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Why Single Payer Healthcare Works 1

The Left claims single-payer healthcare saves money. Does it?

By Petrarch  |  September 9, 2018

Rushing onwards towards an election which, we are told can be expected to be a thunderous Blue Wave - or possibly a Red Wave - the Left is crowing at every optimistic portent.  Their most recently cause for celebration is a recent poll finding that a majority of Republicans support a nationalized single-payer healthcare system on the lines of Canada or England where doctors all work for the government and anyone can go to the hospital without getting a bill.

Of course, the vast majority of Democrats want healthcare to be totally provided by the government too, and have for decades.  So, are we doomed to hospitals handled with the brisk efficiency and effectiveness of the DMV?

Not necessarily, as even the celebratory article admits:

...there’s reason to think that the aberrantly high level of support it shows for socialized health insurance is a reflection of how nondescript the wording of Reuters’ question was; voters were asked whether they would support “a policy of Medicare for All,” but were not provided with any concrete definition of what that policy would entail.

Something For Nothing?

Pollsters and poll-watchers both know that you can create whatever results you like by artfully writing the questions.  If you ask "Should everybody get all the healthcare they need, even if they can't pay for it?" you're naturally going to get overwhelming support.  If, instead, the question is "Should you be forced to pay for a million-dollar liver transplant for the drunk bum who harasses you in the street when you try to go into Starbucks?" the results will be somewhat different.

Yet, despite countless studies revealing worse results, longer wait-times, and lower medical satisfaction in nationalized healthcare systems, an equal number of polls reveal how enormously popular they are in their own countries.  The United Kingdom is so enamored of their National Health Service that a large portion of the opening ceremony of the 2012 London Olympics was spent glorifying it.

Why?  If, as free-market advocates argue, a free market always produces better results more cheaply, why is support for our system so low and theirs so high?  For that matter, why does the United States pay far more for medical care than anywhere else?  Is it possible that the Left is truly on to a way to beat the laws of economics?

In a word: Yes - but magic always comes at a price.

Monopoly Power Works Both Ways

Most Americans are familiar with the concept of a monopoly, in which one giant corporation controls a market.  When this happens, you can always count on service to be both expensive and slow as in all monopoly DMVs, though sometimes of high quality.

The textbook example is the old AT&T, which controlled all long-distance telephone service and almost all local service for decades.  AT&T rented you your handsets which were built so solidly that they nearly never broke, and many are still in use today in rural areas.  They built their landline system with incredible robustness and quality, such that telephone lines failed a small fraction as often as electrical power.  Once you got service, it was solid.

But it could take awhile to get a new line or new extension installed, and the monthly bill was many times what it is today when adjusted for inflation.  When government antitrust action forced AT&T to break up, all sorts of innovative new services and competitors sprang in to being, causing prices to plummet.  Today, we may grouse about our cellphone bills, but we get unimaginably more for our communications dollar than fifty years ago.  We can all halfway around the world for less money that we'd spend for an in-city local call.

AT&T was a monopoly provider in that AT&T was the only company selling telephone service.  You could buy it from them at whatever price they wished to charge, or not at all.

A consumer monopoly may be less familiar: that's a situation where there is only one purchaser for goods.  Many countries have nationalized commodity monopolies, in which only the government agency may purchase crops from a farmer.  The farmer does not necessarily have to accept what the government offers, but if he doesn't, nobody else is allowed to buy.  As you'd imagine, in this kind of system the farmer can be paid a lot less than he otherwise would or, depending on who's spent the most money lobbying, the farmer gets paid more than he otherwise would, but everyone eating his food pays far more for it.

A national health care system uses the same power against doctors and nurses: because only the government can operate hospitals and doctors' offices, the government is the only employer of doctors and nurses.  If you want to be a doctor or nurse, you will work for the government at whatever wage they offer or you can do something else.  That's the very definition of "single-payer".

Now, a lot of people want to be a doctor or nurse regardless, and many people would prefer the stability of a government job.  In our American system, though, most doctors have monumental student debts; much of their apparently-vast salaries goes to pay off those loans.

A single-payer health care system could quite likely save money by paying doctors, say, half what they currently get.  Consider a surgeon who is taking in $300,000 today.  If the government now cuts his salary to $150,000, that's still more than he could get doing anything else without going back to college and growing his student debt even more, so he probably won't quit.  He'll just have a greatly reduced standard of living, and bitter resentment against the government (good!) and possibly his patients (bad.)

But, on paper, it works.

In the long run, of course, you have far fewer people choosing to become doctors - the smart and ambitious go into law or Wall Street instead.  That is exactly what has happened in England, which is why the NHS reports chronic staff shortages.

Since healthcare at government wages turns out to be a job Englishmen won't do, the NHS has turned to the same solution applied over here for farmworkers: import foreigners to do the job cheaply.  This sort-of worked for a long time and saved a ton of money; the costs of becoming a doctor in Africa or Southeast Asia is much lower, and people from those countries consider a first-world government job a close approximation of Heaven.  Nearly half of new "British" doctors are foreign.

But as other countries grow richer, their doctors are less eager to leave; the NHS no longer finds it so easy to hoover up doctors from across the poorer world.

And the population of England is a tiny fraction of that of the United States.  If relatively small England can't staff its hospitals in spite of drawing from the entire world, how could America ever hope to?

No, the cramdown savings by underpaying medical staff aren't going to materialize if America goes for single-payer, even though the evidence from Canada and the U.K. is solid and well-known.

So are all such single-payer savings not likely to happen in any real American system?  Actually, no: in the next article in this series, we'll look at a massive savings that would all too real.