Why a Single-payer Health Care System Would Be Good for Counties
by Paul Clay Sorum, MD; Professor of Medicine and Pediatrics, Albany Medical College, Albany, New York; and Chair, New York Capital District Chapter of Physicians for a National Health Program
The Journal of County Administration
October 2007
What can save counties from impending heath insurance driven financial disaster? A single-payer health care system!
“The problem for counties is the soaring health care responsibilities and costs that already consume much of their budgets. County governments have a responsibility for the health of all their residents, especially for those at the margins. Many expend substantial taxpayer dollars on Medicaid, county hospitals, nursing homes, health departments, and other health costs. They provide health insurance for their current employees and retirees. All these costs are rising faster than people’s incomes and property values. County governments desperately need, therefore, a means of fulfilling their responsibilities without causing serious financial problems for county taxpayers.
The first step of a solution is to recognize the need to provide adequate health coverage to all residents of all counties. Almost all health reformers, interest groups, and politicians agree that everyone should have health insurance. If people do not have health insurance, they do not get preventive care, they delay seeking treatment for illnesses, they use the emergency rooms more frequently than those with insurance,and counties end up paying in different ways for the unpaid and higher bills.1 The cost of the health forgone because of uninsurance has been estimated at $65 to $130 billion.2
Not everyone is willing, however, to provide coverage sufficient for people’s health needs. The number of “underinsured” is rising as employers offer reduced coverage. The barebones basic packages envisioned by the Massachusetts reforms, the donut hole in Medicare part D, the high deductible policies increasingly offered to employees—all these leave millions of people underinsured, unable to pay all the co-payments on their medications, at risk of allowing their illnesses get worse, and of going bankrupt if they get seriously injured or sick. Consumer Reports reported that in May 2007 that “29 percent of people who had health insurance were ‘underinsured,’ with coverage so meager they often postponed medical care because of costs.”3 Even the Reader’s Digest is alarmed: in its recent poll, “two-thirds of adults 21 and older said they feel they ‘can’t afford to be sick.’”4
The second step of a solution is to decide how to go about providing this adequate coverage. Reform plans fall into two categories, proposing either to utilize the private insurance companies—through tax credits or vouchers, individual mandates, employer mandates, and/or expansions of public programs for the poor—or to set up a “single-payer” system. In this issue, I will explain why private insurance companies cannot provide the solution and a single-payer system can. In the next issue, I will explain how a single payer system would work and how it can be instituted.
Private insurers add enormous costs to our already skyrocketing medical expenditures. These include both insurers’ administrative costs—the salaries of their highly-paid executives and armies of employees, their marketing expenses, and (in the case of for-profit insurers) their profits—and the billing related costs imposed on providers. In California, billing and insurance-related functions for insurers and providers represent 20-22 percent of privately insured spending in California acute care settings.5 In the US, we spent in 2001 $351 per capita on administrative costs, while the Canadians spent only $54 and the French only $48.6
The health premiums charged by private insurers are soaring, owing in part to their administrative waste and profits. Premiums have increased 78 percent since 2001, while wages increased 19 percent and inflation was 17 percent. For employment-based insurance, they averaged $12,106 for a family of four in 2007 and $4,479 for a single person.7 As a consequence, employers, especially small employers, are dropping health insurance benefits—60 percent of companies offered them in 2007 versus 69 percent in 2000, and only 45 percent of companies with 3-9 employees in 2007 versus 57 percent in 2000—and individuals have difficulty in paying on the open market for adequate insurance (especially since premiums are higher for non-employment-based insurance). Thus, in spite of the widespread conviction that people need health insurance, not only has the number of uninsured risen to nearly 47 million (15.8 percent of the population) 8, but the number who are inadequately insured is rising even faster.9 So the counties’ health burdens are increasing. Even if counties self-insure for their own employees, they may buy health administrative services and pay for health care in markets inflated by the unneeded expenses of the private insurance companies that dominate these markets.
