Time to Support Single-Payer Health Care, Even if the ACA Is a Success

-- Posted by Neil H. Buchanan

Although I have occasionally mentioned single-payer health care, and done so quite approvingly, I am not sure if I have ever directly and simply said that I support it.  Whether or not I have done it before, I did so quite explicitly today in my Verdict column.  To the extent that I am doing something in that column beyond merely stating the obvious (that I have been in favor of single-payer all along), the timing of the column is probably what matters most, for reasons that I will explain in this post.

The big news in the last few weeks on the health care front has been the surprising success of the Obama Administration in getting more than 7 million people to sign up for coverage on the new health care exchanges.  This is big news, because it undermines the only real plank of the Republicans' 2014 electoral platform.  (Sorry, but "Obama the imperial president" is just not going to fly.)  Seven months before the mid-term elections, the Republicans are finding that their deeply held belief that the Affordable Care Act will surely be a horrible failure is turning out to be wrong.

One way to respond to that news is to argue with the facts.  As they did with unfavorable polls before the 2012 elections, and as they still do with climate science, and as they still do with evolution, Republicans have been denying reality -- frantically claiming that the signups for the ACA have been inflated, or that they are not "new enrollees," or whatever.  Even Jon Stewart, bizarrely, gave Republicans some aid and comfort when he expressed sketpicism that the announced number was 7.1 million, as against a goal of 7 million -- or, as he put it with eyebrow arched, only 1.4% above the target.  It is hard to know why anyone would find it strange or suspicious that people who have achieved a goal made a big push that would get them just over the finish line, but "haters gonna hate," I guess.

In any event, none of the attacks on the facts are holding up to scrutiny.  And, honestly, even if the enrollments had totaled only 6.9 million -- and do you think that anyone on the right (or on Comedy Central, for that matter) would be saying that it was no big deal to have fallen only 1.4% short? -- the important point was that the enrollments needed simply to be big enough and diverse enough (by age, health status, and so on) to allow the system to be actuarially sound, keeping the private insurance companies from losing money.  And that is the big news.  The 7 million target was the best guess of what it would take to comfortably conclude that "nationalized Romneycare" would succeed.  At this point, we have every reason to believe that it will.  For Republicans, and especially their Senate candidates, that is bad news.  For everyone else, that is a huge step forward.

Short of trying to deny reality, the Republicans only other possible response is to propose an actual alternative to the ACA.  They have never done so, because there is no alternative to the ACA that preserves the private insurance companies AND allows Congress to require those companies to cover people with pre-existing conditions, which is the one goal that nearly everyone agreed upon from the beginning.  As Paul Krugman pointed out on his blog earlier this week, some Republican staffers are finally admitting that there is no conservative alternative to the ACA, because the ACA is the conservative alternative to single-payer national health care.

All of which brings us back to the question of why the timing matters, in terms of endorsing the single-payer "Medicare for All" alternative.  Why now?  It might seem counter-intuitive to argue that Democrats should immediately try to undermine what is arguably their greatest social accomplishment in more than a generation.  Why not let it work for awhile, and see how it goes?  Let us at least enjoy the reality that many people who would have died too soon, or who would have been financially devastated by medical care costs, or both, will see a better future than would have awaited them had the health care system continued on its previous course.  Right?

There is no doubt that things are better now than they were before.  The danger all along, however, was merely a specific example of the classic liberal-versus-radical, incrementalist-or-absolutist conundrum.  Yes, we have improved matters considerably by taking the cautious Obaman approach.  But doing so inevitably becomes (especially for people like Obama's advisors) not an argument to take the next step, but to settle all-but-permanently for less.  (See, e.g., the inadequate fiscal stimulus program of 2009-10.)

Do we really lose much by settling for less, especially if we have achieved the important goal of meaningfully improving people's physical, mental, and financial health?  The answer is yes, we really do lose a lot by waiting to switch to a single-payer system.  Under other circumstances, I might have devoted some time in my Verdict column to rebutting specific arguments against single-payer plans ("You'll have to wait in long lines, just like in Canada!!" and all that), but here is where being a macroeconomist is helpful.

As I pose the question toward the end of my column, do we really want to spend an extra $1 trillion per year, "rising every year in perpetuity" (projected to reach $1.5 trillion in 2023, and continuing to rise), to keep private insurance companies in business?  To put this in perspective, the gross domestic product last year was about $17 trillion, of which we spent almost 18%, or $3 trillion, on health care.  More than one trillion dollars of that was the extra cost for having a non-single-payer system.  The ACA is slightly more expensive overall than the system is replaces -- although it reduces the federal deficit, due to its dedicated taxes -- precisely because it covers more people.  But under either alternative to single-payer, the country throws away about $1 for every $3 it devotes to health care.

Maybe a more vivid way to think about it is this: The "gross state products" of Tennessee, Iowa, Kansas, Minnesota, Missouri, Nebraska, and both Dakotas -- or just the entire economy of Texas -- currently add up to the same extra amount that we needlessly spend on keeping the current duct-tape-and-bailing-wire health care ecosystem afloat.  I know that people on the coasts like to ignore "flyover country," but we actually benefit from their economies!

In some ways, the enormity of the waste in both the pre- and post-ACA private health care systems becomes its own argument not to do anything.  It seems impossible to imagine that one out of every seventeen workers is doing something pointless and unnecessary (and, in many cases, counter-productive).  And it certainly seems too good to be true that we could really save one third of our health care costs.  The fact is, however, that some countries do even better.  For example, the Brits and the Swedes both spend 2% of GDP less than France, which is the basis that I have used for the comparison of the U.S. with the next-most-expensive country.  If anything, the estimate that $1 out of every $3 is wasted is too low.

I note in my column a study by a UMass economist, Gerald Friedman, which forecasts the potential savings going forward of a specific proposal to expand Medicare, H.R. 676.  Importantly, Friedman also devotes a fair amount of effort showing how the expansion could be financed, in a progressive way.  This is important, because the current Medicare system is underfunded only in the sense that the specific tax that is supposed to support the whole system has turned out to be too small, not in the sense that the economy could not afford to support it from general tax revenues.  Too many people have misused the financing projections for the current Medicare system to say that we cannot afford to expand the system to other Americans.

The larger point, however, is that we cannot afford not to do so.  The "third way" types running the show in the White House (and in Hillary Clinton's nascent campaign) will surely counsel caution and prudence, saying that we must wait.  Waiting, however, is hardly a "cautious" move, unless one considers it prudent to waste the equivalent of the output of eight states in the middle of the country.