Blog Post

AEIdeas

Consider it a different kind of Obamacare “repeal and replace” plan. As Democrats dabble with democratic socialism, might the idea of a single-payer healthcare see new life? After all, it is a key item in Bernie Sanders’s campaign agenda. And the crowds love him!

So maybe time to see how things are going with the Britain’s National Health Service. From the Economist:

Though the health budget has been spared the cuts of the past years, it has remained flat at a time of rising pressures. The population is becoming older and fatter. Waiting lists have hit seven-year highs. Austerity in other areas, most notably social care, has left folk in expensive hospital beds who should be at home. … The question is: is Britain willing to pony up? It is a cliché to talk of the NHS as the country’s secular religion, a service still adored in the context of the post-war era in which it was born. But as the collectivist afterglow of that age fades, each generation is less misty-eyed than the last. Like a tired marriage held together only by the tax benefits, Britons’ purported love affair with the NHS has become transactional. They are horrified by America’s private insurance system and like the services that they and their nearest use, but less out of “love” than out of a baser enthusiasm: for good stuff at low cost. Thus Britain spends relatively little on health as a share of its GDP, and ever-less in comparison with other rich countries. The essential fact circumscribing Mr Hunt is that, according to the Kings Fund, a health think-tank, 72% of Britons think the NHS should provide all drugs and treatment at any cost, but only 38% are willing to pay more tax for it. … So let Mr Hunt, along with the prime minister and chancellor of the exchequer, confront voters with the truth: if Britons love their tax-funded health system so much and want it to work, they will have to pay more for it. And if not, they should start considering the alternatives: probably a social insurance system akin to that used elsewhere in Europe. The objection to such a shift—that the taxpayer-funded model is more efficient—is correct, but counts for little if the status quo is politically unworkable. It may be that a more individualistic, consumerist country simply needs a more individualistic, consumerist health service; one of personal accounts, more choice and clearer rights and responsibilities. Perhaps it is time for that divorce.

The UK spends about 9% of GDP on healthcare vs. 17% of the US. And from 2009 through 2013, according to the OECD, annual real spending per person in the UK fell by 0.9% while it rose by 1.5% in the US. Yet it seems that recent UK spending patterns are unsustainable.

At the same time the US is more or less in line with the OECD average since 2008. And from 2003-2013, US spending was below the OECD average and about the same as the UK. More or less the same with Canada, too, another single-payer system.

So suddenly switching to a single-payer system would accomplish what exactly as far reducing what the US spends on healthcare? As Bloomberg’s Megan McArdle has written:

Let’s get a government system in there, get our cost growth down to the level of other OECD countries instead of the insane rates that our inefficient private system produces. Eventually, as the economy grows, health care will shrink relatively, if not absolutely, and the proportion of national income that Americans spend on health care will come to resemble that of the rest of the world. Here’s the problem with that idea: America doesn’t have a cost-growth problem. The rate of cost growth in our “insane,” “inefficient,” “free market” system isn’t particularly high by OECD standards. It’s the level that’s so high. We’re growing at a normal rate, but off a much higher starting expenditure — an expenditure that we’ve so far proven unable to cut by even a bit.