A Better-Quality Alternative: Single-Payer National Health System Reform


Hospitals compete for patients by establishing competing specialized services rather than cooperating to establish one high-quality unit. Two decades of "regional planning" requiring certification for more costly capital expenditures have shown that, absent more direct financial control of capital allocations, such regulatory efforts have not succeeded.76

Reorientation toward macroallocation broadens quality horizons in many ways. Establishing "fences" that prospectively define available resources means that less energy and money are wasted micro- managing each decision, and more energy is directed toward overall quality.77 A child scolded to clean his plate because there are children starving in Africa may reasonably question the logic. Refusing intensive care unit treatment to an elderly patient because the resources could be better used for prenatal care is similarly hard to justify if we lack a structure to redirect the resources.78 Global budgets allow managerial energies to be redirected away from maximizing revenue, improving market share and expansion, toward improving quality.

Competition gurus rely on report cards to allow marketplace choices to drive competition toward better quality. They overestimate the precision of measurements at the level of the individual provider or health plan (New York Times. March 31, 1994:A1, A11)79 as well as the higher "leverage" potential of coordinated system improvement. Because existing measures lack precision, cost may end up being the only "objective" measure. Berwick80 has argued that quality needs to be induced rather than selected. Measuring performance ought to be aimed more at improving quality than at lubricating competition. Such improvement requires leadership committed to improving each component of the system as well coordinating its various elements.

9. Quality requires prevention. Prevention means looking beyond medical treatment of sick individuals to community-based public health efforts to prevent disease, improve functioning and well-being, and reduce health disparities. These simple goals, articulated in Healthy People 2000,81 remain elusive. Nine preventable diseases are responsible for more than half of the deaths in the United States, yet less than 3% of health care spending is directed toward prevention.82

Private health insurance attaches funding only to individual patients and thus separates the funding role and control from that of representing broader societal interests.83 Insurance companies discovered risk factors, such as hypertension,84 yet they used this insight primarily to exclude high-risk individuals. This fragmenting of the community places both sick people and the social causes of disease outside the boundaries of medical care. Although rhetorically "prevention is cheaper than cure," many preventive measures probably increase costs.85 This, combined with high patient turnover rates and short-term financial orientation, gives private insurers little incentive to invest in prevention.

Health care financing should facilitate problem solving at the community level. Community-based approaches to health promotion rest on the premise that enduring changes result from community-wide changes in attitudes and behaviors as well as ensuring a healthy environment.86, 87 Stores that refuse to sell tobacco to minors and promote low-fat foods, schools that teach avoidance of human immunodeficiency virus infection, and a health department that can guarantee clean air and water have a more vital role in ensuring health than does private health insurance. According to Enthoven,88 the originator of managed competition, its "goal is to divide providers in each community into competing economic units." Capitation payments to competing providers, in theory designed to motivate prevention, thus fracture the community and make community-based interventions more difficult because no provider has a population-based purview.

10. Affordability is a quality issue. Effective cost control is needed to en- sure availability of quality health care both to individuals and the nation. Good-quality care should not mean expensive care; if it does, it will not be available to most citizens. Flawed cost control reduces quality in many ways. It diverts resources from legitimate health needs, increases iatrogenic risks, and leads to financial barriers to care. These harmful impacts derive both from failure to contain costs and "side effects" of ill-conceived cost-control measures.

Despite multiple cost-control measures during the past two decades, costs continue to escalate. These measures have failed to slow growth of administrative costs, improve efficiency, curb ineffective or marginally effective services, or rein in excessive managerial or professional salaries or profits.89, 90 Moreover, many cost-control initiatives have encouraged providers to discriminate against less profitable patients and increase their focus on fiscal rather than clinical goals.

