Arnold Kling  

If Medicare were a Country...

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Intellectual Gladiators... Popular Opinion...

Laurence J. Kotlikoff and Christian Hagist write,


European critics of the U.S. health care system often focus on the private provision of health care and health insurance. Yet the more important difference between the United States and other developed countries is the failure to control government spending. Other countries employ global budgets and control access to expensive drugs and new technology. The United States, by contrast, has very meager spending controls. If current trends continue, U.S. government health care spending will consume an ever growing portion of national income — far more so than any other developed country.

In other words, our government programs, Medicare and Medicaid, which cover only the old and the poor, are going to be larger as a share of GDP than other countries' socialized programs that cover everyone. So if we socialize medicine for everyone, we are not going to magically see our spending drop to the share of GDP we see in other countries because of "efficiency."


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COMMENTS (8 to date)
MjrMjr writes:

I don't get the sense that advocates of a single payer health care system have any illusions that we could "magically" see our spending as a percentage of GDP drop to the level France or Germany has. For all its appealing features, a single payer system wouldn't eliminate the need for rationing at some level. I think the best case to be made for single payer is that it's trading one form of rationing for another, the upside being that there's a large savings to be realized in economies of scale and streamlining administrative processes.

Not that I trust the(current) U.S. gov't as a body to restrain spending, but the alternative is to continue the present course in which less people have insurance coverage each year and the increasing cost of benefits provided by firms to employees continues to cause wage stagnation. I really don't see any easy answers, but when I look at Europe I can't help but conclude that they're achieving basically the same results for less money and wonder why we can't go better here?

aaron writes:

Duh.

quadrupole writes:

MjrMR,

I think you are missing the point. About 50% of all medical spending in the US is government spending. Only about 25% of the population is covered by a government health care program. About 62% of the population is privately insured and about 13% of the population is uninsured. So no matter what your supposed administrative cost savings are, your government medical care is still twice as expensive per person than private medical care. Therefore, you can reasonably expect your overall medical costs to go through the roof if you move to socialized mediciine in the US.

What you have in the US is a very expensive public system, an expensive, but OK private system, and 13% of the population that is unserved. Wouldn't it make more sense to solve the problem with the 13% of the population without mucking things up for the 62% that has insurance that is more or less serving them well, for much lower cost per person than the government system?

Daniel writes:

The gouvernment health care is more expensive, because it just covers the old and poor. These people are far more likely in need of medical care. The private insurers don't cover these 'bad risks'. Therefore they are less expensive. It's simply a matter of selection. If all people (good and bad risks) would be insured in one single gouvernment system, the costs per capita would be substantially lower than in today's Medicare and Medicaid.

Matt writes:

Yes, the old need he bulk of the medicare, but we already spread much of that cost over the whole population. In a sense, we have a single payer system today.

Deweyjon writes:

What if each our states were a country:

Hasn't the whole world always been a "global economy"?

Columbus and co. were just looking for better jobs.

What is it that determines borders after all?

Uh oh! WAR!

MjrMjr writes:

Quadrupole:
Daniel's response pretty much hits it on the head. The group of people covered by Medicaid/Medicare are anything but a representative sample of the population.

Are the 62% of people with coverage generally served well? I'm not sure. Premiums, co-pays, and out of pocket expenses keep going up way faster than inflation. I think most people would cite a very high level of dissatisfaction with their insurance company and the medical establishment in general. And perhaps trumping everything else is the fear most people have of losing their coverage entirely.

Would not changing anything except providing some sort of health coverage for the 13% be better than doing nothing? Absolutely. Would it be better than implementing single payer health care? I'm all ears for anyone who wants to make that case.

Call me a cynic, but I won't hold my breath for opponents of single payer health care to propose a way to do so.

John Thacker writes:

I think most people would cite a very high level of dissatisfaction with their insurance company and the medical establishment in general.

Actually, no. In the US, most people cite a very high level of satisfication with their own insurance and care, but a very high level of dissatisfication with the establishment in general. How much that latter is based on truth or not is unclear.

Some of that 13% uninsured are healthy people (especially the young) in New York and New Jersey, where the laws mandate that insurance must be available for purchase at the same standard rate regardless of condition. As a result, it's insane for anyone who is currently healthy to purchase insurance on their own, due to adverse selection.

Even comparing just spending on the elderly in other countries to the US, the US spends a greater proportion of GDP on its own elderly than other nations do. Thus, it is again unreasonable to assume that moving to a single payer system would cut costs.

Some of the European systems that function quite well, like France and Germany's, are properly speaking not "single-payer" systems. France has a strong set of user fees along with private corporate contributions as well.

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