XPost: alt.california.illegals, az.politics, seattle.general   
   XPost: alt.fan.letterman   
   From: oblundercare@barackobama.com   
      
   By Megan McArdle   
   (Corrects reference to costs in sixth graphic; adds definition   
   of "per-capita government spending" in sixth paragraph.)   
      
   A few weeks back, I wrote a story on Vermont’s adventures in   
   single-payer health care.   
      
   “So this is going to be expensive. So expensive that I doubt   
   Vermont is actually going to go forward with it,” I concluded.   
   “This should be instructive for those who hope -- or fear --   
   that Obamacare has all been an elaborate preliminary to a   
   nationwide single-payer system. It isn’t. The politics are   
   impossible, and even if they weren’t, the financing would be   
   unthinkable.”   
      
   I was inundated by complaints from proponents of more government   
   intervention in the health-care system. Permit me to summarize   
   the many individual exchanges I had with these interlocutors.   
      
   “Why are you ignoring all the evidence that single-payer works?”   
   they demanded. “If single-payer is so expensive, how come   
   America spends twice as much as civilized nations, for worse   
   outcomes?”   
      
   “Good question!” I responded. “I will do a follow-up post to   
   explain why single-payer doesn’t magically transport us to the   
   land of cheap health care.” This, as you may already have   
   guessed, is that post.   
      
   Let’s start with where they are right. The U.S. spends a lot   
   more on health care than, well, anyone else:1   
      
   Ah, you will say, but the U.S. is so much richer! We are the   
   biggest rich country and the richest big country. Of course we   
   spend more.   
      
   There is indeed a strong, though not perfect, correlation   
   between how rich a country is and how much it spends on health   
   care. But that alone can’t explain why we spend so much:   
      
   Even if you look at spending as a fraction of national income,   
   the U.S. is an outlier. The figures above are for 2010; we now   
   spend close to 20 percent of our national income on health care.   
   One in every five dollars earned goes to buy health-care   
   services, while no other nation cracks 15 percent.   
      
   The implication that many people draw from this is that the U.S.   
   could realize fabulous savings from switching to a government-   
   run health-insurance system. But wait:   
      
   The U.S. already has a government health-care system. Actually,   
   it has several: Medicare, Medicaid, Veterans Affairs, military,   
   federal employee benefits, state and local government benefits.   
   And this system already spends more per capita than most other   
   rich-world governments:   
      
   The numbers get a little better if you look at them as a   
   percentage of gross domestic product. But not much better. We   
   are spending almost as high a percentage of gross domestic   
   product as every other country, just to cover a fraction of our   
   population. How can that be?   
      
   Well, let’s think about the general theories of why government   
   makes health care cheaper. The first idea is that you get big   
   discounts for buying in bulk. Because governments cover a lot of   
   people, they can negotiate the best prices, which can’t be   
   matched in America’s fragmented market.   
      
   The problem with this idea is that U.S. health insurers already   
   buy in bulk. They cover more people than many of the countries   
   cited as cost-control models for the U.S.:   
      
   A more sophisticated version of this argument says that the   
   power comes from setting prices and controlling administrative   
   costs. This is the idea behind a “public option.”   
      
   But we already have a public option. As mentioned, we have   
   several. And Medicare doesn’t control costs noticeably better   
   than the private sector does:   
      
   Medicaid controls costs significantly better. That’s because   
   it’s a program for poor people who don’t vote much, and   
   politicians don’t necessarily care if doctors refuse to take it.   
   So states set reimbursement rates that are so low that you could   
   pay more to take your kid to Panera than the government would   
   pay for you to take him to see a general practitioner.   
      
   On the other hand, seniors vote, and thus, politicians are very   
   reluctant to tinker with reimbursements. Prices are set the way   
   that other governments set them -- by a centralized committee.   
   But they’re set high.   
      
   There are two potential outcomes for a “public option” health   
   insurer: It could set rates high, in which case it wouldn’t   
   control costs, or it could jam them down to Medicaid levels, in   
   which case no one but the very healthy or the very desperate   
   would buy that insurance because it will be hard to actually use   
   that coverage.   
      
   That brings us to the most sophisticated version of the   
   argument: that we can use monopoly power to bring our health-   
   care spending in line with that of other countries. As long as   
   there is private-sector competition, the argument goes, prices   
   will stay high, because doctors can refuse to accept government   
   reimbursement. But if the government is the single provider of   
   health care (or at least, the single price setter), then we can   
   drive down reimbursements and drug prices to something   
   approaching European levels.   
      
   This idea has a number of problems, starting with its   
   constitutionality. Here’s a big one:   
      
   Most of the time, since the 1980s, growth in government spending   
   has been higher than total growth, not lower. This represents   
   coverage expansion, as well as price growth. What it does not   
   represent is significant cost control.   
      
   Think that’s just because conservative ideologues are preventing   
   the government from doing its job and controlling costs? Well,   
   here’s an even bigger problem with the idea that getting   
   government involved is going to bring our costs down:   
      
   What’s the problem? I hear you cry. Well, the problem is what   
   you don't see in that picture.   
      
   What you don’t see is any government cutting health spending by   
   any significant amount. Oh, Germany managed, once. Canada kept   
   it level for a while. But no one has cut by anything like 35 to   
   40 percent -- which is what we’d need to get our spending in   
   line with Canada’s.   
      
   I’ve only shown a few countries, to keep the graph easy to read,   
   but these examples aren’t cherry picked, except that they’re big   
   rich countries like us. When you dig into the Organization for   
   Economic Cooperation and Development data, you don’t see any   
   government, anywhere, making sustained cutbacks in the health-   
   care system, except for situations such as in Greece, which cut   
   back substantially in the middle of an economic meltdown and a   
   sustained run on its government debt. Absent the impetus that a   
   whopping financial crisis provides, at best, you see them hold   
   down cost growth.   
      
   Holding down growth rates is feasible -- give people a smaller   
   bump in what they were expecting. Cutting spending is absurdly   
   difficult, because it means cutting people's incomes. Incomes   
   that they counted on to help make their mortgages and car   
   payments. Maybe you don’t feel so bad for expensive surgeons who   
   have to sell the Bimmer, and I don’t, either. But America’s cost   
   inflation is not just fancy surgeons. It’s everything: surgeons,   
   general practitioners, nurses, respiratory technicians, private   
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)