Health care reform: The simple, humane solution
By Winthrop C. Dillaway
Guest Columnist
Star-Ledger
May 22, 2009
President Obama has challenged Congress to enact substantive health care reform before the end of 2009. The need is urgent because of the chaotic complexity, unsustainable cost inflation and gross inequities in the current health care system.
Thoughtful policymakers, businessmen, economists, health care professionals and concerned citizens discuss and debate many reform possibilities: individual mandates, employer mandates, community rating, guaranteed issue, public plan options and government subsidies.
One reform proposal, known as single-payer (also referred to as “Medicare for All”), deserves a closer look. Compared to all other proposals, single-payer is simple, economical and humane.
U.S. citizens and policymakers only need to look north to Canada for an example of a single-payer system — universal public health insurance, financed by taxes, with a single-payment system managed by the government. It is not socialized medicine, but rather, socialized insurance. The delivery of health care remains mostly independent from the government with private doctors and private, nonprofit (so-call voluntary) hospitals.
Canadians, with their single-payer system, enjoy guaranteed comprehensive health care with per capita costs of about half as much as in the U.S. At the same time, by most standards, the overall quality of care in Canada is at least as good as in the United States. Notably, Canadians live more than two years longer than U.S. residents.
Why is single-payer health care so affordable? The economic advantage derives from two sources; enormous administrative savings, and the less well-recognized savings that would come from creating a single-risk pool.
First, the single-payer administrative advantage becomes apparent in comparisons of administrative costs in the U.S. (about 31 percent of health spending) and Canada (about 16.7 percent).
In the single-payer system, one public agency eliminates duplications, inefficiencies, costs and confusion. Currently, the U.S. health care system struggles with approximately 1,300 health insurance companies that produce thousands of different insurance plans. These create costs not only at insurance companies, but at the hospitals and doctors’ offices that must generate billions of bills and accounting documents annually to get paid.
The administrative simplicity of a single payer system translates into $350 billion to $400 billion in savings per year. This would suffice to cover all of the uninsured. In addition, it would also provide excellent coverage for the insured — without premiums, deductibles and copays.
Though not as obvious, the second and more important economic advantage comes from the creation of a single-risk pool. Indeed, the cost of “Medicare for All” confuses and worries many. They ask: How can Medicare for all of the U.S. population be affordable if the current Medicare system is so burdened with cost overruns and projected funding shortfalls?
In fact, the answer to this question demonstrates the significant advantage and strength of a single-risk pool. The 80/20 rule helps with the understanding. About 80 percent of the population is healthy at any given time. The remaining 20 percent is utilizing health care and creating most of the health care costs.
Current government programs, especially Medicare (which covers the elderly and the long-term disabled), already cover most of this 20 percent, high-risk population. The private health insurance industry in the United States focuses on the 80 percent low risk, healthier and profitable portion of the risk pool.
The U.S. health care system allows private insurance to deny coverage to high-risk patients. This, of course, constantly enhances profits from the larger, healthier portion of the population and shifts costs to Medicare. Therefore creating a single-risk pool, a “Medicare for all,” assures that the contributions of the healthy go to subsidize the sick, not to enhance private profit.
Single-payer spreads the risk to the largest, most efficient, and most economical pool possible, that is, the entire population. In addition, the creation of a single risk pool makes sense for simplifying management, accountability, information technology, communications, etc.
Yet the greatest advantage of single-payer comes not from its simplicity and economy, but from its inherent equity and fairness. Single-payer means “automatic enrollment.” That immediately and totally eliminates the difficulties and confusions of individual mandates, employer mandates, community rating, guaranteed issue, public options and government subsidies. Automatic enrollment embodies equality and democracy.
The major obstacles to single-payer reform emanate from fierce opposition by enormously wealthy and powerful vested interests, and from the popular misunderstanding about the importance of a single risk pool.
Single-payer would require a major paradigm shift for most of those involved in the current debate. Nevertheless, the results of the presidential election and the current economic crisis make such a shift possible. Only single-payer can resolve the health crisis in a way that is simple, economical, and humane.
Winthrop C. Dillaway III is a physician and faculty member in the Department of Family Medicine at the University of Medicine and Dentistry of New Jersey.
http://blog.nj.com/njv_guest_blog/2009/05/health_care_reform_the_simple.html