Single payer healthcare is coming to America. It’s inevitable.

Summary: Conservatives’ bold propaganda have made Americans fear the health care systems of our peer nations, systems that produce equivalent care a half the cost (or less) or ours — but cover everybody. America’s march to universal coverage began with Medicare (1965) and Medicaid (1966). Obamacare expanded it, covering more people but at unsustainable cost. Here Ed Dolan looks at the facts and draws the obvious conclusion: single payer insurance will come to America. The longer we wait, the more difficult the transition.

Health Care Reform

Single Payer Healthcare is Coming.

Stop Fighting It.
Start Figuring Out How to Make It Work.

Guest post by Ed Dolan.

As everyone knows by now, the United States is alone among advanced economies in not having a single payer healthcare system with universal coverage. It is, however, already much closer to such a system than most people realize, and the current round of Republican healthcare reforms, if enacted according to plan, will bring it even closer. Yet there is no reason to fear the single payer future. Read on.

The true scope of government in our healthcare system.

The federal government already operates three large healthcare systems, Medicare, Medicaid, and the Veterans Administration. Each of the first two is comparable in size to the single payer systems of most European countries. If we categorize healthcare expenditures by the type of primary payer, the three big federal programs accounted for roughly a third of all spending in 2015, according to data from the Centers for Medicare and Medicaid Services:

Who pays for health care?

To get a true picture of the government role in healthcare, though, we need a different perspective. If we categorize expenditures by the source of the funds, instead of the type of payer, the government share of spending is much larger. Partly that is because state and local governments account for 17 percent of all healthcare spending, not fully reflected in the chart above. Also, that chart hides the extent to which federal tax expenditures finance much of our ostensibly private health insurance. According to data from the Tax Policy Center, deductions and exclusions of health insurance premiums and related tax breaks cost the federal government some $250 billion in revenue in 2015 — as big a burden on the federal budget as if Uncle Sam wrote a check for that amount.

Deductibility of employer healthcare expenditures account for about three-fifths of total tax expenditures. The remainder come in the form of exclusions of Medicaid benefits from declared income, deductibility of insurance for self-employed individuals, tax breaks for some kinds of out-of-pocket costs, and other items. If we categorize healthcare expenditures according to the ultimate source of funds rather than the primary payer, we find that government budgets account for over half of all spending, as the next chart shows.

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What to expect from the Trump years, and why.

Summary: The media overflow with hysterical predictions about the next four years, but few well-grounded visions. Here is a brief look at  some of what we can expect, and why, and what these events reveal about ourselves.

What makes America great? Great for whom?

Trump: Make America Great Again

Investors have pushed US stock to near-record valuations (record valuations on price to growth basis) on the belief that the Trump administration will enact a massive fiscal stimulus — tax cuts (mostly for the rich) plus infrastructure and military spending — resulting in another round of fantastic fiscal deficits. Just as hard-rock conservatives Reagan and Bush Jr. did.

Skeptics’ rebuttal points to the eight years of Republican criticism of Obama’s deficits — deficits which prevented the 2008 crash from starting a depression and supported the economy during its long, slow recovery. How could the GOP justify massive deficits now, during an expansion? Conservative’s beliefs and history help us better predict how the conservative majority in Congress will vote. Start with their beliefs about deficits, easily stated.

  • Vast military spending and tax cuts are good; the resulting deficits are bad.
  • Tax cuts are good in both booms and busts, no matter how large the resulting deficits.
  • Deficits don’t matter for Republican Administrations, only for Democratic Administrations.

To see how this works we turn to one of America’s most influential presidents, whose administration radically changed America and set the patterns we still live by: George Bush Jr. The pivotal moment when fiscal policy change is described in this excerpt from The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill by Ron Suskind (2004, p291). Cheney is the key mover, as in most things during the Bush Jr. years.

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See America’s income inequality grow during 1979-2011, a driver of Campaign 2016

Summary: To understand this election we must see the accumulated stresses which produced the insurgencies in both parties. Rising income inequality — “the hollowing out” of the middle class and rise of the 1% — is probably the biggest, yet still poorly understood (until recently conservatives denied it). This great study by one of our top economists describes the dismal picture, essential for us to understand if we are to begin the reform of America.

