To listen to some, you would think single payer health care will cause the sky will fall, and it will be full of really large rocks when it hits our heads.
At least that’s what the editors at the Wall Street Journal (subscription required) would have you believe will happen if Wisconsin adopts a single payer system.
While I’m no fan of single payer, I’m even less enamored of junk economics masquerading as policy analysis. And junk is what the editors’ arguments are.
Here’s some of the hysterical text from the editorial folks at the WSJ…
“Democrats who run the Wisconsin Senate have dropped the Washington pretense of incremental health-care reform and moved directly to passing a plan to insure every resident under the age of 65 in the state. And, wow, is “free” health care expensive. The plan would cost an estimated $15.2 billion, or $3 billion more than the state currently collects in all income, sales and corporate income taxes. It represents an average of $510 a month in higher taxes for every Wisconsin worker.
Employees and businesses would pay for the plan by sharing the cost of a new 14.5% employment tax on wages. Wisconsin businesses would have to compete with out-of-state businesses and foreign rivals while shouldering a 29.8% combined federal-state payroll tax, nearly double the 15.3% payroll tax paid by non-Wisconsin firms for Social Security and Medicare combined.”
Not mentioned by the editors is the impact on businesses and individuals and providers who wouldno longer have to pay premiums out of pocket or company coffers. The Journal has a lot of very smart people, therefore the only explanation is that they are also disingenuous. Because it looks like the proposed plan would result in health care costs about 10% lower than under the current system.
Here are the real numbers from the act itself. Employees contribute 4%, employers 10.5% of Social Security wages. The state’s average salary is $42,300, therefore monthly costs paid by the employee would be $140 and employers would pay $370. That’s pretty competitive with what most employers and employees are paying today.
The plan design is not onerous either – $300 deductibles per individual with $600 per family; no deductibles on children, co-pays of $20 per office visit, no cost share on preventive care. Prescription drugs co-pays are $5, $15 and $40 (brand name non-formulary).
Or maybe the WSJ editors aren’t as smart as I think. The article also includes this howler:
“Private companies are making modest progress in sweating out health-care inflation by making patients more cost-conscious through increased copayments, health savings accounts, and incentives for wellness.” Where they come up with this nonsense is anyone’s guess, although there are any number of johnny come lately health care “experts” out there peddling this consumerism-as-cure-for-health-care-costs tripe. If you want sources, search for “consumerism” on this blog.
There are reasoned, intelligent, insightful arguments against single payer. The Journal’s superficial attempt to discredit single payer does that publication, and the anti-single payer folks, no favors.
I agree that the WSJ article was disingenuous, but I wonder about the following:
1. Assuming the Medicare and Medicaid programs remain intact, how will provider reimbursement rates be determined and how will they compare to Medicare rates?
2. Will the financing mechanism include the cost of covering the unemployed (including pre-Medicare eligible retirees) and those who are either self-employed or work for very small businesses with, say, five or fewer employees?
3. Will the system cover illegal immigrants?
4. Given the large number of employees in such low wage industries as restaurants, (small) retail, housekeeping, landscaping, etc., more of the economy might migrate to the underground, off the books sector. When such workers get sick and don’t have insurance, they will show up at the ER, demand their right to treatment under EMTALA and claim to be unemployed.
5. People with expensive chronic conditions from other states will have an incentive to move to Wisconsin, and, after the one year waiting period, claim their right to health insurance courtesy of the state’s taxpayers.
6. According to the WSJ article, the combined payroll tax can go as high as 16% if necessary to cover costs. While I wish the state and its taxpayers well with the endeavor, there is enormous potential for adverse unintended consequences here. From a national perspective, however, it would be far more preferable to get some real world experience with such a system in a single state than to impose it on the whole country and have it blow up in our face.
7. It is extremely difficult to find the right balance between cost and quality in healthcare. It would, therefore, be far more preferable to have multiple private insurers free to experiment with those who do the best job winning the most customers while others replicate the best ideas that emerge. It is highly unlikely that a one size fits all government system that determines all the coverage and reimbursement rules will get it right.
The Healthy WI initiative isn’t single payer. There is a publicly-operated fee-for-service option that would be offered in all regions of the state, but that option would be in direct competition with private health plans. The lowest cost plan in each region would be deemed the “lowest cost network,” and that plan would, as a result, be fully covered by payments from the Healthy WI trust fund, which is funded through the assessments on employers/employees SS wages. If participants opt for another network or the public FFS plan, they’d need to pay the difference between that choice and the lowest cost network price.
I agree the WI plan is not real single-payer reform. A single state can’t implement a genuine single-payer system. They don’t have the authority. I’m all for single payer at the federal level. But I’m worried that state-based experiments will be misinterpreted as “single-payer” and could give genuine single payer a bad name if they fail.