| Economics

The Inevitability of Single Payer

by Michael Bindner

Cross-posted from Daily Kos from two days ago:

I see that there is still activity around seeking a public option in reconciliation. I think this is a mistake. If you are going to offer any grudge amendment from the left, offer one to make TARP money available to health insurers in financial difficulty and give the USG the authority to liquidate operations as it sees fit. The USG should see fit to start offering its own insurance plan which will grow and grow until it eats everyone else. (Of course, there was not such amendment, but the analysis still applies, which is below the fold).

How will Single Payer happen? Its pretty obvious. The Republicans knew, it seemed, but were not clear. They spent too much time on historionics and not enough time explaining their position - that reform is a prelude to real government run health care - either a single payer Canadian system or a British national health service. They left people with the impression that if you give the Democrats an inch, they will take a mile. That is not how it will happen, however.

Here is what I told the White House, the Senate Finance Committee and the House Ways and Means Committee majority and minority staffs:

"The main attraction of single payer comes from the nature of commercially provided insurance to seek profit, and how that effects the delivery of service. The problem is that even with all of the consumer responsibility you can think of, the drive for greater and greater profits will have insurance companies constantly searching for ways to avoid paying for the care they promise their policy holders.

Firms are less concerned about deductible levels as they are about how to avoid paying for serious chronic illness. Patients with several risk factors, such as a high BMI and advancing age, are not attractive to insurers since they detract from the bottom line due to the possibility of stroke, diabetes, heart attack et al.

If insurers must cover everyone and can't charge potentially sicker people more, their ability to increase profits over time (which seems to be the goal of privately held firms) will be greatly impacted. In the end, their business model will not handle covering everyone at a market rate. This will lead to either consolidation (until they can't consolidate anymore), bail outs or the offloading of the sickest to some kind of public fund.

In other words, single-payer insurance is almost inevitable - whether by government mandate or because of the natural tendencies of the market. Does this mean Congress can pass single payer healthcare now? It would be extremely unlikely for the industry or Congress to be that forward thinking. The best thing measure at this time is to pass something now and let events develop. If and when the bottom falls out of the industry, however, Government must be ready with some kind of single payer proposal."

Private insurance is doomed. (The Bill is now law, we can say it now). It will be doomed faster if mandates are found unconstitutional or are inneffective to really force participation (especially if you can drop coverage until you get sick).

If the GOP had said this more clearly, rather than sounding like a bunch of conspiracy nuts, they could have stopped the inevitability of single-payer, which will come about once the insurance industry starts running to TARP after their stock price starts to tank.

My advice if you have a small fortune and want a big fortune is to buy a CDO betting that within 10 years the Insurance companies will go to TARP and be liquidated (or be ready to sell their stocks short).

If we want real, sustainable, health care reform it is time to realize that we need a payroll tax or a VAT to pay for it. More importantly, we need to start spreading the word that private insurance is doomed. The more we say it, the more it is true and the quicker we get real reform.

Tell Cramer and give him a big Booyah! from me.