The best choice for health insurance is a single-payer system

By John Daley, M.D.
The New Hampshire Union Leader, April 23, 2012

While Obamacare risks being overturned by the Supreme Court, Vermont has pushed ahead with a primarily single-payer plan called Green Mountain Care, led by progressive governor Peter Shumlin.

In his op-ed of April 13, “Vermont's single-payer health care is good medicine for NH,” Fergus Cullen suggests that such developments would drive businesses across the Connecticut River into New Hampshire because “new and higher taxes are coming to Vermonters, most likely on businesses.” However, there is no historical evidence to support this premise, and in fact the reverse is more likely, as single-payer systems worldwide have been shown to be the least expensive overall for businesses and the society at large.

Our present employer-based health insurance system is an almost uniquely American creation, an accident of World War II, when employers compensated for wage freezes by offering this benefit. While other countries have ensured universal coverage and lower costs by enacting various government-planned systems, ours has evolved such that we now spend 17 percent of GDP, an average of $7,200 per person, despite leaving 50 million uninsured.

As of 2011, the average insurance plan for a family of four costs about $13,100, of which the average employer pays about $10,405 per employee, the rest paid by the employee. Thus, for an average employee making $50,000, the effective burden (or potential tax) is 20.8 percent.

This huge health insurance responsibility for employers makes us less competitive globally, as we have to compete with other countries that lack it. It is also the primary reason behind most labor strikes in this country. Auto executives have acknowledged that a significant cost of your car is due to their health insurance costs, and it is the main reason that some auto plants have migrated across the Detroit River to Windsor, Ontario.

Although I don't know how Vermont plans to pay for its system, and the policymakers in Vermont may not yet know either, the present model in this country is H.R. 676, as proposed in the Congress, albeit with limited support so far. It institutes an employer payroll tax of 4.75 percent and an employee payroll tax of 4.75 percent (both now pay a 1.45 percent Medicare tax). This is a drastic decrease in costs and headaches for businesses. Although an employee tax may not sound good, the average insured family now spends $5,848 yearly on premiums, services, drugs, supplies and the Medicare tax, which is 11.7 percent of that $50,000 average salary. With such a system in place, New Hampshire should worry about migration to Vermont for both business and citizens, especially those with inadequate insurance.

How does single-payer control costs? It does so by eliminating the bureaucratic inefficiencies, global budgeting of hospitals (like fire departments), negotiating better drug prices, and rewarding effective care more than wasteful care. Some say that states should be allowed to experiment with different systems, but there have been experiments all over the globe for 40 years, most notably in Canada, which has lower costs, better health care outcomes, and greater patient satisfaction than we do. And in Canada's situation, single-payer started in a single province and spread because it was a very good idea.

Should we be scared of single-payer as a government overreach? Well, we have had single-payer for our elderly and sickest patients for 47 years, and it is called Medicare. Although Medicare costs are increasing along with all health care costs, their rate of increase is actually slower than that of private insurance, many plans of which are having 10-20 percent increases this year. And I wouldn't blame Obamacare; health care costs have been rising out of control for decades.

Before Medicare, seniors went frequently without medical care, as the uninsured do now. Most believe that Medicare is a very good idea. If you don't benefit, your parents or grandparents are on it. Imagine trying to get that population insurance on the private market, with their pre-existing conditions. Impossible! If it is a bad idea, we should eliminate it. But if it is a good idea for some, it is probably a good idea for all, people and businesses alike.

Basically, as a society we have three main choices regarding our health care system: First, the present (though not-yet enacted) individual mandate, the (now formerly) Republican ideal which is akin to some systems in Germany, Japan and Switzerland; second, tolerance of the uninsured and underinsured, the fairly uniquely American way, if Obamacare is overturned; and third, Medicare for All, or single-payer. If we believe that the first is unconstitutional or immoral, and the second is intolerable, and if we believe that health care should be a right and not a privilege, we should be working toward Medicare for All to make our citizens, state, and our country stronger.

John Daley of Londonderry, is a physician at Derry Medical Center, and an assistant Professor of Family Medicine at Tufts University Medical School.