I promised myself that I wouldn't do this, but GruntDoc threw the bait out there and I just can't help myself.
Before I launch into this, a couple of quick comments: First, I am not necessarily endorsing single payer as a national health plan. I do think it is probably one of, if not the, best systems possible for a nation-wide health funding system, but it does have drawbacks, as I will make clear, and is not itself a panacea. More importantly, it is a politically moribund proposal and I prefer to focus my thoughts on the possible rather than the ideal. Second, in more direct response to the irascible texan, a single-payer system such as the proposed "Medicare for All" National Health Insurance (NHI), is not at all equivalent to the UK's National Health System, which is a true socialized system in which the government owns/employs the hospitals and health care providers, nor is it comparable to any fully-governmentally-operated public institution such as the public schools. What it is, is essentially the same health care delivery system we have today, but publicly financed by expanding the federal Medicare program to cover all Americans.
In the United States, in 2005, health care cost $2.0 Trillion dollars, or about 16% of GDP. About 45% of health care dollars come directly from the government, and the balance comes from the private sector, mostly from employer-financed insurance plans. This is itself anomalous, as most other industrialized countries' governments contribute 70% or more to the cost of health care; the US is unique as the only OEDC country without some sort of nationalized health system. Hospitals, doctors and insurance companies are independent and often for-profit. The result is a highly commercialized, highly fragmented delivery system. The governmental payers (Medicare and Medicaid, mostly) are quite efficient; Medicare has been reported to have administrative costs as low as 3%, a number which has been disputed, but is in any case much lower than the 15-25% of private health care dollars which go to administrative costs. That is an enormous amount of money coming out of citizen's premiums, somewhere from $110-250 Billion, which goes towards non-productive purposes such as corporate profits, exorbitant CEO compensation, marketing, brokers and other middlemen, attempts to deny payments, etc. Recapturing even a small fraction of this administrative waste would provide enough savings to cover all 46 million uninsured Americans, at no increase in cost to consumers. Additional savings to the system would result from the streamlining of processes from the providers' side: no longer would doctors and hospital administrators have to waste valuable time negotiating reimbursement with the myriad health plans in their areas, complying with the arcane rules of dozens of different health plans, appealing denials of care, and billing and trying to collect from hundreds of different payers. The coding and billing requirements for an expanded Medicare are no more difficult to comply with than the current system, and greatly simplified in that it would be the only plan providers would have to interface with.
It is critical to understand that a single-payer expansion of Medicare would retain the status of doctors and hospitals as private, institutions with an intact profit incentive. While the medical market would be publicly funded, it would remain a private health care delivery system. All players would still be motivated to continue to seek efficiencies, reduce costs and increase profits, to innovate and find new ways to deliver care. This plan does not change at all how medical research would be conducted or funded, nor would the innovators in medical technology be impacted -- you get a new drug or medical device approved, then it will get paid for, just as it is today. Patients would still be free to choose their doctors and government would not intrude into the medical decision-making process, as it does not today.
National Health Insurance would improve America's competitiveness in the global market. It is paid for by a modest tax (or premium, if you prefer the term), and no longer represents an increasingly unsustainable burden on employers. GM annually is responsible for over $7 Billion in health care costs for its employees, compared to Toyota, which has been reported as paying, per car built, about 10% the amount that GM pays. It makes no sense for a car maker to run a health plan on the side; Medicare for all would allow America's businesses to cut their costs and focus their efforts on the core competencies of their businesses. It is true that if a national health insurance plan were enacted, some of the money currently contributed by employers to their private health plans would need to be redirected into payroll, to prevent the change from representing a huge pay cut for American workers. However, employers would likely be only too happy to make this change if it takes the risk and uncertainty of future cost increases off of their backs. NHI would also increase the flexibility of the work force, as individuals would be less reluctant to change jobs or start their own businesses, knowing that their health care was secure and no longer dependent on their employers. The Medicaid program, which is woefully underfunded, byzantine in its various forms, difficult to access, and a huge burden on states' budgets, would be eliminated and folded into the NHI.
The drawbacks of a change to a National Health Insurance plan are real, and significant. Most immediately, the hundreds of thousands of jobs extant in the private health insurance industry would be eliminated. Some of these could be assimilated into the administration of the National Health Insurance, but there would be significant upheaval and human cost associated with the transition. Additionally, billions of dollars in market capitalization in the for-profit insurance sector would evaporate, potentially causing disruption in the financial markets. These would, however, be short-term challenges, and more than compensated for in the longer run by the increased efficiency of the NHI. The displaced workers would, unlike displaced workers today, still have health care coverage!
