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Posted on January 14, 2004

Patchwork Health-care Reform not What Most Want, or Need

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Published on Sunday, January 11, 2004 by the Boulder Daily Camera
Single-Payer: We’d Get More for Less
Patchwork Health-care Reform not What Most Want, or Need
by Brian Smith

Politics aside, we could all have better health care for less cost. Our current health-care system pays for universal health care but does so in an ineffective, costly manner while providing overall poor care. Unfortunately, a majority of physicians are opposed to single-payer health care, despite a majority of citizens who support it. Major health-care reform will happen only if citizens demand change.

Currently, no one can be denied health care for lack of insurance, but private providers can demand payment at time of service, while emergency providers cannot. This tends to shift uninsured patients toward expensive ER care. Since the emphasis in ER medicine is single-contact care, all eventualities must be covered, and that leads to significantly more expensive care.

A visit for a cold in a clinic setting may cost $50, while that same visit in an ER could easily exceed $500. In addition, patients without insurance tend to put off visits until they are sicker, when care is more expensive and outcomes poorer. Improving access to care, promoting preventative care, and adequately treating disease can significantly decrease cost while improving outcomes. It should be noted that unrecoverable costs of care for the underinsured are shifted to paying patients.

In 2002, health-care costs in this country exceeded $1.6 trillion. This represents approximately 15.5 percent of the U.S. GDP, in contrast to most developed countries, where costs are typically less than 10 percent GDP. A significant portion of this cost is administrative, which approaches 30 percent to 35 percent in America as opposed to 15 percent to 17 percent in the Canadian system. Private insurance overhead runs almost 12 percent vs. 3.5 percent for Medicare.

Pharmaceutical costs have spiraled out of control, with really no attempts to limit them. Currently medications account for about 15 percent of overall health costs and rising. There is no market control of these costs, and costs are set based only on what the pharmaceutical company wants to earn during the life of the drug patent. Competitive drugs are usually priced in the same ballpark. Generics are only marginally cheaper. When drugs from this country can be exported to Canada, re-prescribed and re-imported at cost savings of 20-50 percent, it is clear there is a problem.

It is important to understand the lack of market control in all aspects of medicine. The ultimate consumer, the patient, rarely has any concept of cost vs. benefit of medications, studies, care etc. Physicians write prescriptions but don’t have direct knowledge of actual costs. This lack of market control is inherent to the system of medicine and understanding that is essential to understanding the need for external controls on the system.

A quick look at the numbers involved in implementing universal health care shows it is feasible. By switching to a single-payer system, administrative costs could easily be reduced by 50 percent. Reasonable tort reform could cut malpractice costs by 50 percent, and cost controls of medications could easily realize savings of 25 percent. Overall, these measures could reduce U.S. health-care costs to about $1.35 trillion. Improved access, prevention and disease management should further reduce cost to about $1 trillion to $1.2 trillion (10 percent of the GDP).

Universal care could be funded by modestly increasing the “Medicare” tax, appropriately taxing tobacco and alcohol, incorporating a 10-percent co-payment, and combining all current health-provider systems while utilizing the current infrastructure. The current Medicare/Medicaid budget is about $420 billion. Some $200 billion in taxes on cigarettes and alcohol would help to offset the health costs associated with their use.

Another $40 billion to cover the health-care costs associated with motor vehicle accidents could be raised either through vehicle licensing fees, fuel tax, or could be collected by auto-insurance companies. Adding current VA funding of $25 billion, worker’s comp ($80 billion) and a 10-percent co-payment for those who can afford it ($100 billion); only an additional $300 billion to $350 billion would need to be raised through a combination of payroll and income taxes to provide universal care. Keep in mind that overall this represents a cost savings while guaranteeing coverage for all and improving health care.

Universal single-payer health care is both economically feasible and desirable. With decreased societal cost and improved health, it is a win-win situation. Why physicians and politicians resist such change really has more to do with their financial interests in the current system, or fear of government-run programs, rather than interest in providing good health care for all citizens. The current system is broken, and health-care costs will continue to spiral out of control if
the government continues its patchwork approach to reform. A recent poll shows 62 percent of Americans want universal single payer health care.

It is up to you to let them know you care. Brian Smith is a Boulder physician.

Copyright 2004, The Daily Camera and the E.W. Scripps Company