Single Payer Is Inherently Problematic

By now, even many liberals accept that Bernie Sanders’ health-care plan is deeply flawed. Kenneth Thorpe, a progressive professor retained by Vermont to help craft their single-payer plan, argues that Sanders’ plan would result in higher costs for 71 percent of working households who currently have private insurance.

But the problems with single-payer go beyond Sanders’ plan. Single-payer inherently creates substantial problems for doctors, hospitals, and patients.

A century ago, the economist Ludwig von Mises argued that the economy cannot function without real market prices. Market prices inform producers about the value of their services, enabling them to best serve consumers. If lots of consumers want laser eye surgery, high demand will lead to higher prices, which encourages other entrepreneurs to enter the market. If consumers don’t care for colonoscopies, the lower demand drives prices down and encourages entrepreneurs to stop focusing on that service.

This feedback mechanism is absent when government sets prices. The result is misallocation and chaos, as we see in Medicare.

Medicare tries to centrally plan around 6 billion prices every year. The resulting prices are often arbitrary. Cataract removals, for example, are reimbursed at eight times the rate of a visit to a primary-care physician. This is despite the fact that cataract removal is a 50-year-old assembly-line procedure that can be done in 10-15 minutes. In contrast, primary-care physicians are required to draw on a wide range of medical experience in order to diagnose a range of problems.

This pricing structure distorts the health-care market. One result is a shortage of primary-care physicians that experts predict will only get worse.

These problems would be exacerbated under single payer. Today, Medicare can get some sense of the right price by seeing what’s happening in the market. This keeps the problems of shortages and surpluses contained. With the rest of the health-care market removed, the problem would be much worse.

The second issue with single-payer health care is that it encourages overconsumption. While it’s emotionally satisfying to attack those who make money off the sick, "free" health care incentivizes people to use it unnecessarily. According to Health Affairs, people who are newly insured tend to consume twice as much health care due to their insurance.

But while demand for health care rises under single-payer, supply drops. Single-payer advocates argue that the government, as the sole buyer of health care, could use its buying power to drive down prices. The problem is that lower prices set by government lead to reduced output. This can also be seen in Medicare today, as 9,539 physicians opted out of Medicare in 2012. In a single-payer health-care system, some of these would leave the market, leading to shortages.

Advocates of single-payer nevertheless claim that it works: Just look at other countries. It is true that health care is often less expensive in single-payer countries, but with health care you get what you pay for.

In countries with single-payer, advanced medical technology is often hard to come by. The United States has four times as many MRI machines per capita as Canada and five times as many as Britain. Similar shortages are found in CT scanners. Fewer women get mammograms in single-payer countries, which leads to lower five-year cancer survival rates.

Advanced procedures are often rationed. In 2010, Norway, Sweden, and Canada reported that over half of patients waited more than four weeks for specialist appointments.

Even basic care is rationed, as “free” health care creates a mismatch between supply and demand. Patients in Canada, for instance, wait an average of 13 weeks for surgical and diagnostic treatment. Compare that to three weeks for Americans.

Rationing often hits the poor hardest, because the wealthy have more freedom to wait (they can take time off work, for instance) and can often afford to travel abroad or obtain additional private health-care coverage.

The lack of profit incentive also leads to mistakes. The U.K. and other single-payer countries have higher mortality rates within 30 days of hospital admission for a heart attack, as well as increased risk of postoperative complications. Half of Canadian discharged patients are not given post-treatment instructions on follow-up care, contacts, or treatment options. Compare that to only about a quarter of patients in the U.S.

Profit-maximizing hospitals work hard to decrease complications, because complications are expensive. They hurt the hospital’s brand, deter future customers, can cost thousands to fix, and even leave the hospital vulnerable to a lawsuit.

Single-payer leads to rationing, shortages, and poor care. It would exacerbate our current problems. If we want real health care, let’s try something we’ve never tried before: a free market.

Julian Adorney is a Young Voices Advocate. Grant Phillips hosts the popular Liberty.Me webcast "Unbiased America Live."