TANSTAAFL and single payer health care

In economics, it is said that there ain't no such thing as a free lunch.

That is the phrase behind the acronym "TANSTAAFL."

Various observers have noted that contemporary advocates of single-payer health care appear to throw TANSTAAFL out the window. They appear to believe that something may be had for nothing.

I was reminded of this while doing some research on single-payer health care. I was actually just trying to compile a list of nations who use a single-payer universal system, but I kept running into these crazy pages advocating the single-payer system. I eventually locked in on a page that peddled the single-payer system as an economic stimulus, and offered a study to back it up.

How intriguing, I thought.

The study was produced by the Institute for Health and Socio-Economic Policy, a "research arm" of the California Nurses Association. The CNA spins the study like this:

Medicare for All (Single Payer) Reform Would Be Major Stimulus for Economy with 2.6 Million New Jobs, $317 Billion in Business Revenue, $100 Billion in Wages. The number of jobs created by a single payer system, expanding and upgrading Medicare to cover everyone, parallels almost exactly the total job loss in 2008, according to the findings of a groundbreaking study released today.

• Read the complete press release here

Isn't that awesome? Single-payer health care features all kinds of benefits!

Could there be a catch?

The study certainly does put the very best face on single-payer health care by emphasizing the economic benefits. Despite that emphasis, the catch is difficult to hide. It comes through clearly in the conclusion of the study:

This study demonstrates that a comprehensive Medicare based Single Payer system can make significant contributions to access of quality care for all U.S. residents and in the process generate a much needed and very substantial economic stimulus in the form of jobs, enhanced business and public revenues and increased wages for the public at large.

All this comes at a relatively modest increase in net costs of $63 billion.

Not to insult anyone's intelligence, but the study just explained to you that the benefits will cost us $63 billion. So this "economic stimulus" is perfectly Keynesian. And, of course, the problem with Keynesian stimulus is that the bill comes due eventually. That $63 billion in red ink--who pays for that year after year?

TANSTAAFL.

Either somebody pays the tab--resulting in a subtraction of a portion of the economic pie ($63 billion net)--or else the government eventually has to start denying services in order to meet its financial obligations.

Ironically, these numbers the CNA trumpets as economic stimulus come largely from an increase in the demand for health care services created by the expansion in coverage. That is the curse of third-party payment. This study spins one of the big drawbacks of the single-player version of universal health care into a positive!

clipped from www.calnurses.org

These ladies love the idea of single-payer health care because it takes from other parts of the economy to bolster their segment of the economy. At least until the government institutes wage caps and/or rationing of services. But maybe nobody explained that part to them.

President Obama's recent public statements on health care seem to perform the same type of illusionist's tricks with the economics involved. Obama tells us that we can't afford to do nothing, since the price of insurances is going up so fast. That is why we need to reform things. But even in a system pulled as far from free market principles as ours, the rising cost of health insurance would do exactly what Obama is preaching.

Obama, after all, is saying that we need to spend less on health care. That, coincidentally, is exactly what high prices do. They decease demand for services. Would you use a cell phone if it cost you $5,000 per month? Probably not.

So the increase in prices would automatically tend to decrease health care expenditures.

On the downside, people will get less health care. But how is that different from the plan Obama supports? Just try to divine the source of the savings in his plan.

Digitalizing medical records? That will cost money up front, and it isn't clear it will save much in the long run.

Preventive care? In certain cases preventive care saves money, but many preventive measures are not cost effective at all. And in any event preventive care tends to simply delay an eventual big expense later on. The cardiac arrest you avoid tomorrow may turn into the inoperable cancer you get 10 years hence. The health care system saves money if you die of the sudden cardiac arrest, bottom line.

Let's look at one savings that Obama has emphasized particularly:

The biggest thing we can do to hold down costs is to change the incentives of the health care system that automatically equates expensive care with good care. Now, this is an important concept, so I want everybody to really focus on this. We are -- we've been under the illusion that the more health care we get, the healthier we become. And it turns out that every study shows that the question is, are you getting the right care, are you getting the best care, the high-quality care, rather than are you having a whole bunch of tests ordered that are unnecessary, getting a bunch of treatments that are unnecessary, staying in hospitals longer than may be necessary -- all of which drives up your costs, but doesn't make you better.

One question: How?

You can cut down on diagnostic tests if doctors somehow reduce their liability, but I have yet to detect a thread of tort reform in the Obama prescription for health care.

I don't see how, minus tort reform, the health care system will reduce so called expensive care without the government telling doctors how to do their jobs. Do you? Single-payer advocates help me out. How is that supposed to work?