Prominent progressives have undercut a cherished policy goal of the left. They’re wrong on both the politics and the economics.
By Adam Gaffney, M.D.
The New Republic, March 8, 2016
Around the time that the insurgent campaign of Bernie Sanders hit its stride, a chorus of liberal pundits and economists began to coalesce around a decidedly grim message for the 60 million people in America who remain either uninsured or underinsured: Give up on your pipe dream.
Single-payer, Paul Krugman wrote in one of a series of posts in January, “isn’t a political possibility,” and is in fact “just a distraction from the real issues.” Last week in the American Prospect, sociologist Paul Starr went further in describing single-payer as a “hopeless crusade for a proposal that will go down to defeat again, as it has every time it has come up before.” And in an earlier article, he argued that even if single-payer was possible, other priorities should take precedence. Hillary Clinton is on the record agreeing with such sentiments: As she put it, single-payer “will never, ever come to pass.”
Single-payer universal health care, in other words, is dead on arrival. Time to move on.
Their essential arguments are twofold: Single-payer reform is politically impossible on the one hand, and economically infeasible on the other. However, they are very wrong on both counts. The first argument rests on a severely impoverished political vision, the second on inexcusably flawed economic and policy assumptions. Though the Sanders campaign is facing increasingly daunting obstacles to the Democratic nomination, the American health care question is not going anywhere. These criticisms therefore require greater dissection and contestation—before they congeal as the conventional wisdom.
Let’s first admit the obvious: The political terrain for transformational health care reform is currently quite adverse. A single-payer bill would encounter colossal resistance from, for instance, the health insurance lobby, which is understandably in no great rush to be legislated off the face of the planet (nor does the pharmaceutical industry look forward to long-avoided price negotiations with the government). It’s also true that a Democratic sweep of both houses of Congress is unlikely in the coming election. And Democrats are, in any event, divided on the issue, as this primary election demonstrates.
To proceed, however, from an admission of these facts to an acceptance that the cause should be abandoned is to concede the contest before the first shot has been fired. This is something the Democratic Party has excelled at—with disastrous consequences—for decades. Conservatives, in contrast, have been far more willing to adopt ambitious, long-range political goals, even when contemporaneous political forces are arrayed against them.
As Daniel Stedman Jones describes in his “Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics,” the articulation of an initially unpopular, highly ambitious, anti-New Deal “neoliberal” program—outlined and promoted in the decades following World War II by economists like Friedrich Hayek and Milton Friedman and associated think tanks—took decades to “bear fruit.” But when political and economic circumstances changed in the 1970s, conservatives had an ambitious program ready to launch, and the right-wing revolutions of Ronald Reagan and Margaret Thatcher could begin in earnest. From the 1980s onward, Jones writes, Hayek’s early “ideological vision” became reality with a vengeance:
“The free market became the organizing principle for microeconomic reform … Trade unions were vanquished and the power of labor was diluted … Market mechanisms became the models for the operation of health care … The purity that Hayek advocated was meant as an optimistic and ideological and intellectual tactic rather than a blueprint. The results have been extraordinary.”
In the years since Reagan and Thatcher, conservatives have had continued success in pushing the political center—on economic, if not social, issues—further and further rightward. Yet just as the right marched forward to the drum of Hayek, liberals have far too often been content to passively follow behind, albeit while maintaining something of a respectable distance. Nowhere is this clearer than in health care.
This story is well known and often told: Many—perhaps most—of the key provisions of the Affordable Care Act are derived from (formerly) conservative health policy proposals. As the sociologist Jill Quadagno describes in a 2014 article in the Journal of Health Politics, Policy and Law, the ACA’s “employer mandate” was drawn from Nixon’s 1974 “Comprehensive Health Insurance Plan” (itself a counterproposal to Ted Kennedy’s single-payer plan). Meanwhile, the individual mandate was first articulated by Stuart Butler at the Heritage Foundation, a conservative think tank. And by 1993, Republicans in Congress were proposing a bill (the Health Equity and Access Reform Today Act, or HEART Act) that, as she puts it, had “nearly identical” provisions to the ACA, including “an individual mandate, an employer mandate, a standard benefit package, state-based purchasing exchanges, subsidies for low-income people, [and] efforts to improve efficiency.” (She also does note a few differences, most prominently the ACA’s Medicaid expansion, which is by far the law’s most beneficial provision.)
Yet like Nixon’s 1974 bill, the 1993 Republican embrace of this individual mandate-based plan was provoked, in part, less by an earnest desire to expand health coverage than by a legitimate fear of single-payer reform. The economist Mark Pauly—one of the authors of a slightly earlier version of an individual mandate-based plan prepared with the hope of enticing the first Bush administration—acknowledged this in a 2011 interview with Ezra Klein at The Washington Post: The idea was to deflect “the specter of single-payer insurance,” as he told Klein.
