Posts Tagged ‘monopsony’

Analyzing the effects of a single-payer system

September 20, 2009

A single payer healthcare system is one in which all of the healthcare payments in an area come through a single entity. Many supporters of the single-payer option take for granted that a single-payer plan will cut healthcare costs more than any alternative. Especially ignorant writers claim that the single-payer system is the “only way to control healthcare costs”.  Some more intelligent ones have actually laid out why such a system would be effective.

First, some terminology. A monopsony is a market situation in which one buyer purchases something from multiple sellers. A monopoly is a market situation in which one seller sells something to multiple buyers. In both situations, the market advantage usually lies with the united, single entity. In an ordinary market situation, creating a monopsony would benefit those united under it, the consumers, at the expense of those running the hospital. Most inquiry usually stops here.  However, the situation is more complicated than that. Due to strict occupational licensure, the American Medical Association has obtained a monopoly in the healthcare labor industry.  This monopoly benefits the doctors at the cost of those running the hospital . The hospital has been passing this cost onto the consumer through high medical costs. A single-payer system, therefore, would not be able to truly negotiate costs lower because it isn’t getting at the problem.

The Physicians for a National Health Program claim further benefits of a single-payer plan. They claim that the government would decide a sum to pay the hospital for its entire funding. This would lead to rationing and inflexibility in the hospital.  The individual would have to pay out of pocket for preventive care.  People would be required to pay out of pocket for treatment and medication under any unexpected overload of the budget, such as an epidemic.

Even further, because the source of the problem is not being treated, healthcare costs will not decrease, but increase. The budget given to these hospitals will become less and less relative to the costs of healthcare without cutting the budget periodically; however, the budget will be further cut. The “rationing” will be dealt by the hospitals to a higher degree every year.

This bill is a wreck, and the more we look at it, the worse it appears.