Blog & Reviews

America Needs Single Payer, and We Will Have a Heavy Lift to Make It Happen

Apr 16, 2017 | Blog | 0 comments

Brian Riedl has published a piece at National Review about single payer health system reform.  The entire article is copied below with my comments in parentheses at the end of each paragraph.

America Needs Health Care Reform and Single Payer Will Be No Part of It

By Brian Riedl, senior fellow at the Manhattan Institute

Is America’s adoption of Canadian-style, single-payer health care inevitable? As Republicans fail to enact conservative reforms, a growing consensus — ranging from conservative columnist Charles Krauthammer to the liberal New Republic and former Senate majority leader Harry Reid — has emerged that single-payer is increasingly likely if not inevitable within the next decade.  (There will be nothing inevitable about the passage of single payer legislation.  The medical industrial complex, which owes its enormous wealth to corporate welfare from all levels of American government, will not stand idly by and allow single payer legislation to pass.  Mr. Riedl himself will join in the effort to block passage of such legislation, funded no doubt by the combined interests of health insurers, Big Pharma, and all other for-profit interests in American health care business as usual.)

But don’t burn your private-health-insurance card just yet. Single-payer is not coming any time soon.  (Single payer will only come with a massive effort by patients and their families through exercising their franchise to vote and eliminate the politicians of both major political parties who will never see the value of sustainable health system reform.)

The “inevitability” argument is as follows: America tops the world in health-care spending yet fails to achieve better health outcomes. Insurance companies drive up costs though administrative bloat, paid advertising, excessive salaries, and an unrestrained drive for profits. Universal coverage has become a universal voter demand, and the chaos of Obamacare as well as the Republicans’ failure to deliver a popular alternative leaves as the only acceptable solution a single-payer system in which all citizens are enrolled in comprehensive, government-run health care. For these reasons, most Democrats and even one-fifth of Republicans 18 to 29 years old want a single national health plan. (The status quo in American health care business as usual is unsustainable.  All of the many trillions of federal debt projected for the working lifetime of my children is health care debt.  20% of American GDP is spent on health care, a far higher proportion than is true in any other country, and that proportion is growing unsustainably.  Personal bankruptcy in the US is driven by the cost of care for illness and injury and having insurance does not protect anyone financially.  American health care delivery is manifestly of poor quality and inefficiently financed compared to other first world nations, and therefore far more costly.  American taxpayers pay the world’s highest taxes for health care-a total of about $2 trillion per year- and then add another $1 trillion per year out of pocket.  This can not continue.  Health care threatens the US economy.  That is what is driving Americans to reconsider our national health policy.)

But the “inevitability” argument for single-payer collapses under the weight of its astronomical cost to taxpayers. (What collapses under the weight of its astronomical cost to taxpayers is the status quo in health care in the US.  Taxation pays for 2/3 of the $3 trillion spent each year on health care in the US, and that still isn’t enough.  The federal deficit is all health care throughout the lives of the millennial generation.  Our nation’s economy will collapse under the weight of health care business as usual.  Something must change this trajectory or we will become a second class nation.)

Bernie Sanders’s 2016 proposal would cost $32 trillion over the first decade, requiring an average annual tax increase of $24,000 per household. Vermont in 2014 abandoned its single-payer plans when it was confronted by a required state-tax increase of 160 percent, up to $27,500 per household. New York’s recent attempt at single-payer suffered death by sticker shock. This summer, California’s single-payer plan was rushing toward enactment until the score came in at $400 billion per year, or $26,500 per household. This prompted Assembly Speaker Anthony Rendon, a Democrat, to abandon the plan because it “does not address many serious issues, such as financing, delivery of care, [or] cost controls” (gee, is that all?). And no, the family savings from no longer paying insurance premiums cannot balance these exorbitant taxes. (Mr. Riedl fails to point out that continuing to follow the status quo in American healthcare over the same decade of Mr. Sanders proposal would cost $49 trillion, or $17 trillion more than Mr. Sanders proposed health reform.  It is not single payer that costs so much, it is doing business as usual in American health care.  All of the various states that examined single payer, despite Mr. Riedl’s highly selective list of ‘studies’, have found that single payer health system reform would cost substantially less than going forward with the status quo in American health care.  Every nation which has single payer as its national health policy spends considerably less on health care than does the US.  To state otherwise is dishonest.)

These stratospheric cost estimates stun advocates, who cling to the romantic fantasy that single-payer can cover virtually every health-care need, with little or no co-payments or deductibles, all at an affordable cost in taxes. (We Americans already tax ourselves enough to pay for single payer health system reform.  Single payer systems can foster both higher quality care while being a far more efficient means of health financing.  Savings of $1 trillion per year over the status quo in American health care are possible with single payer health system reform.)

Such a system has never existed anywhere. For example, three-quarters of Canadians purchase supplemental health insurance to cover prescription drugs, ambulance costs, dentistry, and other services not fully covered by the government. Canada also rations care through lengthy wait times, leading 50,000 exasperated Canadians per year to go to the United States or elsewhere for major care. Other “single-payer” countries also often ration care, charge co-pays and deductibles, and depend on the private sector to supplement the government’s offerings. (The Canadian health care system did not have intent to provide financing for dental care, and Canadians fund health care at a much lower per capita rate than is true in the US.  Yes, health care rationing exists in Canada, and in every nation.  The US rations health care by ability to pay, leading to tens of thousands of premature deaths that could be prevented if the vast sums of money spent in the US on health care would be more efficiently spent.   If Americans wish to include the costs of dental care, emergency transport, prescription drugs, etc. in a single payer system, should such come to pass in the US, then that is possible given taxpayer support being made available.)

