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The single-payer debate we should be having

Michael Fleshman

Bernie Sanders's argument in favor of single-payer health care is pretty simple.

"The United States is the only major nation in the industrialized world that does not guarantee health care as a right to its people," Sanders said at a 2015 rally of the National Nurses Union, one of the leading advocacy groups in favor of moving to a Medicare-for-all approach. "Meanwhile, we spend far more per capita on health care with worse results than other countries. It is time that we bring about a fundamental transformation of the American health care system."

Hillary Clinton's campaign has sought to counter the appeal of this proposition with a questionable line of attack, arguing that the election of a Democratic president on a Medicare-for-all platform would somehow help Republicans unwind the existing Affordable Care Act and other aspects of insurance provision.

Alternately, she has (accurately) noted that a universal Medicare system would require higher taxes — only to be met with the counter that a universal Medicare system would involve less overall spending.

On this, too, Sanders is right. Medicare manages to finance patients' health care at dramatically lower per-person rates — just as foreign countries do — so if Medicare covered everyone, total spending would decline even as some of it was shifted to the tax side of the ledger.

The real issue is something else entirely. Single-payer systems save money by squeezing health care providers — doctors, hospitals, and ultimately everyone who works for them — which would be very difficult to accomplish ex post facto. If the political consensus did exist for enacting large, across-the-board cuts in doctors' fees and hospital charges, then there would be no need to shift to a single-payer system in order to accomplish the cuts. In the absence of such a consensus, the switch to single-payer actually wouldn't save money, and the costs would become exorbitant.

This doesn't mean single-payer advocates are wrong that such a system would be a good idea. But it does mean that their current rhetoric totally evades a central issue — should the federal government massively slash payments to health care providers, and how on earth do they plan on winning the political fight to make that happen?

Medicare works because it pays providers less

Single-payer skeptics tend to be simply incredulous that government-run systems, both in the United States and abroad, are more cost-effective. Isn't the government a legendary cesspool of waste and inefficiency? Why would a government-run system be more efficient?

Well, here's the answer: Foreign single-payer systems pay doctors less. They also pay pharmaceutical companies less. They pay less for medical devices, too.

It turns out that Medicare uses this trick, too, offering doctors only about 80 percent of what private insurance plans pay them.

The downside to Medicare paying just $426 on average for a colonoscopy when private plans offer $639 is that as a result, some doctors refuse to see Medicare patients. This is particularly something you see in large, dense, rich cities like New York or Boston where medical practices that can manage to get themselves written up on magazine "Best Doctors" lists can afford to be choosy about their patients.

But to the average health care provider, the Medicare patient market is just too big to ditch. Doctors — and hospitals and everyone else — take what they get and are glad for it.

A single-payer structure is neither necessary nor sufficient

The thing about saving money by having a single health care payer squeeze providers on reimbursement rates is that adopting a single-payer structure is neither necessary nor sufficient to achieve the gains. In other words, if the American political system wanted to cut doctors' payments, we could do that without moving to a single-payer system. Conversely, adopting a single-payer system does not on its own lead to low reimbursement rates — that's a separate decision that the political system would have to make.

The term for regulating the fees charged by doctors, hospitals, and others in a multi-payer setting is called all-payer rate setting, and it's a pretty good idea.

The problem, politically speaking, is that doctors and hospital administrators like money. When politicians try to take away their money, they complain and they lobby. And it turns out that most people have more confidence in doctors than they do in members of Congress, so not only does the lobbying cash count but the complaining is extremely effective.

On sufficiency, consider the case of prescription drugs. Medicare pays lower prices on virtually everything it buys than do private insurance plans. The big exception is prescription drugs, where Medicare is required by law to pay the open market rate. Lots of liberals (including Bernie Sanders) don't like this and have proposed changing it. But they haven't won the fight. And the case of Medicare's prescription drug program should be a cautionary tale to anyone who thinks adopting a single-payer model somehow automatically leads to cost savings.

The truth is that there are two entirely separate questions: Who pays health insurance claims, and what prices does the government set? It's true that shifting from a multi-payer to a single-payer system streamlines some elements of payment administration, but the overwhelming preponderance of the cost savings in a Medicare-for-all plan comes from the lower reimbursement rates.

To get single-payer, liberals have to be more honest with themselves

In policy terms, the Sanders-Clinton dust-up over Medicare for all is pretty clearly meaningless. Whether Sanders or Clinton sits in the White House, Congress isn't going to enact a Medicare-for-all bill. And whether Sanders or Clinton or Ted Cruz or Donald Trump or whoever else sits in the White House, liberals aren't going to stop fighting for one.

But if they ever want to get such a bill passed, liberals are going to have to start being more honest with themselves about what their vision entails — a sharp 20 percent cut in doctors' pay rates, alongside comparable cuts for other kinds of health care providers.

This is not an unreasonable thing to fight for. American doctors are paid much more than foreign doctors, and the foreign ones seem to treat illness just fine. But it's a tough, down-and-dirty fight with some very powerful and very well-respected interest groups.

That's why cautious, pragmatism-oriented politicians like Clinton don't want to embrace it. An oddball senator or House member here and there is no big deal, but a major party presidential nominee running on a single-payer platform would run into a buzzsaw of opposition from the American Medical Association and other health care providers.

Right now, Sanders and other single-payer proponents' main strategy for dealing with this problem is to talk around it. Medicare is extremely popular, so "Medicare for all" is a popular slogan, and that's what they talk about. But you can't get major policy change enacted on this basis. At some point, to get the savings of their dreams liberals are going to need to win a straightforward argument over the merits of cutting doctors' pay.

But in my experience, relatively few rank-and-file single-payer proponents are even aware that stingy reimbursements is how single-payer controls costs — in part because essentially none of the movement's leaders ever say it publicly.