Income growth by quintile — and by percentile for the top quintile

Income Growth 1979 - 2011

Growth of income and welfare in the U.S, 1979-2011

By John Komlos. Published by the NBER, April 2016
Excerpts. Red emphasis added.


{These} estimates have to be considered preliminary. Nonetheless, there are a few consistent patterns in which we have confidence that they will survive successive improvements.

These include most vividly what in the colloquial is referred to as the “hollowing out” of the middle class. The lower-middle class 2nd quintile and the middle class 3rd quintile fared the worst in all specifications: their income increased at a rate of between 0.1% and 0.7% per annum (Figure 1). In contrast, the only group whose income grew remarkably was the 5th quintile and especially the top 1% whose income registered an astonishing growth rate of between 3.4% and 3.9% per annum, reaching an average value of $918,000 by the end of the period under consideration.

Somewhat surprising is the consistently positive growth of the income of the lowest quintile. The poorest group registered an income growth estimated to be between 0.5% and 1%, i.e., consistently above that of the 2nd and 3rd quintiles, and equaling that of the 4th quintile (Figure 1). This is all the more surprising insofar as their net transfers decreased over time while those of the three middle class quintiles increased by as much as $9,000 per annum (Table 4).

… However, it is astounding that the relative income of the rest of the 5th quintile besides the top 1% did not experience such humongous growth. Only the top 1% increased enormously from a factor of 21 to a factor of 51, a surge of no less than 144%.

… Another recurring pattern is that the income of the 2nd and 3rd quintiles consistently lagged behind the other quintiles. This is referred to in conventional parlance as the “hollowing out of the middle class”. … According to the low estimates, it would take about 600 years for incomes in the 2nd quintile to double and on the order of a millennium for welfare to double. These are growth rates that are reminiscent of those that prevailed prior to the Industrial Revolution.

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Why do so many new-born babies die unnecessarily in America, the City on a Hill?

Summary: America has wealth and power never before seen in history. Yet the 1% reap the gains of our astonishing productivity while an underclass grows in our cities and rural areas. This post looks at one aspect of this, the price paid by American babies for our national mismanagement. There is no point in getting angry about this — unless you decide to act.

For we must consider that we shall be a city upon a hill. The eyes of all people are upon us, so that if we shall deal falsely with our God in this work we have undertaken, and so cause Him to withdraw His present help from us, we shall be made a story and a byword though the world.

— John Winthrop in A Model of Christian Charity (1630).

America: City on a Hill


Why is Infant Mortality Higher
in the U.S. Than in Europe?

NBER Bulletin on Aging and Health, 2015 (1)

Graphics and red emphasis added.


The U.S. infant mortality rate (IMR) compares unfavorably to that of other developed countries, ranking 51st in the world in 2013. In the U.S., there are nearly 7 infant deaths during the first year of life per 1000 live births, roughly twice the rate in Scandinavian countries. The U.S. IMR is similar to that of Croatia, despite a three-fold difference in GDP per capita.

What explains the U.S.’s relatively high IMR? This is the subject of a new NBER working paper by researchers Alice Chen, Emily Oster, and Heidi Williams, “Why is Infant Mortality Higher in the U.S. Than in Europe?” (NBER, September 2014).

There are numerous theories as to why the IMR is higher in the U.S. than in other countries.

  • There may be reporting differences for infants born near the threshold of viability, with the U.S. more likely to count them as live births while other countries are more likely to count them as miscarriages or stillbirths.
  • Babies in the U.S. also may have lower birth weight or a lower gestational age at birth, predisposing them to worse outcomes.
  • U.S. babies may experience a higher neonatal mortality rate (deaths within the first month of life) or higher post-neonatal mortality rate (deaths in months 1 – 12) than do babies of similar birth weight and gestational age in other countries.

To quantify the importance of these potential sources of the U.S. IMR disadvantage, the authors combine natality micro-data from the U.S. with similar data from Finland and Austria. These countries provide a useful comparison because Finland has one of the lowest IMRs in the world and Austria has an IMR similar to much of continental Europe.

