Neuron Culture

Single-payer and the cost game

Having written the below as a comment on my previous post , I realized it should perhaps be its own post.

My previous post drew notice to Malcolm Gladwell’s recent article and blog posts about the competitive disadvantage our employer-based health-insurance system (and retirement system) inflicts on many American industries. Only hours passed before a commenter offered the (well-worn) argument that providing the obvious solution to this problem — a national single-payer system providing universal health care — “would be disastrous …[if done] before tackling the cost issue.”

This “but what about the costs?” argument against single-payer is a canard, and ignores that our system is already a disaster when it comes to costs. We will need to address costs as part of a single-payer system, but it seems unfair to ask that we do so ONLY if (and before) we move to such a system; the insistence implies that costs are only a problem in a universal plan and not today’s “system.” Yet rising costs are just as ruinous in the present system as in a single-payer system. They drive up premiums every year, making it ever more painful for companies and individuals to buy adequate coverage and preventing others from getting any. And our private-insurance system clearly rots at curbing costs. If it’s so good at controlling them, why do we spend almost twice as much per capita as otherwise similar countries (France, Germany, Canada, the UK) with single-payer universal care and better health outcomes?

Abateknife.jpg

The skilled blade of Dr. Joseph Abate, Burlington, Vermont, cleaning up my knee cartilage last month. My insurance (which cost me dearly) covered this procedure, but only because I’d already exhausted my $5000 deductible (paying out $5000 cash on top of the $8000 in premiums my family pays for the $5K deductible plan) undergoing a different (nonelective, very painful) operation earlier in the year. ___________________________________________________________

Some single-payer skeptics worry about costs because, well, we need to worry about costs. But others, I think, love to raise the “what about costs?” question because it gives them an unfair advantage. As a rhetorical point, insisting that single-payer advocates solve the cost problem puts them uniquely on the spot for answering tough questions about what gets covered — and in doing, so, ignores that our present system is already answering these problems, silently and badly, in the way we spend our health-care money.

It ignores, for starters, that we spend some 25% — that would be about $500,000,000 — on insurance operating costs; Medicare spends less than 5%. It also ignores that our have v. have-not approach, in which the insured get almost anything and the uninsured almost nothing, already makes gruesomely unjust decisions about which costs are most important. Should we spend huge percentages of our total health-care spending on the last few days of people who stand little chance of surviving — while many sick people can’t even see a doctor? Should cleaning up my knee cartilage so I can play baseball on weekends be a more important cost to cover than examining an uninsured person’s mole or a funny lump early enough to detect and treat their cancer?

Most of us would say no to either question. Our present system says yea to both. We spend vast sums on the last 2 days of death while ignoring millions of illnesses and injuries that simple care could make better. And we apparently think it makes sense to fix my knee (if I happen to be insured, which I am, on my own dime — many, many dimes) than it does to examine the lump of someone who’s uninsured and forgoes examination till the lump grows large. Somewhere, while I play baseball this weekend, grows a detectable but unexamined melanoma that will kill its uninsured host.

We can make a healthy start — and save hundreds of billions — by nationalizing not health care but health insurance. (Opponents of single-payer love to call it “nationalized health care” or “socialized medicine.” But single-payer doesn’t nationalize or socialize the care, which would be provided by the same mix of providers we have now. It simly rationalizes the insurance coverage.) People love to come up with nightmare implications for single-payer, but in essence it’s MediCare extended to everyone. Medicare’s poorer cousin, Medicaid, of course, is a troubled program, as Congress seldom hesitates to short the poor and because Medicaid relies heavily on funding by cash-strapped states. But Medicare is (the new prescription drug plan aside) a success, ensuring that our elderly get most of the medical care they need from the providers and hospitals they want. Want a model of how a single-payer system could work in the U.S.? We already have one. It’s called Medicare.

The California plan that just passed the legislature proposes something along these lines. Another, national proposal, HR 676, simply Medicare to cover everyone. And the Physicians for a National Health Care Plan have proposed another single-payer system model

The solutions are out there. What lacks is the leadership.

Comments

  1. #1 Kelly
    August 29, 2006

    I’ve sat along side a few deathbeds and I don’t think we can hope to save much on end of life care. We will only rarely know that we’re at the last few days. Are there any stats on how well doctors can forecast our last few days? I only have anecdotes of friends and relatives. A few went faster than the doctors expected but most lasted longer. Perhaps they shaded the date a bit closer to help us make the best of the time that’s left, which seems honerable.

