Friday, March 13, 2015

Single payer, many costs

Reihan Salam wrote recently for NR about how containing costs through price controls -- a  supposed selling point of single-payer systems like Medicare -- can severely distort the way doctors and hospitals treat their patients. It seems obvious that below-market reimbursement rates will adversely affect treatment in one way or another, but the trade-off is not often acknowledged by Medicare’s boosters.

What’s always puzzled me is that the same people who use the cost-control argument in favor of single-payer healthcare would be horrified to see it applied to other types of government monopolies. Take public education. There is essentially a “single payer” for education within school districts. But public-school advocates would never argue that the system should be used to push teacher salaries down below market levels. In fact, raising teacher pay to be on par with the salaries of other college graduates is a perennial goal of progressives. What happened to monopoly cost control?

Imagine Republicans proposing to reduce school spending -- just as Obamacare reduced Medicare’s budget -- but insisting that it’s not a cut to services, it’s merely “savings” generated by squeezing education providers a little more. Democrats would cry foul, but that’s exactly how they sold cuts to Medicare.

The prevailing view on the Left seems to be that underpaying teachers is bad, but underpaying doctors is good. I understand that a wealthy doctor may be less sympathetic in the public mind than a school teacher, but they both respond to financial incentives. Underpaying either one is going to have consequences.

I first made this point in an op-ed for Forbes.

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