Question

Over the past several years, some politicians have proposed that the U.S. implement a “single payer” healthcare system. Please provide brief (non-political) answers to Parts A, B, and C.

1. Identify ONE economic argument in favor of this type of system (three sentence limit!). Note: I am asking for an economic argument, not a “moral” argument (but some moral arguments can be framed within an economic context).

2. Explain why this system could lead to the over-consumption of medical services (three sentence limit).

3. Identify two reasons why this system could lead to the under-consumption of (necessary) medical services. (three sentence limit for each reason).

Answer 1

A. An argument in favor of single payer healthcare system -
A large percentage of American people are insured throught their employers. Generally, these additional costs of sponsoring healthcare tend to be costly. Under such a system , companies can target their focus on paying their employees rather than take up such costs. [Lower administrative costs]

B. Solutions to medical problems would require the usage of expensive new technologies or drugs. E.g.- consider the case of the Covid19 pandemic where numerous varieties of drugs would have to be tested in absense of a vaccine, to somehow cope with ailing patients. Thus, the single payer would be burdened with this kind of an overuse for a lot of patients.

C. Two reasons , why this system could lead to underusage of necessary services -
1. Lengthy time of waiting - Everyone won't have access that easily hence, people might choose to save essential time and avail medical services from elsewhere, leaving it underused.
2. Limit on covered services - Government funding will be relatively low, thus there would be a compromise to innovation and newer technologies, which could influence consumers to think about alternatives while selecting essential medical services.