A friend and I did a single payer presentation for the VP of our local business round table
He was very skeptical of government. My colleague wrote down his major concerns, and we prepared comments on them as follows.
BUSINESS CONCERNS
• Medicare is broke
• Government just messes things up
• WA workers’ compensation benefits are the highest in the nation and adding more taxes is too burdensome for state businesses
• Medicaid taxes are too high and the rising cost of Medicaid is causing cuts to education funding in WA state
• Most businesses are going to a high-deductible health insurance model with Health Savings Accounts as a more cost-effective way to provide employee benefits
• Public Utilities such as the Fire Department and Seattle City Light keep increasing their budgets and raising their rates. Contracting with private companies might lower costs by increasing competition.
• Healthcare is not as important as education or transportation infrastructure
RESPONSES
MEDICARE IS BROKE
The Medicare risk pool is made up of retired and disabled individuals who require more health care because of their age and condition. By opening up the risk pool to include younger and healthier individuals, you can cover more people more cost effectively. Of course, younger and healthier individuals sometimes need expensive care as well, but again, by increasing the risk pool, the costs per person will decrease. Indeed, when the CBO crunched the numbers during the health care reform debate, they came to the conclusion that the only plan that would contain health care costs was a universal plan like Medicare. There is also an enormous liability in drug coverage due to price negotiation having been written out of the drug benefit legislation. Medicare should be able to obtain volume discounts similar to those that are available to large concerns in every industry. The cost controls of regional global budgeting are not now part of Medicare, but they would be under Medicare for All.
GOVERNMENT JUST MESSES THINGS UP
Yes, sometimes government programs don’t run as well as they should. The Medicare drug benefit is a case in point. As a result of lobbying by the pharmaceutical industry, the prices of Medicare prescription drugs could not be negotiated. The result was poor public policy, with burdensome costs to both the government and covered individuals.
In contrast, there are many government-funded programs that have been successful: the interstate highway system which fostered tourism-related businesses as transportation industries, the GI bill after World War II which enabled a generation of young Americans to complete college degrees and fuelled America’s world economic dominance. The catalog mail order business and mass market magazines were products of the Rural Free Delivery Act of the 1890s.
The entire computer industry was created by the government during WW II, and the government was the major customer for mainframe computers through most of the 50s. The hacker subculture that created the personal computer was entirely funded by the government at MIT and Stanford. The government created the internet itself, which has caused numerous spin-offs in all sorts of directions creating products and wealth barely dreamed of a generation ago.
The government also created the entire aviation industry and still pays for most of the infrastructure. Boeing’s civilian aircraft division didn’t make a single dime in profit for 20 years, subsidized by defense contracts the entire time. European governments realized that they would have to create similar subsidies in order to compete.
Notice what is true in all these cases—the government sets the specifications, pays the bills, regulates and may pay for ongoing infrastructure support, but the actual work is carried out by private businesses. This is how single payer health care would work.
WORKERS’ COMPENSATION BENEFITS ARE TOO HIGH
Under a single-payer health system, all payments for medical care would be funded through the Washington Health Security Trust and all state residents would receive care as part of that coverage, thus reducing the overall cost of medically-related employee benefits.
MEDICAID TAXES ARE TOO HIGH AND THE RISING COST OF MEDICAID IS CAUSING CUTS TO EDUCATION FUNDING
WA receives funds from the Federal Government for Medicaid benefits. These funds would be channeled into and disbursed by the WHST. Given the savings projected to be generated by a universal health care system, all health care spending including Medicaid should decrease, causing more funds to be available for education and other important state programs.
MOST BUSINESSES ARE GOING TO A HIGH-DEDUCTIBLE INSURANCE BENEFIT WITH HEALTH SAVINGS ACCOUNTS.
For many years businesses have been concerned about the rise in health care costs. Some have tried the high-deductible plans and found that such plans did not serve them or their employees well. If employees are young and healthy, this is cost-effective. If not, the costs are just as great or greater than in a traditional health insurance plan. These plans are just an attempt to avoid having the healthy 85% majority pay for the care of the expensive 15% minority—this ratio holds in all age demographics, though younger groups are cheaper. This undermines the entire point of a shared risk pool, in which the healthy are forced to pay for the care of the sick. This is perfectly fair, as you have no way of knowing whether or not you will ever be part of the unlucky 15%. There is simply no way around this—we pay anyway, and at far higher rates. There was a very well known case of a child with an infected tooth in Maryland a few years ago. His mother could not afford $85 to have the tooth pulled, so he got blood poisoning. The emergency room spent $250,000 trying to keep him alive, but he died anyway. Is promoting high deductible plans really worth $249,915 to business?
PUBLIC UTILITIES KEEP INCREASING BUDGETS AND RAISING RATES
Fire and police services are part of the public safety expenditures of a society, and they get more expensive over time just like everything else. Levies are presented to voters periodically, and are routinely approved. Having a centralized source of public safety services ensures comprehensive coverage with reduced jurisdictional issues. Without regulation, utilities inevitably use their monopoly power to steal from the public. Seattle City Light is still paying for being shafted by California’s totally fake “energy crisis,” caused directly by deregulation. Areas served by publicly owned utilities had no brownouts, and there have been none since regulation was put back into place.
Increasing competition creates nothing but disaster in the production of public goods. Markets work only when you want more of something—fantastic if you are talking about hard drive memory or restaurant variety, but horrendous when you are talking about heart attacks, assaults and house fires. Two competing sets of capital equipment doubles the price of public goods right from the start. If a second cardiac center opens in a city well served by just one, people are not going to obligingly start having twice as many heart attacks. The single most important factor in surviving complex surgery is the number of similar operations performed by the surgical team. Cut the number of surgeries in half, and their competence is degraded by half.
HEALTHCARE IS NOT AS IMPORTANT AS EDUCATION OR TRANSPORTATION INFRASTRUCTUREWhether that is true or not, the savings achieved by a universal state-wide health care system can help to restore funding for education and transportation.
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