Today, of course, Republicans are no longer afraid of the menace of single-payer, for a perfectly good reason: The mainstream of the Democratic Party has largely abandoned it. As Steven Brill noted in “America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System,” when the Democratic Senate Finance Committee Chairman Max Baucus began formulating a health care agenda after the election of President Obama, he was clear about “one thing” above all else: His proposal would not look like single-payer. Instead, Baucus’s plan would, as Brill writes, be a “moderate plan … that could attract bipartisan support.” Yet despite this massive concession to (or embrace of) conservative health care principles, the ACA failed miserably in attracting bipartisan support: It didn’t even earn a single Republican vote in the House or the Senate. So much for the much-vaunted politics of compromise.
Today, Republicans have by and large abandoned earlier “moderate” positions on health care, and instead tried to lamely recycle various tired nostrums—Health savings accounts! Insurance across states lines! Medicare vouchers!—to a weary nation. Yet the net effect of this push and pull has meant that the health care center has veered rightward to a striking degree, such that today, liberals like Starr and Krugman contend that a law that is largely the same as the Republican HEART Act from the early 1990s should—with perhaps a few tweaks down the road—form the core of our health care system.
The liberal retreat on single-payer is in line with a long history of centrist Democratic thinking that haplessly confuses rearguard action with political vision. Passing a federal single-payer bill would, no doubt, necessitate key electoral victories, a powerful campaign at the governmental level, and a formidable grassroots struggle. Useful initial steps in this direction might include the election of a president determined to pass single-payer, the restoration of single-payer to the platform of the Democratic Party, and vigorous support for such reform by pundits and scholars in high places. That none of these things may wind up happening is a cause of the alleged political “impossibility” of single-payer—not its result.
This brings me to the second of the two core arguments of the single-payer naysayers: “Medicare-for-all” would come at a price we simply cannot afford. The most recent iteration of this argument traces back to Kenneth Thorpe, an economist at Emory University, who published an analysis asserting that the Sanders plan (itself based on calculations of the economist Gerald Friedman, who has also taken a lot of criticism from Krugman and others for his optimistic economic projections under a President Sanders) would be about twice as expensive as his campaign has argued. Thorpe’s numbers spread like wildfire: After being initially reported and evaluated by Dylan Matthews at Vox, they’ve been cited by Starr, Krugman, the editorial board of The Washington Post, and basically everybody else. “[H]is health-care plan rests on unbelievable assumptions,” noted the Post, “about how much he could slash health-care costs without affecting the care ordinary Americans receive.”
But there are many ways to look at the issue of single-payer financing. David Himmelstein and Steffie Woolhandler, health policy professors at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School, efficiently took apart Thorpe’s numbers in two point-by-point by critiques. To get into the nitty gritty of the major errors in Thorpe’s economic assumptions, I’d direct readers to their article at the Huffington Post. And notably, as they describe in The Hill, Thorpe had himself previously found single-payer to be entirely affordable—indeed, he once asserted that it would reduce costs even as it expanded coverage.
Friedman, Thorpe, and Starr have also engaged in an exchange at the Prospect about these issues. In truth, it seems that more economic analysis may be needed with respect to the precise mix of taxes that are necessary. But the reality is that the specific taxes laid out in Sanders’s slim single-payer proposal are relatively unimportant at the current time; they would have to undergo significant reexamination and revision as the proposal was transformed into an actual bill. At this stage, it’s more useful to take a step back and look at the debate over the affordability of single-payer in more general terms, by asking three larger questions. First, what new costs would a single-payer system generate? Second, what savings would single-payer deliver? And third, could the new costs roughly balance the savings?
First, when speaking about new costs, I mean actual new expenses, not existing private expenditures that become public expenditures. The difference is crucial: with the proper mix of progressive taxes, the transition from private to public spending can be achieved without imposing any economic burden on the non-affluent (and indeed, lightening it for many). But actual new expenses, in contrast, can be seen as a legitimate source of real “new spending.”
For instance, according to the latest estimates from the National Center for Health Statistics, some 29 million people were uninsured in 2015. Covering these individuals requires cash. It’s worth pointing out, however, that many of these individuals are already using health care, with some of the costs either coming out of their own pockets or being passed on to other public or private payers. Replacing those existing expenditures will have zero effect on overall national health spending. At the same time, many of these individuals are, sadly, currently forgoing health care, and to the extent that universal health care allows them to go to the doctor or get tests or medicines they’ve so far been avoiding, some new money will indeed need to be spent.
Second, proposals for “Medicare-for-all” usually call for the elimination of cost sharing, which is to say no copayments, deductibles, and co-insurance. I’d argue that this is an essential aspect of real universal health care (with some notable exceptions, such payments are absent from the systems of Canada and the United Kingdom). The harms of such payments are all too real: As a result of out-of-pocket exposure, an analysis of survey findings published by the Commonwealth Fund last year put the number of underinsured Americans—the insured who lack sufficient coverage against the cost of medical care—at 31 million in 2014. Though discarding such out-of-pocket payments might sound like a pricey proposition, to the extent that these monies are already being spent, their elimination would be a wash, with no net effect on overall national health expenditures. But again, as is the case with the uninsured, insofar as some individuals and families are avoiding health care because of out-of-pocket payments, the elimination of these financial barriers would result in some real increases in health care utilization.
