Single Payer is Doomed Before It Starts

Donald Trump tweeted that Britain's National Health Service is "broke and not working." All too true: expenses have forced 40% of walk-in health centers to close, all elective surgery in January to be cancelled, and primary care has been decimated, it's not surprising that problems have surfaced. It is just as predictable that the usual call for "more money" echoes around the UK. All this is the result of economic laws that have been completely ignored since the days of Aneurin Bevan, the father of the UK NHS.

The first is the Law of Rationing. In short, "Everything is rationed, either by price or by rule." I can't afford a private jet. Price rationing limits those to people of substantial wealth, and their high price acts as a signal in the market to balance the supply of private jets with the market of willing buyers.

But suppose that the government declared that private jets were free. Everyone would want one. Suddenly there would be a shortage of hangars and runway space. And to pay for the jets, taxes on workers would rise, because the workers who build private jets have to get paid. The unintended consequences are mind-blowing. Ultimately, the government would have to start limiting who could have private jets. First, they would require a pilot's license. Then, more secure hangars would be required. Finally, you'd have to prove that you really, really need a private jet.

Substitute "Free Health Care" for "Private Jets" and you get the picture. Nothing is free. As the protagonist in The Moon is a Harsh Mistress notes,

"Gospodin," he said presently, "you used an odd word earlier -- odd to me, I mean..."

"Oh, 'tanstaafl.' Means 'There ain't no such thing as a free lunch.' And isn't," I added, pointing to a FREE LUNCH sign across room, "or these drinks would cost half as much. Was reminding her that anything free costs twice as much in long run or turns out worthless."

"An interesting philosophy."

"Not philosophy, fact. One way or other, what you get, you pay for."

Or, as the mechanic in the Fram oil filter ad says, "You can pay me now, or pay me later." You pay either way. Unfortunately, if you try to be cheap by legislating "free" health care now, you'll pay dearly later. Health care that was rationed by price will become rationed by rules that make it less and less available.

In England, this process is reaching a tipping point. A couple of years ago people were waiting many hours in the Emergency Department just to be seen by a doctor. So the NHS ruled in 2004 that 95% of all patients would be seen within four hours of arrival. In order to avoid breaking the rule, Emergency Departments refused to allow ambulances to unload their patients until the ED could meet the time standard. So patients were stuck in ambulances outside the ED door, and there weren't enough ambulances left to answer calls. Now the rule has been scrapped. Predictably, the left-wing members of Parliament are calling for more money. And that brings us to the second law.

The Law of Subsidy says that "When you subsidize something, you get more of it and it gets more expensive." In England, this happened a bit more slowly than in the U.S. It may be that the older generations of Britons were a bit more "proper" than us Yanks, and so tended to rely less on the dole than current generations. This slowed the growth of the NHS but did not change the ultimate outcome.

The National Health Service was sold as a way to provide health care to an underprivileged population. Aneurin Bevan stated that,

"The collective principle asserts that... no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means."

"The National Health service and the Welfare State have come to be used as interchangeable terms, and in the mouths of some people as terms of reproach. Why this is so it is not difficult to understand, if you view everything from the angle of a strictly individualistic competitive society. A free health service is pure Socialism and as such it is opposed to the hedonism of capitalist society."

The language of his disdain for economic laws should be familiar in tone. By calling capitalism "uncivilised" and "hedonism," he presaged Saul Alinsky's Rules for Radicals and its call to "Pick the target, freeze it, personalize it, and polarize it." The truth is unimportant. Victory is all that matters.

Bevan succeeded, but his victory is being erased by the Law of Subsidy. What was sold as a boon to the poor has become a subsidy for bureaucrats. The Law of the Bureaucrat declares that while a bureaucracy may have been created to deal with a perceived problem, the bureaucrat's Prime Directive is to ensure that he has a job forever. And because he was appointed to solve the problem, he's smarter than everyone else and should be paid accordingly.

Perversely, the bureaucrat can never solve the problem, or his job would disappear. So he continues with the language that created him, trying to sell greater and greater funding for his failed enterprise. And when it fails more dramatically, he blames anyone but himself, and gets rewarded with a bigger budget. Ultimately, as Margaret Thatcher famously quipped, "The problem with liberalism is that eventually you run out of other people's money."

