The Conservative Case For Single Payer Health Care (Its the Competitiveness, Stupid)

On the surface, the title of this article seems paradoxical. How can any conservative in the USA even contemplate the concept of the government creating a single-payer health insurance system covering all Americans and, in effect, ending private major medical health insurance?

In this post I hope to make the conservative case for a single payer incontrovertible for those occupying the centre-right politically.

Conservatives are supposed to be the defenders of business. Yet our current health care system works as an albatross around the neck of American business. Likewise, the piecemeal reforms of ObamaCare seem only to make some problems even worse. Hence it is only a matter of time before a single-payer becomes inevitable in this country. Therefore conservatives need to position themselves and come to terms with this eventual reality. And if history is a judge, many times it takes, say, a Nixon to go to China or a Clinton to do welfare reform. A Republican president may be the one who puts single-payer in place down the road.

According to the US Chamber of Commerce, group health insurance is the single most expensive benefit offered to employees. General Motors’ cost alone to offer health insurance yearly to employees is $5 billion dollars. To put it in perspective, health care insurance alone, adds $1,500-$2,000 to the price of each car that comes off the assembly line.

A RAND study from 2009 found that companies with higher levels of participation in employee health insurance benefits had much slower economic growth then those companies and industries which had lower health insurance costs or participation to deal with.

Let’s face it, health insurance is a drag on American competitiveness. Every major trading partner of the United States has some form of government-organized health care, so why do we continue to saddle American corporations like working donkeys with such expensive costs?

Americans pride ourselves on being the land of opportunity and of Horatio Alger. Yet the truth is social democratic Denmark now has higher levels of entrepreneurship than the USA. One primary difference between a Danish entrepreneur and his/her American counterpart is health care. Because of universal health care, a Danish worker with health problems can strike out on their own anytime and start up a business. Americans with health problems have to weigh the cost and benefit of leaving their jobs and decide if they can afford or even qualify for an individual health insurance policy.

Americans are more and more making working decisions based on health insurance. According to the Census Bureau, over 78 percent of all small business have no employees. Thus entrepreneurs in America are more likely to have to buy individual health insurance policies, which are usually more expensive and difficult to obtain than group health insurance.

It is no secret conservatives and libertarians in the USA ♥ Hong Kong. After all HK has Ricardian free trade, low levels of regulations, no capital gains tax and an individual flat tax. Every year when the Heritage Foundation releases its Index of Economic Freedom, HK always tops the list.

However, HK has a dirty little secret. It has a very good national health care system. HK citizens have some of the highest life expectancies in the world but their government health care system only costs about three percent of their GDP to operate (a sharp contrast to the 20 percent of GDP that USA health care costs are expected to be in the next decade).

The point of the HK example is that this beacon of capitalism manages to operate the freest economy in the world while offering and providing a British-style national health service. if one listens to rightwing shock radio or the rhetoric of the Tea Party, it is impossible for that to happen. After all government health care would turn America into a giant Gulag Archipelago.

American conservatives are free to believe that a single-payer system in America will lead to a road to serfdom. Just don’t tell the citizens of Hong Kong, OK? You may embarrass yourself.

In many areas of America, words like “free trade” and “globalization” are fighting words. Blue collar America lives everyday with the worry that they will show up at work and find a sign saying, “Moved to China: See ya, Don’t want to be ya.”

Those workers are then left to scramble to find a job, usually for less pay and lesser benefits. In the meantime they go on unemployment insurance and hope they can pay their COBRA premiums with their unemployment pay and their spouse’s salary. (COBRA allows Americans to keep their former employer-offered health insurance if they pay the full cost once they leave the company. Typically, employers pay 50% of an employees health insurance premiums.)

Let’s contrast this to the Danish workforce again. When leftwing journalist Bob Kuttner traveled to Denmark, he discovered something very interesting (and probably fascinating since Kuttner is an advocate of managed trade). What he found was the Danish labor movement is completely at ease with free trade and globalization. Part of this is because of Denmark’s very proactive labor retraining policies; but some of it has to do with the fact that a Danish worker’s health care is not tied to their employment. So if a Danish worker’s job is outsourced to Poland, at least some of the pain is mitigated by not having to worry about losing health insurance.

If conservatives would like to take the teeth out of the American labor movement, what better way than to eliminated their fears about free trade and the free market by supporting a single-payer?