There are some other points to be made (like the additional costs of providing universal long term care and dental care), but in reality these two items—covering the uninsured and improving coverage for the underinsured—are the main new costs that a single-payer national health program would have to cover. Taking that into consideration, is single-payer indeed “unaffordable”?
To answer, we have to look at the opposite side of the equation, at the potential for efficiency savings in such a transition. And clearly, the biggest source of savings is the reduction of the vast bureaucratic apparatus that undergirds the entirety of the health care system, as Himmelstein and Woolhandler emphasize (and have studied in depth). This “apparatus” is devoted to such critical tasks as the compilation of lengthy itemized hospital bills, the pursuit of medical debtors, the design of needlessly complex yet shoddy insurance products, the issuance of bills to innumerable payers, the endless clinical documentation necessary to generate proper payment from insurers, and so forth. Overall, this represents a massive, parasitic drain on the American economy. And so, too, does our unnecessarily high pharmaceutical expenditures. But it is, in particular, the issue of administrative savings that has received insufficient attention in discussions on health care reform.
Frustration with the lack of accurate discussion around such savings (and around single-payer more generally) led several physicians—including myself, Andrea Christopher (a fellow in general medicine at Harvard Medical School), Himmelstein, and Woolhandler—to organize an open letter contesting this crystallizing critique of single-payer. The letter was published in February in the Huffington Post, and has been signed by more than 920 physicians and medical students. It makes this bottom-line point about the balance of savings and costs:
“We devote 31 percent of medical spending to administration, vs. 16.7 percent in Canada—a difference of $350 billion annually. And single-payer systems in Canada, the U.K., and Australia all use their bargaining clout to get discounts of 50 percent from the prices drug companies charge our patients. The potential savings on bureaucracy and drugs are enough to cover the uninsured, and to upgrade coverage for all Americans—a conclusion affirmed over decades by multiple analysts, including the Congressional Budget Office and the Government Accountability Office.”
Moreover, our letter notes that expansions of health coverage have historically been accomplished without massive increases in health care utilization: Essentially, doctors devote more attention to those who are sick and somewhat less to those who are well, resulting in relatively modest increases in health care use. “Experience in many nations over many decades,” we conclude, “provides convincing evidence that single-payer reform is both medically necessary and economically advisable.”
We can, in other words, afford to provide comprehensive health care to everyone in the nation, free at the point of use, with “one large network” of physicians and hospitals available to all. Currently existing private spending will be largely replaced by public spending, which would require a mix of new taxes. Overall health spending would stay roughly say the same, though future cost increases could be much better controlled. The number of the uninsured would fall from some 29 million to near zero. At the same time, the rest of us who are already insured would be able to stop worrying about which providers are in- or out-of-network, whether or not a doctor’s visit or a medication is worthwhile in light of a steep copayment, how to decipher a daunting medical bill, or the loss of coverage that might accompany dismissal from a job, loss of a partner, or the descent into poverty. This, to me, seems like a very good bargain.
Paul Starr, who (as noted) has penned several recent articles dismissing single-payer (as well as blasting Sanders’s candidacy more broadly), is perhaps most famous for his Pulitzer Prize-winning 1982 book “The Social Transformation of American Medicine.” It’s a book that I read as a first-year medical student, and that has shaped my understanding of the American health care system greatly. In it, he traces the emergence of the American medical profession, and follows how our failure to publicly organize the health system gave way to the rise of a “corporate medical enterprise,” a sector—as he notes in the final chapter—that is “likely to aggravate inequalities in access to health care.” Clearly, this has come to pass.
But I wish to conclude by turning to the very first words of the book. “The dream of reason did not take power into account,” the book begins. “The dream was that reason, in the form of the arts and sciences, would liberate humanity from scarcity and the caprices of nature, ignorance and superstition, tyranny, and not least of all, the diseases of the body and the spirit.” Power—whether of the medical profession or of the corporatized organizations that have since superseded it—complicated the fulfillment of the dream.
The dream, however, is not yet dead. With respect to health, the idea that all lives should be as long and as healthy as is possible—a vision that can only be fulfilled by the universal and equal provision of the very best that modern medical science has to offer—still burns bright. But now, in twenty-first century America, it is not just conservatives, but many liberals, who are among the powerful standing in opposition to its fulfillment.
Adam Gaffney is a physician and writer whose articles have appeared in the Los Angeles Review of Books, Salon, CNN.com, USA Today, In These Times, Jacobin, and elsewhere.
PNHP note: Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.