Blog & Reviews

Obamacare was shaky from the day it was passed

Jun 19, 2017 | Blog | 0 comments

The Washington Post editors published an opinion about how costly single payer health system reform will be. In doing so, they ignored published data from the United States and Canada and decades of experience elsewhere in the first world. Here is the entire editorial with my comments in parentheses.

OBAMACARE LOOKS shaky, mostly because Republicans are sabotaging it. (Obamacare was shaky from the day it was passed. The cost for Obamacare is/was unsustainable. This is the major point that the Washington Post and all Obamacare defenders never address. The Affordable Care Act was unaffordable from day 1.)

This, in turn, has rekindled calls on the left to create a European-style “single-payer” system, in which the government directly pays for every American’s health care. California lawmakers, for example, are considering such a plan for their state. (Actually, what is being called for from people on both the right and left of US politics is a Canadian-style single payer system.  Canada had multiple private sector health insurers, just like the US, until province by province single payer health system reform triumphed during the 1970s.  Americans are increasingly persuaded by the advantages of single payer health system reform and state by state we too, could eliminate the waste of the private, for-profit health insurance business model.)

The single-payer model has some strong advantages. It is much simpler for most people — no more insurance forms or related hassles. Employers would no longer be mixed up in providing health-care benefits, and taxpayers would no longer subsidize that form of private compensation. Government experts could conduct research on treatments and use that information to directly cut costs across the system.  (This is an astonishingly short list of the advantages of single payer.  How about the fact that all Americans would have health care financing?  No American would ever again languish and die from appendicitis because they could not afford an ER visit. We could actually realize the dream of improved quality, universal access, and lower cost.  We could put millions of health care bureaucrats to work actually providing health care, instead of playing the games of benefit denial.  American taxpayers would actually get value for their longstanding generosity in supporting health care programs.)

But the government’s price tag would be astonishing. When Sen. Bernie Sanders (I-Vt.) proposed a “Medicare for all” health plan in his presidential campaign, the nonpartisan Urban Institute figured that it would raise government spending by $32 trillion over 10 years, requiring a tax increase so huge that even the democratic socialist Mr. Sanders did not propose anything close to it. (The Urban Institute is one of many, many estimates of the cost of single payer health care, and many others have tallied far lower costs.  But note that this estimate says that single payer would raise ‘government spending’.  Of course government spending would be increased, because there would no longer be any private, out-of-pocket spending under a single payer system.  The Washington Post here is selectively making the cost problem appear worse than it really is.  Could this be because health insurers are heavy payers of advertising money to the Post?)

Single-payer advocates counter that government-run health systems in other developed countries spend much less than the United States does on its complex public-private arrangement. They say that if the United States adopted a European model, it could expand coverage to everyone by realizing a mountain of savings with no measureable decline in health outcomes, in part because excessive administrative costs and profit would be wrung from the system. (The waste in the US system is simple and straightforward to understand.  It costs Americans $400 billion/year in administrative costs over the amount spent in Canada for a health financing business model featuring private for profit health insurers.  And, due in large part to that same business model, we waste another $700 billion per year on poor quality care–inappropriate care, patient injury, and failure to consistently deliver best practice clinical science.  Changing to single payer immediately captures the $400 billion/year in administrative savings, and delivers most of the savings allowed by quality improvement within a short few years.)

In fact, the savings would be less dramatic; the Urban Institute’s projections are closer to reality. The public piece of the American health-care system has not proven itself to be particularly cost-efficient. On a per capita basis, U.S. government health programs alone spend more than Canada, Australia, France and Britain each do on their entire health systems. That means the U.S. government spends more per American to cover a slice of the population than other governments spend per citizen to cover all of theirs. Simply expanding Medicare to all would not automatically result in a radically more efficient health-care system. Something else would have to change.  (YES, the American taxpayer pays the world’s highest taxes on health care.  Time for us to recognize that.  We taxpayers have been very generous with healthcare programs.  But are we to accept the Urban Institute’s bias that we Americans simply can not do better with the public spending on health care?  Single payer health system reform means that something else would change.)

The Congressional Budget Office has released its score on the revised American Health Care Act. Here’s what’s in the report.

With monopoly buying power, the government could tighten up on health-care spending by dictating prices for services and drugs. But the government already has a lot of leverage. A big reason it does not clamp down now on health-care spending is that it is hard to do so politically. (This is the heart of the issue:  health system reform is a heavy political lift.  Lots and lots of money is made by the medical industrial complex and those corporations defend their windfall profit schemes voraciously.  A single payer health system reform movement must, state by state, overcome that massive political force maintaining the status quo.  Having done so, there would be a wide field open for change that can sustain the reform.)

Republicans have tarred the Affordable Care Act’s Medicare cuts as attacks on the cherished entitlement program. Doctors and hospitals have effectively resisted efforts to scale back the reimbursements they get from federal health programs. Small-town America does not want to give up expensive medical facilities that serve relatively few people in rural areas. A tax on medical device makers has been under bipartisan attack ever since it passed, as has the “Cadillac tax” on expensive health-insurance plans. When experts find that a treatment is too costly relative to the health benefits it provides, patients accustomed to receiving that treatment and medical organizations with a stake in the status quo rise up to demand it continue to be paid for. (These battles should be fought state by state, with different solutions likely chosen in different places.  What will work in sparsely populated Western states will not likely be what works in the densely populated states of the Eastern seaboard.  Federal tax money will be required in each state, so this must be a true federalist approach, federal minimum standards with state specific health policy and private health care delivery.)

A single-payer health-care system would face all of these political barriers to cost-saving reform and more. To realize the single-payer dream of coverage for all and big savings, medical industry players, including doctors, would likely have to get paid less and patients would have to accept different standards of access and comfort. There is little evidence most Americans are willing to accept such tradeoffs.  (Americans are realizing that single payer is the way forward.  The status quo will not do at all.  The politics of health care will change substantially over the next few years.)

The goal still must be universal coverage and cost restraint. But no matter whether the government or some combination of parties is paying, that restraint will come slowly, with cuts to the rate of increase in medical costs that make the system more affordable over time. There are many options short of a disruptive takeover: the government can change how care is delivered, determine which treatments should be covered, control quality at hospitals, drive down drug costs and discourage high-cost health-care plans even while making the Obamacare system better at filling coverage gaps. (Didn’t the Post editors in this last paragraph just deny the premise for the rest of the article?  Either the American body politic can take on the political heavy lift of health system reform or not, but they can not have it both ways.  Single payer, because of the significant and immediate savings on administrative waste it make possible, is the only way forward for real, sustainable health system reform.)

Let me know your thoughts in the comments.

Dr. Joseph Jarvis