Most people assume that universal health care will save money. They may be right. May be. Canada, France, Germany, Great Britain, Japan, and Taiwan all have universal health care systems that cost 6-10% of their GDP. The US healthcare system consumes over 15% of our GDP, rising with no end in sight. How might universal health care, single-payer system save money here?
There are basically four ways: each is a form of simplification. Complexity is very expensive - in time, people, resources, and opportunity costs.
Downsizing Bureaucracy
Taiwan spends 2% of their healthcare budget on administration. In the USA, middlemen, red tape, bureaucracy and other non-value adding steps consume roughly 30% of our healthcare dollars. Simplification means drastically reducing the bureaucracy, which translates to downsizing insurance agents, billing clerks, accountants, reconcilers, utilization review officers, compliance monitors, healthcare consultants, etc.
Information Sharing
Walker and colleagues have calculated that a national health information system could save over $75 billion per year. [It would also dramatically improve medical outcomes.] With appropriate information sharing, costs would go down because: 1) Errors and adverse impacts would decrease; 2) Redundancy would be virtually eliminated; and 3) Time wastage - for both patients and providers - would be a thing of the past.
Cost-saving information sharing requires easy access to medical data by appropriate individuals, which would necessitate tearing down all the legal and regulatory barriers to effective information sharing, whether erected in the name of personal security or social agendas.
Tort Reform
In addition to downsizing and information sharing, a third way that other countries reduce costs is by eliminating the practice of defensive medicine. To do that here would require, amongst other changes, scrapping the entire US tort adversary system for medical negligence. (See "Debunking the bad apple.") Even if you are ready for this (and I certainly am), how would the Trial Lawyers Association respond?
Central Planning
All countries with universal health care systems use central planning to control costs. They either limit the services offered or the payments to providers or both. Controlling services is effectively rationing health care, such as age limits on kidney dialysis, joint replacements, or open-heart surgery. Are you prepared to have your mother rejected for a life-saving bypass operation or forced into a wheelchair for lack of a hip replacement, because she is over a certain age?
In Japan and Israel, doctors are paid less than auto factory workers. In this country, a pediatrician gets paid less than the man who delivers the Enfamil. If the market determines value, then apparently health care providers have very little value in these countries.
Healthier Populace
Some countries like Great Britain with their National Health Service (NHS) are trying to control costs by improving general health, viz., reducing cigarette smoking and obesity. Unfortunately, they are doing this in an established culture that feels it is entitled without limits. NHS attempts have been met with great resistance. In the US, we also say we promote good health by legally restricting smoking and yet we still subsidize tobacco farming.
Bottom line:
Universal health care funded through some form of a single payer-type system could save huge sums of money if and only if:
•The new system is uncharacteristically simple, not overlaid with complexities, extraneous issues and separate agendas;
•We are willing to give pink slips to tens of thousands of US workers;
•We implement an effective national health information sharing system;
•We scrap the present medical negligence tort system and create something that actually works;
•We accept some form of care rationing; and,
•We are prepared for a powerful backlash from numerous special interests.
I am ready to accept all the necessary consequences in order to have true universal health care. Are you?