Instead of accepting the trade-offs that every nation faces, Senator Sanders, the Vermont state government, and others promise citizens nearly all the health care they desire for “free.” That pushes projected tax costs through the roof, even before accounting for the massive new demand that would result from nearly all procedures, drugs, and treatments being “free.” (There is no free lunch.  American taxpayers know that well when it comes to health care, because they lead the world in paying health care taxes.  What pushes health care costs through the roof is pretending that health care is a market commodity with an inverse relationship between price and demand.  No matter what is charged for an appendectomy, only people with appendicitis actually demand that surgery.  No one has an appendectomy because it is on sale this week.  However, if the pretense of a market is allowed, and a for profit hospital CEO is unburdened by any expectation other than that he/she should make as much money as possible for the stock holders, then the price for an appendectomy will multiply because the family of a patient who needs an appendectomy will pay any price to save the life of their relative.  The pretense of a market in health care induces high prices.  That is the root of high cost in American health care, not increased demand due to lower point of service payments.)

Single-payer nations have not reduced costs through groundbreaking innovations in health delivery. They merely pay providers less, and ration care. But a mature health system like America’s cannot simply slash payment rates to European levels. Large and roomy hospitals have been built, expensive technologies adopted, and billion-dollar drug-research investments made under the promise of reimbursement rates sufficient to recoup their costs. European governments never slashed payment rates deeply. They merely set them low decades ago and thereby discouraged expensive investments from being made in the first place (choosing instead to free-ride off America’s innovations and drug developments). Despite the higher cost base in the United States, health-care costs here have grown at rates similar to those in the rest of the developed world since 1990. (There is no evidence that other nations are free riding on American innovations in health care.  First world nations, taken as a group, publish new peer-reviewed clinical science at a per capita rate that is equal to if not better than that of US clinical researchers.  Single payer nations have reduced cost through lower overhead.  If American overhead were the same as Canadian overhead, Americans would save more than $400 billion per year on administrative costs alone.  A significant feature of the poor quality of American health care is too much care—or clinically inappropriate care-care which has no basis in clinical science.  An example of clinically inappropriate care is defensive medicine, which by definition is care delivered for a reason other than the care of the patient.  American health care systems would rather make a sale than care for the patient, which is the direct cause of the opioid epidemic in the US.  Health care costs in the US have risen at dramatically higher rates than the rest of the first world beginning in 1960, when high tech care actually began to take hold world wide.)

This high cost base is why profit margins for health-insurance companies and hospitals are not excessively high — and cannot absorb deep cuts. (Health insurance profit margins are all unnecessary, but are not the reason why the health insurance business model is so toxic.  High overhead, which is baked into the health insurance business model, robs Americans of hundreds of billions of dollars each year.  And mirror image high overheads are induced in the health care delivery sector as they seek to get paid by health insurers.  Hospitals should seek first to care for patients, not make profits.  The US has the most profitable health care system in the world, and that is why Americans are saddled with the poorest quality health care system in the first world.  We can not have both high profitability and optimal health care quality.)

So why not simply adopt Medicare for all? Because Medicare’s survival depends on providers overcharging private-insurance customers in order to recoup their losses from Medicare’s below-cost reimbursements. Medicare’s annual payment errors total $60 billion (so much for its supposed efficiency). And even though Medicare tries to save money through member premiums, co-pays, and deductibles as well as through low provider payments and coverage gaps that make Medigap policies necessary, it is still heading toward bankruptcy, with a projected $33 trillion shortfall over the next 75 years. (Medicare’s problems are numerous, which is one reason I support state based single payer health system reform.  But Medicare’s problems can be traced to a medical industrial complex which places profits and sales before patient care, and with the political might to make corporate welfare happen over and over again.)

Medicare recipients are flocking to the relatively free-market Medicare Advantage system, and benefiting from a Medicare prescription-drug program that has relied on private-sector choice and competition to come in 40 percent below projected cost. Evidently markets can work in health care. (Medicare Advantage is a taxpayer rip off.  These private plans are designed to specifically attract healthier seniors.  However, when those seniors really need care, as with all health insurance, they have trouble getting it under Medicare Advantage.  So, after the taxpayer pays high monthly ‘premiums’ to Medicare Advantage plans for the months of healthy living, the plan fails to efficiently cover real sickness needs and the senior will disenroll back into traditional Medicare, where the taxpayer will pay again.  Americans pay much more for drugs than do citizens of other nations, including Americans on Medicare Part D.  Markets do not work in health care.)

Finally, most Americans simply distrust the government too much to accept the upheaval it would create by imposing single-payer. They would be loath to trade their current private insurance for a bureaucratic system designed by the same politicians who gave us a collapsing Obamacare system and endless wait times for veterans seeking care from the VA. (Americans have a great distrust of the federal government, true.  Therefore, let the states take care of health system reform.  Get the federal government out of the way so that states can opt to organize single payer health care.  I know many Americans who would love to try an experiment that would free them from the burdens of working with the bureaucracies of private health insurance. )

America needs fundamental health-care reform. A single-payer system will not be part of it.  (What fundamental health care reform is there without single payer?)