The most prevalent approach to containing costs has been patient "cost sharing." Financial barriers have serious quality-impairing potential unless they are adjusted to patients' need for care and ability to pay .91,92 It is impossible to erect a barrier high enough to discourage unnecessary care, low enough that needed care is not deterred, and simultaneously adjusted to a patient's discretionary income. Donabedian91 argues that "even if such adjustments were made, financial barriers would remain too blunt an instrument for assuring a precise calibration of care to need." The RAND Health Insurance experiment confirmed this, finding that "changing economic incentives can alter the amount of care consumed, but implementing such incentives appears to increase or decrease proportionately both appropriate and inappropriate use."46


Private insurers and employers have regularly sought cheaper care and to avoid paying beneficiaries' bills, but have rarely advocated better-quality care for patients.93 Health reformers in the United States should heed lessons learned in other industries. An obsession with cutting costs rather than with quality leads to both suboptimal quality and higher costs. Systems based on trust and common purpose achieve far more than those based on barriers and competition. In addition, solutions that tamper with a system, increasing complexity, are inferior to those that simplify the way a job is done.52

Health-financing reform provides a pivotal opportunity to improve the quality of health care. We believe that a single-payer national health program provides the most effective framework for implementing the quality-enhancing principles discussed above.

A managed competition strategy, such as that proposed by the Clinton administration and debated in Congress, while designed to provide universal access, has not demonstrated an ability to contain cost and creates a complex structure with separate and unequal multitiered care. Eschewing the easily enforceable budgetary constraints of the single-payer approach necessitates reliance on potentially damaging financial incentives, wasteful micromanagement, and complicated budgetary regulation to minimize spending. Accountability, achievable only if patients are maximally empowered and involved, is structurally nurtured by an open and publicly controlled funding process and impeded under managed competition by multiple intermediaries between providers and patients. Effective implementation of computers in clinical medicine would be retarded by pecuniary interests favoring proprietary data and incompatible software formats and enhanced by public development, ownership, and standards. Global budgeting facilitates directing national resources based on the needs derived from these epidemiologic data, whereas competition ensures that resource allocation will depend on profitability.

No amount of regulation and oversight can breathe quality into a system that is not based on caring professionals working for patients.26 There is little empirical evidence that report cards and regulatory constraints can reliably separate "good" from "bad" care. The technical capabilities of such measures are too imprecise, and incentives for gaming are too great (New York Times. March 31, 1994:A1, A11).66, 79, 94 Such measures encourage mindless efforts to meet concrete, but in many cases tangential, criteria while emphasizing sanctions and policing, which run counter to the CQI principles that empower workers to think innovatively about processes. Regulation cannot revitalize a system controlled by financial institutions driven by fiscal incentives that reward both efficiency and fraud, quality care as well as neglect of patients' problems. More regulatory and administrative 'overhead does mean less time and resources for patient care.

A single-payer system is not a panacea for resolving these problems. What it does offer is a framework for collectively engaging these issues in a fair, cohesive, and effective fashion. The 10 principles outlined above, while neither a detailed blueprint of how a US single-payer system would work nor a point-by-point critique of alternate reform proposals, suggest that important opportunities to improve quality would be compromised were the United States to settle for a managed competition approach.

Rather than being a code word for the status quo, quality must become a pivotal guide for change. A unified system emphasizing cooperation, democratic accountability, and explicit planning is preferable to a fragmented approach with accountability abdicated to success or failure in the market and planning forsaken in favor of resource allocation based on profitability. Only this preferred approach to system redesign can lead us to a qualitatively better system, one that instills a sense of ownership and pride in its patients and providers.

We thank Ann McKinnon for editing assistance. The 18 members of the working group that drafted this report were as follows: Dr Schiff (chair), Dr Bindman, Thomas Bodenheimer, MD, MPH, Dr Brennan, Carolyn Clancy, MD, Oliver Fein, MD, Ida Hellander, MD, David U. Himmelstein, MD, Linda R. Murray, MD, MPH, T. Donald Rucker, PhD, Ron Sable, MD (deceased), Jeffrey Scavorn, MD, Ronald Shansky, MD, Ellen Shaffer, MPH, David Slobodkin, MD, MPH, Steve Tarzynski, MD, MPH, Steffie Woolhandler,MD, MPH, and Quentin D. Young, MD.


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