchers that Republicans like to tout, where the money follows the child, and they can spend it on either public or private school. In this case the money follows the insurance customer, and they can spend it on either public or private insurance. If Republicans like school vouchers I don't see how they could not like "insurance vouchers".

Of course it doesn't help that the public plan is called "public", since virtually every other public program we have is directly subsidized. And this is probably what is leading to the concern that even if the public option isn't unfairly subsidized in this bill, it could be in a future bill. But if the public plan turns out to be as big a flop as some people predict it will be, then there shouldn't be the political will to preferentially subsidize it in the future, so the concern is not warranted unless you actually think the public plan will perform better, in which case you should be supporting it in the first place, unless you work for a private insurer.

Neil Sinhababu said...

Excellent point, Anonymous.

Dan Bonevac said...

As a Republican, I'm not convinced. The question (Greg Mankiw's, actually) is whether there will be any additional subsidy provided for the public option. If so, there is an unfair advantage, and this is a direct undermining of private insurance. If not, it's hard to see why there would be any cost saving. In fact, the incentives that private insurers have to reduce costs wouldn't be present in the public plan, and, being only one of several options, it wouldn't have the power to reduce payments in the way that Medicare does.

I don't buy the argument that a single-payer system would be preferable. Cancer survival rates are far higher in the United States than in countries with government-run health care. And, right now, single-payer systems are free riders on the American system, which supports advances in medical research, innovations in health care delivery, and quick access to medical procedures unavailable or available only after long waits in government-run systems. If you need an MRI, or a knee replacement, or treatment for breast or prostate cancer, you are vastly better off in the United States than in Canada, Britain, Australia, or France. Many Americans know this, which is why opposition to Obamacare is strong, especially among the elderly.

Unknown said...

Hey Neil! All great points. I guess there are two reasons I'm not fully convinced that the move from a public option to a single payer system will be complete:

1. As Kenneth Arrow first noted, the market for health care does not always follow the predictable economic patterns of other markets, so your model seems plausible but not necessarily guaranteed. After all, the public grade schools never pushed private schools out of the market because of characteristics similar to health care -- for example, the personal nature of the service provided, the dependence on geographically local providers, and the difference in legal restrictions on public and private employees.

2. You may have addressed this in passing when you mentioned private add-ons on top of the single payer, but I know a lot of people who are 65 and still working but prefer to go through their employer's health insurance rather than Medicare. This suggests that there is some advantage to the private insurance -- even if it's just familiarity. So if we all have Medicare-type coverage, there is still something appealing about private insurance.

Regarding subsidies as mentioned by anonymous -- one reason for the subsidies is that our society is better off if we provide health care to people even if they cannot afford it (including immigrants without green cards, though it is political suicide to admit that) -- a wage earner cannot afford the same premium as an attorney, but the attorney depends on wage earners to be healthy enough to build homes and pave roads and so forth. We already pay for that care in ERs, so we might as well pay for the preventative care that is half as expensive and twice as effective.

I support the public option mostly because I do not particularly care for my current provider (Aetna) and because most people I have ever known to be pleased with their health insurance are government employees of some kind -- state attorneys, university professors, etc.


Neil Sinhababu said...

Thanks for responding, Daniel. I won't be able to deal with any followups for a day or so because I'm flying over the Pacific, but here goes.

Daniel, the Schumer proposal makes sure no additional subsidy is provided for the public plan. As for the cancer point, it is true that the US does better at breast and prostate cancer. But there are other conditions where it doesn't do as well (see link).

There's also a good chance that a universal health care system would encourage lots of innovation not encouraged by the current system. Right now there's no incentive for a pharmaceutical company to go after diseases primarily affecting the uninsured. If you set up universal health care you create those incentives. Orszag's proposals for comparative effectiveness review will most likely redirect a lot of sales and marketing spending at Big Pharma to R&D, as it'll force pharmaceutical companies to compete on the actual effectiveness of their product instead of who can hire the hottest cheerleaders to sweet-talk doctors into prescribing their product.

Neil Sinhababu said...

One more thing I wanted to say to Daniel -- opposition to changes in the health care system from the elderly may not help your point here, because the elderly are actually mostly covered under a government plan. (Some of them, famously, don't even know that Medicare is a government program.) So if they don't like Obamacare, it may be because of fear of losing the government plan they have.

Neil Sinhababu said...

Thanks for responding, Eleanor, and I obviously agree with most of what you say. I just wanted to touch on the private school / public school point. If it turns out that health care goes the way education has, and we have the vast majority of people in a government-guaranteed public plan with a few outliers doing the private thing, I'll be happy to declare victory.

Unknown said...

Regarding the education angle: it's worth pointing out that despite the existence of private schools, there is still a fairly stable consensus that everyone should pay for public schools even if a small minority don't use them. I don't see why the calculus doesn't work out similarly for health insurance.

In fact, I'd be inclined to think of private schools as the (almost) equivalent of "top-up" private insurance in most countries' health care systems: they're what you get if you're willing to pay more.

party said...

People of other countries are run with obama's plan happily but Americans people are against him...
why ????????????

Neil Sinhababu said...

Because they haven't tried it yet. When countries try it, they always like it.

Anthony said...

The Schumer proposal sounds like the FNMA of health insurance. If it passes it's just a matter of time before it'll get bailed out with taxpayer money. In the mean time, the "regulations and requirements [of] all other plans" will balloon until they have driven all the private players out.

Gary Ehlenberger said...

A single pay system would optimize the statistical analysis for prediction and research. The medical science would improve and thus drive down costs and make it easier to spot environmental health costs. This would make it easier to make sure companies report the true cost of doing business including health and environmental effects.