By Drs. Edward P. Ehlinger and Susanne L. King
The Journal of the East and West Metro Medical Societies
In discussions of health care reform, consensus is rapidly developing around the urgent need for universal health care coverage in the United States. There is also an almost universal understanding that this coverage is not feasible without cost containment. Given the facts that over 47 million people in the U.S. are uninsured and an even greater number are underinsured and that the percentage of the U.S. Gross Domestic Product (GDP) going to health care is over 16 percent, it’s not surprising that the issues of access and cost have become priority issues in our country.
An increasing number of health care professionals and policy makers are claiming that a single-payer system is the only rational approach that can actually contain costs, achieve universal coverage, and maintain or improve quality. They argue that only a single-payer approach can address the economic pressure on businesses and the rising costs of health care for individuals and still be able to expand coverage to everyone. However, these statements are guaranteed to bring forth a series of questions about single payer. Here are responses to some of the questions that are frequently raised.
1) What is single-payer health care?
“Single payer” means that there is one payer – one insurer – who reimburses health care providers for their services. This is in contrast to the current system that provides payment through multiple insurance companies. This one payer has the authority to negotiate limits on what providers, pharmaceutical companies, and equipment manufacturers charge just as insurance companies do now. This payer could be either the state or the federal government. Every industrialized country in the world, other than the U.S., has some form of nationally administered health coverage. Medicare is a single-payer system that has been in place in the U.S. since 1966. However, Medicare is a less than ideal single-payer system because it cannot set budgets for hospitals nor negotiate prices with pharmaceutical companies.
2) Is single payer socialized medicine?
Single payer is not socialized medicine because hospitals and clinics would still be privately owned, rather than owned by the government, and doctors would still be in private practice. “Single payer” simply refers to the taking in and paying out of the health care dollars, which would replace the current multiple-payer system dominated by private insurance companies. Single payer refers to the mechanism used to pay for health care services not how the services are delivered. Many industrialized countries have a single-payer system; some provide services through a national health service, but most provide services through physicians in private practice. All of the leading single-payer bills introduced in the U.S. at the federal and state level would leave the health care provider sector in the hands of private practitioners.
3) Doesn’t Medicare have big problems?
Traditional Medicare has worked very well for patients and they have been happy with it. Because the traditional Medicare program spends a lot less money on administrative functions than private-sector insurers, Medicare is the most efficient health insurance program, public or private, in America. However, the partial privatization of Medicare since the 1980s and the recent total privatization of the Medicare drug benefit have raised costs and brought prosperity to many health plans and insurance companies. Their administrative costs have created an economic burden for the program of billions of dollars per year. Subsequently, payments to doctors, the actual providers of care, have been cut.
In many ways it is the actual need for Medicare that is causing some concern. As the U.S. population ages, there will be an increase in demand for Medicare services. That means there will be an increased need for funding to provide those services. This is not a crisis but a predictable occurrence that needs to be addressed by policy makers and health care planners.
There is a need to find a way to finance that increase in services. Reducing administrative waste through a single payer would be one of the mechanisms of doing that. Funding Medicare Part B (which is the primary revenue source for the physician and drug parts of Medicare) from general revenues rather than payroll taxes would also help eliminate the illusion that somehow Medicare Part B could “go bankrupt.” Imminent bankruptcy is never a concern for government programs, like the Pentagon, which are financed by general revenues.
4) Can we afford single payer, if that means covering 47 million uninsured people?
Compared to other countries, the United States already pays enough to provide comprehensive coverage for everyone. However, coverage for everyone isn’t realized because 31 percent of our health care spending goes for administration through the patchwork of private for-profit and not-for-profit insurance companies and health plans. Potential savings from eliminating the administrative waste and marketing expenditures of insurance carriers have been estimated at $350 billion per year.
5) Won’t there be waiting lines or rationing with single payer?
A poll done in the late 1990s showed that rationing was worse in the United States than in Canada, which has a single-payer system. At that time, 12 percent of Americans said they couldn’t get necessary health care in the previous year compared to 8 percent of Canadians. In 2005, the median wait for specialists or elective surgery was four weeks. A 2007 study highlighted the fact that 37 percent of Americans reported being unable to get necessary medical care “because of cost during the past year” versus 12 percent in Canada.
The United States already rations care based on ability to pay and 18,000 Americans die every year because they lack health insurance. Canadians live longer and are more satisfied with their health care than Americans, while paying half as much per person. If waiting problems in Canada are an issue, it’s because the health care system is underfunded rather than because it is single payer. No single-payer advocate is proposing that the United States lower health care spending to Canadian levels.
6) Won’t our aging population break the bank in a single-payer system?
Japan and European countries have a higher percentage of elderly citizens, yet they spend much less on health care than we do – and have better outcomes. Universal access to health care will improve the health of the population. The issue is what is the best way to get to that universal access in a way that is economically sustainable? A single-payer approach is the most likely approach to achieve that goal.
