CBO Report on Single-Payer Healthcare Shows How Complicated and Painstaking Implementation Would Be

Health care costs have been skyrocketing in the United States, well beyond overall inflation. Going to the hospital should not be an experience that bankrupts American citizens, yet it has become increasingly commonplace. One solution proposed, particularly by those on the Far Left, is that of single-payer health care. In short, single-payer healthcare is a mechanism in which taxes cover essential health care needs for its citizens. It is one way that can bring about universal health care. Senator Bernie Sanders (I-VT) has really been clamoring for it since his presidential campaign (see my analyses on Sanders' previous proposals here and here). More recent was Congresswoman Pramila Jayapal's (D-WA) single-payer proposal, which is even more extreme that Sanders' proposals.

To weigh in on the conversation is the Congressional Budget Office (CBO), an entity that is often seen as the gold standard of estimating the effects of U.S. legislation. Last week, the CBO released a report last week entitled "Key Design Components and Considerations for Establishing a Single-Payer Health Care System." This CBO report is not an analysis on specific proposals, such as those from Sanders or Jayapal. The report details features of the single-payer system, as well as questions that would need to be answered (see below).




I am sure that proponents liked this report in part because it provides a blueprint of making single-payer a reality. I read the CBO report this weekend, and what I realized is that proponents of single-payer health care would have to answer a lot of practical questions before making it a reality. Officially speaking, CBO is not taking a position on the merits of single-payer healthcare. Even so, it implicitly provided a fair amount of criticism of single-payer health care. Here are the highlights from the report.....

• Big Picture: "The transition toward a single-payer system could be complicated, challenging, and potentially disruptive (p. 3)." 
• Costs and Ambiguity About Cost Savings: Regarding costs, CBO said that "shifting such a large amount of expenditures from private to public sources would significantly increase government spending and require substantial additional government resources (p. 6)." What is more intriguing is that CBO remains agnostic on whether single-payer will save money: "Total national health care spending under a single-payer system might be higher or lower than under the current system depending on the key features of the new system (p. 6)." This part is significant because the cost savings is one of the primary arguments used by single-payer proponents. 
• Increased Waiting Times and/or Reduced Access: Since single-payer healthcare would increase demand for healthcare, it would put pressure on the supply of healthcare: "If the number of suppliers was not sufficient to meet demand, patients might face increased wait times and reduced access to care (p. 6)." This isn't mere theory. This already happens in other countries. Canada is notorious for its waiting times, and the United Kingdom reduces access since demand for medical services exceeds supply. 
• Issues with Fewer Choices and Lack of Customization: The CBO states that "compared with the options available under the current system, the benefits provided by the public plan might not address the needs for some people," as well as "the public plan might not be as quick to meet patients' needs, such as covering new treatments (p. 8)."
• Tradeoff with Greater Access: "Although covering a wide range of services under a single-payer system would provide greater protection to enrollees, it would increase costs to the government (p. 9)." This is especially true with long-term services and supports [LTSS]: "Public spending would increase substantially relative to current spending if everyone received LTSS benefits."
• Potential Issues with Paying Providers and Setting Payment Rates: There are different methods to pay providers and setting their payment rates. Both of these factor affect government spending and providers' revenues, the latter of which could affect providers' incentives to deliver services (p. 18).
• Potential Issues with Drug Pricing: Under a single-payer system, the government acts as a single buyer, also known as a monopsony. Depending on whether the government uses negotiated pricing, value-based pricing, reference pricing, or administered pricing, the government could affect the profits of drug manufacturers, thereby affecting their incentive to produce new drugs (p. 23). 

Postscript
As we see, the extent of the effects of single-payer depend on multiple factors, including administration, eligibility, cost-sharing, the role of private insurance, provider participation, provider rates, and system financing. The CBO report might provide a blueprint for single-payer proponents, but the it also provides the single-payer skeptic with plenty of ammunition because the report shows the sheer number of obstacles facing single-payer implementation, as well as tradeoffs. With the policy discussion surrounding single-payer healthcare in recent months, it is amazing how many unanswered questions there are surrounding the specifics.

If I were to take an educated guess, single-payer proponents are delaying answering such questions because it would be a repeat of trying to implement Obamacare. The politicians advocating for Obamacare made such promises as lower premiums, greater competition, and the ability to keep one's current provider. Because Obamacare proponents were more concerned with pushing their legislation through than answering some basic questions about implementation and other considerations, Obamacare ended up being a downright disaster. I hope that the U.S. legislature does not reach the point of seriously enacting a single-payer system into law because in theory and in practice, it is policy that does not do favors in the healthcare market. However, if we reach the point where single-payer healthcare has actual potential to become enacted policy, the burden of proof will be on proponents to answer the questions that are laid out in the CBO report. In either case, the CBO report illustrates that there are more questions than answers in the single-payer healthcare debate.