Conservatives should love single-payer health insurance

What if I told you that the theoretical underpinnings of single-payer health insurance are supported by conservative economics?

In 1982, leading political economist Mancur Olson published The Rise and Decline of Nations, a book that merged theories of collective action and macroeconomics to explain economic growth patterns across geographic regions and time periods. The argument goes like this.

The freedom afforded by democratic societies entails the freedom to organize into interest groups, each of which lobbies to secure an increasing share of the economic pie. The efficacy of these groups will be affected by their size (larger coalitions are harder to manage), wealth (money is power) and geographic concentration. The longer a democracy remains stable, the more interest groups form and, therefore, the greater share of the economic pie is set aside for group-specific, as opposed to general, interests. In the long run, this slows economic growth as small, wealthy, well-organized interest groups are able to out-regulate and out-litigate the national interest.

The tradeoff implied by Olson is that democracy, in the long and uninterrupted term, does not allow for maximized economic growth. This doesn’t make him anti-democratic, and he also isn’t wrong.

His theory explains the post-WWII economic booms of Japan and Germany, where the countries were given an effectively clean slate with respect to interest group organization (along with monetary and institutional support from the West). It also explains the stagflation seen in Great Britain at the time of his writing, where labor unions had made the British economy unnecessarily rigid. Olson’s work has received a great deal of critical and academic acclaim: a quick Google Scholar search shows that his work has received over eight thousand academic citations.

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But while conservatives love Olson because he takes academic digs at organized labor, they gloss over one of his bigger implications: A market’s efficiency is very much dependent on its ability to discourage the organization of specialized interest groups. Nowhere is this more true than in the market for health insurance.

Liberals join in some of the conservative critiques of Obamacare, even if the reasons for the bill taking the form it did are in many ways conservatives’ fault. As Theda Skocpol and Lawrence Jacobs outline in their book on the passage of Obamacare, putting together comprehensive legislation in America goes about as well as Olson would predict: When conservatives complain that the bill is a messy cobbling-together of interest group carve-outs designed to keep everyone just happy enough to not make a fuss, they’re right. The law is a series of regulations and mandates crafted with industry and consumer groups in mind — not the general national interest.

For pragmatic reasons, that may have been the best we could do. And don’t get me wrong, the law is an unarguable improvement over the system we had previously. But the corollary to the conservatives’ criticism — one they would rather not talk about — is that the even better alternative, in line with Olson’s theory, is a health insurance system that bypasses interest groups altogether and establishes an insurance system with an encompassing interest in mind. Namely, and perhaps ironically, a national one.

When the Affordable Care Act was being pieced together, proposed changes to health insurance regulation had to pass muster with AHIP. And the AMA. And the AFL-CIO. And PhRMA. And the MDMA. And the AMTA. And the AARP. Et cetera, et cetera. Some interest groups’ support had to be won; others’ had to be appeased in order to blunt their opposition. In line with Olson’s theory, the Skocpol and Jacobs show that as more groups were given a seat at the table, the bill became increasingly complex, ad-hoc and opaque.

The bill’s best and worst components are all directed at slices of the American public instead of the whole. From the Medicaid expansion to the medical device tax (which trade groups are vigorously pushing to repeal); from the extension of dependent coverage to the age of 26 to the tax on Cadillac plans; and from closing the Medicare Part D donut hole to the employer mandate (if it’s ever implemented), the bill isn’t a comprehensive overhaul so much as it is a series of narrowly-aimed tweaks to the existing market. This makes implementation messy and, as we liberals have to admit, somewhat inefficient.

For a conservative, the obvious solution to this inefficiency is to simply not bother to regulate the insurance market at all. After all, the free market is able to correct for things like this, right?


Demand for health care, and by extension health insurance, is inelastic. If your leg is broken, you won’t choose to not get it treated. You will go to the hospital and figure out the (high) costs later. Since practically everyone is guaranteed to use health care, but there’s a great deal of uncertainty regarding when the care will be accessed, it makes sense to spread medical risk across as wide of a pool of consumers as possible. The more people paying into the system, the less each person has to pay in order to ensure that everyone’s expenses are taken care of.

That’s why Medicare has far lower operational costs than individual or otherwise-private health insurance plans. In addition to the fact that a private company needs to take a cut in order to turn a profit, they’re also insuring a smaller pool of people than if there were only one provider — this means that competition in the health insurance market drives costs up, not down. In other words, the fragmentation of the health insurance industry contributes to its inefficiency as much as if not more than the private-ness of it.

So what we’re left with is an inefficient market that is susceptible to capture by special interest groups and isn’t able to self-regulate without failing. The solution, then, is to eliminate the market. A single-payer system for financing health insurance — not the care itself, just the mechanism by which we pay for it — would address liberals’ concerns about access and conservatives’ concerns about efficiency.

And, like Obamacare itself, the idea can trace its origins back to conservative political economy.

Jim Demint, eat your heart out.


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8 Responses to “Conservatives should love single-payer health insurance”

  1. AdmNaismith says:

    I don’t know why any company in America (or not, heh) from the largest Corporation to the smallest start-up would want to take on the burden of providing helathcare coverage.

    Why the likes of Chrysler or GE has not INSISTED on single-payer decades ago is beyond me.

  2. Naja pallida says:

    His argument assumes that the word ‘conservative’ has any meaning at all in our discourse anymore. It doesn’t. It is used to describe the whole spectrum of babbling right-wing loons, most of whom have no interest in what have historically been listed as conservative principles – only authoritarian control and lock-step adherence to their ideological faux-outrage of the day.

  3. nicho says:

    You argument assumes that conservatives have a coherent and consistent political philosophy. They don’t. So you can’t argue from the silly things they say to what they “should” believe, because they will change their minds in a heartbeat depending on which way the wind was blowing. And moreover, if you examine what they say, it is internally inconsistent.

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  5. Indigo says:

    The fallacy here, Jon, is the assumption that Republicans are consistent on public issues. That’s not the case. Their consistency is tied to their effort to prove government does not work by destroying it.

  6. Jon Green says:

    Oh, absolutely. My point is that they *should*, not that they *will*.

  7. Demosthenes says:

    While your excellent article should make sense, I strongly disagree. Remember when Democrats foolishly thought ObamaCare would attract GOP support given its Republican provenance? As soon as the Democrats embraced it, th GOP as quickly backed off. The inventor of RomneyCare himself sought repeal of his “godson”, the ACA.

    You can be 100% guaranteed that the GOP would unanimously oppose single payer.

    Wanna bet?

  8. Bill_Perdue says:

    Obamacare is Romneycare is Heritagecare. Obama beat Romney, in part, by stealing his health care scam Romneycare, and making it Obamacare. Its the same scam dreamed up by the Heritage Foundation. and

