PNHP Logo

| SITE MAP | ABOUT PNHP | CONTACT US | LINKS

NAVIGATION PNHP RESOURCES
Posted on February 27, 2009

Health Care Reform: Learning from the International Experience -- A Case for Single Payer

PRINT PAGE
EN ESPAÑOL

by Claudia Chaufan
Social Medicine Portal
February 27th, 2009

So President Obama gets it: he has recognized that the time to reform health care is now, and he is right. After touring the country during his campaign, he must be aware that thousands of Americans are going bankrupt, every year, because they cannot afford their medical bills, even when they have insurance, and are employed and middle class. He surely is also aware that thousands die of perfectly preventable illnesses because they lack health insurance. And that all of these things are unheard of, at least in developed economies.

Yet the president has also said that reform will fail unless we can reign on costs. And he is right again, because health care costs are estimated to reach $8,000 a year per person, and are increasing at three times the rate of inflation, even if our extraordinary 2 trillion-dollars per year-expenditure buys us a patchwork system ranked 37th by the World Health Organization in overall performance, below that of every other industrialized nation.

Now, some have argued that the problem is “too much government”. And they are right to say that there is a lot of government: after all, 60% of the two trillion comes already from public funds - in case the reader didn’t know, 10% of anybody’s income, on average, is already financing, through taxes alone, some form of public health care services, whether one qualifies or not for any public program. They are also right to say that this public expenditure is breaking the back of taxpayers, both at the federal and state levels — a case in point is the current individual mandate experiment in Massachusetts, which has turned out to be a fiscal time bomb, draining money as it is from safety net providers, and forcing people who make as little as 31,000 dollars a year to “choose” between adequate yet unaffordable coverage, affordable yet skimpy coverage that hardly qualifies as insurance, or a fine of over 900 dollars.

So recommendations for President Obama for how to reign on costs abound: from the “let’s deregulate the private health insurance market and allow everybody to spend their health care dollars as they choose to” types (one wonders where these folks have been during the meltdown of the global financial system!), to the “consumer driven” types, who suggest shifting (yet more) costs to “consumers” - higher premiums, co-pays, or deductibles — to the “shared responsibility” types (well, who would dare oppose “shared responsibility”, even if it is hardly a meaningful health policy concept? Incidentally, the latest paper by Jacob Hacker, the “father” of the “shared responsibility” model, is the best defense of public financing and indictment of private health insurance I’ve read in a long time!), to the over 100 options-list of the Congressional Budget Office (CBO) - which, incidentally, has (correctly) challenged the enthusiasm for wellness programs, preventive medicine, or electronic medical records, at least as strategies to reign on costs (That’s right! it is not the broccoli that others eat and that we presumably don’t that explain why others spend so much less than what we do! And if you don’t believe me, ask the Brits!).

Remarkably, nobody close enough to the corridors of power, indeed, not even the CBO, seems to mention the “s” word (single payer!). Could it be that “single payer” is too close to “socialism”? (they both begin with an “s”, no?). Or is it that whoever has been organizing the meetings around health care reform under the blessings of Senator Edward Kennedy thought that single payer advocates were unworthy guests to the secret “talks to shape policy”?

Given this notable absence, let me fill this vacuum so that the president hears all the options (don’t you think he’s the type who can appreciate a good challenge?). Let me explain in a simplified way how every other industrialized economy in the world — and even more recently Taiwan — has managed to develop systems that guarantee a basic amount of health care to virtually 100% of their population, based on medical need and not ability to pay, spending no more than 60% of what we do, and yes, using a lot of government! I am quite confident that the president will like my proposal. After all, I remember him saying that the question is not too much or too little government, but government that works for ordinary Americans.

So how do others achieve the remarkable feat that has defied Americans for decades?

First, they’ve created systems that pool health risks widely, because they understand that money spent on dividing people up into different pools or plans — as we do, we spend over 30 cents of each health care dollar pushing paper and underwriting policies — is money not spent on health care, and therefore wasted, if the goal is to provide health care universally (as opposed to, for instance, create a “competitive illness market” just for the heck of it). So at any given moment, the healthy majority subsidizes the unhealthy minority, the young, who on average spend less, subsidize the old, who on average spend more, and so forth.

Let me point out that cross-subsidization minimizes the need for public subsidies, because there are no longer “special populations” (the old, the poor, the disabled, the “other”) who are shunned by the private insurance sector because, after all, they are not “good customers”. Pooling also exempts health professionals from the time-consuming task of figuring out what is covered, under which conditions, and for whom, and from the expensive paperwork of the multiple payment schemes with the unpredictable rates of reimbursement characteristic of the private sector.

Second, they use the great purchasing power that comes from bulk purchases to get the best bang for their health care dollar. This is the purchasing power that American consumers lack, for which reason we pay the highest prices in the planet for services that cost a fraction elsewhere: for instance, while people in Baltimore, Maryland, spend $329 dollars for Lanzoprasol, a widely used drug to reduce acidity, people in Spain pay $9 for the same dose of the same product.

Third and last, they finance their health care systems collectively with compulsory contributions. One could say that they take shared responsibility seriously, rather than merely advocating for the sum of individual responsibilities, individual-mandate type! But because they understand that it is pointless to demand that people contribute what they cannot afford, in all cases contributions to the system are a predictable proportion of income, which makes contributions affordable to individuals and families, and complies with the principle of financial fairness, as articulated by the World Health Organization.

Now, systems vary from country to country and no system is free of problems. Yet what matters is what they share:

They share a commitment to a goal: to eliminate financial barriers to health care.

They share an understanding of a best strategy: that insuring health care cooperatively is the way to go — cooperative financing is known as “social health insurance”, a type of insurance where everybody plays, where the ability to make a profit from connecting patients with providers is severely restricted if not altogether banned, and where contributions are a predictable proportion of income and entitlements a function of medical need.

And single payer is simply a type of social insurance: it is a hybrid system, a private-public partnership which combines public financing with private delivery of services. And it is the only mechanism that has the capacity to reign on costs while achieving the goal of universal health care. And I say care, not insurance coverage — they are not equivalent and should not be considered so.

Single payer can expand coverage while containing costs by maximizing purchasing power, minimizing administrative waste, and minimizing the need for subsidies, that ultimately have to be picked up by all of us, taxpayers. It embodies the pragmatism that President Obama is often credited with in that it builds upon well-tested, and anything but radical, models of financing, yet clearly in the pursuit of a goal: that of universal health care. And it is fiscally conservative in that it provides relief to states that, like California, among many others, spend enormous amounts of money on public programs and health insurance for employees, including retirees, and their families.

Moreover, under single payer, Americans would be able to choose, and keep, their doctors whatever happened to their financial or work lives. They would have meaningful choices — not choice of “health plans” where people are forced to select from within “preferred provider” lists or to second guess their present or future medical needs, but choice of doctors and whatever services they need, the sort of choice that people care about.

As an aside, the notion of social insurance is over 120 years old. Otto Von Bismarck, first chancellor of the German empire, sponsored the first social health insurance system in 1883, among other reasons to prevent the spread of socialism. And as history shows, he succeeded.

In closing, single payer shares with the health care systems of all developed nations, with the glaring exception of ours, the understanding that social health insurance is both good economics and good morals:

It is good economics because it yields the best bang for the health care dollar. And it is good morals because guaranteeing health care, a basic human need, is the mark of a society that cares about human dignity.

Will President Obama think that we can? I can only hope.