To address the reporting difference issue, the authors limit their sample to infants born after 22 weeks of gestation with birth weight over 500 grams, since births are required to be reported above these thresholds. They also limit the analysis to singleton births, as access to reproductive technologies has increased the frequency of multiple births, which have higher mortality rates.

Making these restrictions reduces the U.S. IMR disadvantage by about 40%, but a substantial disadvantage remains. In this sample, the U.S. IMR is 4.65 per 1000, versus 2.94 in Austria and 2.64 in Finland.  See the graph…

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Be Proud America! as we watch our babies die

Summary: We’ll hear much about American exceptionalism from candidates for President during the next 17 months. Here’s a tangible example — the greater fraction of infants that die in America than in our peers. We know how to fix it; we have the money. We lack only the will. Be proud, America!  {1st of 2 posts today.}

Some insights into the factors affecting infant mortality, showing how badly we’re doing.

NBER: infant mortality, Jan 2015

From the January NBER Bulletin on Aging and Health story about this study:

The U.S. infant mortality rate (IMR) compares unfavorably to that of other developed countries, ranking 51st in the world in 2013. In the U.S., there are nearly 7 infant deaths during the first year of life per 1000 live births, roughly twice the rate in Scandinavian countries. The U.S. IMR is similar to that of Croatia, despite a three-fold difference in GDP per capita.

What explains the U.S.’s relatively high IMR? This is the subject of a new NBER working paper … To quantify the importance of these potential sources of the U.S. IMR disadvantage, the authors combine natality micro-data from the U.S. with similar data from Finland and Austria. These countries provide a useful comparison because Finland has one of the lowest IMRs in the world and Austria has an IMR similar to much of continental Europe.

…  In short, worse conditions at birth and a higher post-neonatal mortality rate are both important contributors to the U.S.’s higher IMR.

Finally, the authors explore how the U.S. IMR disadvantage varies by racial and education group. They find that the U.S.’s higher post-neonatal mortality rate is driven almost entirely by excess mortality among individuals of lower socioeconomic status. As the authors note, “infants born to white, college-educated, married women in the U.S. have mortality rates that are essentially indistinguishable from a similar advantaged demographic in Austria and Finland.”
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Don’t ask if there’s a biotech bubble. Ask why we have another bubble.

Summary: Powerful trends occur when multiple waves combine. So it is with the biotech bubble, where our inability to learn about our out-of-control financial sector meets the grifter economy. The results will be spectacular, and typical of our time — powerful benefits to society manipulated to produce massive profits for the 1%. As you read this remember that it need not be this way.

This is a follow-up to Economics gets interesting as the economy darkens while stocks bubble. {2nd of 2 posts today.}

Back to the Future


  1. The dream machine
  2. About the profits of Big Pharma
  3. The grifter economy
  4. About the patent cliff
  5. The slowdown in drug discovery
  6. Conclusion
  7. For More Information

(1)  The dream machine

Credit Suisse published a report about the biotech industry with deserves attention. Here is a brief excerpt.

Biotech Has Been the Best Performing Sector For 5 Years In a Row – No Sector Has Ever Done That!

Given the unprecedented performance in the biotech sector – are we in a “biotech bubble”? We are in completely unprecedented times for the stock performance of the biotech sector:

  • Since 1/1/2011 the BTK {NYSE Biotech Index} has delivered 204% performance vs. 64% for the S&P500. The BTK is up nearly 400% since the previous peak reached during the mother of all bull markets, i.e. the dotcom fuelled 1999/2000 frenzy. The cumulative market cap of the 5 large caps is $513B currently up from $128B at the beginning of 2011 (and $82B at the beginning of 2001);
  • Biotech was the top performing sector for the last 5 years – 2011-2015;
  • The number of IPO’s in 2014 (82 IPOs) has eclipsed the previous peak (67 IPOs) in 2000. There have been 12 IPOs YTD; (d) Multi $B valuations for SMID caps are now the norm. There are currently 44 public biotechs with >$2B market caps (outside the 5 large caps), 1 year ago there were only 26 and in 2011 just 14.

