Fraser Forum

Universal health care doesn’t require a single-payer government monopoly

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A recent article in the New York Times by Robert H. Frank makes a politically appealing case for why the United States should adopt a single-payer system. Unfortunately, the author makes a number of inaccurate (or at least, incomplete) observations that deserve correction.

Specifically, the author’s assertion that “the entire country, can save money and improve services by embracing single-payer health care” is simplistic, misleading and may inadvertently lead to the unwise adoption of policies that have resulted in poorly functioning health-care systems elsewhere.

To begin with, it’s important to underscore the fact that the pursuit of universal health insurance coverage in no way necessitates a single-payer government monopoly. In 2013, at least 31 (of 34) members of the OECD—a group of economically developed countries—achieved universal health-care insurance coverage. Some (Canada, for example) use a single-payer approach while others (such as Switzerland and the Netherlands) rely on regulated private health-care insurance markets. Across the spectrum, countries vary considerably with regards to regulations governing profit-motives, methods of remuneration, risk-pooling, cost-sharing and a number of other important policy considerations.

Understanding the variety of 31 flavours of universal health care (Baskin Robbins is a coincidentally appropriate reference) is important because it helps highlight the hollowness of Frank’s primary claim—that “the total cost of providing health coverage under the single-payer approach is actually substantially lower than under the current system in the United States.”

While this is certainly indisputable in an international context, it’s also misleading because all 31 OECD countries with universal health insurance coverage have lower costs that the U.S., regardless of whether they employ a single-payer approach or not.

Similarly, Frank’s argument that “the average cost of coronary bypass surgery was more than $73,000 in the United States but less than $23,000 in France” is true, but it has nothing to do with the concept of single-payer.

In fact, the same data source shows that the cost of bypass surgery is even lower in Switzerland ($17,729) and the Netherlands ($14,061)—two countries that rely heavily on regulated private health care insurance markets.

To be fair, I think Frank is aware of these caveats, which is why his article ends on a whimper, acknowledging that moving to single-payer will require increased  tax revenue, and that his preference for it simply hinges on a belief that it’s likely to be  more palatable to the electorate than an individual mandate (as with the Affordable Care Act). Assuming his belief is correct (which it may not be) he should have stated it upfront rather than relying on selective facts to make his case for a single-payer system.

A more serious concern is his certainty that the high quality of care many Americans are accustomed to will be maintained. For example, he takes readers on a thought-experiment where he asks them to suppose that their “state’s government took over road maintenance from the county governments within it, in the process reducing total maintenance costs by 30 percent.” While he goes on to admit that “state taxes would obviously have to go up” he also states that “roads would be as well maintained as before.”

Apparently, this is supposed to be analogous to a move to single-payer that would result in lower total costs and similar service. However, a more accurate analogy to single-payer health care would likely involve fewer roads that are only accessible to a limited number of users who must queue up because of capacity constraints. Basically, single-payer health-care systems are often only able to lower costs by rationing services.

Think that’s far-fetched? Let’s look at some hard data.

The poster child for single-payer is undoubtedly Canada. Like every other universal (and not necessarily single-payer) health-care system in the OECD, Canada spends less per capita than the U.S. does on health care. However, it also has some of the longest wait times for treatment in the developed world. In a recent survey of adults in 11 countries (including the U.S., Switzerland and the Netherlands), Canada ranked last in terms of the ability to get a same or next-day appointment when sick, the wait for treatment in the emergency department, the wait to see a specialist and the overall wait for all elective surgery.

To be clear, Canada’s poor performance is not the result of its pursuit of ensuring universal access to health care. Rather, it’s more attributable to its stubborn adherence to a single-payer system where the government has a monopoly over the financing of core-medical services, its active discouragement of private alternatives, and the Canada Health Act’s prohibition on copayments and user-fees—policy stances that contrast those commonly found in more successful universal health-care systems around the world.

The Canadian experience underscores the point that ignoring important differences in policy when comparing universal health-care systems results in bold but simplistic (and potentially inaccurate) generalizations about the virtues of single-payer health care.

Unfortunately, Robert H. Frank’s broad conclusions about which system is best based on poorly-constructed analogies and cherry-picked data do a disservice to taxpayers, medical professionals, policymakers and most importantly, patients.


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