Private health insurers must, according to the logic of the free market,contribute to uninsurance and underinsurance. As long as health insurance is a market commodity, private insurers must promise prospective enrollees as much as possible, but also reduce costs as much as possible, i.e., must spend as little as possible of their premiums on actual health care. Even if individual medical directors and other employees are virtuous and well meaning, they must avoid sick patients and deny care if their companies are to survive in the market.
Furthermore, private insurers cannot, unlike county governments, make the health of the population a top priority. They must, like other businesses, focus on short-term results, not on the long-term health of their enrollees (especially since these people are likely to change insurers and eventually switch to Medicare). In addition, in marketing their products to select groups, they fragment the population and undermine our already-fragile sense of social solidarity: they reinforce people’s short-sighted inclination to refuse to pay for those with more health needs, and fewer means, than themselves. They encourage healthy people to forget that they might one day suffer major illness and injury and that they, and the county as a whole, benefit if all county residents are as healthy as possible.
Private health insurers do not, therefore, provide the solution to the crisis in health expenses faced by county governments. But a public single-payer system, similar to but more inclusive than Medicare, is the solution with public financing but largely private delivery of health care.10 All legal residents would have an insurance card entitling them to basic but comprehensive care, i.e., access to the health services that would provide significant benefit to them. The structure of the single-payer system will be discussed in the next issue. The counties would continue to play a role in delivering health care, through their clinics and hospitals, but would no longer be burdened with paying for this care.
Critics will argue, however, that a single-payer system, an expanded Medicare for All, would not be desirable. These criticisms are found not only in the distorted charges of political candidates, but also in the serious and reasoned arguments of single-payer opponents in scholarly articles and in public forums, such as in Albany, NY, the series of four forums on “The Pros and Cons of Medicare for All” sponsored by public radio WAMC in spring 200611. It is necessary to address the three major criticisms.
First, opponents of a single-payer system assert that it would amount to “socialized medicine,” to “government run medicine,” with health care decisions made by government bureaucrats rather than by physicians. This set of charges distorts the reality of what is proposed.
- Medicare for All is not socialized medicine. In socialized systems, the physicians and other providers are government employees; in Medicare for All, they would remain as they are now, mostly private practitioners, paid not by salary but by fee for service.
- Physicians and patients in countries with national health insurance have greater freedom of decision making than do physicians in the U.S.; in Medicare for All, medicine would be macro-managed; in current managed care, medicine is increasingly micro-managed, as insurance companies strive to reduce their own costs (and thereby increase the psychological as well as financial costs to patients and providers). Second, opponents of a singlepayer system point to Canada and the United Kingdom and charge that it will result in underfunding and waiting lists.
- In fact, single-payer systems do not necessarily result in waiting lists; they are not a problem in, for example, France and Japan.
- Even if they are a problem in Canada and the United Kingdom, the extreme cases are not typical (just as the cases in the U.S. documented in, for example, Michael Moore’s movie, SiCKO, are atypical); the waiting lists involve noncritical care; and lists are being reduced through government efforts to increase capacity, even as the number of Americans without health insurance increases.12
- Not only do those of us with health insurance often face delays to getting certain services, but those without insurance or money face uncalculated waiting times.
- Even if our own capacity is strained as health coverage becomes universal, the American public, the American voters (most of whom currently have insurance) will not put up with longer waiting lists and will insist on increasing our capacity. Third, opponents charge that national health insurance will causes taxes to rise and will bankrupt the country by increasing health care expenses.
- What should interest individuals is not how much they pay for health care in income taxes, but how much they pay in all taxes—sales, property, payroll, and income—plus over-the-counter health expenses. The question is, therefore, what happens to overall costs.
