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Why it is difficult to make sense of the claims and counter-claims of single payer financing

Single-payer health plan wouldn't cost U.S. more

By Steffie Woolhandler and David U. Himmelstein
Philadelphia Inquirer, February 5, 2016

In our "read my lips/over my dead body" political culture, the threat of tax increases usually shuts down proposals for single-payer national health insurance. Lately, conservative pundits - and even liberals like Hillary Clinton - have been repeating the mantra that single-payer insurance would break the bank.

Never mind that Canadians, Australians, and Western Europeans spend about half what we do on health care, enjoy universal coverage, and are healthier. Their health-care taxes are higher.

Or are they? According to our study in the current issue of the American Journal of Public Health, American taxpayers picked up 65 percent of the total health-care tab last year - a figure that will soon rise to 67 percent.

We paid $2.1 trillion in taxes to fund health care - $6,560 per person. That's more per capita than Canadians or people in any other nation pay. Indeed, our tax-financed health-care bill is higher than total health spending (private as well as public) in any other nation except Switzerland.

Official accounts from agencies like the Department of Health and Human Services peg taxpayers' share of U.S. health spending at about 45 percent, a figure that includes Medicare, Medicaid, the Centers for Disease Control and Prevention, and Veterans Affairs. However, this kind of tally omits two important items.

First, it leaves out government spending to buy private health coverage for public employees like teachers, firefighters, and members of Congress. Indeed, government employers account for 28 percent of all employer health spending.

Second, it excludes tax subsidies for private employer-paid plans and other privately paid care - $326 billion last year - that mainly benefit affluent families.

Omitting these government expenditures from the official health-spending tabulations obscures the fact that our health-care system is already about two-thirds publicly funded. In contrast, the Office of Management and Budget, not to mention most health-policy experts, considers tax subsidies for private insurance to be tax expenditures.

Even many uninsured families pay thousands of dollars in taxes for the health care of others.

More than one-third of these tax dollars meander through private insurers on the way to the bedside. These private insurers siphon off 12 percent for their overhead and profits (vs. 2 percent in the Medicare program) and also inflict huge paperwork costs on doctors and hospitals. A shift to single-payer national health insurance would save at least $400 billion annually on paperwork alone, enough to cover all of the uninsured and eliminate co-payments and deductibles for the rest of us.

That means a national single-payer plan wouldn't cost Americans any more than we're currently spending. Moreover, the taxes to pay for it would be fully offset by the savings from eliminating private insurance premiums.

Moving from our current level of tax financing, 65 percent, to Canada's 70.7 percent would mean a tax increase of about $185 billion per year. But Americans would save at least that much on premiums. The vast majority of American households would come out ahead financially, and everyone would be covered.

Drug and insurance firms that would lose billions under single-payer health coverage generously fund its detractors (including Clinton, who has gotten more health-industry dollars than any other presidential candidate). These naysayers suggest that a single-payer plan (or "Medicare for all," as Bernie Sanders likes to call it) would downgrade Americans' coverage, and they also raise the specter of big tax increases.

But a national single-payer plan would give all Americans the first-dollar coverage enjoyed by Canadians and Brits, and guarantee them a free choice of doctors and hospitals - a choice that private insurers currently deny to many of us.

Surprisingly, American taxpayers already pay enough to fund national health insurance. We just don't get it.

Steffie Woolhandler, M.D. and David U. Himmelstein, M.D. are professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School.

http://www.philly.com/philly/opinion/20160205_Single-payer_health_plan_wouldn_t_cost_U_S__more.html

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Comment:

By Don McCanne, M.D.

There are two important reasons for distributing this update on how much we spend in taxes for the health system. One is that most people do not realize how much they are already spending for health care through mostly opaque tax policies - approaching two-thirds of our national health expenditures! Right now the more important reason is that people are bashing single payer reform with reports and articles based on selected taxes drawn from single payer financing proposals - particularly countering the brief single payer proposal from a leading candidate for the Democratic nomination for President. Misinformation is rampant.

A big part of the problem is that most people have no idea what they are currently spending on health care, especially since most of it is hidden in our taxes. So when people “analyze” the single payer proposals by pulling out the various taxes, adding them up, along with recalculating upward what the expenditures would be under single payer, ignoring the savings that are already firmly established in the policy literature, then calculating the deficits in the federal budget that would result, and then projecting that out over ten years - the cumulative total is in the trillions - an almost incomprehensible number. Scary.

When individuals compare those enormous numbers with what they know they are currently spending - employee share of the premium for employer-sponsored plans, deductibles and copayments, and Medicare payroll taxes - they do not realize that this is only a small part of what they are actually paying, so the single payer taxes appear to be horrendous to them. Little do they realize that, with our current system, we will be spending about 43 trillion dollars on health care over the next decade, and much of the spending will be opaque to individuals and their families (since, again, two-thirds is paid through the tax system).

We now have claims on one side that the costs of single payer are egregiously high, and on the other that the savings for individuals and families will be phenomenal - conclusions that are reached by playing with these numbers. In fact, well designed single payer models save typical individuals and families an average of about 5 percent from their current total spending (including the hidden costs). Only very high income individuals would pay more.

By losing people in the fog of these incomprehensible numbers, the opponents are able to suppress discussion of the more important reasons why we should enact a single payer system: absolutely everyone is covered, deductibles and other financial barriers to care are greatly reduced or eliminated, free choice of health care professionals and hospitals is returned to patients, central planning ensures adequate but not excessive capacity in the system, excessive prices are reduced to fair levels, and economic policies are put in place that slow health care inflation to sustainable levels.

Do not get hung up on the numbers, Just remember that most people will see better numbers, whether they recognize them or not,  while everyone will see a superior health care system. And that is what single payer is all about.

Physicians for a National Health Program (PNHP) is a nonpartisan educational organization. It neither supports nor opposes any candidates for public office.