2016-02-11 – President Obama’s signature achievement is Obamacare. Republicans like to say that Obamacare is an unprecedented expansion of the federal government. Everything is unprecedented. But if Obamacare is what they say it is, it is also an unprecedented expansion of the private health insurance industry. Every new policy sold on the Obamacare exchanges is a policy sold by a private insurance company.

(If you’re not into the details of a complicated law, the federal expansion has to do with an expansion of Medicaid and the establishment of minimum standards for what constitutes health insurance. A policy now has to cover a broad range of care and may not exclude pre-existing conditions, and must cover children until they reach age 26, and more.)

Obama chose to pursue a public-private solution to the healthcare financing problems in this country for political reasons. If you think he faced fierce opposition in getting this done, think about what the opposition would have been if the health insurance industry would have opposed him. If Obama would have gone for a single-payer system, nothing would have happened.

Hillary apparently agrees with that assessment. Bernie Sanders does not. Who knows what the Republican candidates want. All they say is “it will be absolutely the best, trust me.”

One of the knocks on the single-payer idea is that it wouldn’t be affordable. Let’s think about this.

100% of health care costs in this country are paid by somebody. And we are the somebody. This is true regardless of how this is done. We pay by making direct payments to providers. We pay when we pay insurance premiums. We pay in the form of taxes for any government program. We and nobody else.

The question is, does one form of payment impose costs on us that another form of payment does not? The answer to this question is yes.

Here are the main costs borne by our healthcare financing system today.

• Costs for provider services;
• Costs to verify that provider services have been performed and make payment when valid;
• Costs to determine if the patient has coverage.

All systems have the first cost. All systems have the second cost; no one wants to pay a bill for services not performed. Only the private-insurer system has the third cost. Under a single-payer system, everyone is covered. The cost to ascertain this is minimal.

But in the system we have today, insurance company XYZ doesn’t want to pay if you are not covered or if you get treatment that is not part of the policy. We pay a huge amount to pay insurance companies to deny us coverage.

We also pay a lot of executive salaries and lots and lots of dividends to the owners of the health insurance company.

These costs would be gone in a single-payer system

Health insurance companies were happy with Obamacare because it meant that they could sell millions of additional policies. Health insurance companies would be very unhappy with a single-payer system because that would reduce the number of policies sold to zero. It would destroy an industry.

But reducing the policies sold to zero would remove the costs associated with the private insurance system.

So, if you want to pay higher health care costs to save an industry and the jobs that exist to deny claims and the profits that are associated with maintaining that industry, that is a legitimate position.

But going to a single-payer system inevitably means eliminating one layer of cost.

The typical response to this is that a single-payer system would remove competition from the system and prices would go higher as a result.

A single-payer system means a single payer (i.e., probably Medicare) is picking up the bill. It doesn’t mean single provider. Providers would still be in a competitive system. Doctors and hospitals and pharmaceutical companies would be free to charge what they want, but Medicare would have the clout to negotiate price reduction. Clout that you or I would never have on our own . . . when we are sick and willing to pay whatever we have.

(Why is it always doctors and hospitals and big pharma who are setting prices and not nurses?)

So there you have it. This is how the system works. The private system has costs that a government system would not have. But you might think that the free market would be able to lower prices if it were allowed to work. It hasn’t so far, but you might hope for a different result.

I personally don’t think that would happen. I think that if we went to a single-payer system, health care costs would slowly go down to levels seen in other countries.

So the answer to the question: can we afford a single-payer system? Is yes. In the same way that I can afford to fill my gas tank at $1.79 a gallon when I formerly had to pay $3.49. Remember, we pay 100% of the costs one way or another.