Single-Payer v. Market-Oriented Healthcare: Which is Better?

 

 

It has been their goal from the beginning. Progressives have been pushing for socialized medicine since the days of Teddy Roosevelt. In the politically correct world of healthcare terminology it is referred to as “single-payer” healthcare.

There is no real debate happening in Congress right now between Democrats and Republicans on how to stop the collapse of ObamaCare. While Republicans favor a market-oriented system to correct the ObamaCare problems, Democrats deny the problems exist and demagogue the issue, trying to frighten the public. Their real goal is to let ObamaCare implode and then push for its replacement with a single-payer system. Which system is best for America’s future?

The Lancet Study

Chris Conover, writing in Forbes, reports a new study from the British medical journal Lancet that compares the two systems. This study adds to the growing mountain of evidence that market-oriented health care systems outperform the single-payer systems that so enamor progressives.

This study compared healthcare outcomes in the single-payer systems of Canada and the United Kingdom (UK) with those of market-oriented systems in the Netherlands, Switzerland, Singapore, and the United States.

Single-payer systems rely on a command-and-control approach to healthcare that depends on price controls and government determined capacity constraints that predictably lead to long waiting lines and lower quality care. Market-oriented systems rely on markets to ensure universal access to high quality care at an affordable price. Switzerland uses private health insurance for all of its citizens, even the poor and the elderly, providing subsidies to purchase the insurance for those in most need.

The Lancet researchers, led by Christopher Murray, uses a measure called the Healthcare Access and Quality Index (HAQ Index) to focus on mortality related to adverse effects of medical treatment. This index measures the ability of countries to avoid “amenable mortality”; i.e., deaths that hypothetically would not occur with timely and effective medical care.

Conover says amenable mortality in the U.S. accounts for about one-fifth of mortality under age seventy-five in men and nearly one-third in women. Since there are over one million deaths a year in the U.S. among those under age 75, this implies there are more than one quarter million avoidable deaths annually.

Market-oriented health systems demonstrably outperform single-payer healthcare systems

Created by Christopher J. Conover

 

This figure shows a comparison between single-payer systems in Canada and the UK on the left with market-oriented systems in Switzerland, Netherlands and Singapore on the right. The United States is depicted in the middle. Higher HAQ indexes are seen in green. To be sure, the numbers suggest that single-payer would be an improvement over the status quo (ObamaCare) but not nearly as good as the market-oriented systems in the countries on the right.

Conover has also isolated the “adverse effects of medical treatment” scores, which demonstrate that market-oriented health systems do even better at avoiding medical mistakes than single-payer countries. Contrary to intuition that might suggest more regulation by the government reduces mistakes, this study shows that greater reliance on market forces actually produces greater incentives to avoid errors. It is interesting that Singapore – which relies heavily on health savings accounts – performs the best of all on this measure.

Achieving Potential

The Lancet authors recognize that resources vary from country to country which may limit what can be achieved in avoiding preventable deaths. By these measures alone you could not expect the UK to have a HAQ Index as high as Switzerland, which has a GDP per capita twice as high as the UK. Yet despite these differences the market-oriented systems come closer to achieving their hypothetically attainable HAQ index scores than the single-payer systems. This is depicted in the graph below.

Market-oriented health systems perform much closer to their potential

compared to single-payer health systems

Created by Christopher J. Conover

 

In this graphic we can see that the United States is functioning 11.1% below what it is capable of, which by the earlier calculations results in 250,00 preventable deaths per year. If these measurements are accurate it implies that conversion to a single-payer system like Canada would improve the HAQ Index and potentially save 150,000 lives per year compared to our status quo. However, conversion to a market-oriented system such as Switzerland would save an additional 100,000 lives or 250,000 lives over the status quo.

The status quo is unacceptable. No one wants to go back to the pre-ObamaCare days. America can do better. But the answer is not single-payer healthcare. The answer is a market-oriented health system that preserves freedom of choice to pick your doctor, your insurance coverage, and your treatment – and incentivizes doctors and hospitals to provide high quality care at the lowest possible cost. Such systems in countries like Switzerland, the Netherlands and Singapore are already providing high-quality healthcare at a lower cost to both government and patients than in America today.

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