Arnold Kling  

Single-Payer: Klein vs. Kling

Make-Work Bias of the Macabre... Rodrik on Blogging and Lemons...

You might think that the fact that I disagree with Ezra Klein about single-payer health insurance is a "dog bites man" story. But read on.

Klein writes,

We’ve got all these great universal bills passing at the state level, and I’m here to tell you that, well, they are pretty great, but they’re not going to work.

...The plans fall for a few small reasons, and one big one. The big one is that states don’t have the fiscal stability to run universal health care. 49 of 50 states cant deficit spend. That means that when the state goes into recession and more people need subsidies and the revenues to give them don’t exist the state can’t borrow the money.

...As a stopgap, increasing coverage through state plans is worthwhile, but health care reform is more than access – it’s actual reform to bring down costs, which are, at the end of the day, the biggest problem in the system. And the states don’t have the regulatory authority, the money, or, save in a few cases, the size to do that.

I would like to see single-payer tried at a state level. Let's see if we can remove some of the obstacles. True, recessions happen. But states could address them by using "rainy day" funds. When times are good, collect extra taxes and save them. When times are bad, spend out of the rainy day funds. My guess is that having a rainy day fund that is specifically within a health care program would be within pretty much every state constitution.

As far as cost-reducing reform is concerned, what on earth does Klein have in mind? Does he think that managed care is the answer? Surely, states can do that. I don't think that he has in mind getting rid of oppressive medical licensing regulations, but those are definitely a state matter. I don't think he has in mind relaxing mandates for coverage, but again those are a state matter.

I'm trying to think of the Federal laws that are getting in the way of states that want to deregulate health care in order to reduce costs. And I'm coming up with...[sound of crickets chirping]...

I am very worried about anyone who takes the position that health care reform must be done at a national level, rather than have experiments undertaken at the state level. That's like telling me I can only invest in the stock market if I pick a single stock and put all my money on it. No diversification. No trial and error. Just one big bet. Scary.

Thanks to Megan McArdle for the pointer.

Comments and Sharing

COMMENTS (5 to date)
Jack writes:

Maybe I'm missing the point, but several small population countries (e.g. Canada) have centralized health care so it's not crazy to say half of US states have big enough populations to fund such health care experiments. Since when do you need a 300 million population for centralized health care? I also don't get why/how states have no borrowing ability. Sure they have *less* borrowing ability, but...

Ben Kalafut writes:

Speaking of experiments, here in Arizona we're going to ban single-payer.

The effort doesn't yet have a website, but it's being run by some of the same people who got our Prop. 207 partial-takings measure passed. I've put the full text of the initiative up at

spencer writes:

The Mass health insurance program is being conducted because Romney managed to get two years of federal funding to finance it.

So for all practical purposes it is a two year experiment. If at the end of two years it is not working well it will end.

I guess if Romney is President it might work out differently.

MT57 writes:

Klein's statement that states aren't big enough to have leverage in negotiating healthcare prices for their citizens is absurd.

The notion that we should have a federal system of universal health insurance because states can't deficit-spend is also absurd. A pressure to borrow to pay current expenses may exist but those expenses are concentrated in the sickest and least productive members of the community (the most recent Kaiser Family Foundation study showed that 22.5% of all healthcare expenses are spent on the sickest 1% of the nation), who are most unlikely ever to repay the investment. Thus, to borrow to fund that category of expenses would be a long-term fiscal disaster - exactly why we should not have universal health insurance.

Richard Smith writes:

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