What John Oliver Didn’t Mention about Single Payer Health Care

During the first episode of this season of “Last Week Tonight,” HBO host John Oliver used his monologue to make the case for the United States to adopt a single-payer health-care system. While Oliver articulated many of the shortcomings of the current system, much of his arguments in favor of a single-payer system missed the mark.

As Oliver noted in his program, whether to adopt single payer represents a debate between the devil one knows and the devil one doesn’t. Skeptics of single payer have the advantage of inertial bias—that is, people may not want to give up what they currently have.

On the other hand, supporters of single payer can characterize the future however they like—even if it doesn’t always line up with the facts. That dynamic has allowed supporters to frame single-payer health-care as “Medicare for All,” even though the legislation introduced by Sen. Bernie Sanders (I-Vt.) would abolish the current Medicare program.

In his program, Oliver acknowledged some of the trade-offs associated with a move to a government-financed health-care system. But he also minimized others, and failed to explain some of the fundamental flaws in Sanders’ approach.

Cost Explosion

Oliver’s segment attempted to tackle the three primary critiques of a single-payer system: It will cost too much; lead to lines and waiting lists for care; and undermine individual choice. On the cost front, Oliver noted that estimates will vary as to whether the Sanders bill will lead to an increase in overall health-care spending. After admitting that the bill could either reduce health spending or cost “a f-ck of a lot more,” Oliver basically threw up his hands, calling the exact amount of spending under the new system unknowable.

On this front, Oliver didn’t analyze why health costs would likely rise under single payer. He mentioned (correctly) that Sanders’s bill would essentially abolish all premiums, deductibles, and co-payments for health care in the United States, making the new system much more generous than the current Medicare program, and much more generous than single-payer systems in places like Canada and Great Britain.

But Oliver did not mention four critical words that majorly affect costs: “Induced demand for care.” In other words, because Sanders’ legislation would make all health care “free” to patients, they would demand much more of it. According to the Urban Institute, a liberal think-tank, a single-payer system that eliminated cost-sharing would result in nearly $1 trillion more in health spending per year than a single-payer system that retained a system of co-pays and deductibles roughly equivalent to Obamacare’s Gold health insurance plans.

Along with many liberals, Oliver views eliminating cost-sharing as a feature of Sanders’ single-payer proposal. But at containing the costs of such a system, it represents a major bug—one Oliver never acknowledged.

Waiting Lists

Oliver did concede that waiting lists for care exist in other countries’ single-payer systems. However, he contended that patients wait primarily for non-emergency care, using knee replacements as an example. (Many patients wouldn’t call the concept of waiting nearly 10 months for a knee replacement—the average wait in Canada for an orthopedic procedure—a non-urgent matter.) He also didn’t point out that 4.56 million individuals in Britain—roughly 7 percent of that country’s population—were on waiting lists for care as of last fall, an increase of roughly 40 percent in the past five years.

Oliver’s discussion of waiting lists also missed a critical point: Sanders’s legislation would go further than other countries with single-payer systems, because it would prohibit individuals from purchasing private health insurance. Canadian and British patients who object to government waiting lists can purchase private coverage, and obtain care via that route.

Under Sanders’s proposal, American patients would not have that choice: They could only opt-out of the single payer system by paying for their treatment entirely in cash. Because not even a family making several hundred thousand dollars per year could afford the full costs of a heart transplant or chemotherapy, the vast majority of Americans would have no choice but to wait for care until the government system got around to treating them.

Choice

That brings up Oliver’s discussion of choice, and whether taking choice away matters. He points out—rightly—that many Americans do not have a substantive choice of either insurers or doctors, because their employers control the former, and by definition the latter.

But it doesn’t require the federal government taking over the entire health-care system to solve this problem, and give Americans a true choice among insurance plans and doctors. I have pointed out on many occasions the ways the Trump administration has acted to make coverage more portable, so that individuals, not employers, and not the federal government, choose the coverage options they prefer.

Oliver talks about the choices some patients currently face: whether to seek treatment they cannot pay for, or rationing medicines based on cost grounds. But patients would face similar choices under a government-run system—just for different reasons.

Oliver acknowledged the likelihood of waiting lists under a single-payer system, as have other supporters. For instance, the head of the People’s Policy Project has argued that costs won’t rise under single payer because “there is still a hard limit to just how much health care can be performed because there are only so many doctors and only so many facilities.” In other words, people will seek care, but not be able to obtain it.

In such circumstances, people won’t have a “choice” at all. Because they cannot purchase private insurance to cover treatments the government plan does not, they can either wait for care or they can…wait for care. That’s not just not giving patients choices, it’s harming patients by prohibiting them from buying the insurance they want to buy with their own money.

Towards the end of the segment, Oliver revealed his own bias against giving American patients any choices. After a clip of former South Bend Mayor Pete Buttigieg’s claim that “I trust Americans to make that right choice” on health care, Oliver responded to laughs: “Okay, well, hold on there. You trust Americans to make the right choice? You know Americans choose to drink Bud Light, right?”

Even as he tries to rebut conservative claims that single-payer would undermine Americans’ choices, Oliver admits that he doesn’t really want to give Americans a choice at all. He would rather use government to impose his beliefs on others, and force them to comply.