The Law of Subsidy has killed the NHS. It just doesn't realize that it is dead. But thousands of those it was created to care for are dead, because it simply cannot fulfill its promised goals. And the U.S. is headed down the same path. Fortunately for us, voices are starting to point out real fixes.

I have repeatedly pointed out that government is bad for your health. Just as with the NHS, the U.S. population has been sold the lie that insurance is necessary for long life. In fact, all insurance does is increase cost, because it's a subsidy for those who provide health care. But there has been a conspiracy of silence over this fact. Further, the treatment of health insurance premiums as a non-taxed "fringe benefit" makes it easier to subsidize further. In short, Congress passes a pretty "benefit" that you actually pay for. And it ultimately ratchets costs higher.

President Trump has done a bit to reverse the trend, but private citizens are doing more. Medishare is a private cost sharing program that provides care at a fraction of insurance rates. Outpatient surgery centers such as the Surgery Center of Oklahoma operate at lower costs because they don't have to wrestle with insurance companies. And many physicians are now providing concierge Direct Primary Care at drastically reduced costs.

What do these have in common? They are completely outside the government and insurance company umbrellas. Patients see how much their care actually costs. Providers work to be competitive in order to attract patients. And patient satisfaction is much greater.

I spent thirty-two years on the medical staff of a major metropolitan medical center. There was no incentive for the administration to ever negotiate with an individual on price. Instead, it was always a deal between the hospital and the insurance company. My medical group did the same thing. We negotiated prices with Blue Cross, Humana, and other insurance companies. They passed on the costs to patients via premiums, all the while lobbying for more and more mandates on coverage.

Could there be a system more devoted to screwing the public? No one is personally intending to cause harm to anyone else. In fact, my group worked hard to provide high-quality care. But the incentives are there for all to see, if they will look. The Laws of Rationing, Subsidy, and the Bureaucrat are laws of nature. Nothing will ever repeal them. Our only hope is to stop going down the roads to which they lead us.

Donald Trump tweeted that Britain's National Health Service is "broke and not working." All too true: expenses have forced 40% of walk-in health centers to close, all elective surgery in January to be cancelled, and primary care has been decimated, it's not surprising that problems have surfaced. It is just as predictable that the usual call for "more money" echoes around the UK. All this is the result of economic laws that have been completely ignored since the days of Aneurin Bevan, the father of the UK NHS.

The first is the Law of Rationing. In short, "Everything is rationed, either by price or by rule." I can't afford a private jet. Price rationing limits those to people of substantial wealth, and their high price acts as a signal in the market to balance the supply of private jets with the market of willing buyers.

But suppose that the government declared that private jets were free. Everyone would want one. Suddenly there would be a shortage of hangars and runway space. And to pay for the jets, taxes on workers would rise, because the workers who build private jets have to get paid. The unintended consequences are mind-blowing. Ultimately, the government would have to start limiting who could have private jets. First, they would require a pilot's license. Then, more secure hangars would be required. Finally, you'd have to prove that you really, really need a private jet.

Substitute "Free Health Care" for "Private Jets" and you get the picture. Nothing is free. As the protagonist in The Moon is a Harsh Mistress notes,

"Gospodin," he said presently, "you used an odd word earlier -- odd to me, I mean..."

"Oh, 'tanstaafl.' Means 'There ain't no such thing as a free lunch.' And isn't," I added, pointing to a FREE LUNCH sign across room, "or these drinks would cost half as much. Was reminding her that anything free costs twice as much in long run or turns out worthless."

"An interesting philosophy."

"Not philosophy, fact. One way or other, what you get, you pay for."

Or, as the mechanic in the Fram oil filter ad says, "You can pay me now, or pay me later." You pay either way. Unfortunately, if you try to be cheap by legislating "free" health care now, you'll pay dearly later. Health care that was rationed by price will become rationed by rules that make it less and less available.

