American Healthcare in Crisis: Problems and Solutions (Part 2)

This is the second post in a four-part series on the American healthcare system.


Medicaid, and Why Single Payer Won’t Work

The Obamacare rollout was fraught with missteps and confusion, and this wasn’t just limited to the healthcare.gov web site.  Not only did most Americans’ healthcare costs not go down, President Obama’s repeated statement “If you like your healthcare plan, you can keep it” was given Politifact’s Lie of the Year award in 2013.

However, as bad as things have become with regards to our skyrocketing premiums and deductibles, the true costs of Obamacare have yet to be realizedThis is because Obamacare incentivized states to increase Medicaid enrollment by offsetting those costs with presumably short-term federal subsidies.  Predictably, as sign-ups have increased, it is beginning to blow up state budgets.  From the Daily Wire:

Thirty-two states were suckered into expand[ing] Medicaid under Obamacare, but the costs have been higher than expected – a whopping 49 percent higher, to be exact. The higher costs are due to the higher than expected enrollment numbers for Medicaid… “States that expanded Medicaid will either have to boost health costs, raise taxes or cut spending to cover this Obamacare ‘freebie,'” the editors of Investor’s Business Daily wrote. “Given that Medicaid is already swamping state budgets, this will not be good news.” This is especially true given that over the years, states will be left with higher and higher Medicaid bills as the federal government won’t pay as much for it, and in doing so will drain state budgets.

Linda Gorman of the Independence Institute had this to say about Medicaid:

 “Medicaid was designed in 1965 to care for very poor people who cannot help themselves. Its basic structure has remained constant. It is not designed to operate like a private insurance plan and its notional coverage is much, much, more extensive. Copays, where they exist, are on the order of a few dollars. It already has waiting lists. Expect them to explode. Fraud is already a problem. Expect it to grow as well. We also know that Medicaid coverage increases emergency department use.”

Interestingly, if single payer is your goal, the collapse of state budgets helps to advance your cause, as it is only a matter of time before governors and state legislators beg the federal government to take Medicaid off their hands.  Unlike the federal government, the states have to eventually balance their budgets.

Ironically, as was pointed out in a study by the Commonwealth Fund of 13 high-income countries prior to the full implementation of Obamacare, we were already spending more tax dollars on healthcare than most countries (17.1% of our GDP in 2013, or approximately $2.7 trillion):

Even though the U.S. is the only country without a publicly financed universal health system, it still spends more public dollars [emphasis added] on health care than all but two of the other countries.

Given that there were almost 60 million individuals on Medicaid in 2013 and nearly 52 million on Medicare in 2012, and that total revenue in 2015 (including federal, state, and local taxes) was $6.12 trillion, one can see how extending government healthcare to all Americans could potentially consume most, if not all, of our tax revenue.  This may offer some insight into why the blue states of Vermont and California have been unwilling to pass their own single payer plans.

As tempting as it might be for some to continue to allow government to continue to try and “fix” our healthcare, single payer certainly is not the answer.  Centralized control has not lowered costs or improved efficiency; nor has it resulted in better outcomes.  Despite some claims to the contrary, Medicare does not have lower administrative costs, and we’ve all witnessed what a government monopoly on healthcare with essentially no accountability for outcomes such as the Veteran’s Administration does for the quality of patient care.

NEXT: Comparing the Costs of “Billed Through Insurance” to “Self-Pay”


“Doc” is a primary care physician in private practice in Colorado.  Read his other posts in this four-part series:

Part 1: How Healthcare Became So Expensive in America

Part 3: Comparing the Costs of “Billed Through Insurance” to “Self Pay”

Part 4: Pre-Existing Conditions and More Free Market Solutions

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