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Steffie Woolhandler, M.D., M.P.H., Briefs Democratic Platform Committee on Single Payer

Testimony in support of single-payer national health insurance

By Steffie Woolhandler M.D., M.P.H., M.A. (Hon., Harvard)
FACP Prof. of Public Health, City University of New York at Hunter College
Lecturer (formerly Professor) in Medicine, Harvard Medical School
Adjunct Clinical Professor of Medicine and Staff Physician,
Albert Einstein College of Medicine

Democratic Platform Drafting Committee Hearing, June 17, 2016

PNHP note: the following testimony, and subsequent dialogue with members of the drafting committee, can be viewed below, or on the C-SPAN website.

I am a primary care doctor and professor of medicine and health policy. In 1986, I co-founded the non-partisan organization Physicians for a National Health Program, whose 20,000 members advocate for single payer reform.

Our proposals for single payer reform have appeared in the New England Journal of Medicine, The Journal of the American Medical Association, and most recently in the American Journal of Public Health. That proposal and references for my statements appear in my written testimony.

1. The ACA has not solved the health care crisis. About 30 million Americans are uninsured today. And 25 million would remain uninsured even if all states were to accept the Medicaid expansion.

2. Millions more have such hollowed-out coverage that they can’t afford care. Deductibles on employer-sponsored plans increased 255% between 2006 and 2015. Deductibles in the ACA’s exchange Silver plans average $3,064.

My research with Elizabeth Warren, when we were both professors at Harvard, found that medical problems were a cause of 62% of all personal bankruptcies. The majority of the medically bankrupt had private insurance that failed to protect them. This year, the Consumer Financial Protection Bureau reported that unpaid medical bills are by far the most common debts sent to collection agencies.

3. Many Americans have been forced into insurance that limits their choice of doctors and hospitals, often excluding leading cancer centers and teaching hospitals. Medicare for All would assure everyone a free choice of doctor and hospital. 

4. Health inequality is on the rise. Today, the wealthiest American men live, on average, 15 years longer than the poorest. Meanwhile, the life expectancy gap has fallen in Canada. Overall, Canadians and Europeans now live 2 to 3 years longer than Americans.

5. Single payer systems in these nations provide first dollar coverage, while spending about half as much per person as we do.

6. The economic numbers on single payer add up. At the outset, government health spending would rise, but would be fully offset by reductions in premiums and out-of-pocket costs. Over the longer term, single payer reform would be less inflationary than our current market-based system. (Markets are designed to expand, and they do, especially when they're heavily subsidized.)

Single payer would save about $3.3 trillion on insurance overhead over the next decade by replacing private health insurers, whose overhead averages 12%, with a single public insurer with overhead of 2-3%, as in the traditional Medicare program or Canada’s single payer.

Single payer reform would also slash the paperwork that insurers inflict on doctors and hospitals, saving another $2.75 trillion over 10 years. Doctors would send all bills to one place using a simple billing form, and hospitals would stop sending bills. Instead, they’d be paid negotiated lump-sum budgets – much as we pay fire departments. Administration consumes 25% of hospital budgets in the U.S., vs. 12%, in Canada and Scotland.

Overall, a single payer reform would save more than $6 trillion on paperwork over the next decade, enough money to cover all of the uninsured, and to upgrade coverage for those of us with insurance.

7. A single payer reform could save an additional $2 trillion over ten years by using its leverage as a monopsony buyer to drive down drug prices.  This strategy has allowed Europeans and Canadians (as well as the VA) to get drugs at half–price. 
 
8. A Medicare buy-in or public option will not work. It would improve choices for some Americans but fail to garner most of the administrative or drug savings available through single payer. Moreover, as in the Medicare Advantage program, overall costs would go up because private insurers would cherry pick the healthiest patients, shunting expensive and unprofitable patients to the public option. We have already seen this dynamic at work in the collapse of the non-profit insurance coops under the ACA. In insurance competition, good guys finish last.

9. Single payer is popular. Most doctors, like other Americans, now favor national health insurance, and according a recent Gallup survey, the public now greatly prefers it to Obamacare.

