Wednesday, December 17, 2014

Vermont Learns Why Single-Payer Won't Work

Vermont's Gov. Peter Shumlin today bailed out of a statewide single-payer plan because of "the big tax increases that would be required to pay for it". This should come as utterly no surprise, save to the people for whom single-payer constitutes a panacea. (Extra bonus points in that article to Jonathan Gruber for helping grease along that inevitability.) Megan McArdle back in April wrote a piece giving a lot more reasons than I have, but at its core, the argument is this: if you start from a high basis, and you don't do a good job of controlling cost growth, and your peers applying single-payer (or outright socialized medicine) aren't doing a good job of that, you will not restrain costs.
Once we pulled away from the other countries, even an average growth rate meant that the gap between our spending as a percentage of GDP, and theirs, would continue to widen -- especially if their GDP grew faster than ours for any length of time.
That is why we cannot count on financing single-payer with the fabulous cost savings to be gained by making our system more like Europe's. Europe didn’t gain fabulous cost savings by making their systems more like Europe's: Its nations started from a lower base, and held down cost growth, but they did not actually use single-payer systems to cut what they were spending.
"Once spending is in the system," she continues, "it’s hard to get rid of." Yes. Just ask anyone who's followed the Medicare Sustainable Growth Rate fiasco, which has had no fewer than eight votes post-Obamacare-passage to keep higher rates in place than the required statutory cuts. Vermont was never going to get there from here, and they found out in a big hurry that just papering over the costs with somebody else's money was going to require some very hard choices.

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