John Hood: We’re sliding towards single payer
RALEIGH — North Carolina is about to become the 40th state to expand its Medicaid program under the Affordable Care Act. The bill drew huge, bipartisan majorities of legislators.
Republican leaders resisted expansion for years, arguing that the promise of permanent 90% funding from Washington was either implausible or fiscally irresponsible. They no longer feel that way. I still do. The federal government’s current deficits are unsustainable. Either some future Congress and presidential administration will get serious about closing them — in which case states should expect that 90% Medicaid match to go away — or federal debt will reach economically ruinous levels.
That said, North Carolina’s Medicaid-expansion debate does illustrate that conservatives and progressives may agree on a major health-care initiative while maintaining very different long-term goals. Virtually all conservatives accept that health plans with massive government funding and regulation — in the form of Medicare, Medicaid, and heavily subsidized exchange plans — are here to stay, but can coexist alongside a robust market for health plans that are substantially private in funding and control.
Many progressives, by contrast, see this new Medicaid expansion as merely another step to their ultimate goal of a single-payer system. The next steps will be to lower the eligibility age for Medicare, for example, and to expand Medicaid coverage for long-term care.
In my view, we’ve spent the past two decades sliding down the slippery slope to Medicare/Medicaid for all. It’s time for conservatives to put on our spiked shoes and try to find a stopping place before it’s too late.
That means articulating a clear, attractive, practical alternative that preserves the maximum amount of choice, competition, private innovation, personal responsibility, and fiscal restraint. Fortunately, we don’t have to invent such a system from whole cloth. We can learn from the best practices of other countries.
Contrary to popular belief, single-payer systems aren’t standard among other industrialized countries. Many rely on a combination of government and private health care arrangements to extend universal access to basic medical services. Some of these systems are arguably more pro-market and less heavily subsidized than ours is.
The Foundation for Research on Equal Opportunity (FREOPP) has just published its latest World Index of Healthcare Innovation. Its scholars use a wide array of data to rate health care systems on four criteria: quality, choice, technology, and fiscal responsibility.
Switzerland won the top ranking in the 2022 index, as it did in the previous two years. The Swiss system is based on competing private plans, not a government monopoly. In fact, only one of the six highest-ranking countries on the FREOPP index has a single-payer system.
“Private insurance systems empower patient choice, and create room for insurers to organically evolve their benefit designs without having to wait for politicians or regulators to act,” the FREOPP scholars write. “In addition, universal private systems tend to be more fiscally sustainable, because countries can means-test their subsidies and phase them out as one ascends the income scale.”
The United States doesn’t just outspend the rest of the developed world on health care. We already spend more tax dollars on health care than most of our peers do. That’s because we subject so little of our government subsidy to means-testing. Wealthy seniors and poor seniors get essentially the same Medicare coverage. And one of our largest subsidies — excluding employer-sponsored health insurance from taxable income — actually benefits upper-income households more than lower-income households, since the latter face lower marginal tax rates and are less likely to be enrolled in group health plans in the first place.
So, whether you agree or disagree with the North Carolina legislature’s decision to expand Medicaid, it’s time for serious thought about what happens next. At the state level, conservatives ought to fight for greater choice and competition among medical providers. At the federal level, conservatives ought to replace our current, inefficient system of tax subsidies with something fairer and fiscally sustainable.
If we don’t, the slope towards a single-payer system will only get slipperier.
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