A single-payer system that provides universal access would also be better able to address the lifestyle and behavior issues, like obesity and tobacco and alcohol use that are major contributors to health care costs.
7) Some people believe that their insurance is meeting their needs; why should they change?
While some people may be comfortable with their present insurance coverage, that coverage is unstable and often inadequate when it is most needed. Because our current system is tied to employment, if people change or lose jobs, their coverage and care is disrupted. Others find their coverage fails when they get sick: 75 percent of the one million Americans experiencing medical bankruptcy each year were insured when they got sick. Insurance premiums are going up every year for policies that cover less and less.
8) How would single payer be financed?
There are a variety of ways that a single-payer system could be financed. Currently, about 60 percent of our health care system is publicly financed (via our taxes), 20 percent is financed by private employers, and 20 percent is financed by individuals. With a state or national single-payer health program, that funding formula could be maintained as a way to finance universal access.
Another option would be a payroll tax on employers (approximately 7 percent) and an income tax on individuals (approximately 2 percent). The payroll tax would replace all other employer expenses for employee health care. The income tax would take the place of all current insurance premiums, co-pays, deductibles, and any other out-of-pocket payments. For the vast majority of people, a 2 percent income tax is less than what they now pay for insurance premiums and out-of-pocket payments. This is particularly true for anyone who has had a serious illness or has a family member with a serious illness. Small employers would also benefit from this payroll tax approach since many now have to pay 25 percent or more of payroll for health insurance compared to the 8.5 percent currently paid by large employers.
While most people and businesses would pay less with a single-payer approach, everyone would have more comprehensive coverage. In addition to medical care and drugs, benefits would include mental health care, dental care, and long-term care.
9) Who would run a single-payer plan?
It is a myth that with national health insurance the government will be making the medical decisions. The government would only be the administrator of the health care funds. In a publicly financed, universal health care system, medical decisions are left to the patient and doctor. Cost containment measures like negotiating limits on what providers, pharmaceutical companies, and equipment manufacturers could charge would be publicly managed by an elected and appointed body. This body, in consultation with medical experts in all fields of medicine, would decide on the benefit package, negotiate doctor fees and hospital budgets, and be responsible for health planning and the distribution of expensive technology. Right now, insurance companies make many health care decisions behind closed doors. Their primary interest is in profits, not the health of the people.
10) Won’t doctors dislike a single-payer system?
Because of its administrative burdens and the hurdles to care created by insurance companies, most physicians are very dissatisfied with the current health care system. Physicians would like to make medical decisions with their patients, without the intrusion of profit-motivated insurance companies. In addition, when patients are unable to pay because they are uninsured or underinsured, doctors often provide care for which they don’t get reimbursed. More and more physician groups are also supporting single payer.
In 2007, almost 60 percent of physicians supported government legislation to establish National Health Insurance – a 10 percent increase in support since 2002. This level of support is similar to that found among physicians in Minnesota and Massachusetts where two-thirds of physicians support single payer. This increase in support for National Health Insurance is distributed across every medical specialty. The largest increase was seen among physicians who “strongly support” National Health Insurance; now almost twice as many physicians support it as oppose it. It has been reported that the number of physicians currently supporting National Health Insurance is much larger than the entire membership of the American Medical Association.
In addition to individual physicians, a single-payer approach is supported by multiple professional organizations like the American College of Physicians, the American Medical Student Association, the National Medical Association, the American Public Health Association, and the American Nurses Association to name just a few.
11) How would we get to a single-payer system?
There are multiple paths to achieving a single-payer system. The most logical would be to develop an expanded and improved “Medicare for all” approach at the national level. National single-payer legislation (HR676) has been introduced and has more supporters than any other proposal for health care reform.
While a full-scale conversion seems unlikely in the short-term, there are steps that could move the country and states in that direction. One approach at the national level would be to add children to Medicare followed by adults. In Minnesota, single-payer legislation could be adopted for children with adults gradually added. Another Minnesota option would be to open MinnesotaCare to small employers and individuals and then expand it to large employers.
Single-payer legislation for Minnesota (SF2324) has been introduced in the Minnesota legislature by Senator John Marty and has garnered a great deal of support. In Canada, single-payer health legislation was introduced province by province, rather than at the national level which gives credence to this state-based approach as a way of moving toward a national single-payer system in the U.S.
Support for single-payer health care is increasing as people learn about the benefits of this solution for our ill-conceived health care system.
Edward P. Ehlinger, M.D., MSPH is the director of Boynton Health Service in Minneapolis, MN. Susanne L. King, M.D. is a child and adolescent psychiatrist in Lenox, Massachusetts.
Reprinted with permission, MetroDoctors, the Journal of the East Metro and West Metro Medical Societies, July/August 2008.