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American taxpayers already give trillions to the medical industrial complex, damaging our Republic; Single Payer health reform would be a fix for this problem

Sep 18, 2017 | Blog | 0 comments

Jay Cost posted a piece on the National Review about how political favoritism damages our American Republican form of government.  Trouble is, he asserts that this WILL be the case if single payer is passed, when in fact, it already IS the case in our health system.  Single payer, in fact, gives us a chance to reclaim our republican form of government.  Here is Mr. Cost’s opinion piece, in entirety, with my comments in parentheses.

Bernie Sanders remains the hot ticket in Democratic politics these days. He is hocking a “Medicare for all” program that presidential aspirants are tripping over themselves to endorse. Given the ideological trajectory of the party’s base over the last 20 years, it probably will not be long until Democrats formally call for a single-payer system in their presidential platform. Single-payer is a very old idea; Harry Truman proposed a version of it back in 1945. It is a testament to the self-conceit of the Left that it fancies itself “progressive” while simultaneously endorsing an idea that has been around for generations. (I have no great love of progressive or liberal thinking  myself.  I consider myself to be a conservative.  But, let’s be fair, conservatives and liberals alike can be self-conceited, especially when it comes to health system reform.  Doesn’t the conservative usually look for good in the ideas of the past?)

And let us be clear: This is a really bad idea. Even the Washington Post editorial board — no bastion of conservative economic thought — strongly criticized it, saying it would have “an astonishingly high price tag.” The economic arguments against single-payer are well known by now: It would impinge on individual liberty, negatively affect health outcomes for many, and, yes, cost more than anybody can possibly imagine.  (Let me be clear: single payer health system reform is the one good idea available to us in health system reform.  .The Washington Post editorial board, like most everyone, conservative and liberal, who have commented about the cost of single payer, has ignored the facts.  Single payer health systems world-wide do not cost more, they cost less, than business as usual in American health care.  The economic arguments overwhelmingly favor single payer.  I am a fan of single payer health system reform because I am a fiscal conservative. The only way (ONLY-the one, single possible) to solve our federal deficit is single payer health system reform.  We waste $1 trillion each year on poor quality care and inefficiency in our for-profit, marketized health system.  Single payer reform makes it possible for us to reduce, perhaps eliminate, that waste, saving us from a deficit that will otherwise kill our government, economy, and way of life.  What negatively affects health outcomes is business as usual in American health care, where ‘providers’ would rather make a sale than care for a patient.  Being locked into a job to retain health benefits instead of opting to start a new business or follow other creative pathways is the direct consequence of our current health system, robbing us of economic freedom.  Single payer reform will free the American workforce to optimize its productivity.)

I wish to call attention to the civic consequences of single-payer. It would elevate the medical-services industry to a dangerous height in our government and undermine the republican principle that the people, rather than special interests, should rule. As a Medicare-style program, single-payer is socialized medicine in the sense that the government, acting on behalf of society, takes responsibility for the health of all, but not in a strictly Marxist sense of the term. The government does not control, to use the Marxist term, “the means of production” under single-payer. That is similar to the arrangement in the VA health system, where the government actually owns the hospitals and employs the doctors. Instead, under Medicare-for-all, medical-service providers would remain private contractors and go to the federal government — instead of insurance companies or individuals — to collect their fees. Medicare for all utilizes a strategy of mediation — the government employs some private group as mediators for its public purpose. This sort of arrangement is not uncommon in the United States, although the scope of Sanders’s proposal far surpasses any previous endeavors. Under such public-private partnerships, factions coordinate with the government, not out of the kindness of their hearts, but because the state makes it in their interests. The groups, in other words, derive a profit from their dealings with Washington, D.C., which in turn means that the feds are responsible for maintaining their bottom lines. In the private economy, this is really no problem. It is merely the exchange between two independent actors of goods or services for cash, which happens billions of times every day. The problem is that the government is not independent. Far from it. The government is open to be influenced by the very factions that it is contracting with. Flush with the cash they received from providing services to the government, these factions have the resources to pull the policy needle in their direction. In other words, public subsidies are a pathway to political influence, creating “special” interests that are often able to guide government policy at the expense of the general interest. (All of these civic consequences, which Mr. Cost is asserting will be the case if single payer is passed, are already true today, exactly as he outlines them.  We Americans raise $2 trillion in taxes and credits per year for our health system, and the medical industrial complex influences everything about health care in both the public and private sectors.  2/3 of the money in health care today in the US is from the public sector, mostly federal.  And the policy needle is always pulled in the direction of the special interests.  Public subsidies already happen, political influence already is wielded, “special” interests already guide government policy at the expense of general interest.  Single payer organized on a state by state basis, however, would have the potential to disperse that power from Washington DC into 50 different state capitols.  Policy making would be closer to the people, who could wield more influence over how health care systems function.  Health care corporations have a strangle hold on health policy now.  Single payer reform seeks to break that stranglehold and give it back to the people at the state level.)

