Expert: Single-Payer Health System Could Save Maine $1 Billion a Year

With health care costs high and rising, state lawmakers are trying to come up with new alternatives incorporating recent federal reform laws. Today in Augusta, a committee heard from a health care expert who says a single-payer system could save a billion dollars in Maine each year.

» Click here to listen to the story

Maine Public Broadcasting Network
Oct 19, 2010

In the early 1990s, when Taiwan wanted to tackle rising health care costs, it hired economist William Hsiao to come up with a solution. And it was a tall order, Hsiao told the Legislature's Joint Select Committee on Health Care Reform Opportunites and Implementation.

"Taiwan decided that everyone should have access to basic health care. However, health care costs money, and regardless of how you pay for it -- either out of your own pocket or though premiums paid partly by your employer or out of your own pocket -- it's going to be paid by somebody, through some avenue."

With the goal of affordable universal coverage that is sustainable over time, Taiwan developed a single-payer system, adminstered by the government. Hsiao, a professor at Harvard, says the cost is much lower than in the United States health care system, and it is paid for by employers, employees and the federal government.

And, he says, nearly everybody is covered. "They even sent people under the bridges to find the homeless to enroll them. And the Taiwanese that live overseas fly back to Taiwan for their health care, because it is literally free, and high quality."

Hsiao spoke to a committee room crowded with health care lobbyists. The committee was formed following the passage of the federal Affordable Care Act last spring, to prepare Maine for the law's implementation.

One committee member wondered if there is another way to develop mandatory, standardized health care coverage while still using private insurers, in a system more like that seen in Holland and Germany.

"I wouldn't call it single-payer, but then I'm a Republican," says Rep. Les Fossel, a Republican from Alna. He points out that the state requires car insurance, and it is provided through private insurers. Though he is not sold on single-payer, he says something needs to change.

"The thing is, we simply can't sustain the system as it is going forward now," Fossel says. "The Affordable Health Care Act did a whole lot to define coverage, but Truman had it wrong when he said 'the buck stops here.' The buck keeps being shoved down to the guy at the lowest level. And we have to figure out a way to pay for it. And this is going to be an extraordinarily difficult thing, and yet if we don't, we are going to kill people."

And kill jobs, he might have added. Jim Miller, general manager of Wooden Boat Publications, which employs 33 people in Brooklin, says small businesses are struggling with fast-rising health care costs.

"We had a renewal in May and we experienced a 17 percent increase in premiums, which is an increase of $48,000. That's a one-year increase," Miller says. "Unfortunately, there is nothing we can do to offset this cost, nor is there any way to understand why this happened."?

Miller spoke at a press conference held by Maine AllCare, which used Hsiao's visit to beat the drum for health care reform. He says Wooden Boat is self-insuring part of its employees' deductibles this year, basically gambling on the health of its employees. And Miller says the lack of affordable health care puts the business at a competitive disadvantage.

"We are also faced with competition from international magazines located in countries that offer national health insurance," he says. "They are at a cost advantage, as are the U.S. magazines we compete against who have chosen to drop coverage for their staff."

William Hsiao is now working as a consultant to the state of Vermont, as it tries to develop an affordable health care plan. And he says that if Taiwan is any example, the United States could save a lot of money by moving toward a single-payer system.

"Taiwan right now, 2009, is spending 6.1 percent of its GDP for health care. The United States last year was spending 16.7 percent of its GDP for health care," he says.?

In Taiwan, Hsiao says, the system saw 10 percent cost savings just by rooting out the health care providers who were fraudulently or excessively billing for services. Similar savings in Maine, he says, would equal a billion dollars a year.