Is the Healthcare.gov debacle, with its dozens of overlapping contractors, just a metaphor for why a single-payer system makes so much more sense, or is it actually one of the reasons a single-payer system makes so much more sense?
Giving things to people costs money, so you would expect that indiscriminate gifting would be expensive. But that doesn’t mean highly targeting giving is more efficient, or even cheaper overall.
Throwing leaflets out of an airplane might cost you $500 for the flight and $100 for the 1,000 leaflets. If you only drop 500 leaflets, you save on printing costs. Your cost per leaflet goes up, but your total cost goes down.
That’s indiscriminate. But giving away fewer leaflets will increase your costs if you want to be selective. If you want only men over six-foot-four to get your leaflet, the cost of administering that rule might be more expensive than the airplane drop. Trying to give just 50 leaflets only to men over six-foot-four requires hiring someone to walk around qualifying people as tall men, which would be expensive.
Obamacare isn’t just about giving away healthcare, but that’s part of it. And it shows that restricting who gets healthcare isn’t just a savings: Yes, you’re giving away less, but you have to pay the cost of figuring out who can’t have it, and then preventing those people from stealing it. (This is a variant of what is known as the cost-of-gates-for-rich-people dilemma).
In the case of Obamacare, the Tea Party saved us money by denying health insurance to undocumented immigrants, but cost us the money spent screening customers to make sure they’re not undocumented immigrants (and then paying for the ER visits of innocent children with asthma).
It’s not just undocumented immigrants. The nearly infinite rules for subsidies and exclusions cost money to administer. Just in case you have a hard time figuring your way through this flowchart, the government will have to pay for a system to do it for you:
A plan this complicated has a lot of these costs. To name a few: In the budgeting and planning phase we have to pay for health economists, in the administration phase we pay for database managers, and in the PR-disaster phase we pay for lawyers representing private contractors who testify before Congress.
Which is what hit me yesterday, when, at a hearing of the House Energy and Commerce Committee on the Obamacare roll-out, John Lau from Serco bragged about “the professionalism of our recruiting efforts and the outstanding way we have on-boarded and trained our people.” Inventing verbs is never a good way to save money. More importantly, though, neither is attempting to communicate with databases from Social Security, the Internal Revenue Service, Homeland Security and many insurance plans thousands of times per minute, just to make sure people don’t steal health insurance.
At that hearing, the House committee also heard from Cheryl Campbell, a senior vice president at CGI Federal; Andrew Slavitt from Optum; and Lynn Spellecy, corporate counsel for Equifax Workforce Solutions. This is what their prepared statements covered (click on the image to enlarge, so you can see the references to “health”):
When I was a kid I lived in Sweden for a while. It was the 1970s. As members of the family of a visiting scientist, each of us got a little metal tag on a chain with a number stamped on it. When I went to the doctor, I just showed them my tag. (The dentist, of course, was at school, because that’s where the children are.)
Giving away healthcare has a lot of costs, but figuring out who to deny shouldn’t be one of them.