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The Myth of the Switching Pain

Single-payer critics argue that removing people from employer-based plans would be a disaster. They're wrong.

Library of Medicine / Flickr

Critics argue that single-payer has a unique problem in that it would remove people from employer-provided health plans.

Krugman:

A far more important consideration is minimizing disruption to the 156 million people who currently get insurance through their employers, and are largely satisfied with their coverage. Moving to single payer would mean taking away this coverage and imposing new taxes.

Chait:

First, most people who have employer-based coverage like it and don’t want to change.

Rattner:

Amid the many complications of Medicare for All, the question of what would happen to the 157 million Americans who get their insurance from their employers and the 19 million who are enrolled in Medicare Advantage loom large.

One remarkable aspect of this particular criticism (which I am going to call the “switching pain” criticism) is that it never seems to be fleshed out beyond a few sentences. I do not know why exactly this is. But one reason might be because, when you do so, the argument becomes totally indefensible.

Single-Payer Causes Zero Net Switching Pain

In our current health care system, virtually all workers are forced to switch away from an employer plan onto the public Medicare plan around age sixty-five. Moving to a single-payer plan would thus cause two offsetting outcomes:

  1. Workers would no longer switch to Medicare at age sixty-five.
  2. Workers would switch, during the one-off transition, to single payer at their current age.

So moving to a single-payer system creates one unit of switching pain (number two above) while eliminating one unit of switching pain (number one above). Therefore moving to a single-payer system creates zero net units of switching pain even for those currently insured by employers. All it does is move up the eventuality of switching to Medicare from age sixty-five to whatever age you happen to be right now.

Additionally, calling it “switching pain” is probably not even right. I adopt that term because that is how the critics describe it. But as Zaid Jilani recently reported, we switch around ten thousand people onto Medicare everyday as they turn sixty-five and those who go through the process seem pretty happy about it.

It’s not switching pain. It’s switching pleasure.

Single-Payer Actually Reduces Switching Pain

The fact is that the thing that most disrupts people’s employer-provided health insurance is the system of employer-provided health insurance. Twenty million people were fired or laid off last year from jobs and another 40 million quit or separated from their job for another reason.

Not every one of these people had insurance from their job, but many of them did. If we assume half of these job separators had employer-provided health care, then that means the current system of employer-provided health insurance pushes 150 million people off their employer-provided health insurance every five years.

Single-payer would eliminate this churn and therefore eliminate the switching pain associated with it. And, since single-payer, by itself, causes no net switching (point one above), this means that single-payer dramatically reduces switching pain. So the evil that single-payer is supposed to cause is actually the evil that single-payer solves.

The Current System Requires Constant Switching

In addition to forcing people to switch every time they separate from a job, the current system also requires them to switch (or consider switching) every year that they are in a job. The only way the health insurance market works as a market is if, at open enrollment each year, workers reassess their options and switch to whatever plan is best.

Of course, in most cases, it is not workers who are tasked with the decision of whether to switch to a new insurance plan. It is their employers who, if they are behaving in the way the market requires, must go out each year and see if there are better insurance plans on offer. If the employer finds a better plan, then the employer will forcibly switch all of their employees to it.

Thus, even if you stay on with the same job, you are constantly at risk of being forcibly moved to another health plan.

Satisfaction Surveys

Critics of single-payer like to cite (or mention in passing without citing) surveys showing that people are generally satisfied with their employer-provided health insurance. There are two problems with this.

First, the same surveys show the people are more satisfied with public health insurance.

 

People on military or veteran’s health care, which is a full-blown UK-style system, are the most satisfied. They are followed closely in satisfaction by those on our major public health programs, Medicare and Medicaid.

Second, asking everyone if they are satisfied with the health system or their health insurance is not a good way to assess how much people actually like the insurance they have. Health insurance is insurance, meaning that some people get a lot of benefits paid out from it while most get very little, at least at a given point in time. Those who do not currently need a bunch of medical care have no idea how good their insurance is because they rarely use it.

If you asked me how I like my car insurance, life insurance, and renter’s insurance, I guess I would say “they are great, the companies never bother me.” But insofar as I’ve never made a claim on any of those policies, the real answer is “I have no idea.”

Those who do not currently use the system will be satisfied. But when they have an accident and get hit with a budget-busting deductible, they’ll probably reconsider. In short, the whole premise of this metric is wrong.