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CBO: Single-Payer Health Coverage Would Improve Workers’ Lives

Republican legislators are using the prospect of voters’ approval of Medicaid expansion this November as one of their excuses not to cut our regressive sales tax.

And Senators on the State Affairs Committee that killed HB 1327 on Friday say it’s fiscally irresponsible to take what would amount to $150 million in revenues out of the tax base now when large-scale spending initiatives like $600 million worth of upgrades to the prison system and potentially Medicaid expansion lie ahead.

“To throw money away instead of addressing serious bills that you owe is not what fiscal conservatives do,” Sen. Lee Schoenbeck said. “That’s what the liberals do” [Joe Sneve, “South Dakota’s Taxation Fight Has Republican Lawmakers Pointing Fingers at One Another,” Sioux Falls Argus Leader, 2022.02.25].

My friend Lee keeps getting this wrong: liberals don’t throw money away; we invest money in public goods and services that end up making everyone’s life better and saving the state money in the long run.

Consider, for example, this week’s working paper from the Congressional Budget Office, which looks not merely at the smart step of Medicaid expansion but our ultimate goal of 100% socialized health care coverage, in which we cover all of each others medical bills through taxes. The CBO, which has a Republican boss, finds that a single-payer system would have complicated and mostly positive economic effects:

In 2030, under Option 2, GDP is 1.4 percent higher than projected under current law. The effect can be decomposed into five channels (see Figure 11):

  • The redistribution of workers’ compensation to taxable wages boosts real GDP by 1.2 percent because it increases both the labor supply, by increasing the after-tax wage rate, and the capital stock, because households save a share of the increase in their disposable income and accumulate new capital.
  • The reduction in premiums and OOP expenses reduces GDP relative to current law by 3.0 percent. That reduction is driven by the positive wealth effect, which results in households’ choosing to work fewer hours over the course of their career. Moreover, as households’ OOP expenses late in life are lower under a single-payer system, they choose to reduce their saving, and the capital stock declines.
  • The reduction in administrative costs increases GDP by 2.4 percent in 2030. The percentage increase in GDP is larger than the percentage increase in economywide productivity because the boost to after-tax wages increases households’ disposable income and, ultimately, their saving and the capital stock.
  • The reduction in payment rates to providers increases GDP by 0.9 percent in 2030. The effect of reduced payment rates on GDP is smaller from 2021 to 2025 because the payment rates are phased in over time. The increase in productivity that occurs when providers find ways to provide care with fewer resources is offset initially by reductions in labor costs throughout the supply chain in the health care sector. In the long run, the effect on wages diminishes as labor markets adjust.
  • Lastly, improvements in people’s health outcomes increase GDP in 2030 by 0.5 percent relative to current law, as the population and labor force grow and workers’ average labor productivity increases [Jaeger Nelson, “Economic Effects of Five Illustrative Single-Payer Health Care Systems,” Congressional Budget Office: Working Paper Series, February 2022, p. 23].

Note that the one decrease in GDP comes not from government oppression but from the practical liberation workers get when government takes the private health insurance monkey off their backs. Workers spend less on health care premiums and out-of-pocket expenses, so they can choose to work fewer hours and spend more time enjoying their physically and economically healthier lives.

Single-payer would help South Dakotans and all Americans live better lives. We have the chance to liberate another 42,000 low-income South Dakotans from the oppression of unreliable private insurance and medical bankruptcy with Medicaid expansion in November; why not take the next step and use the sales tax dollars that the Legislature refuses to cut to provide every South Dakotan with reliable, life-enhancing state medical insurance?

11 Comments

  1. larry kurtz 2022-02-26

    Hey Democrats. Most Native Americans don’t want Medicare for All; they want a fully funded Indian Health Service and military personnel want better TRICARE coverage.

    About a million people are enrolled in Medicaid in New Mexico and about 200,000 folks don’t have any medical insurance at all so the governor is expected to sign a bill into law that would automatically check for eligibility on individual tax returns.

    https://sourcenm.com/2022/02/24/n-m-residents-may-soon-be-able-to-sign-up-for-health-coverage-while-they-file-their-taxes/

  2. Cory Allen Heidelberger Post author | 2022-02-26

    I’m open to putting all Americans on Indian Health Service or TRICARE, whichever single-payer system can expand and cover everyone most efficiently.

  3. Porter Lansing 2022-02-26

    Colorado and New Mexico are brothers in arms against MAGA tyranny.

  4. Loren 2022-02-26

    I wonder what the cost savings would be for doctors/medical facilities/providers to figure out ONE insurance system rather than the patchwork we have right now. It’s so frustrating. Every year we have to go thru the list of “preferred providers” to figure out if we need to find a different provider as policies change.

  5. larry kurtz 2022-02-26

    I like the idea of rolling the funding for Obamacare, TRICARE, Medicare, the Indian Health Service and the Veterans Administration together then offering Medicaid for all by increasing the estate tax, raising taxes on tobacco and adopting a carbon tax. Reproductive freedoms should be included with conditions just like the military does under TRICARE.

  6. Porter Lansing 2022-02-26

    The Schoenbecker doesn’t get out much.

    He posits, “That’s what the liberals do.” referring to poor fiscal policy.

    But Leo … it’s the liberal states that send South Dakota money every year to pay it’s bills because SD is too poor to even raise the necessary revenue stream to be self-sufficient.

    It’s the RED state connies that can’t stretch a buck to make ends meet.

  7. Mark Anderson 2022-02-26

    Cory, how else can Republicans feel superior to others? Golf only goes so far.

  8. Anne Beal 2022-02-28

    you keep missing the point that the country already has two single payer systems, the IHS and the VA, and the people enrolled in them don’t like it, and want out. VA started their care in the community thing but reimbursements are so low some providers are starting to refuse it.
    The government pays for things until they don’t.

    One of my grandchildren was on Medicaid and needed an apnea monitor. What Medicaid would pay for was an archaic device with long wires; looked like some kind of medieval torture thing.
    What medicaid wouldn’t pay for: a wireless bluetooth device which goes on under the pajamas, with no strangulation or electrocution risk, which links to parents’ cellphones.
    Single payer is great until it isn’t, and when it doesn’t meet your needs, you’re out of luck.

    They have single payer in Canada which has a two tier system now: if you have money you come to the USA for treatment and pay cash. If you don’t have money you stay home and hope you don’t die waiting for diagnostics.

  9. Cory Allen Heidelberger Post author | 2022-02-28

    Hey, Anne, how was your grandchild going to get that monitor without Medicaid?

  10. Porter Lansing 2022-02-28

    This is the biggest crock or Republican bul*SHi* since, “That Social Security won’t be there when you get old!”

    I heard that when I was a teenager in South Dakota, and it’s never been late with my pension money every month.

    “They have single payer in Canada which has a two tier system now: if you have money you come to the USA for treatment and pay cash. If you don’t have money you stay home and hope you don’t die waiting for diagnostics.”

    99.95% of Canadians don’t want anything from USA healthcare except the laughs it provides over a few cold ones.

  11. Richard Schriever 2022-03-01

    Anne Beal

    1. The US has a two-tier system now. For prescription drugs or dental care, or eye care, if you have the time and self-reliance OR the connections you travel to Mexico and get superior care for 20% the cost.

    2. Most users of the VA are perfect happy with that system.

    3. Tricare is essentially the private sector getting it’s fingers into the former internal military system. Most people don’t like it.

    4. The Canadian system is what PAYS for those people that come to the US for care, not private cash.

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