Turtles and Tortoises

Turtle vs. tortoise.  Quick, what’s the difference?

Turtles spend most of their time in the water; tortoises on land.

There is a relatively long list of two things that seem the same, so much so that many of us use the words interchangeably, but have some meaningful differences.

Alligators and crocodiles

Cement and concrete

Champagne and sparkling wine

Ethnicity and nationality

Mugs and cups

It would make for a great casual dinner conversation.  Give a pair of words and note the thing that makes them different.  Or a drinking game if you live in a fraternity where everything is a drinking game.

My favorite couplet:  Great Britain vs the United Kingdom.  The latter contains Northern Ireland while the former does not.

Understanding the nuances between words that look like synonyms, but aren’t quite the same, will come in handy as the discussion around universal healthcare heats up with the coming political season.  It might not matter much if you know whether your road is solid (cement) or includes stone, rock and sand as well (concrete), but it may matter a lot what someone actually has in mind when they advocate for a ‘single payer system.’

The Medicare for All Act of 2019 (HR 1384) making its way through the House – not going anywhere in this Senate – is one such animal.  It is a single payer proposal, but a specific form of such.  And the details matter.  This proposal is radical, even by global standards, for a single payer model.

It is funded at a fixed amount allocated by Congress, has no role for private insurance nor any regional governance.  Further, it has no patient cost sharing – no participation in the premium, no co-pay, no deductible, no co-insurance.  It also has a very broad scope of coverage, including dental, vision and long-term care benefits.

It probably should be renamed ‘Medicaid for All’ because, but for everything being controlled at the federal level, it functions more like Medicaid than Medicare.  But that label doesn’t play as well in the marketing campaign, does it?

I’ll call my sparkling wine ‘champagne’ even if it was not made in that specific region of France because it just sounds better.

Canada, the idea that comes to mind for most people when you say, ‘single payer’ – maybe because it is the one other country most people can find on a map – does not have a single national insurance system.  Provincial governments receive per capita grants that they administer within the federal rules.

The Commonwealth Fund did an analysis of the ‘single payer system’ in 12 high-income countries.  There is variation across several dimensions – policy setting, administration, benefits coverage, and patient cost sharing.

Yes, they are all far more government driven than we are currently, but as with ‘ethnicity’ vs. ‘nationality,’ at times the subtle differences matter a lot.  Just a little tip in case you want to press in a little deeper in coming days as this idea gets tossed around.

The Red Meat Defense

I was on the debate team in college for year before deciding I’d rather have a life than spend my weekends wearing uncomfortable dress shoes as we argued the merits of the Volker Rule or the escalation of our nuclear arsenal.  However, that was probably the smartest time of my life.  I benefited from osmosis just by hanging around those geniuses. 

Not having a lot of debate experience in high school, I remember getting ambushed by the ‘red meat defense’ at our first tournament.  Whatever it was we were arguing for would have raised the personal incomes of Americans.

The other side hit us with the red meat argument, a canned rebuttal to anything that would improve anyone’s standard of living.  It went like this: when people make more money, they eat more red meat; when people eat more red meat, cardiac disease goes up; so if you vote for their plan, you will be killing people.  Judge, surely you are not an evil sinner, are you?

I was reminded of that logic this weekend as I read a piece in the New York Times about what would happen to physician incomes in a single payer system.

Now, let me declare a couple of my starting presumptions as I read this opinion piece.

  1. A) I believe the Democratic candidate for president in 2020, whoever it may be, is likely to run on a single payer platform. Though there is still some intra-party soul searching to play out for the Dems, this seems increasingly like a foregone conclusion. Healthcare will be back atop the issues list and it will no longer be about Obamacare. They are likely to skip the incremental approach and put the whole enchilada on the table.
  2. B) The opinion page of the NYT is a wholly-owned subsidiary of the Democratic National Convention, so these pieces are not random thoughts, but can be considered inside intel on the party’s talking points.

The headline of the piece was, ‘Would a Single Payer System Require Painful Sacrifices from Doctors?’

After the obligatory opening statements about the overall societal virtues of a single-payer system, the article turns to what will happen to physician income. 

And the short answer is, ‘Hey doc, money does not buy happiness, so we’ll be doing you’re a big favor reducing your income.’  Really.

Here, I’ll let Robert Frank, the economist who penned the piece, sum up the case for you:

‘In sum, although the switch to a single-payer system would entail lower payments to service providers like doctors, it would also affect their frames of reference and conditions of employment in offsetting ways. International happiness studies offer no reason to conclude that, once it has been fully implemented and absorbed, the switch would require truly significant sacrifices by most American health care providers.’

There you go…your very one version of the red meat argument: we care about you too much to let you make too much money and just end up miserable.

Thud Thud Thud

[This week we are exploring the story of how Vermont’s effort to build a single payer healthcare system came to an end. Click here for Part One and Part Two.]

So Vermont, a liberal state that prides itself on going first on many progressive issues, tried to make state-provided universal healthcare coverage work, but economic reality killed the deal. It was simply too expensive. We’ll wrap this up with a few final random observations.

Right out of the gate, Governor Shumlin’s plan ran into problems. A big initial assumption was that the state would increase its Medicaid contribution by 3%, every year, from 2012 to 2017 because for every dollar it spent on Medicaid, it got a matching $1.17 from the Feds.

