The Need for Accountability

Ezra Klein did a post yesterday channeling Alan Enthoven's list of "cons" about a single-payer health care system. We get the following:

  1. Locks in fee-for-service medicine. Hard to change once implemented. Medicare's coverage of preventive services has been poor.
  2. We need a lot of innovation in payment and delivery services, and single-payer blocks that.
  3. Too much entanglement with politics. Think of how the earmarks will work
  4. Government can't set every price correctly. There are too many of them!
  5. Tax burden probably too high for the US.
  6. Government isn't really designed for efficient program management.
  7. There's little accountability for poorly run public programs.
  8. There's poor customer service.
  9. Legislators don't want efficiency.
  10. Medicare's low administration isn't merely efficiency, it's also undermanagement.

To me what's striking about this list is how few of the objections are answered by the currently-in-vogue mandate/regulate/subsidize alternative. After all, you can't just mandate that people get "health insurance" and then provide subsidies for them to purchase it. You need to legislatively define a benefits package spelling out what constitutes "health insurance." Once you're there, most of these concerns about undue politicization and bad political incentives already get built in. What's more, on top of all the stuff on the list right there, you'll have various insurers "competing" against each other by competing to hire lobbyists to pressure congress into re-writing rules to give them a competitive advantage over their adversaries.

One way or another, in other words, if we aren't going to try to have a free market in health insurance then we're going to be relying on the idea that we can have an adequate level of accountability through the political system. There's reason to be skeptical about politics' ability to deliver in the right ways, but the whole case for universal health care programs is founded on solid evidence that market accountability doesn't deliver socially desirable outcomes on the health care front. Having politicians create a pseudo-market that's highly distorted by mandates, regulations, and subsidies is counting on politics to deliver the good every bit as much as a single-payer system would.

In that regard, a couple of constructive solutions about the hypothetical social democratic single-payer promised land. One is that there's a good case for a system in which the federal government provides most of the money but allows states to administer systems with some autonomy and some financial responsibility. That sets up a certain level of political competition so that if the Delaware system is delivering poor results but the Rhode Island system is excellent, ambitious Delaware politicians can run election campaigns saying "our system is 47th out of 50 while Rhode Island is getting great results, let's copy them!"

The other is that you can hybridize single-payer and market elements. Make preventive medicine free. Make it less than free -- have nurse practitioners kicking down doors and immunizing children. But for other things, you can implement cost-sharing that's scaled to the recipient's income. You guarantee that lack of funds never forces anyone to go without care, but you also ensure that everyone has an incentive to at least think a little about whether or not he really needs treatment. See Jason Furman's paper on cost-sharing and then imagine that all costs not borne by the individual would be picked up by the government. That gives you some market pressure, but also substantial equity because price-to-consumer is determined by ability to pay in a way that ensures that struggling families aren't left out in the cold.