The name Margaret Thatcher is said with much reverence in the USA by conservatives, almost with the same love as for Ronald Reagan. Yet Lady Thatcher always supported Britain’s National Health Service(NHS). In 1983, for example, as she geared up for her re-election campaign, Thatcher said, “The NHS is safe in our hands.”

Rather ironic that if Lady Thatcher were to change citizenship, move to the USA and try and run for office as a Republican, she probably could not win a GOP primary. She would be denounced as a crypto-commie by Tea Party activists for having once supported “socialized health care.”

Thatcher– much like the other iconic conservative statesmen of the 20th century in Europe, from Winston Churchill to Konrad Adenauer to Ludwig Erhard to Charles DeGaulle– made peace with their countries universal health care system. It is only in America where making peace with such an arrangement would be considered, “socialism” or “Marxism”.

The current system is unsustainable, a single-payer is coming– it’s only a matter of time. Conservatives forget that health care is not an example of a perfect market. It is not the same as shopping for a car, choosing an airline or deciding which brand of cereal to buy. Health care is the quintessential example of information asymmetry (PDF).

If conservatives and Republicans can’t talk about these things, they will cede the issue to liberals and Democrats.

Saddling American corporations with external costs, whether they are imposed by the market or by government, make no sense whatsoever.

They took the tax deduction. The worker pays the taxes for single payer with insane tax rates while having NO say in how their medical dollar is spent or what kind of treatment they will get.

But we do need to talk seriously about how we’re going to get health costs under control, enhance American competitiveness abroad and make it possible for Americans to be productive without worrying about whether catastrophic health care expenses will jeopardize their families’ future.

My thoughts on the topic.

In a free society, health care choices are necessarily individual, but given the uneven chance that an individual will incur catastrophic healthcare expenses, individuals must pool resources to fund health coverage, usually by means of insurance.

When healthcare was funded by a single family, funds were necessarily limited; a family would not starve its children to treat the sick or aged. The amount of effort to save a single life that could be spent has changed for two reasons:

1. Technology has vastly increased the amount that could be spent on any one case.

2. Pooling healthcare resources has vastly increased the money available to be spent on any one case.

In effect, the “family” now paying for the service is the entire insurance pool. That pool, or its agent, the insurer, then has a say in what they will fund, just as the family once did. So now, instead of a family refusing to starve, we have an insurer refusing to go broke. It's a tradeoff. We have more funds available for any one individual, but less control over how they are spent. As long as technology is increasing the upper bounds of what might be spent, we, as a pool, face hard choices about what we can afford. When a moral imperative to make an infinite commitment to save any one life meets a technical ability to bankrupt the pool, somebody MUST lose in the pursuit of saving that one life.

As the pool enlarges to a global perspective, the moral problem takes on a new dimension, and "the least of mine," takes on a whole new meaning. The money spent on Terri Shiavo could feed, clothe, medicate, and educate ten thousand children who otherwise will die. So as long as it's the family's money, that's OK, but when it becomes your money and the power to take it is outside your control, that's quite another thing.

We have to find ways to make hard moral choices in order to contain costs. It's inescapable.

Seventy percent of your medical dollar (or nearly eight percent of the national economy) is spent upon people who die within six months. Meanwhile, pregnant mothers still don't get decent prenatal care that would prevent life-long medical expenses and aliens enter the country carrying hepatitis, parasites, and antibiotic-resistant strains of infectious diseases that go untreated. Hospitals are on the verge of bankruptcy caring for the indigent. Private insurance rates bear much of that cost as a hidden tax in hospital charges.

Distorted treatment priorities are only part of the picture. The system provides few financial incentives to promote health. Proper diet, regular exercise, and annual check-ups do not reduce the price of coverage. Similarly, there are few penalties for high-risk behavior.

The system is insane. Government is the problem and socializing medicine will make it worse.

In a free market, there are usually two underlying factors determining the scope of coverage:

1. How the costs were incurred: whether the medical problem was no fault of the insured person's own choices or whether it was the result of an irresponsible and avoidable choice.

2. The cost-effectiveness and extent of the adjustment: whether it's risky or experimental or if less expensive substitutes exist.

