Trains show why “single payer” government healthcare won’t work.

Trains were the first large-scale industry in the United States.  And it was an enormous challenge to get railroads built.  The government got involved in the rail industry by means of transportation regulations and land grants which gave large pieces of land to the railroads that could be sold for a profit or used to build track.  Trains were profitable at first because they offered a much cheaper alternative to overland transport when marketable goods were moved from place to place.  Passenger fares were less profitable than commercial fares.

When trains raised the rates that passengers were paying, the government stepped in to regulate the fares.  After years of transportation regulations, trains were less profitable.    Like the railroads, the interstate highway system was built with government investments from tax dollars.  Both of the American transportation systems, rail and highway, were aided with government money. When the interstate highway system was built, trains met with new transportation competition. And increasing competition between two government subsidized industries didn’t help the railroads.

If you study the effect of regulated train fares what you find is that the public seems to win for only a short time because they get cheaper fares.  But their taxes eventually have to supplement the money that the passengers aren’t paying.  So there’s no real savings.  Public taxation subsidizes train fares (which externalizes costs to non-users).  What also happens is that government regulation of train fares undermines the train industry until it stops being profitable.  When the government remains involved, the trains lose their ability to manage and run their business until it becomes less well maintained, less well-managed and unable to improve.

I read and hear people commenting about healthcare.  Some of them wishfully think that a single payer system will get rid of the insurance middleman and make healthcare more affordable.  But the healthcare system is already showing huge inflation that has been caused by government programs like Medicare and Medicaid.  In fact, government interference in the healthcare marketplace started during the Great Depression.  In 1933, FDR wrote government sponsored healthcare into his social security bill.  The 1933 AMA opposed this move as government sponsored healthcare, so that version of it didn’t pass into law at that time.  But soon thereafter, insurance companies like Blue Cross got started selling health insurance under hospital sponsored plans.  And nowadays, health insurance co-pays hide the very high rate of inflation in pharmaceuticals and the costs of healthcare generally.

With 20 trillion dollars of government debt, the idea that more government interference in healthcare will reduce prices is only a wish.  There’s no historical reason to believe it would happen.  If you look at railroads, government involvement destroyed a once profitable industry which had to receive government subsidies in order to run at reduced fares.  That was taxes paying what the trains couldn’t charge customers according to regulations.  Government was powerful but it couldn’t use its power to change the nature of the train business.  Lower fares weren’t enough to keep the railroads healthy.  And the railroad industry became less nimble and less robust.  Some would say that it wasn’t even a real industry anymore–just a hollowed out shell of its former self.  Eventually the government had to buy it.

The healthcare industry is larger and more complicated than the railroad industry.  Government interference in healthcare has already raised prices and encouraged monopoly.  Single payer would further harm or even destroy the healthcare marketplace and it would serve interests outside of caring for sick people.  Government intervention in the healthcare marketplace has already harmed both doctors and patients.  “Single payer” isn’t any kind of remedy to our healthcare problems.  It would only worsen harms to patients and doctors.

If you would like to learn more about how we got to our current place in history, buy a copy of Political Catsup with Economy Fries available at Amazon.com today.

sources:

Wikipedia, History of Health Care Reform in the United States, https://en.wikipedia.org/wiki/History_of_health_care_reform_in_the_United_States, accessed 20 Mar 2017.

R. Kent Weaver, The Politics of Industrial Change: Railway Policy in North America, The Brookings Institution, Washington D.C., 1985.

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