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Thursday, February 25, 2021

Single-payer health care: What the death of the safety net does to the New Deal

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What happens when you remove a centralized safety net? A credible study by economists Francis Wahlgren and Kari Cook finds that premiums for single-payer health insurance would almost certainly increase significantly for most low-income families if the government did away with deductibles and copayments.

They further find that there would be much smaller net cost savings from eliminating subsidies to premium subsidies: Given the very large premium subsidies and the high deductibles, even though there would be fewer subsidies overall, most of the subsidies would flow to the poorest families. As a result, the move to single-payer would actually be a net fiscal drag.

The findings are by no means convincing, but they make clear that health care reform could not be easy in the absence of a safety net. As Wahlgren and Cook write:

…taxpayers would be forced to redistribute a greater portion of their income to cover the growing share of health care costs that would be pushed onto insurance markets by eliminating the cost-sharing provisions of current law. Many people still would have minimal coverage. This redistribution would mean that a substantial share of the people who now have insurance would not be able to purchase it at all. And this feature of the ACA, one we have not yet observed in America, remains unaddressed — more people would suddenly lose insurance than we will reduce the coverage gap. In short, no matter how you cut it, access to health care under a new health care system would become much more costly for the typical American family.

In other words, the figures prove a point I have been making for a few years: Deregulation not only failed to lead to greater health care benefits for the average American but also resulted in more people uninsured than would otherwise have been the case.

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