At minimum, Oliver’s program acknowledged the very real trade-offs associated with a single-payer health-care system. But had he explained those trade-offs fully, the American people would understand why single payer would result in adverse consequences to both our health-care system and our economy as a whole.

This post was originally published at The Federalist.

The Importance of Unsubsidized Exchange Enrollees

Attempting to pre-empt concerns about rising premiums on Obamacare Exchanges in 2017, the Department of Health and Human Services (HHS) over the recess released a report claiming that federal subsidies will insulate most Americans from the effects of even a massive premium spike for Exchange plans. But in focusing on the number of individuals who qualify for federal subsidies, the HHS report missed an important detail: To become more financially stable and sustainable, the Exchanges need greater enrollment by those who do not qualify for subsidized plans.

I first noted back in March 2015 the split in Exchange enrollment: Only individuals who qualify for the richest subsidies have signed up for coverage in significant numbers. While the numbers have shifted slightly, the same dynamic remains. An updated analysis from consulting firm Avalere Health found that 81% of the potentially eligible individuals with incomes between 100-150% of the federal poverty level—those who qualify for the richest premium subsidies, and cost-sharing reimbursements to help with things like deductibles and co-payments—selected an Exchange plan. But enrollment declines substantially as income rises. Only 16% of eligible individuals with incomes between three and four times poverty selected a plan, and only 2% of those with income above four times poverty—those ineligible for both premium and cost-sharing subsidies—signed up.

While insurance Exchanges in general have suffered from lackluster enrollment, unsubsidized coverage lags even further behind earlier predictions. When Congress enacted the bill into law in March 2010, the Congressional Budget Office (CBO) predicted that in 2016, Exchanges would enroll a total of 21 million Americans—17 million receiving insurance subsidies, and 4 million purchasing unsubsidized coverage. As of March 31, the Exchanges had enrolled 11.1 million Americans—9.4 million buying subsidized coverage, and 1.7 million in unsubsidized plans. When it comes to meeting the 2010 CBO projections, unsubsidized enrollment (42.3%) lags more than ten percentage points behind enrollment of individuals receiving federal subsidies (55.2%).

Although an imperfect proxy, rising income does in the aggregate correlate with longer life-expectancy and better self-reported health status. If wealthier individuals who do not qualify for insurance subsidies enrolled in Exchange plans, the overall risk pool of the Exchanges might improve. As it stands now, however, Exchange enrollees are sicker than those in the average employer-provided health plan. What the HHS report tried to highlight as a feature—the large number of enrollees receiving subsidies—is in reality a bug, as the poorer, sicker population has proved difficult for insurers to cover.

The HHS study contained other material shortcomings. It did not acknowledge that, according to multiple estimates, off-Exchange enrollment nearly matches Exchange enrollment—a fact with two major implications. First, it means more Americans will pay the full freight of higher premiums than the Administration would have you believe. Second, it reinforces that insurers can circumvent the statutory requirement to combine off-Exchange and on-Exchange enrollment into a single risk pool by only selling policies off the Exchange. Some carriers have effectively segmented the market in two by doing just that.

Most obviously, while the HHS report advertised how insurance subsidies would cushion the effect of higher premiums for most Exchange purchasers, it did not attempt to estimate the impact on the federal fisc of that higher spending. Others have also noted that the Department again declined to release the underlying data behind its assertions. But by highlighting how much of their population receives federal subsidies, HHS essentially advertised Exchanges’ one-dimensional nature—the same aspect that has many insurers heading for the exits.

Does Brookings Have a “Wonk Gap?”

Yesterday two researchers at the Brookings Institution released an article claiming that “people are getting more for less” in the individual market under Obamacare.  The piece claims that people are getting “better” coverage, so I asked one of the authors on Twitter: What proof do you have that the coverage is better?  Do people like PPACA plans more than their prior coverage?  Are these new plans leading to better health outcomes for patients?

In an exchange of tweets, Brookings’ Loren Adler said that surveys show people are satisfied with their PPACA coverage — a nice point, but one that doesn’t prove people think it’s “better” than what they had before.  And he admitted that studying the trade-offs PPACA created — in which generally plans have a higher actuarial value, but smaller doctor and hospital networks — “wasn’t the focus of the research piece.”  All well and good, but if that’s the case, why go out on a limb and make an unsubstantiated claim that PPACA coverage is “better?”

He didn’t have a good answer.  He tweeted that the claim of “better” coverage “has nothing to do with the analysis itself of premium comparison,” and that “the wording used in the intro/conclusion has nothing to do w/ analysis itself.”

Think about those words for a second.  Is that the standard we want for research — that people can reach “conclusions” that have “nothing to do with the analysis itself?”  On that basis, I wrote an e-mail to Brookings (pasted below) requesting a retraction or clarification on the specific point that coverage is “better” and people are getting “more” under PPACA.

As I pointed out last night, the Brookings researchers MADE the nature of PPACA coverage a focal point of the analysis, by including unsubstantiated claims to fit a political talking point: “You’re getting more/better coverage for less!”  Having been called out on it, they should prove the claim, or withdraw it.

Folks on the Left complain frequently about a supposed “wonk gap” among conservatives.  I’d be VERY interested to hear from Paul Krugman, or any other observer, who would defend a researcher who makes conclusions that — by his own admission — have “nothing to do with the analysis itself.”