From a physician's perspective, I am less than thrilled by the prospect of Medicare being my only payer. Medicare Part B is not well-funded and under continuous pressure in Congress for further cuts. If all my patients reimbursed at Medicare rates, it would represent a significant reduction in revenue which would not be adequately offset by the reduction in administrative costs. The likelihood of future cuts is very concerning and absent some reworking of the mechanism for physician compensation which appears to provide some guarantee that NHI would maintain provider compensation at its current levels, neither I nor the physicians' lobby would ever get fully behind a NHI.
There are a number of other crises in American health care which are not addressed by an expansion of Medicare. This should not be taken as a defect on the part of the NHI, but simply beyond the scope of the proposal. For example, the progressively escalating costs of health care: increasing amounts of services provided, expensive new technologies, inflated pharmaceutical prices, etc, do not have any mechanism for control in the proposed NHI. However, neither the current system nor any other proposed system include mechanisms to address this problem. Similarly, the alleged undersupply of physicians, the inarguable shortage of primary care physicians, and the relative overcompensation of specialists compared to primary care doctors remain as pressing problems under the proposed NHI.
There are a number of myths about a single-payer system which should be addressed:
Single Payer is equivalent to Socialized Medicine (which is bad).
Untrue. As noted above, the fact that all current players in the health care delivery system -- Doctors, hospitals, industry -- remain private and for-profit differentiates this proposal from other, true, socialized health care systems. It is also worth noting that just about every OEDC country with a socialized health system has lower infant mortality and longer life expectancies than the US. I won't delve into the argument whether socialized medicine is better or worse than our system; however, it is to some degree an open question at this time. However, this plan only creates a National Health Insurance, as opposed to a National Health System.
A National Health Insurance would result in rationing of health care.
Some would argue that in the US now we already have rationing of health care. If you have money, you get care; if not, you don't. Additionally, access to critical health services such as mental health and substance abuse treatment, long-term care, and preventative care are extremely restricted under the current privately-funded system. However, nothing about the NHI proposal requires or implies rationing as a mechanism for controlling costs. Given that the policy-makers in Washington DC would be answerable to angry voters, the viability of any sort of rationing as a political answer is limited, to say the least.
Canada has a similar system and has prolonged wait times for elective care.
True, however this exists for unrelated reasons. For one, physicians in Canada are paid far less than in the US; this has resulted in a large-scale emigration of Canadian-trained physicians to the US. Canada has about 25% fewer doctors per capita than the US, and historically has invested far less in medical technologies, such as CT scanners and MRIs, and Canadians admitted to the hospital stay significantly longer, resulting in limitations on inpatient capacity. Moreover, in the US today, if you do not have insurance, the wait time for elective care is forever. Given the existing medical infrastructure in the US, and absence of any disincentive for further investment, it appears that the ability to deliver care to all comers would be preserved at least as well as it currently exists.
Single Payer would create a huge, complex, government bureaucracy.
As opposed to the simple and user-friendly relationship Americans currently enjoy with their insurance companies? A NHI plan would expand the existing Medicare administration, which is incredibly lean compared to its private-sector rivals, and simpler, since questions of eligibility and enrollment are eliminated under NHI. The massive private bureaucracies that currently exist would cease to be, and administration would become simpler for health care providers and employers.
The Free Market can solve the problems of the health system better than the government.
If a free market existed, that might be correct. However, the current system creates such huge asymmetries in information that no free market can be said to exist. Consumers are unable to compare prices between different health care providers, and are reluctant to price-shop for medical services in any case. Consumers and employers have limited ability to compare and choose health care plans, especially small businesses and private individuals. Insurers use their size and superior financial resources to coerce hospitals and doctors to accept lower reimbursement. Insurers go to great lengths to identify and discriminate against consumers who may be sicker and less profitable. Pharmaceutical companies abuse patent protections and market forces to inflate the cost of prescription drugs. In a market with so many skewing factors and perverse incentives, free market forces are severely constrained at best.
I'm running out of steam, and have, I suspect, lost the interest of most of my readers. Health policy is so exciting! It's exhausting to think about, let alone try to organize your thoughts and back up your arguments with facts. I hope I have provided plenty of fodder for discussion/argument, so feel free to open fire in the comments. Tomorrow, I will compare this single-payer plan to my preferred solution. And by tomorrow, I mean "the next time I have the energy to undertake such a herculean effort."
21 January 2007
I promised myself that I wouldn't do this, but GruntDoc threw the bait out there and I just can't help myself.
Posted by shadowfax at 11:34 PM