  2. #2 quitter
    August 29, 2006

    I agree. But it’s also worth mentioning that beyond paying more per capita in healthcare we are also receiving poorer quality of care. We are ranked by WHO almost last among industrialized nations for access to care, infant mortality, etc., and we still are paying more than any other country for this low quality of care. I think that’s the death of the private enterprise argument right there.

    The debate is over. Our private system is a failure.

  3. #3 Mike Renzulli
    August 29, 2006

    While I realize that our Medicare and Medicaid programs are socialized, single-payer systems, you need only look to them to see how screwed up our healthcare system is due to the numerous ways government screws up our healthcare. What it really comes down to is this: the reason why US healthcare is so expensive isn’t due to the fact that it is privately run, its because the healthcare market is tightly regulated. I believe under current US law, hosptials cannot turn away someone who shows up at an Emergency Room for care. If they have health insurance, they still get care so to make up the loss of funds, the hosptials raise the prices of the services they provide. Get government out of the business of running or managing healthcare and then people can have access to low cost, good quality care. Its wrong to force others to pay for someone else’s care.

  4. #4 quitter
    August 29, 2006

    That has to be about the most uninformed comment on healthcare I’ve seen in a long time. I take it you don’t work in a hospital? Not a doctor? Probably don’t know any either?

    The reason uninsured people are not turned away from hospitals isn’t just because it’s illegal, it’s because it’s also against the medical code of ethics, and it should be obvious to anyone that it would be immoral to deny care to someone in an emergency because they don’t have insurance. That you suggest that that is a problem of the system is really frightening, not only due to the absence of knowledge of where health care costs really come from, but because it demonstrates the absence of a moral compass.

    In terms of your lack of knowledge as to where costs are being generated in the medical care system, I’ll tell you, it’s not in emergency room visits. It’s in ICUs, in end-of-life care, in exponentially increasing prescription drug costs (largely caused by DTC advertising).

    Further, Medicare and Medicaid operate on a shoestring budget compared to private insurance companies overhead (and your use of single-payer terminology is misapplied). Administration of these benefits costs a fraction of the administration of private insurance.

    Finally your argument loses empirically. Countries with single-payer or socialized medical systems provide better health care for less money. It’s in the literature now here’s a lay article). Americans are ranked last among industrialized nations for the quality of our medical care, we’re even falling behind in quality of care in comparisons between equivalent wealthy populations in Britain or Canada, and yet we spend more money per capita than any other country. This is just stupid, we spend more money for less, and poorer-quality care.

    Talk about kneejerk libertarianism. Yuck.

  5. #5 Richard
    August 31, 2006

    People who urge that government get out of healthcare forget why government became involved in the first place. We had totally private health care before; it sucked. Why would we want to go back to a system that was even worse than the one we have now? As an American now living in Canada, I’ll take the single-payer system any day. It ain’t perfect, but it’s far more just, equitable, and efficient than the private, corporate model in the U.S. Doctors are still their own bosses and have private practices, but the bills get paid by the government and everyone is insured. Everyone. I can’t tell you what a relief it is to not have the dark cloud of ruinous medical expenses hanging over me.

  6. #6 bigTom
    September 8, 2006

    I’m the guy who raised the cost isuue. I hadn’t meant that cost is only a problem for universal versus out current system. It’s a huge and growing problem for all.
    It would be nice to get some numbers, I had a discussion about illegal immigrants, my interlocuter implied the cost problem was the illegals -and maybe legal cost’s. Given rough percentages of population I said it’s not likely more than 20% , and the ratio (of costs) is much
    higher than that. Does anyone have data on where the actual costs are.
    For want of data I’ll venture some crude guesses -hopefully to be replaced by real numbers.
    Care for non citizens – 10%
    Legal cost (including unneccesary defensive medicine) – 5%
    Insurance overhead – 25%
    excessive drug profits – 10%
    excessive end of live care – I’m the guy who raised the cost isuue. I hadn’t meant that cost is only a problem for universal versus out current system. It’s a huge and growing problem for all.
    It would be nice to get some numbers, I had a discussion about illegal immigrants, my interlocuter implied the cost problem was the illegals -and maybe legal cost’s. Given rough percentages of population I said it’s not likely more than 20% , and the ratio (of costs) is much
    higher than that. Does anyone have data on where the actual costs are.
    For want of data I’ll venture some crude guesses -hopefully to be replaced by real numbers.
    Care for non citizens – 10%
    Legal cost (including unneccesary defensive medicine) – 5%
    Insurance overhead – 25%
    excessive drug profits – 10%
    excessive end of live care – <5%
    If we can get REAL data about the sizes of the various factors, we can at least have a rational debate about solutions.