10. In summary, single payer reform is the only route to affordable and sustainable universal coverage. The Democratic Party cannot pretend that minor tweaks to our failing health care system will fix it.

Additional Written Testimony and Documentation for the Democratic Party Platform Committee

By Steffie Woolhandler, M.D., M.P.H.

1. The full text of the recent physicians’ proposal for single payer health care reform is available at http://www.pnhp.org/nhi.

2. My estimates of single payer savings on insurance overhead are based on the following sources. According to the National Health Expenditure Accounts, private insurers’ overhead in 2016 was 12.5% of total premium (see: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/nhe60-24.zip). In contrast, according to the Medicare Trustees, overhead in the traditional Medicare program is less than 3% (see: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/reportstrustfunds/downloads/tr2015.pdf), and overhead in Canada’s single payer program, which streamlines administration by paying hospitals global budgets, is 1.8% (see: https://www.cihi.ca/sites/default/files/document/nhex_trends_narrative_report_2015_en.pdf).

3. The large administrative savings for doctors and hospitals under single payer have been well documented (see, for instance my studies in the New England Journal of Medicine at: http://www.nejm.org/doi/full/10.1056/NEJMsa022033#t=article, and in BMC  Health Services Research at: http://www.ncbi.nlm.nih.gov/pubmed/25540104). Every serious analyst of single payer reform has acknowledged these savings (for a summary of studies of the cost of single payer reform see: http://www.pnhp.org/facts/single-payer-system-cost), including the Congressional Budget Office, the Government Accountability Office, the Lewin Group (a consulting firm owned by UnitedHealth Group).

As my international research team found, U.S. hospitals spend one-quarter of their total budgets on billing and administration, more than twice as much as hospitals spend in single payer systems like Canada’s or Scotland’s (see: http://content.healthaffairs.org/content/33/9/1586.abstract). Similarly, U.S. physicians, who must bill hundreds of different insurance plans with varying payment and coverage rules, spend two to three times as much as our Canadian colleagues on billing (see: http://www.nejm.org/doi/full/10.1056/NEJMsa022033).

4. Nations with national health insurance programs that negotiate drug prices pay about half as much for prescription drugs as Americans (see: http://content.healthaffairs.org/content/32/4/753.abstract).

5. Implementing a single payer program would disrupt the private insurance industry, but would not disrupt the smooth functioning of hospitals, clinics, doctors’ offices and other medical providers. The rollout of Medicare in 1965 caused no disruption, contrary to predictions of disaster (see: http://www.huffingtonpost.com/steffie-woolhandler/medicares-history-belies-_b_9245484.html), and the start-up of single payer systems in Canada and Taiwan went smoothly. Interestingly, when Medicare started up, there was little society-wide increase in the utilization of medical services. Between 1964 (before Medicare) and 1966 (the year when Medicare was fully functioning) there was no increase in the total number of doctor visit in the U.S.; Americans averaged 4.3 visits per person in 1964 and 4.3 visits per person in 1966. Instead, the number of visits by poor seniors went up, while the number of visits by healthy and wealthy patients went down slightly. The same thing happened in hospitals. There were no waiting lists, just a reduction in the utilization of unneeded elective care by wealthier patients, and the delivery of more care to sick people who needed it. A similar phenomenon occurred in Canada (see: http://www.nejm.org/doi/full/10.1056/NEJM197311292892206).

6. According to a 2016 Gallup survey (available at: http://www.gallup.com/poll/191504/majority-support-idea-fed-funded-healthcare-system.aspx?g_source=Politics&g_medium=newsfeed&g_campaign=tiles), 58% of Americans favor (and only 37% oppose) “replacing the ACA with federally funded healthcare system.” Among those who favor either keeping the ACA or replacing it with a federally funded system, 64% prefer single payer vs. 32% who prefer the ACA – a 2:1 margin. Moreover, 27% of those who want to repeal the ACA and say they favor replacing it with a federally funded system. Strikingly, while only 16% of Republicans support keeping the ACA in place, 41% favor a federally funded health care system.

PNHP note: Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.