The cost of coverage is determined by the scope of covered risks, the probability of a claim, and the average expense of the treatment. The price of coverage is offset by investment returns on the cash in the coverage pool. For example, insurers may charge more to cover high-risk activities such as smoking or skydiving. A policy may also limit the extent of elective procedures such as certain forms of cosmetic surgery. Unfortunately, pricing many other distinguishing risks is not allowed because the State enlarges the pool paying into the system to the point of the absurd. It closely regulates the terms of the contracts based upon the political power of the groups at risk: those seeking to get others to subsidize the cost of their choices.

It doesn't matter if the risk is riding a motorcycle without a helmet, not taking prescribed medication, or bare-backing in a bath-house, high-risk individual choices cost the insurance pool that pays for the treatment and poses additional risks to the public at large. A State-financed or regulated system, heavily influenced by political interests, is unlikely to assess those risks objectively.

Once those risks are assumed, there is the additional unnecessary legal overhead associated with malpractice settlements. Since humans will probably never know everything about their bodies, there always will be uncertainty and risk associated with the delivery of medical products and services. The assumption that anything less than a perfect cure constitutes medical malpractice is one expensive fantasy. At some point, the choice exercised by those who make healthcare choices must bring its own responsibilities.

The insurer may have reason to lose that lawsuit. First, the settlement is often less than the cost of a court battle. That means that more such cases will be brought because a new precedent, whether due to the cause of the loss, the size of the settlement, or the type of restorative measures demanded, means that all such cases must be covered the same way by all insurers. They must then raise rates and the total industry cash flow then increases. Insurers make money on that cash flow, as well as on investments in companies that treat covered losses. If that sounds like a conflict of interest, it can be.

Free Health Care

Healthcare services don't come free; somebody has to pay for them. While central planning in healthcare works no better than it did in the Soviet Union, the United States, torn between socialized medicine and corporate welfare, has some of the finest care available, but by far the most expensive. While the US bears much of the research and product development costs for the rest of the world, in no way can it be considered a cost-effective system by world standards. There is a lot that can be done to improve its efficiency without resorting to the mediocre treatment characteristic of socialized medicine.

When the level of free service is equivalent to what can be purchased by private parties, there is then no reason to invest in private care. Socialized medicine makes all healthcare policy decisions political thus masking the cost of individual decisions by placing the burden for their consequences upon everybody. That's why AIDS research is starving the search to cure cancer even though the latter clearly costs society far more, which destroys the wealth that funds AIDS research. Government intervention into free-market risk management distorts the cost assessments that help industry identify costly health risks to invest in eliminating them. Treating medical problems is a human need capable of virtually infinite costs, simply because life is fatal. As medical technologies proliferate no insurance pool will be able to afford all the treatments its users could desire.

The best way to reduce the cost of treatment is to prevent the need, a focus upon which our physician-dominated system is lacking. These activities include personal habits that preclude problems (exercise, diet, posture, marriage, oral hygiene), mitigating measures designed to keep a problem from getting worse (special diets, spinal correction, dental care), and diagnostic tools to detect potential problems.

Many nutritional supplements don’t get onto the market as substitutes for prescription drugs because food is not patentable. Decades later, expensive drugs are qualified by the FDA that have side effects the natural products don't have! The fix starts with private property rights. Many of these nutrients are only in unique local habitats. In that respect, the combination of resources and processes that support production of a particular nutrient should be patentable just like a mining claim. It certainly provides reason to understand and care for that habitat instead of ruthlessly exploiting it. You saw it here first.

It is within the preventative realm that the market has operated with relative freedom, but it has suffered from the distortions of treatment costs downstream. New preventative technology usually lacks physician or insurer acceptance, has high initial costs, or suffers from the perverse result of providing insurers reason to cancel coverage as is the case with diagnostic equipment. This is because minimizing total cost to the patient does not drive the profit motives to coverage providers, indeed, quite the opposite.

Only patients can have their own best interests at heart. That's why individual payment systems are the least expensive in delivered cost across total populations as long as each patient understands and is motivated to adopt the least cost option.

Unfortunately, the patient has no idea what a competitive price for most medical services might be, in part because of the distortions due to the buying power of large pools. HMOs, MediCare, and hospital bills (padded to cover the cost of services to the indigent) have absolutely destroyed the patient's ability to weigh competing prices of medical services. Have you ever looked at an Explanation of Benefits form? Did the prices bear any resemblance to reality? Have you ever asked your physician what he or she might take for the service in cash? If so, were you surprised at the difference? So how can anyone objectively judge what is in their own best interest?

You now know why the system is insane.

