How to Fix Healthcare (And Why Single Payer Won't)

By John Mills

Most Americans agree that everyone should have the opportunity to receive life-saving healthcare. What’s debatable is how we can achieve the goal. There are two competing models for how to achieve this objective.

One model is referred to as "single-payer." In this model, the government collects up taxes and it runs a centralized, state-managed system, paying all the medical bills submitted by healthcare providers; individuals don’t pay at all.

The other model, called "the free market," is characterized by a combination of direct payments by consumers to providers, prepaid insurance plans, and philanthropy of the sort that underwrites the St. Jude Children’s Hospital, the American Cancer Society, and helps defray the costs of local emergency rooms.

While there are significant differences between these two models, both models have an important element in common: both are characterized by relatively wealthy people paying some of the healthcare expenses of poor people. Because healthcare is expensive, poor people will never get completely adequate healthcare unless rich people underwrite some of the costs.

Single-payer advocates assert that there just isn’t enough charitable giving to cover the healthcare needs of all relatively poor people. To a small extent, the tax code already increases charitable giving by allowing taxpayers to deduct charitable contributions from taxable income. Right now, there are limits; generally, a charitable deduction cannot exceed 50% of adjusted gross income. If that limit were removed, charitable contributions would increase.

An even larger incentive to contribute would come if there were tax credits for philanthropic giving. If we allowed an unlimited dollar-for-dollar tax credit for medical philanthropy, many people would choose the healthcare option and charitable giving would increase significantly.

So back to the first model. If we are trying to solve the healthcare crisis, what’s wrong with single-payer?

History shows that healthcare does not receive adequate funding when money is allocated by legislative action. Part of the reason government run healthcare systems are regularly subject to inadequate funding is because, as Bernie Sanders points out, the wealthy often don’t pay "their fair share" of taxes. Government tax schemes are just not very good at getting the wealthy to contribute, and that impairs the ability of single-payer systems to cover the costs of treating the poor with money from the very wealthy. Because the bulk of taxes are paid by the middle class, funding healthcare for all with taxes tends to impoverish the middle class. Washington State has some of the most "progressive" lawmakers in the county dominating our legislature, and yet we have some of the most regressive taxes in the nation.

Single-payer systems also suffer from common ills attendant to any monopoly. If someone suggested that we pool all the American health insurance companies into one massive company giving it complete control over health insurance payments, almost everyone in America would think that a bad idea for obvious reasons – monopolies are inherently oblivious to the needs of customers and tend to be abusive and unresponsive. The problems of monopolizing healthcare do not suddenly vanish if the monopoly is called "Medicare."

Before Americans should even consider nationalizing a system that’s created an excellent, vibrant healthcare industry, there should be evidence that the legislature won’t cripple it irreparably over the coming years by habitually under-funding medical services, something that’s happened to every single-payer system on the planet. Today, there’s no reason at all to think the problem will be solved by giving politicians authority to control all healthcare decisions through a comprehensive single-payer system.

John Mills is a former chair of the Libertarian Party of Washington. He has a long history of activism with the liberty movement, dating to Roger McBride's presidential campaign in 1976. He is self-employed as a lawyer in Tacoma, WA.