Single Payer and Progressive Economic Illiteracy

California State Senate passage of an especially bad single payer health care bill earlier this month is testimony to the economic and fiscal illiteracy of RoseAnn DeMoro, the California Nurses Association leader who is pushing this bill through the legislature. DeMoro makes over $350,000 per year ostensibly to protect nurse’s salaries and benefits, but she appears to spend more of her time trying to destroy our economy. She embodies a progressive mindset in California that totally rejects basic economic analysis.

As I explained previously, SB 562 (The “Healthy California” Act) would bankrupt the state. It tosses out proven medical cost control mechanisms like those used by Kaiser Permanente, replacing managed care with unlimited fee for service coverage. In the absence of any co-pays and deductibles, patients and providers will have no incentive whatsoever to control costs. Further the lack of eligibility requirements would draw in both illegal immigrants and Americans from other states who have pre-existing conditions and less generous insurance coverage.

In a San Francisco Chronicle op-ed, DeMoro argues that the $400 billion annual price tag for her measure won’t be a problem because we’ll get rid of insurance company profits, which totaled $26.7 billion over six years. Some quick arithmetic will show that when you annualize that number, it amounts to only about 1% of state healthcare costs. That 1% savings from eliminating insurance company profits will prove to be a mere rounding error once all cost controls are stripped away from the healthcare system.

But why worry about budget math, when we all know that healthcare is a right? But is it really?  If you’re stuck alone on a desert island, you still can exercise your God-given right to free speech. But, in the absence of doctors or medical facilities, your so-called right to healthcare is meaningless. Similarly, there could have been no right to mammograms before mammography was invented (as is true with any new procedure or test).  Thus, rather than thinking of healthcare as a right, we should instead think of it as a series of very important products and services.  We should certainly take steps to ensure that these products and services are affordable and widely available, but giving them away – as socialist societies do – has proven time and again to be a bad solution.

Unfortunately, today’s Progressives have either forgotten about or never learned anything from the collapse of socialism in the Soviet Union and the old Warsaw Pact.  After all, it has been a long time since the Berlin Wall fell and East Germans streamed West not only to obtain personal freedoms but also to enjoy the material comforts that only a market economy can offer.

While they may be forgiven for not remembering the failure of Marxism in the 1980s, they cannot be excused for ignoring the ongoing plight of socialist states like Venezuela and Cuba today. Despite possessing vast oil reserves, Venezuela has fallen into poverty, with food and medicine in very short supply.  Venezuelans have learned that government decreed “healthcare as a right” is meaningless in the absence of the wherewithal to purchase needed pharmaceuticals or to pay doctors who are now fleeing the country.

Cuba has been impoverished for decades, especially after the Soviet Union stopped subsidizing the Castro regime. Cubans struggle with low government salaries and shortages of basic goods. Those that have cars typically drive vehicles imported prior to the 1959 revolution. While Cuban leaders often blame the nation’s plight on the US embargo, the country trades freely with Canada and the European Union. So, in fact, Cuba has access to all the Western goods and technology it can afford. Problem is:  Cuba cannot afford very much.

Cuba is very proud of its socialized medical system, as I learned during a 2012 healthcare tour of the island. The country does have high life expectancy in part because everyone sees a primary care physician regularly. However, doctors are paid only about $20 per month, and have trouble making ends meet despite also receiving the government’s monthly food ration. One doctor I spoke to was planning to emigrate while others supplement their income by demanding bribes before performing certain procedures. As in Venezuela, many pharmaceutical products are in short supply.

Further the medical technology available to most Cubans is shockingly primitive.  We were surprised to learn that Cuban neighborhood health clinics do not even have disposable plastic syringes: instead they wash and reuse glass syringes. Quite a contrast to our state, where some cities even give out free plastic syringes to drug addicts!

Fortunately, there are still some people in California state government with enough fiscal sense to realize that socialism doesn’t work and who can prevent SB 562 from becoming law. It probably won’t make it through the Assembly, and, if it does, Governor Brown is likely to veto it.

But after 2018, we may not be so lucky. The leading candidate to replace Brown, Gavin Newsom, has voiced support for single payer. Also, the 2018 campaign promises to be a wave election in which liberals come out in full force to show their resistance to President Trump.  While their goal may be to turn the House of Representatives blue, it could produce collateral damage in California by reinforcing the Democratic supermajority. In that case, the Assembly may have the critical mass needed to push through a bill similar to SB 562 and sink our economy once and for all.