In England, this process is reaching a tipping point. A couple of years ago people were waiting many hours in the Emergency Department just to be seen by a doctor. So the NHS ruled in 2004 that 95% of all patients would be seen within four hours of arrival. In order to avoid breaking the rule, Emergency Departments refused to allow ambulances to unload their patients until the ED could meet the time standard. So patients were stuck in ambulances outside the ED door, and there weren't enough ambulances left to answer calls. Now the rule has been scrapped. Predictably, the left-wing members of Parliament are calling for more money. And that brings us to the second law.

The Law of Subsidy says that "When you subsidize something, you get more of it and it gets more expensive." In England, this happened a bit more slowly than in the U.S. It may be that the older generations of Britons were a bit more "proper" than us Yanks, and so tended to rely less on the dole than current generations. This slowed the growth of the NHS but did not change the ultimate outcome.

The National Health Service was sold as a way to provide health care to an underprivileged population. Aneurin Bevan stated that,

"The collective principle asserts that... no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means."

"The National Health service and the Welfare State have come to be used as interchangeable terms, and in the mouths of some people as terms of reproach. Why this is so it is not difficult to understand, if you view everything from the angle of a strictly individualistic competitive society. A free health service is pure Socialism and as such it is opposed to the hedonism of capitalist society."

The language of his disdain for economic laws should be familiar in tone. By calling capitalism "uncivilised" and "hedonism," he presaged Saul Alinsky's Rules for Radicals and its call to "Pick the target, freeze it, personalize it, and polarize it." The truth is unimportant. Victory is all that matters.

Bevan succeeded, but his victory is being erased by the Law of Subsidy. What was sold as a boon to the poor has become a subsidy for bureaucrats. The Law of the Bureaucrat declares that while a bureaucracy may have been created to deal with a perceived problem, the bureaucrat's Prime Directive is to ensure that he has a job forever. And because he was appointed to solve the problem, he's smarter than everyone else and should be paid accordingly.

Perversely, the bureaucrat can never solve the problem, or his job would disappear. So he continues with the language that created him, trying to sell greater and greater funding for his failed enterprise. And when it fails more dramatically, he blames anyone but himself, and gets rewarded with a bigger budget. Ultimately, as Margaret Thatcher famously quipped, "The problem with liberalism is that eventually you run out of other people's money."

The Law of Subsidy has killed the NHS. It just doesn't realize that it is dead. But thousands of those it was created to care for are dead, because it simply cannot fulfill its promised goals. And the U.S. is headed down the same path. Fortunately for us, voices are starting to point out real fixes.

I have repeatedly pointed out that government is bad for your health. Just as with the NHS, the U.S. population has been sold the lie that insurance is necessary for long life. In fact, all insurance does is increase cost, because it's a subsidy for those who provide health care. But there has been a conspiracy of silence over this fact. Further, the treatment of health insurance premiums as a non-taxed "fringe benefit" makes it easier to subsidize further. In short, Congress passes a pretty "benefit" that you actually pay for. And it ultimately ratchets costs higher.

President Trump has done a bit to reverse the trend, but private citizens are doing more. Medishare is a private cost sharing program that provides care at a fraction of insurance rates. Outpatient surgery centers such as the Surgery Center of Oklahoma operate at lower costs because they don't have to wrestle with insurance companies. And many physicians are now providing concierge Direct Primary Care at drastically reduced costs.

What do these have in common? They are completely outside the government and insurance company umbrellas. Patients see how much their care actually costs. Providers work to be competitive in order to attract patients. And patient satisfaction is much greater.

I spent thirty-two years on the medical staff of a major metropolitan medical center. There was no incentive for the administration to ever negotiate with an individual on price. Instead, it was always a deal between the hospital and the insurance company. My medical group did the same thing. We negotiated prices with Blue Cross, Humana, and other insurance companies. They passed on the costs to patients via premiums, all the while lobbying for more and more mandates on coverage.

Could there be a system more devoted to screwing the public? No one is personally intending to cause harm to anyone else. In fact, my group worked hard to provide high-quality care. But the incentives are there for all to see, if they will look. The Laws of Rationing, Subsidy, and the Bureaucrat are laws of nature. Nothing will ever repeal them. Our only hope is to stop going down the roads to which they lead us.