The history of American self-government gives us many examples of how these bargains can go awry. All the way back in 1790, Alexander Hamilton sought to use public creditors as the basis for creating a national currency. He succeeded, but he made the government so dependent upon the speculators that he was forced to bail them out not once, but twice, in 1791 and 1792. In the 1830s, Andrew Jackson tussled with the Second Bank of the United States, whose managers and stockholders became so powerful because of their public charter that Bank president Nicholas Biddle could force an economic recession in 1833 to teach Jackson and the country a lesson. To build the railroads, the government offered vast loans and tracts of lands for private companies, creating the mighty combines of the late 19th century, which wielded such substantial influence that they could lobby Congress out of forcing them to pay back their debts. The protective tariff was intended to grow the industrial base of the nation, and by the end of the 19th century, it had helped achieve this outcome. But Congress did not finally abandon protectionism until the Great Depression — in large part because high tariffs benefited industrial magnates, who in turn built up powerful political constituencies in the government. Franklin Roosevelt’s first New Deal was basically a disaster, because the president wrongly thought he could create a grand bargain among labor, corporations, and consumers to manage the economy. In truth, he gave enormous power to corporate America, which drafted production codes to benefit itself while small businesses suffered. After World War II, President Dwight Eisenhower worried about the “military-industrial complex,” a network between Defense Department bureaucrats, military contractors, and members of Congress that was able to dominate foreign and military policy according to their own ends, rather than the good of the nation. The housing bubble and the Great Recession have their origins, at least in part, with such entanglements. Fannie Mae and Freddie Mac were public-private agencies that made an enormous profit thanks to their public charters. They reinvested just a portion of their funds back into the political process, to ensure that government regulation affecting them would remain lax. Even Medicare itself — which Sanders wants to expand — has been deeply troubling on this front. Shortly after its enactment, it was widely acknowledged to be a runaway program, as the government could not control the reimbursement rates for providers. While Uncle Sam has gained some leverage over the last 30 years, the industry wields incredible influence in determining how much the government pays it. This is a very diverse array of policies, but they all exhibit a similar flaw. When the government wishes to accomplish some public purpose that it does not have the means to do itself, it contracts with private parties to accomplish the end. In exchange, the state promises, in effect, to guarantee the private parties a profit from the arrangement. The interest groups gladly accept and then use their public bounties to build a political power base, ensuring that their ends are secured, even if they are not in the public interest. Factions that are blessed by the government come to dominate it, to the detriment of the general welfare. (Excellent recitation of the the foibles of public-private partnerships, especially those done at the federal level.  Why, Mr. Cost, can you not see how that is already happened in health care? )

What Sanders and the left wing of the Democratic party aim to do is to top all these previous endeavors — committing to pour trillions of dollars into the medical-services industry for the sake of public health. They assure us that the government will be able, under such an arrangement, to negotiate a better deal for the taxpayer. But this assurance only demonstrates that they do not understand how our government functions in practice. History has shown that precisely the opposite has happened, again and again. Factions that are blessed by the government come to dominate it, to the detriment of the general welfare. “Medicare for all” would be like creating a fearsome new Pretorian Guard. These elite soldiers were tasked with protecting the life of the Roman emperor, but their rarefied position gave them extraordinary influence over the affairs of state, to the extent that they sometimes assassinated emperors they opposed and set up new ones more to their liking. If the federal government commits to giving trillions to the medical-services industry to protect the lives of the American people, expect that industry to wield dangerously inflated influence. And it would be dreadful for the republican quality of our system. (Love the allusion to the Pretorian Guard.  Let’s agree that getting the federal government out of the way so that states can wield the power in health policy will help us preserve the republican quality of our civic system.)

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