A few weeks back, I wrote a story on Vermont’s adventures in single-payer health care.
“So this is going to be expensive. So expensive that I doubt Vermont is actually going to go forward with it,” I concluded. “This should be instructive for those who hope — or fear — that Obamacare has all been an elaborate preliminary to a nationwide single-payer system. It isn’t. The politics are impossible, and even if they weren’t, the financing would be unthinkable.”
I was inundated by complaints from proponents of more government intervention in the health-care system. Permit me to summarize the many individual exchanges I had with these interlocutors.
“Why are you ignoring all the evidence that single-payer works?” they demanded. “If single-payer is so expensive, how come America spends twice as much as civilized nations, for worse outcomes?”
“Good question!” I responded. “I will do a follow-up post to explain why single-payer doesn’t magically transport us to the land of cheap health care.” This, as you may already have guessed, is that post.
Let’s start with where they are right. The U.S. spends a lot more on health care than, well, anyone else:
There is indeed a strong, though not perfect, correlation between how rich a country is and how much it spends on health care. But that alone can’t explain why we spend so much:
The implication that many people draw from this is that the U.S. could realize fabulous savings from switching to a government-run health-insurance system. But wait:
Well, let’s think about the general theories of why government makes health care cheaper. The first idea is that you get big discounts for buying in bulk. Because governments cover a lot of people, they can negotiate the best prices, which can’t be matched in America’s fragmented market.