Monday, May 23, 2011

Single Payer Health Care: Just What California's Economy Needs

Worried about the state's anemic economy and Sacramento's unwillingness to take California's future seriously? Well, worry no more, because State Senator Mark Leno of San Francisco has figured out exactly what our economy needs right now: a bullet to the head. If his SB 810 becomes law, that bullet will take the form of every lefty socialist's favorite bad idea: single-payer health care in California.

In a move similar to the one Vermont is pursuing, Leno's bill would essentially opt California out of Obamacare, and replace it with a single payer in Sacramento that pools all the funds currently spent on health coverage by individuals, employers, and government. It would provide essentially unlimited coverage, even to illegal immigrants. The bill has passed the Senate Health Committee, and is currently in the Rules Committee, although Leno does not plan to introduce it this year. Single-payer bills, you may recall, were passed twice by the Legislature in recent years, only to be vetoed by Schwarzenegger. At this point, Leno says he has not discussed his bill with Jerry Brown, who came out in favor of a national insurance plan during his 1992 Presidential campaign.

We'll wait to see whether the bill has any realistic chance of becoming law; something tells us that Gov. Brown has little appetite for a massive new entitlement after the war he's fought on this year's budget. But it says a lot about our Legislature's indifference to reality that it's even considering this. Its advocates, of course, repeat the tired canard that the law will save money by eliminating "administrative costs" and using purchasing power to obtain lower prices on pharmaceuticals and devices. For single-payer advocates, "administrative overhead" is analogous to the unspecified "fraud and waste" that conservatives say they could cut from Medicare and Medicaid with no effect on benefits. The dirty secret of Medicare is that it achieves lower administrative costs by neglecting to audit its claims; as a result, the CBO estimates that the program is defrauded to the tune of tens of billions of dollars every year. True believers might argue that a little fraud and waste are acceptable in the interest of providing universal coverage, but they punch a big hole in the argument for administrative savings. And "greater purchasing power" sounds an awful lot like price controls to us. Of course, if device and drug makers can't get prices in California that make their products worth creating, they'll simply make less; in other words, we'll have shortages. We're also guessing that SB 810 won't be budgeting for the substantial drop in income tax revenues and the increase in unemployment claims that result from destroying thousands of private health insurance jobs in California.

The law's proponents are also unlikely to address the biggest criticism one can aim at single payer: if you promise a large number of people that you'll pay for unlimited use of something they want, how on earth do you expect to remain solvent? The reply is usually to insist that free medical care is a right and to deny that the problem exists, but the simple fact remains that facility space, the time of physicians and other professionals, pharmaceuticals, and medical devices are all scarce resources that can't be claimed by an infinite number of people. Single-payer systems like those in Canada and the UK are notorious for shortages in physician access: wait times for non-emergency surgeries and rates of screening for common cancers are far superior in America's supposedly barbaric system. The only answer to them is to insist that health care professionals work harder and harder, which in the limiting case is (we believe) prohibited by the 13th Amendment. But what about the costs? If California can implement a single-payer system that remains solvent without denying access to any services, it will be the first in recorded history to accomplish that feat. Assuming that doesn't happen, we're likely to be told that the rationing will be done by "experts"; usually, this means employing "comparative effectiveness research", or using economic analysis. Both promise to solve the resource allocation problem scientifically, yet neither can deliver on that promise. Comparative effectiveness advocates gloss over the fact that robust clinical trials for many widely-adopted treatments don't exist, and in many cases aren't possible. Economists touting the value of "cost effectiveness analysis" are on even shakier ground: setting aside that (a) economic standards defining "cost effectiveness" are entirely arbitrary, and (b) any estimate of cost-effectiveness is vulnerable to legitimate methodologic criticisms, policy wonks might recall that the state of Oregon attempted to use cost effectiveness analysis to redesign its Medicaid program back in the early 1990s. However, the use of economic criteria in their plan effectively vanished due to public backlash and problems with the Americans with Disabilities Act. In a state as litigious as California, it's hard to imagine a different outcome here. As such, the health care of all Californians would be held hostage to the same political forces in Sacramento that are currently trying to pass a budget. And we can't imagine that anyone wants that.

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