How To Use Single Payer Healthcare As Trojan Horse For A Good Welfare State

Currently, total health expenditures in the US make up around 17% of GDP. The average for the OECD is 9.3%. Around half of our healthcare spending is public while the other half is private. Thus, very roughly speaking, to shift all of the current healthcare expenditures onto the public health insurance, you’d need initially to raise the tax level by 8.5 points of GDP (half of 17%).

If you believe, as I do, that switching to a single-payer healthcare system would allow us to better curb healthcare inflation and thus to control costs much more effectively than we currently do, then that means that the 17% of GDP we currently pay towards healthcare could be pushed down over time. Let’s assume that, by keeping healthcare inflation in check through single-payer, we could eventually bring health expenditures down to around 10% of GDP (slightly above the OECD average).

Under this scenario, we would initially raise the tax level by 8.5 points in order to cover the half of health expenditures that are currently paid out privately. Then, over time, we would cut healthcare expenditures by 7 points (from 17% to 10% of GDP). Assuming we didn’t lower the tax level over the expenditure-slimming period, we would be able to use those 7 points of savings towards other welfare programs (child care, child allowance, paid leave, etc.). And there is a lot of stuff you can get with 7 points of GDP.

Single-payer healthcare is the only program that would allow you to pull of this kind of trick. This is because it is the only program that, if done right, will require progressively less revenue (as a percent of GDP) to operate over time. If you can win the initial tax level bump necessary to make it happen (which you can sell as being a simple cost shift from private premiums to public taxes) and hold on to the tax level bump as healthcare expenditures recede, then you can fill out much of the welfare the US currently lacks with the resulting surplus.