Yes, that meant that part of Vermont’s plan was for those of us from the other 49 states to help fund their handout. Fortunately, for we 49ers, the Vermont economy was not growing fast enough to fund that 3% Medicaid spending increase and that was scrapped, leaving a big gaping hole in the spreadsheet.

The plan to finance this with a huge payroll tax hike also flipped the concept of regressive taxation. One argument from single payer advocates is that the current employer sponsored model is regressive on low wage earners who have to spend a larger portion of their salary on health insurance than do high wage earners.

But this model flipped that upside down. With healthcare now being financed as a payroll tax, insurance would cost a lot, lot more for high wage earners. Business owners, in an economy struggling to grow already, pushed back hard as this would make Vermont even less attractive to the type of high earning talent that drive growth.

The apologists had the same arguments, both before and after then thud, which you would expect. Healthcare spends too much money dealing with insurance companies and having a single payer would simplify that, though being in the business of processing claims with Medicare and Medicaid would cause me to object just a bit to the presumption of efficiency from a government payer.

And doing this at a state level is an inherently flawed idea anyway, they claim, because Vermont has to pay for those workers who live in New Hampshire. Uh, did you forget that the 49 other states were going to help fund this? When you deploy this idea nationally, who provides that little subsidy, Dubai?

One of the other long standing arguments for a single payer system is what is known as ‘solving the pricing inefficiency problem.’ That is, a big reason that US healthcare costs so much is that while some claims are paid at the low government mandated reimbursement rate, many others are paid at much higher rates. The logic goes that if we simply paid all claims at Medicare (or maybe Medicaid) rates, the cost of US healthcare would go down. Well, if we are going to start making assumptions that don’t have to deal with reality, can I grow hair and suddenly master playing the piano? Dictating prices at unsustainable levels hardly qualifies as a solution.

This won’t be the last run up this mountain, but keep the Vermont story handy for when the subject of a single payer system comes up next.

Thud Thud

[This week we are exploring the story of how Vermont’s effort to build a single payer healthcare system came to an end. Click here for Part One.]

To pick up the tale from our previous post about Vermont’s efforts to provide state-funded health insurance for everyone, let’s turn to Governor Pete Shumlin’s team responsible for figuring out how to pay for this promise.

Tell me if this sounds familiar…Early estimates, those provided during the campaign and the subsequent legislative vote pegged the cost of government healthcare for all at $1.6 billion per year. But as they crawled into the details of defining benefits and pricing coverage, that number swelled to $2.5 billion.

What to do?

Call the consultants.

So they engaged Jonathan Gruber (yes that Jonathan Gruber) to help with the economic model. But it wouldn’t work. Tweaking here and adjusting there had no good effect. The total price tag stubbornly refused to budge from around that $2.5 billion number. Like gravity, the laws of economics are pretty powerful forces.

I guess there is a difference between spinning and duping the ‘ignorant’ voters and having to actually make the spreadsheet balance.

Because we now throw billions around like a hedge fund manager tosses a $5 to the doorman, so let’s put this in context. The entire annual tax revenue for Vermont is only $2.7 billion. Total. Every penny.

So government sponsored, single payer healthcare would require more than doubling the state’s entire tax revenue base!

How about some more context? We suggest you shield the eyes of any children around as this is a bit scary. Raising that much additional tax revenue would require an 11.5% increase in payroll taxes AND a 9% increase in income taxes. Wow.

Yes, employers would lose the cost of paying for health insurance, but the push back from the community was simply too great.

So as Christmas approached, Santa packed his bags and packed it in on his promise of the big gift for everyone. On December 17 he called a press conference to announce that he was abandoning the plan.

There are a few more loose ends to tie up before we put this to bed, and we’ll tackle those in the next post.


In the early, edgy days of the David Letterman Show (yes, that is twice that Dave made the blog), one of my favorite bits was when Dave would go up on the roof and throw things off their seven story building to crash on the street below. Watching TVs, watermelons and long florescent light bulbs shatter was fun. Hey, I was in college.

There, from Letterman and not college, I learned that some things just leave a great thud when they hit the ground.

One such thud happened at the end of December while we were all distracted with shopping and egg nog. It didn’t make a loud crash, but oh, this thud will resonate.

Vermont, as blue as state as we have anywhere in the union, had been racing to be the first state in the country to have single payer healthcare coverage.

It looked like they were going to make it and push past their neighbors in Massachusetts to win the ‘first to single payer’ title, but in late December, that idea landed with a thud. Like’s Dave’s gravity experiments, the laws of nature brought the Vermont idea down.

But I need to back up and rewind, for there is much of interest in this tale.

Recall that when the Affordable Care Act passed in 2010, much of the country was up in arms and the Tea Party was born. But for Vermont, it had the opposite effect – President Obama’s plan did not go far enough.

Later that very fall, Pete Shumlin ran for governor on the platform that Vermont would provide universal, state sponsored health insurance for everyone. 100% of the citizens and even those from neighboring states who worked in Vermont. Even advocates of this payment model shy away from the dreaded term ‘single payer,’ but Shumlin featured it prominently in his campaign.

And he won.

Quickly thereafter, in May of 2011, Vermont passed the legislation to make it so. State provided coverage for everyone would become a reality.

Like much legislation of this sort, they tabled the little issue of how to pay for it. The governor could work out those pesky details.

And that is where we’ll pick up the story in our next post.