The success of large cap biotech has been due to a fundamental shift from Biotech 1.0 to 2.0. … It’s the cool science baby:

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What does the health care debate reveal about us, and our future?

Summary:  Today we have a glance at the debate about one of the most important domestic public policy debates of our time, repeated in every generation since 1945, that illuminates the moral and intellectual nature of America at this point in time. The photo below captures it perfectly, the aggressive ignorance resulting from generations of skillful propaganda on a weak people. Renewal is an inherent capacity of individuals and societies; we desperately need it (more on how to do this in another post).  This is the second of two posts today.

“Of course we want to have universal health care! We aren’t barbarians!”

— attributed to Margaret Thatcher, said in 1993 at Washington, DC (hat tip to Delong)

Keep govt out of my Medicare
This is America today


I am applying for health insurance as a self-employed consultant, a painful experience which reminds me of three important facts about America today. Facts which reveal the basic outlines of our situation.

First, our health care system is a disgrace, a failure to adequately handle a public policy issue solved years (or generations) ago by other developed nations. It’s massive cost and low effectiveness (leaving so many poorly covered, or uncovered) reveals the degeneracy of our ethics and folly of our governance. Decent medical insurance (with caps that don’t cause bankruptcy) can easily cost 1/4 to 1/3 of a blue collar family’s after tax income (without Obamacare’s tax credits).

Also, it shows how large vital sectors (finance, defense, health care) have become parasites, consuming resources disproportionate to their role and size. It’s the grifter economy, however well-intentioned the people involved (i.e., in health care and military).

Second, Republicans are the political group most responsible for this, since 1945 having fiercely fought every step to provide health care to America’s poor and working poor from Medicare and Medicaid (1965) to Obamacare. Even today they fight to deprive Americans of affordable health care, with a policy of Repeal and Promise to do something someday.  Rand Paul’s budget proposals call for a slow strangulation of Medicare, while today some GOP governors reject expansion of Medicaid even at no cost to their State (as of September, only 27 States have expanded coverage) — and some fight even the basic terms (e.g., Kansas).  It’s difficult to imagine such callousness, especially as their arguments are largely bogus.

Third, it shows our weakness as citizens that alone among the developed nations Americans have not exerted ourselves to provide adequate health care to all — despite the obvious self-interest in doing so — or run this sector in a rational manner.

Here are links to the latest rounds in the “debate”. Like most public policy debates in America, they’re polarized between facts and delusions. With each groups taking different sides in different debates; sometimes we have bipartisan delusions (e.g, the WOT).

(a) The Anti-Obamacare FAQ“, Reihan Salam, Slate, 14 November 2014 — A fact-free “Everything you need to know about why conservatives want to repeal the president’s health care law.”

(b)  A gentle but thorough rebuttal: “Here’s Why Conservatives Will Never Give Up Their War on Obamacare“, Brian Beutler, The new Republic, 18 November 2014 — Excerpt:

But in any case, none of these basic differences between liberals and conservatives explain, as Salam puts it, why conservatives are “so pissed off about Obamacare.” He attributes their indignation to the belief “that Obamacare only became the law of the land because President Obama misled the public,” then goes on to explain that conservatives aren’t hypocrites for wanting to turn Medicare into an Obamacare-like program for seniors, or for having once supported the individual mandate; then acknowledges that conservatives are miles from consensus on how best to replace Obamacare; and finally concludes that the law should be repealed anyhow.

None of this makes the Obamacare opposition seem even a tiny bit reasonable, but it does present a few good opportunities to explain why liberals think most of this is all window-dressing for a simpler explanation: Conservatives don’t just oppose distributive programs that help the poor and working class — these programs drive them batty in and of themselves. That Obamacare patched up the single biggest hole in the federal safety net, and in so doing extended government-sponsored health benefits to people through every stage of life, intensifies this reaction.

(c)  A detailed and typically brilliant rebuttal by Brad DeLong (Prof Economics, Berkeley): “Continuing on the ‘What Are Conservative Policy Ideas for Replacing ObamaCare?’ Beat”, Washington Center for Equitable Growth, 18 November 2014 — Excerpt:

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