The high cost of single-payer health care

Obamacare looks shaky, mostly because Republicans are sabotaging it. This, in turn, has rekindled calls on the left to create a Europeanstyle “single-payer” system, in which the government directly pays for every American’s health care. California lawmakers, for example, are considering such a plan for their state.

The single-payer model has some strong advantages. It is much simpler for most people — no more insurance forms or related hassles. Employers would no longer be mixed up in providing health-care benefits, and taxpayers would no longer subsidize that form of private compensation. Government experts could conduct research on treatments and use that information to directly cut costs across the system.

But the government’s price tag would be astonishing. When Sen. Bernie Sanders, I-Vt., proposed a “Medicare for all” health plan in his presidential campaign, the nonpartisan Urban Institute figured that it would raise government spending by $32 trillion over 10 years, requiring a tax increase so huge that even the democratic socialist Sanders did not propose anything close to it.

Single-payer advocates counter that government-run health systems in other developed countries spend much less than the United States does on its complex public-private arrangement. They say that if the United States adopted a European model, it could expand coverage to everyone by realizing a mountain of savings with no measureable decline in health outcomes, in part because excessive administrative costs and profit would be wrung from the system.

In fact, the savings would be less dramatic; the Urban Institute’s projections are closer to reality. The public piece of the American healthcare system has not proven itself to be particularly cost-efficient. On a per capita basis, U.S. government health programs alone spend more than Canada, Australia, France and Britain each do on their entire health systems. That means the U.S. government spends more per American to cover a slice of the population than other governments spend per citizen to cover all of theirs. Simply expanding Medicare to all would not automatically result in a radically more efficient health-care system. Something else would have to change.

With monopoly buying power, the government could tighten up on health-care spending by dictating prices for services and drugs. But the government already has a lot of leverage. A big reason it does not clamp down now on health-care spending is that it is hard to do so politically.

Republicans have tarred the Affordable Care Act’s Medicare cuts as attacks on the cherished entitlement program. Doctors and hospitals have effectively resisted efforts to scale back the reimbursements they get from federal health programs. Small-town America does not want to give up expensive medical facilities that serve relatively few people in rural areas. A tax on medical device makers has been under bipartisan attack ever since it passed, as has the “Cadillac tax” on expensive health-insurance plans. When experts find that a treatment is too costly relative to the health benefits it provides, patients accustomed to receiving that treatment and medical organizations with a stake in the status quo rise up to demand it continue to be paid for.

A single-payer health-care system would face all of these political barriers to cost-saving reform and more. To realize the single-payer dream of coverage for all and big savings, medical industry players, including doctors, would likely have to get paid less and patients would have to accept different standards of access and comfort. There is little evidence most Americans are willing to accept such tradeoffs.

The goal still must be universal coverage and cost restraint. But no matter whether the government or some combination of parties is paying, that restraint will come slowly, with cuts to the rate of increase in medical costs that make the system more affordable over time. There are many options short of a disruptive takeover: the government can change how care is delivered, determine which treatments should be covered, control quality at hospitals, drive down drug costs and discourage high-cost healthcare plans even while making the Obamacare system better at filling coverage gaps.