One theory is that the whole idea behind capitalism is to force the making of tough economic choices. Examples would be the decision of an employer to fire some people when the revenues of the business just don't support them any more; or the decision of a family to sell a beloved home when the expenses get too high. Another theory is that the government has an infinite credit card, which can be drawn at any time, and the money given to whomever they want, so why is there ever a need to make a tough choice?
The best arena to observe the game of using the infinite credit card to avoid tough choices is the arena of healthcare. And thus here in New York we have a state Assemblyman named Richard Gottfried (his Manhattan district is adjacent to my own) trying to push the idea of so-called "single-payer" healthcare for New York. "Single-payer" means that all healthcare is paid for by one entity, namely the government. Medicare is an example of a modified form of "single-payer," although it has some deductibles and co-pays that must be covered by the patient. Lacking a federal single-payer program for those not covered by Medicare and Medicaid, Gottfried for a couple of decades has been advocating that New York should set up its own program at the state level.
Recently Gottfried was in Rochester holding a town meeting on the subject. Here's a report from the Rochester Democrat and Chronicle on December 8. According to Gottfried and his supporters, this is a moral issue, which I suppose means that if you oppose it you must be immoral and, probably, evil. For example, here is one of the witnesses from Gottfried's Rochester hearing, Rev. Dr. Richard Gilbert, quoted in the D&C article:
"Healthcare is a human right," Gilbert said, "grounded in the moral fiber of major world religious traditions. It's not a commodity subject to political whims, economic theories, or social fashion, but grounded in the moral foundation of our very humanity." Gilbert was one of several speakers expressing support for the proposed legislation. "It's passage is a moral imperative of our time," he said.
Well, Rev. Dr. Gilbert, does cost have anything to do with this? In particular, is it morally permissible to ask, for example, how much taxes must be raised to pay for this and what burdens that might impose on people of limited means? Actually, it appears that Gottfried and his witnesses at the hearing had what they thought was an answer to this question:
"New York can have a universal health coverage system that covers all of us, without premiums and deductibles and co-pays and restricted networks," Gottfried said. "It could save New Yorkers over $20 billion a year by not having to pay for insurance company administrative personnel and profit."
That's right, we'll have universal coverage for any and all medical problems, it will all be free to the consumer, and it will cost less than our current system. No problem!
No mention in the D&C article (or other coverage I have found of Gottfried's hearings) of what is going on across the border in Vermont. There, Governor Peter Shumlin has made enactment of a single-payer healthcare system his signature initiative. This article from Avik Roy at Forbes on December 21 gives some background and current developments. After pledging in his first campaign to bring single-payer healthcare to Vermont, Shumlin got to work on the plan promptly after taking office in 2011. He started by hiring lefty healthcare economists William Hsaio of Harvard and Jonathan Gruber of MIT (yes, that Gruber) who came up with the grand comprehensive socialized scheme. A report on the projected costs of the plan was due in January 2013, but Shumlin failed to produce it. A suit to force him to produce it failed. That brings us to the recent 2014 election, where Shumlin's Republican opponent said, "the difference between Peter Shumlin and Scott Milne is that I will tell you before the election that single payer is dead.” Shumlin kept quiet on the subject and won by 2,095 votes.
Then last week, safely re-elected, Shumlin let the cat out of the bag. The projected cost of the Hsaio/Gruber Green Mountain Care single-payer system for 2017 would by $2.6 billion. Did I mention that in Vermont, a state of just over 600,000 people, the entire existing state tax system only raises $1.6 billion per year? To pay for GMC, that $1.6 billion would have to go to $4.2 billion, a 151% increase in the aggregate tax burden. Supposedly this would be paid for by a brand-new 11.5% tax on all payrolls. Needless to say, small businesses screamed bloody murder -- and small businesses are the only kind they have in Vermont. As of now, it looks like GMC is completely dead.
But how to explain the discrepancy between the view of single-payer supporters, who think that single-payer can save enough from elimination of overheads and insurance companies that the aggregate cost of healthcare will fall, and the enormous costs that emerged in Vermont when they actually tried to design and implement a real-life system? After all, don't many European countries with single-payer or modified single-payer systems spend a lower percent of GDP on healthcare than does the U.S.? Megan McArdle of Bloomberg has a take on that in an article today. The gist is that a government takeover of the healthcare system will inevitably start with a need to pay for nearly the full cost structure already in place:
Our spending is indeed high compared with the rest of the world, but that's because it started high. And while restraining government spending is easy, it is a walk in the proverbial (government-funded) park compared to actually cutting spending. Cutting spending means that a number of people are going to lose income and employment. They will have trouble paying their mortgages, car loans and little Johnny's bill for travel soccer. Then they are going to get organized and march on Washington and vote against the politicians who cut their jobs.
And Megan doesn't even consider some of the major tough choice issues that simply must be confronted. In healthcare, a big one is the recent proliferation of new pharmaceuticals, often for particular cancers, priced at $50,000, $100,000 or even $200,000 for a year of treatment. According to this article from Bloomberg yesterday, there are now some 300,000 people in the United States taking drugs that cost an aggregate of $50,000 or more per year. Well, in your single payer system, are you going to pay for those drugs or not? -- "not" of course meaning that someone dies. And if you agree to pay for this latest drug at $100,000 per course of treatment, what's to keep the next one from being priced at $200,000, or, for that matter, $1,000,000? What you thought was your infinite credit card will be tested very quickly.
The New Yorkers advocating single payer apparently think that we can avoid these problems because we are bigger, and maybe because we can just impose the costs on some big business, or maybe on a handful of foreign billionaires with apartments in Manhattan. I would say that we may be able to avoid the tough choices for a longer period, but definitely not forever. And the federal government can undoubtedly avoid the tough choices for even longer; but still, not forever.