- The only way to achieve universal access to comprehensive health care without increasing costs is to adopt a single-payer system. The reduction in administrative costs of insurers and providers and the elimination of marketing costs and insurance company profits would save far more money than would be spent on providing health coverage for the currently uninsured. On the national level, Hadley and Holahan estimated in 2001 that the cost of the additional health services that would be used if the uninsured were provided insurance would be $33.9 to $68.7 billion.13 Woolhandler, Campbell, and Himmelstein calculated in 1999 that reducing our administrative costs to those of Canada would have saved $209 billion14. In his critique, Henry Aaron argued for a lower figure, $159 billion, but still far more than the estimated additional costs.15 On a state level, the Lewin Group has made estimates of the cost of various plans for universal coverage in numerous states from California to Mississippi; consistently, the single-payer plans save money, the others cost money.16
We must, however, be realistic. Even if having a single-payer health care system would seem beneficial to county governments and residents across America, what would it actually look like, and would it truly be possible to institute such a system? These are the questions to be addressed in the next issue.
Endnotes
1. Ayanian JZ et al. Unmet health needs of uninsured adults in the United States. JAMA. 2000;284:2061-9. Institute of Medicine. A Shared Destiny: Community Effects of Uninsurance. Washington: National Academies Press, 2003. Ross JS, Bradley EH, Busch SH. Use of health care services by lowerincome and higher-income uninsured adults. JAMA. 2006;295:2027-36. County-level estimates of uninsured in 2000 by the US Census Bureau are available at http://www.census.gov/ hhes/www/sahie/statecntyest2000.html, accessed September 24, 2007.
2. Miller W, Vigdor ER, Manning WG. Covering the uninsured: what is it worth? Health Aff. 2004.
3. Are you really covered? Why 4 in 10 Americans can’t depend on their health insurance. Consumer Reports. August 2007. Available at http://www.consumerreports.org/cro/health-fitness/health-care/health-insurance-9-07/ overview/0709_health_ov.htm, accessed September 24, 2007.
4. Howley K. I can’t afford to get sick Think your insurance has you covered? Just wait till you need it most. Reader’s Digest. April 2006: 57-70. Article and poll available at www.rd.com/healthcare, accessed September 24, 2007. A lower estimate of nearly 16 million people ages 19-64 underinsured in 2003 is given by the Commonwealth Fund: Schoen C, Doty MM, Collins SR, Holmgren Al. Insured but not protected: how many adults are underinsured? Health Aff. 2005;w5-289-302.
5. Kahn JG, Kronick R, Kreger M, Gans DN. The cost of health insurance administration in California: estimates for insurers, physicians, and hospitals. Health Aff. 2005;24:1629-39.
6. OECD Health Data. Accessed by David Himmelstein.
7. Kaiser Family Foundation. Employer Health Benefits 2007 Survey. Available at http://www.kff.org/ insurance/7672/index.cfm, accessed September 24, 2007.
8. US Census Bureau: http://www.census .gov/hhes/www/hlthins/hlthin06.html, accessed September 24, 2007.
9. See the references in notes 3 and 4 above.
10. The single-payer system most commonly proposed is described, with multiple links, on the website of the Physicians for a National Health Program: www.pnhp.org.
11. Sorum PC. The pros and cons of Medicare for All a series of public forums on health reform. Health Law Journal 2007;12: 24-37. Audio available at www.wamcarts.org (click on “Archives”).
12. Canadian Institute on Health Affairs. Waiting for health care in Canada: What we know and what we do not know. 2006. Available at http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=AR_1385_E&cw_topic=1385, accessed September 25, 2006. Statistics Canada. Access to health care services in Canada,January to December 2005. Ottawa: Minister of Industry, 2006. Available at http://cansim2.statcan.ca/cgi-Hadleywin/cnsmcgi.pgm?Lang=E&SP_Action=Result&SP_ID=2967&SP_TYP=2&SP_Sort=-0, accessed September 24, 2007.
13. Hadley J, Holahan J. Covering the uninsured: how much would it cost? Health Aff. 2003;W3:250-65.
14. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in the United States and Canada. N Engl J Med. 2003;349:768-75.
15. Aaron HJ. The costs of health care administration in the United States and Canada—questionable answers to a questionable question. N Engl J Med. 2003;349:801-3.
16. Available at http://www.lewin.com/ NewsEvents/Publications/. Look in the category “uninsured & safety net.” Accessed September 16, 2007.