The Fantasy of Single-Payer Health Care in the States

(A version of this Health Alert was published in the Washington Examiner)

One of the defining characteristics of Bernie Sanders' socialism is single-payer healthcare, a fully taxpayer-funded universal medical system. Single-payer healthcare has long had a following in the United States, but it is unlikely to become federal policy. Obamacare's setbacks have made Americans less confident than ever that the federal government could operate such a system.

So single-payer advocates are focusing on individual states. This November Coloradans will vote on single-payer healthcare. A couple of years ago, Vermont's governor tried to institute it, but gave up short of the finish line. Other states will surely try. I would put Oregon and (maybe) Hawaii at the top of the list of states to watch.

If successful, this would be a Canadian-style roll-out of single-payer healthcare, which began in individual provinces in the mid-20th century and subsequently won federal support. However, there are significant obstacles to any state instituting true single-payer healthcare in 21st-century America, even if the people or politicians choose it.

Health Services 50 Percent of GDP Growth

This morning’s third estimate of GDP for the first quarter significantly increased the estimate of health spending, such that it comprised one half of GDP growth in the first quarter.

Spending on health services continue to dominate weak GDP growth. Growth in health services spending of $33.3 billion (annualized) comprised 50 percent of GDP growth. However, there was shrinkage in personal consumption expenditures on goods and private domestic investment. This meant personal expenditures on services grew much more than GDP overall. Growth in spending on health services amounted to 62 percent of growth in personal consumption expenditures and 35 percent of spending on services. Spending on health services grew by 6.4 percent, almost twice as much as growth in spending on non-health services (Table I).

Consumer Price Index: Rx Prices Decline

Hard to believe, but prescription drug prices actually declined in May’s Consumer Price Index – down by 0.4 percent versus all-items CPI increasing by 0.2 percent and even medical care CPI increasing by 0.3 percent (Table I).

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Producer Price Index: Pharma Prices Finally Tame

The Producer Price Index (PPI) for final demand goods grew 0.7 percent last month, or 0.3 percent less food and energy. Remarkably, prices for pharmaceutical preparations and medical devices grew less. Pharmaceutical prices were actually flat (Table I).

The Real Lesson of John Oliver’s Medical Debt Forgiveness Stunt

Late-night TV host John Oliver recently caused a stir by attacking debt collectors in a clever way. He set up his own collection agency, bought $15 million of medical bad debt, and then forgave it all. This was all done on TV, to the cheers of his audience.

Oliver claimed to have outdone Oprah Winfrey, who once gave a car to each person in her studio audience. Oprah’s car give-away cost $8 million, just over half of Oliver’s. So, Oliver wins the charitable ego competition, right?

Obamacare Slightly Increased Short-Term Uninsured

The best measurement of people who lack health insurance, the National Health Interview Survey published by the Centers for Disease Control and Prevention (CDC), has released early estimates of health insurance for all fifty states and the District of Columbia in 2015. There are two things to note.

First: About 70 percent of residents, age 18 to through 64, had “health insurance” in 2015, which is the same rate as persisted until 2006. Obamacare has not achieved a breakthrough in coverage. It has just restored us to where we were less than a decade ago.

What has also happened is a significant change from private coverage to government welfare (primarily Medicaid). The shift has been about five percentage points since 2006, and ten percentage points since 1997. (That is, there was no net change in coverage before the Great Recession, but there was crowding out of private coverage in favor of welfare.)

Categorizing people on welfare programs like Medicaid as having insurance is inaccurate, for the same reason categorizing people receiving cash welfare with employed people into one category of people “earning incomes” would be inaccurate.

Second: The National Health Interview Survey is the best survey because it asks people three questions: Whether they were uninsured at the time of the interview, whether they were uninsured for any time within a year, and whether they were uninsured for more than a year. Unfortunately, it does not differentiate between private coverage and welfare.

Between 2013 and 2015, the number of people who were uninsured for one year or more declined by 12.7 million, from 30.5 million to 17.8 million. However, the number uninsured for less than a year increased slightly from 16.9 million to 17.7 million.

I believe this reflects churning between private coverage, Medicaid, and Obamacare exchanges in the increasingly fragmented post-Obamacare landscape. People fall through the cracks, overwhelmed and confused by an unnecessarily complicated “market.”