The Argument Against Single-Pay Healthcare

Regina E Herzlinger, the Nancy R. McPherson Professor of Business Administration at Harvard Business School, wrote a blog that is a must read for anybody who supports a single-pay healthcare system in the United States.

Here are a couple of snippets:

In the United States, Medicare is alleged to be a good cost controller and one that avoids the rationing tactics of the single-payer economies. So how does it achieve this miracle? Give considerable credit to government accounting: Medicare is low cost because the government accountants are permitted to ignore some inconvenient truths: $34 trillion in unfunded liabilities plus $89 billion in underpayments to medical care providers, which are ultimately paid by private insurers. With correct accounting, Medicare’s cost would increase by more than a trillion dollars. Further, if Medicare were the sole US health insurer, it would either increase its payments to providers by $89 billion or the current near-shortage in doctors would reach crisis proportions as medical students and graduates, burdened by huge debts and limited financial prospects, chose other professions.

She also writes:

There is no question that single-payer systems control health care costs: Canada, in which private payment is virtually illegal, and the United Kingdom, in which most of the funding comes from the government, have substantially lower costs. But do single-payer health care systems achieve cost control in a manner that would be acceptable to the American people?

Single-payer systems control health care costs primarily by rationing services to the 20 percent of the people who account for 80 percent of the costs. The political calculus is cruel but irresistible: 80 percent of the people, the healthy ones, will love their system, while some of the sick, a mere 20 percent, will not. As a result, the United Kingdom has the lowest uptake of new cancer drugs among the Big Five European economies and commensurately low cancer survival statistics. The percentage of people treated for end-stage renal disease in the UK is roughly a third of that in the United States and about 50 percent less than it is in other Organisation for Economic Co-operation and Development (OECD) countries. Lack of treatment is essentially a death sentence because most people cannot afford to pay the high costs of treating these diseases from their own pockets.

The full article, which should be read in full, can be found here. Link via the American Enterprise Blog here.

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