More Thoughts on Single-Payer Healthcare

Even though a wrote a posted explaining why opponents of capitalism should oppose publicly funded healthcare I’m not done with the subject yet.

In this post I want to talk specifically about single-payer healthcare. Single-payer healthcare, for those unaware, is a system where everybody pays into a single insurance pool that is administered by the state. Proponents of the system generally believe it would be an effective solution to the healthcare issue facing the United States. These people are either ignorant of history or psychopaths.

Publicly funded healthcare is another example of trying to use the One Ring of government for good. Unfortunately the One Ring is malevolent in nature and therefore can’t be used for good. Let’s consider the entity that would be granted administration over the insurance pool in a single-payer system, the state. How responsible would the state be with the insurance pool? Would they use it for altruistic purposes? We need not speculated on this because the state is the administrator of another pool of collected money, Social Security. The idea behind Social Security was to have a “safety net” for the elderly. When you were no longer capable of working you would begin collecting money from the Social Security pool you previously paid into. How has that pool been managed? Poorly:

What bothers us the most is the opposing view by Jacob Lew, director of White House office of Management and Budget (“Social Security isn’t the problem”). He states, “When more taxes are collected than are needed … funds are converted to Treasury bonds — backed with the full faith and credit of the U.S. government.”

What he doesn’t say is “converted” means the excess is being spent by Congress and replaced with potentially useless bonds. He then says the bonds “are held in reserve for when revenue collected is not enough to pay the benefits due.” He evidently didn’t have the nerve to say where the money would come from to convert the bonds into cash.

That’s the catch-22. According to the Social Security Board of Trustees:

The assets of the combined OASDI Trust Funds increased by $69 billion in 2011 to a total of $2.7 trillion.

The assets are those Treasury Bonds. Whenever there is a surplus paid into the Social Security pool the federal government “borrows” that money using an interesting system of trickery. Surplus money is replaced by Treasury Bonds while the actual money is then spent by Congress on items not related to Social Security. Congress claims that the Treasury Bonds are as good as money but that’s not true because the money to pay those Treasury Bonds has to come from… the federal government!

In other worse Congress has taken that money, replaced it with Treasury Bonds, and spent the money so they don’t have it to make good on the Treasury Bonds. This would be like a bank replacing all of the money in your account with an IOU and spending that money. No guarantee can be made that the bank will be able to make good on the IOU because the money is gone.

What does Congress use the money for? War. OK, they may use it for more than war but the defense budget is a major part of the federal budget so it’s likely a great deal of the borrowed money flows there. Through Social Security Congress has developed yet another way to claim taxes from the populace to buy the necessary war materials to expand the empire. This is the only outcome when using the One Ring. Those who demanded Social Security likely had good intentions but they used the state, which is malevolent by nature, and thus ended up killing people by giving more money to the war effort. In my book a system that is used to kill people under the guide of helping people isn’t a good system.

It’s easy to see that the state has been somewhat irresponsible with its control over the Social Security pool. Returning to the economic argument, some will bring up the fact that Congress is only taking excess money so the program is still able to run effectively. That may be true but Social Security is slightly different than healthcare.

Social Security is paid out to those who surpass retirement age or are disabled. In general the amount of people Social Security is being paid to remains relatively knowable. The state knows who will exceed the retirement age and they know the number of disabled people in the country. There is some variance as a person can be involved in an accident and end up disabled but the influx of unknown individuals isn’t terribly high. Healthcare is an entirely different beast.

The number of people who will develop cancer, break bones, need an organ transplant, suffer a heart attack, have a stroke, etc. will wildly fluctuate. It’s not a predictable number and therefore it’s impossible to know how much money should be put into the insurance pool. This is a risk all insurance companies run, their entire model is based on the idea that fewer people will collect from the insurance pool than pay in. While the risks are the same the consequences are entirely different. If an insurance company fails only those who have policies with them are affected, while policy holders of other companies will remain unaffected. What happens if there isn’t enough money in the state’s single insurance pool? Everybody suffers and they have nowhere else to turn to. This usually results in rationing and some groups of individuals become “less valuable” than others (namely tax payers become more valuable than non-tax payers). The two countries that are held up as the pinnacle of state managed healthcare, Canada and Britain, both practice rationing and tax payers are given priority over non-tax payers.

Single-payer healthcare systems are a sham. Like Social Security they end up being another source of funding for the state’s desires, which are usually destructive, and when the system fails everybody suffers. There are no good arguments for single-payer healthcare unless history and long-term effects are entirely ignored. All ends the require the state as the means are destined to be malevolent.