Sunday, April 19, 2015

Guest blog: Does single payer health care work? No!

A guest blog by Daniel Artz

For those of who think that Single Payer is the solution to America's health care system, here is how Government run single payer health care works. Surprise — it DOESN'T!

Fox News: New VA scandals call into question agency's ability to clean house

Bruce’s response: So you must support Obamacare, which is specifically not single payer.

Daniel: Obamacare may not be the stupidest thing Congress has ever done, but it certainly makes the top ten. And yes, I agree that the American health care system was fundamentally broken BEFORE Obamacare was enacted, but Congress never spent one millisecond on the all important question of WHY. Instead, it simply assumed that the problems with health care were the result of "market failure."

But America hasn't had anything resembling a free market in health care in more than 60 years. It took more than 6 decades of misguided and ill-advised government policy to make health care the wreck that it was, and there is a LOT of blame to go around. The States bear at least part of the blame, with intrusive regulations of the insurance industry and barriers to entry for medical professionals designed and enforced by — who else — medical professionals. Then there are barriers to entry for hospitals and clinics with "certificate of public necessity" requirements and regulations that require unnecessary capital investments that make small hospitals uneconomic.

But the Federal Government created the lion's share of the problems, first when it decided to make employer-paid health insurance a tax-free benefit. This created some very adverse incentives for overuse of medical services. Then we added Medicare and Medicaid, currently accounting for nearly 40% of all demand for medical care, where reimbursements are set not based on demand and supply, but on legislative fiat. And every time Congress discovered that Medicare and Medicaid were going well over budget, it decided to "fix" the problem by reducing reimbursement rates, completely oblivious to the impact that would have on private-payor pricing.

By 2010, reimbursement rates for both Medicare and Medicaid were less than 80% cost of service, meaning that health care providers could ONLY stay solvent by either fraudulently billing in the Government programs, or jacking up pricing way above cost-of-service rates for private payors. Most medical care providers did both.

There were a LOT of other really stupid government policies that helped drive health care costs sky-high, including the bureaucratic cesspool that the FDA has become, driving costs of pharmaceutical products through the roof, and the completely idiotic Medicare Part D that Bush pushed through Congress (President Barack Obama is an incompetent boob, but George W. Bush was no shining light either). So, the health care system was a mess before Obamacare, but the mess was created NOT by "market failure,” but rather by Government failure.

So, in an ill-advised attempt to "solve" a problem largely created by inane government policies, Congress (without a SINGLE vote from a Republican, mind you) decided to double down on stupidity and pass Obamacare. If you take even 30 seconds to think through the premises of Obamacare, you'll see that it can NEVER work as intended. It defies the basic laws of supply and demand. First, the assumption that Obamacare will reduce health care costs by adding 30 million new insureds to the market without doing anything at all about supply of health care providers — does that make any sense at all?

If I told you that Government was going to fund a program to buy free milk, at the rate of a gallon a week, for 30 million Americans who had previously been unable to get milk, do you think that program (adding demand for an additional 1.5 Billion gallons of milk every year) will drive prices for milk up or down? If you foolishly guessed that it would drive prices down, Congratulations, you are foolish enough to be a Democratic Congressman!

Then we get to the whole issue of health insurance. Don't get me wrong, I think health insurance is a good idea, but ONLY for medical care which falls within the essential rationale for insurance — i.e., low risk, high cost events. When you start requiring that insurance cover routine and elective procedures, like annual physicals, contraception, vaccinations, etc., you are grossly misusing insurance, creating very adverse economic incentives, and driving up the costs of BOTH the insurance AND the routine medical care.

Then we get to the "community rating" provisions of Obamacare. Those requirements have NOTHING to do with the efficient and affordable provision of health insurance; they serve only one purpose - to force young, healthy Americans to subsidize older, generally wealthier Americans, a highly regressive intergenerational wealth redistribution scheme. Insane. No, I most definitely do NOT support Obamacare. I think it demonstrates the economic illiteracy and moral bankruptcy of the Democratic Party.

Daniel Artz resides in Sunnyvale, Texas.