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The Costs of Single-Payer

Economist Kash Mansori has a great post about the costs that would come with switching to a single-payer system in the United States. In some respects, a single-payer system would be more expensive than what we have now: people would end up consuming more health care, especially the 45 million who are currently uninsured. But on the plus side, these extra expenses would be outweighed by the cost savings that would come from eliminating a lot of the $400 billion we spend on administrative overhead and allowing the government to bargain down the price of services. Is there any evidence for this? Sure, look at Taiwan:

As another useful data point we can examine the case of Taiwan, a country that replaced a collection of different insurance schemes with a National Health Insurance program in 1995. The percent of Taiwanese with health insurance rose from about 60% in 1994 to 96% a few years later. It turns out that in Taiwan's case, the forces that would increase costs roughly balanced the forces that would decrease costs.
Moreover, providing preventive care to all people, especially those who are currently uninsured, would likely save money by preventing later, costlier hospital visits—it's much cheaper, for instance, to treat diabetes early on than wait for a patient to get rushed to the ER. According to the Institute of Medicine, covering all Americans continuously would save the country anywhere from $65 billion to $130 billion in better health outcomes. Note that this is more than the estimated $80 to $100 billion it would cost to cover the uninsured. On the surface at least, universal coverage makes economic sense.

The catch that's always mentioned, of course, is that some sort of single-payer system would force rationing of health care and stifle innovation. Innovation is a harder problem, but it's worth noting that we already do ration care—by income, by location, by age. But the case for switching to a system that would cost roughly the same, if not less, as our present dysfunctional mess, and would lead to universal coverage, has a lot going for it.

Posted by Bradford Plumer on 02/01/06 at 11:55 AM | E-mail | Print | Digg this | de.licio.us



Comments

That "stiffling innovation" thing is a pharmaceutical company scare tactic. NOTHING has stiffled research like mangled care, which effectively siphoned off money for residency fellowships and residency positions in universities across the U.S. Fewer government contracts, fewer pharmaceutical grants, fewer young bodies to do the grunt work of research--all have had a negative effect on medical research in the past two decades. I can't see how single payer would do anything but help turn this around by freeing up all that $$$ that went to 6 and 7 figure salaries of health care "executives" running the TPAs.

Posted by: DaraQW on 02/02/06 at 4:05 PM

It seems so obvious to everyone I talk to that universal health care is the answer to a lot of our problems. By covering everyone from cradle to grave, prevention and early detection of illness would really cut costs dramatically. Also think about this: with a single payor plan, employers would no longer have to worry about rising premiums for their employees health plans, or Workers Compensation! These are two huge costs that stifle small business especially; so more than likely an economic growth period would result from universal care. Another issue that, I believe, is tied directly in to the single payor, universal care system; would be a total makeover & downsizing of the entire IRS system & going to a total flat tax..this would elimitate a huge expense of maintaing the Federal Tax beaurocracy - in fact the new flat tax system could be so simple that the IRS would really have no reason to exist anymore, as the huge monster it has become. No loopholes would be allowed for the ultra wealthy and multinational corporations.
No stashing of obcene profits in off-shore accounts. Put simply, the new system should require the wealthy to pay their fair share. Of course, the ultra wealthy will always be able to buy whatever they want in cutting edge, state of the art healthcare & that is their right & privilege, but only after they have paid enough in taxes to allow all residents of this country full access to decent housing, healthy foods, and universal health care for all. All that extra government beaurocracy should be re-organized into a watchdog organization to keep industry from polluting our air, oceans, rivers, streams, groundwaters, land, crops, etc., etc. Let's face it folks, us (so called Christian) Americans need to stop looking for the splinters in other nations' eyes, and begin to pull the log out of our own.

Posted by: Eileen on 02/04/06 at 8:41 AM

It is a myth that Universal Health Care, a Single Payer Program, or Medicare for All, would save administration costs, cover everyone, improve service quality, etc. It sounds good in theory, but single payer programs are designed on systemic faulty ideas. I want true health care reform that really fixes the problems we have today. We are a brilliant country. We don't need to copy failed systems from around the world, we need to create the health care solution that is the envy of the world! We can do it. Learn the Myths of Universal Health Care or Medicare for All and then work for REAL SOLUTIONS!!!

Posted by: chad currin on 03/04/06 at 6:39 AM

If you are interested in facts instead of myths, please go to www.healthcareforall.org/summary to read either the exec summary or the 100 page details of a major health care consulting firm's analysis of a proposed single payer plan for a large state.
It is impressive in the use of puplic data on which to base their study. This firm has been on both sides of the issue of universal healthcare.
It would make a good basis for a public debate vs the strong opinions and conclusions of those who prefer the current system whose cost is out of control and leaves 45 million Americans w/o insurance (over half of which are employed full tim).

Posted by: Kahuna33458 on 03/13/06 at 1:11 PM

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