The Deep End of the Pool

Treatment of the medically indigent is totally dependent upon the insurance pool of last resort: the taxpayer. Although minimal free healthcare services cost taxpayers, confining infectious diseases and preventing lifelong problems in children saves taxpayers money in the long run. There is an obvious peril, however, in making free health care services available to anyone.

Controlling healthcare costs thus faces an inherent conflict, regardless of whether healthcare services are private or socialized: A high price at the initial point-of-service inhibits people from seeking help early, when most medical problems are less expensive to confine or treat. Conversely, pricing medical care free of charge would make containing costs impossible. The key to resolving that paradox is in managing the triage function in a manner that serves more purposes than the system does now.

Triage is the process of evaluating patients and determining what kind of diagnostic work or treatment they need. It is done by firemen or EMTs in an emergency. It should be performed a qualified technician or nurse before any person makes it into an emergency room. Any person who doesn't qualify for emergency treatment could then be directed to an urgent care facility or asked to make an appointment.

Triage should be free. The provider must have no relationship to any downstream medical provider. They would provide pricing information on the various alternatives in the process, whether a visit with a doctor, chiropractor, nutritionist, or purchasing lab tests. Triage would thus be little different than walking into a store and deciding what to buy, if anything.

The one problem with putting triage in front of a physician visit is that when most people get sick they want to see a doctor right away. The way to meet that demand is by automating the triage function. Many people have the education to make confined medical choices. An insurer could provide qualified subscribers access to online diagnostic information that would help them research their medical problem, select the appropriate specialist, make an appointment, or communicate about problem to a triage specialist. The software might also test the users' comprehension by which to qualify for the option to make more decisions for themselves. They could schedule diagnostic tests so that a physician could make a decision without a visit. Putting test and treatment protocols online thus would improve both patient education and physician accountability.

Such testing also assesses the effectiveness of the educational tools by which to market better services, reason to research, develop, and improve the quality of online education tools. If copyright for such information bundling and testing were confined for, let's say, five to seven years, the provider has reason to invest in improving proprietary tools, while the benefits are not retained from the public at large for an unreasonable period.

Increasing use of nurse practitioners to screen incoming patients would save both time and money as well as handle the indigent patient fairly. Here we come to the manner in which the scope of patient care for the indigent must be confined to a rational minimum. We have a right to be free, but we don't have a right to free care. The only way to manage the cost of medical treatment for the indigent is to define what kind of services they may have very carefully. It is a political decision.

Where the healthcare industry is truly responsible to the public is in informing our representatives of the relative cost of various healthcare options by which they can then define the scope of coverage in budgetary legislation. Providers should effectively give us a budget for what they can accomplish for a given amount of money, what would be effectively indigent healthcare for bid. Most healthcare purchases today are not made by the user, but by an interest without accountability for acting as the user's agent: their employer. To combine the benefits of pooling with visible pricing means more than making the purchase price of healthcare options visible, it is to return to the user control of the buying decision. We need to expand the concept of the Medical Savings Account to include pretax purchase of healthcare on the part of the employee and end employer purchase of healthcare.

One way to resolve that customer alienation from reality, and provide private providers a way to contain costs, would be to market coverage from a menu of narrowly defined policies. Consumers would combine these policies into a package to suit their individual preferences. By defining coverage pools according to the choices people make, those behaviors that unnecessarily cost the total system would be borne by those who choose to incur those costs.

For example, people who don't want extreme measures taken to save their lives or don't need coverage to treat STDs, obesity, infertility treatments, or caring for children, wouldn't have to pay for them. Those who don’t want elective cosmetic surgery wouldn't buy that policy. If getting regular exercise assured a lower cost of coverage it would motivate the sedentary to start working to qualify for that pool. Forcing people to confront the cost of their choices is an important way to prevent expensive problems. That process reduces the total cost of the entire system. Pricing each distinct need focuses research dollars to fix the problems that have the most potential, whether glamorous university-research or a simple educational tool.

It may be true that America's research is carrying much of the rest of the world stuck with socialized medical care, but it is product development that pays for it. No political system is as efficient at optimizing competing demands on capital as is the marketplace.

There will still need to be restrictions on customized customer pools for the sale of health insurance to preclude exclusion of people who had no choice in their ailments, such as those who suffer congenital diseases. That such groups exist does not discount the value of pricing services by behavior because it motivates healthy decisions that increase the total wealth that ultimately must pay for those who can't.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.