  7. #7 MikeM
    September 16, 2006

    I live in Australia where everyone is covered by the government Medicare system, but optional private medical insurance is a available to bypass – to a limited extent – the rationed free care that applies to elective surgery.

    The system costs far less as a proportion of GDP than the US system, average life expectancy is higher and child mortality is lower than in the US (although in both countries the determining feature is a long tail of very poor people).

    Paul Krugman frequently writes in The New York Times on health care. In a column earlier this month he wrote:

    Let me tell you about two government-financed health care programs. One, the Veterans Health Administration, is a stunning success — but the administration and Republicans in Congress refuse to build on that success, because it doesn’t fit their conservative agenda. The other, Medicare Advantage, is a clear failure, but it’s expanding rapidly thanks to large subsidies the administration rammed through Congress in 2003.

    I’ve written about the V.A. before; it was the subject of a recent informative article in Time. Some still think of the V.A. as a decrepit institution, which it was in the Reagan and Bush I years. But thanks to reforms begun under Bill Clinton, it’s now providing remarkably high-quality health care at remarkably low cost.

    The key to the V.A.’s success is its long-term relationship with its clients: veterans, once in the V.A. system, normally stay in it for life.

    This means that the V.A. can easily keep track of a patient’s medical history, allowing it to make much better use of information technology than other health care providers. Unlike all but a few doctors in the private sector, V.A. doctors have instant access to patients’ medical records via a systemwide network, which reduces both costs and medical errors.

    The long-term relationship with patients also lets the V.A. save money by investing heavily in preventive medicine, an area in which the private sector — which makes money by treating the sick, not by keeping people healthy — has shown little interest.

    The result is a system that achieves higher customer satisfaction than the private sector, higher quality of care by a number of measures and lower mortality rates — at much lower cost per patient. Not surprisingly, hundreds of thousands of veterans have switched from private physicians to the V.A. The commander of the American Legion has proposed letting elderly vets spend their Medicare benefits at V.A. facilities, which would lead to better medical care and large government savings.

    Instead, the Bush administration has restricted access to the V.A. system, limiting it to poor vets or those with service-related injuries. And as for allowing elderly vets to get better, cheaper health care: ”Conservatives,” writes Time, ”fear such an arrangement would be a Trojan horse, setting up an even larger national health-care program and taking more business from the private sector.”

    Think about that: they won’t let vets on Medicare buy into the V.A. system, not because they believe this policy initiative would fail, but because they’re afraid it would succeed.

    Meanwhile, the Bush administration is pursuing a failed idea from the 1990’s: channeling Medicare recipients into private H.M.O.’s. The theory was that H.M.O.’s, by bringing private-sector efficiency and the magic of the marketplace to health care, would be able to do what the V.A. has achieved in practice: provide better care at lower cost.

    But the theory was wrong. Years of experience show that H.M.O.’s actually have substantially higher costs per patient than conventional Medicare, because they add an expensive extra layer of bureaucracy and also spend heavily on marketing. H.M.O.’s for Medicare recipients prospered for a while by selectively covering relatively healthy older Americans, but when the government began paying less for those likely to have low medical costs, many H.M.O.’s dropped out of the Medicare market.

    In 2003, however, the Bush administration pushed through the Medicare Advantage program, which offers heavy subsidies to H.M.O.’s. According to the independent Medicare Payment Advisory Commission, Medicare Advantage plans cost the government 11 percent more per person than traditional Medicare. Oh, and mortality rates in these plans are 40 percent higher than those of elderly veterans covered by the V.A. But thanks to the subsidy, membership in Medicare Advantage plans is surging.

    On one side, then, the administration and its allies in Congress oppose expanding the best health care system in America, even though that expansion would save taxpayer dollars, because they’re afraid that allowing a successful government program to expand would undermine their antigovernment crusade and displease powerful business lobbies.

    On the other side, ideology and fealty to interest groups make them willing to waste billions subsidizing private H.M.O.’s.

    Remember that contrast the next time you hear some conservative going on about excessive spending on entitlements, and declaring that we need to cut back on Medicare and Medicaid benefits.

    Is Krugman right about this?

  8. #8 David Dobbs
    September 18, 2006

    MikeM — I’ve never researched the V.A.’s care in depth, but Krugman’s column matches what I do know and have been told by people who’ve worked there. The V.A. tends to practice more preventive medicine, be less fond of expensive procedures, and — quite important to quality control and doctor’s training — do more autopsies. Those things alone would tend to raise the quality of health care while reducing cost. The long-term relations between doctors and patients would as well.

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