A common myth among opponents of single-payer national health insurance (NHI) is that it would cost too much and break the bank. This belief is based in part upon an assumption that patients would overuse health care if they gained access to it without any cost-sharing when they seek care. Cost-sharing has been a lynchpin of consumer-directed health care (CDHC) since the early 1990s, which assumes that patients who have more "skin in the game" -- through deductibles, co-payments, and other out-of-pocket costs -- will make more prudent decisions about their own health care. But that policy and assumption have been discredited by actual experience over the last 25 years. In fact, the more cost-sharing is imposed on patients with higher deductibles, co-payments and out-of-pocket costs, the more they underuse care by delaying or avoiding necessary care. (1) Moreover, when Canada shifted over to its single-payer financing system in the 1970s, there was only about a 5 percent increase in their use of health care, mostly for necessary care that had been delayed or forgone. (2)
We have to face some inconvenient facts about what we are already spending--and wasting--in our current health care system, six years after enactment of the Affordable Care Act (ACA)--a misnomer given the following facts:
- The ACA continues high cost-sharing in many of its plans and has failed to control costs or prices to the point that one in three Americans cannot afford necessary health care. (3)
- There is rampant profiteering and waste in the ACA, as illustrated by these two examples: the administrative overhead in the growing market of private Medicare plans is six times that of traditional Medicare (4), and private insurers have been gaming the ACA's risk-coding program, under which they are paid more by overstating the health risks of older and sicker enrollees. (5)
- We pay2.1 trillion in taxes to fund health care in this country,6,560 per person, more per capita than in Canada or any other nation. The costs to our government in paying for private health coverage (28 percent of all health spending) and tax subsidies for private employer-sponsored plans and other privately paid care (326 billion in 2015), indicate that we are already paying, as taxpayers, almost two-thirds of total health care costs in the country. That would be enough to provide universal access to health care for all Americans if it were to be re-directed from the inefficiencies and waste of private insurers to patient care in a simplified national single-payer financing system coupled with a private delivery system. (6)
- The landmark 2013 study by Gerald Friedman, professor of economics at the University of Massachusetts, finds that NHI, when enacted, will save592 billion a year by cutting administrative waste of private insurers (476 billion) and reducing pharmaceutical prices to European levels (116 billion). (7)
- Professor Friedman's ten-year projection for funding H. R. 676, the single-payer Medicare for All bill in the House, estimates that9.6 trillion will be saved from administrative economies, lower pharmaceutical prices, and lowered rate of medical inflation, that19.7 trillion will be saved on private insurance premiums, reduced out-of-pocket spending, and other private health spending, that17.5 trillion will be raised from the financial transactions tax, the high-income surtax, and the payroll taxes, and that the deficit will be cut by2.8 trillion. (8)
- With the ACA, the government is paying more than1 trillion in subsidies to private insurers between 2015 and 2024 (9), even though 29 million people are still uninsured and tens of millions underinsured, and there is still no cost containment is in sight.
Critics of single-payer NHI fail to recognize that it would actually save money, even while providing universal coverage for our entire population for comprehensive health benefits, including inpatient and outpatient care, prescription drugs, dental care, mental health services, and long-term care. NHI will be funded by a progressive tax system based in large part on payroll taxes, whereby 95 percent of Americans will pay less than they do now for their insurance premiums, deductibles, co-payments, actual care, and out-of-pocket payments. People with annual incomes of $50,000 would pay $1,500 in payroll taxes, $6,000 for those with incomes of $100,000, and $12,000 for those with incomes of $200,000. (10)
Opponents of NHI use disinformation and distortion of its costs in the everyday debate over health care, especially during this election season. Reports of other studies ignore the savings that Friedman has projected, such as that by Kenneth Thorpe, economist at Emory University, who underestimates administrative savings with single-payer and ignores other savings, such as elimination of subsidies and savings on drugs and medical equipment. (11) Seemingly unaware of these savings, Hillary Clinton, as the Democratic presidential candidate, without apparent concern for the growing costs and unaffordability of care, restricted access, and flight of large insurers from the exchanges, contends that it would put a heavy tax burden on the middle class and still does not support NHI (although in 1994, in the absence of health care reform, she called it inevitable by 2000!) (12)
The costs of health insurance and health care are now exceeding $25,000 for a family of four with employer-sponsored PPO coverage, making the costs of care less affordable all the time. Continuing the ACA or repealing/replacing it with a Republican "plan" will only make matters worse. We have to recognize that private insurers are gaming the system to their advantage and holding us up for more generous bailouts as they exit the ACA's exchanges in droves. We can no longer afford their greed and wasteful bureaucracy. As access to care is further restricted by their higher premiums and narrower networks, we can only expect growing political backlash across the political spectrum.
John Geyman, M.D. is the author of The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans
visit: http://www.johngeymanmd.org
References:
1. Davis, K, Schoen, C, Stremikis, MPP. Mirror, Mirror on the Wall: How the Performance of the U. S. Health System Compares Internationally. New York. The Commonwealth Fund, 2010 update.
http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror
2. Armstrong, P, Armstrong, H, Fegan, C. Universal Health Care: What the United States Can Learn from the Canadian Experience. New York. The New Press, 1998, 131-132.
https://www.amazon.com/Universal-Health-Care-Canadian-Experience/dp/1565845153
3. Pollitz, K, Cox. C, Lucia, L et al. Medical debt among people with health insurance. Kaiser Family Foundation, January 2014.
http://kff.org/report-section/the-burden-of-medical-debt-section-1-who-has-medical-bill-problems-and-what-are-the-contributing-factors/
4. Woolhandler, S, Himmelstein, DU. Single-payer health plan wouldn't cost U. S. more. Philadelphia Inquirer, February 5, 2016.
http://articles.philly.com/2016-02-06/news/70376862_1_health-spending-health-care-single-payer
5. Potter, W. Health insurers working the system to pad their profits. Center for Public Integrity. August 15, 2015.
https://www.publicintegrity.org/2015/08/17/17863/health-insurers-working-system-pad-their-profits
6. Ibid # 4.
7. Friedman, G. Funding H. R. 676: The Expanded and Improved Medicare for All Act. How We Can Afford a National Single-Payer Health Plan. Physicians for a National Health Program. Chicago, IL. July 31, 2013. Available at: htpp:.//www.pnhp.org/sites/default/files/Funding%20HR%/20676_Friedman_final_7.31.13.pdf
8. Friedman, G. An open letter to the Wall Street Journal on its Bernie Sanders hit piece. September 15, 2015.
http://www.huffingtonpost.com/gerald-friedman/the-wall-street-journal-k_b_8143062.html
9. Congressional Budget Office. Insurance Coverage Provisions of the Affordable Care Act. Washington, D.C., April 2014.
https://www.cbo.gov/publication/43472
10. Ibid # 7.
11. Himmelstein, DU, Woolhandler, S. On Kenneth Thorpe's analysis of Senator Sanders' single-payer reform plan. The Huffington Post, January 29, 2016.
http://www.huffingtonpost.com/david-himmelstein/kenneth-thorpe-bernie-sanders-single-payer_b_9113192.html
12. Clinton, H, speaking to a group at Lehman Brothers Health Corporation, June 15, 1994. As reported by Health Care for All-WA Newsletter, Winter, 2015, p. 9.
http://pnhp.org/blog/2016/06/03/hillarys-public-option-proposal-could-it-work/