Why not run government more like a big business?
Under a single-payer system such as Medicare, all medical providers bill the same purchaser — namely, the government, which sets rules about what it will pay for. The putative benefit of this arrangement, as Ezra Klein explains over at Vox, is that the government can use its monopoly on demand to pay medical providers below-market rates.
Not "below-market:" the marginal factor cost exceeds the offer price (economists call that monopsony.)  As columnist Jason Richwine notes, depressing the offer price induces suppliers to provide less.
Take public education. There is essentially a “single payer” for education within school districts. The teachers, principals, custodians, textbooks, and school buildings are all paid for by the government. Yet Bernie Sanders would never argue that the government should use its near-monopoly to push teacher salaries below market levels. In fact, raising teacher pay to be on par with the salaries of other college graduates is a perennial goal of progressives.
On the other hand, perhaps state and local governments are already acting like monopsonists with respect to government schools and state-tolerated universities.
To see the inconsistency another way, imagine Republicans trying to portray a cut in education spending as merely “savings” generated by “limiting reimbursements to education providers.” Sanders would have an arm-waving fit, warning that education quality would suffer. Somehow he has no similar concern when doctors are the ones being squeezed. So here is a question for a reporter to ask: “Senator Sanders, given the benefits of single-payer systems you’ve described, shouldn’t you want to underpay not only doctors, but teachers as well?”
I wonder if there isn't a way for the right kind of university president to call out a stingy legislature for behaving like Walmart or like the canonical coal company.


David Foster said...

It strikes me that we have a single-payer system for defense contractors: you don't have any customers other than the government for you missile, fighter, or artillery piece, at least as far as US customers go. But the defense contracting world is not exactly known for low prices.

Also, at the local level, there is usually a single payer for highway paving services. Are these prices really as low as they should be? And what about quality problems and corruption?

Stephen Karlson said...

Do I understand your question as suggesting government contractors can rent-seek against public officials in a way that vendors cannot do so against Walmart? That's a possibility.

Or are you referring to the way members of Congress can use public procurement for electioneering, consider the various defense systems that the generals and admirals aren't interested in, or all the clinics in West Virginia with Robert C. Byrd's name on them?

Either way, perhaps something other than using buying power is at work. Thanks for noting that.