The United States spends more than twice as much on health care as the average of other developed nations, all of which boast universal coverage. Yet over 39 million Americans have no health insurance whatsoever, and most others are underinsured, in the sense that they lack adequate coverage for all contingencies (e.g., long-term care and prescription drug costs).
Why is the U. S. so different? The short answer is that we alone treat health care as a commodity distributed according to the ability to pay, rather than as a social service to be distributed according to medical need. In our market-driven system, investor-owned firms compete not so much by increasing quality or lowering costs, but by avoiding unprofitable patients and shifting costs back to patients or to other payers. This creates the paradox of a health care system based on avoiding the sick. It generates huge administrative costs, which, along with profits, divert resources from clinical care to the demands of business. In addition, burgeoning satellite businesses, such as consulting firms and marketing companies, consume an increasing fraction of the health care dollar.
We endorse a fundamental change in America’s health care – the creation of a comprehensive National Health Insurance (NHI) Program. Such a program – which in essence would be an expanded and improved version of Medicare – would cover every American for all necessary medical care. Most hospitals and clinics would remain privately owned and operated, receiving a budget from the NHI to cover all operating costs. Investor-owned facilities would be converted to not-for-profit status, and their former owners compensated for past investments. Physicians could continue to practice on a fee-for-service basis, or receive salaries from group practices, hospitals or clinics.
A National Health Insurance Program would save at least $150 billion annually by eliminating the high overhead and profits of the private, investor-owned insurance industry and reducing spending for marketing and other satellite services. Doctors and hospitals would be freed from the concomitant burdens and expenses of paperwork created by having to deal with multiple insurers with different rules – often rules designed to avoid payment. During the transition to an NHI, the savings on administration and profits would fully offset the costs of expanded and improved coverage. NHI would make it possible to set and enforce overall spending limits for the health care system, slowing cost growth over the long run.
A National Health Insurance Program is the only affordable option for universal, comprehensive coverage. Under the current system, expanding access to health care inevitably means increasing costs, and reducing costs inevitably means limiting access. But an NHI could both expand access and reduce costs. It would squeeze out bureaucratic waste and eliminate the perverse incentives that threaten the quality of care and the ethical foundations of medicine.
What is Single Payer?
Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or “payer.” In the case of health care, a single-payer system would be setup such that one entity—a government run organization—would collect all health care fees, and pay out all health care costs. In the current US system, there are literally tens of thousands of different health care organizations—HMOs, billing agencies, etc. By having so many different payers of health care fees, there is an enormous amount of administrative waste generated in the system. (Just imagine how complex billing must be in a doctor’s office, when each insurance company requires a different form to be completed, has a different billing system, different billing contacts and phone numbers—it’s very confusing.) In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services. This alone reduces administrative waste greatly, and saves money, which can be used to provide care and insurance to those who currently don’t have it.
Access and Benefits
All Americans would receive comprehensive medical benefits under single payer. Coverage would include all medically necessary services, including rehabilitative, long-term, and home care; mental health care, prescription drugs, and medical supplies; and preventive and public health measures.
Care would be based on need, not on ability to pay.
Hospital billing would be virtually eliminated. Instead, hospitals would receive an annual lump-sum payment from the government to cover operating expenses—a “global budget.” A separate budget would cover such expenses as hospital expansion, the purchase of technology, marketing, etc.
Doctors would have three options for payment: fee-for-service, salaried positions in hospitals, and salaried positions within group practices or HMOs. Fees would be negotiated between a representative of the fee-for-service practitioners (such as the state medical society) and a state payment board. In most cases, government would serve as administrator, not employer.
The program would be federally financed and administered by a single public insurer at the state or regional level. Premiums, copayments, and deductibles would be eliminated. Employers would pay a 7.0 percent payroll tax and employees would pay 2.0 percent, essentially converting premium payments to a health care payroll tax. 90 to 95 percent of people would pay less overall for health care. Financing includes a $2 per pack cigarette tax.
The General Accounting Office projects an administrative savings of 10 percent through the elimination of private insurance bills and administrative waste, or $150 billion in 2002. This savings would pay for providing medical care to those currently underserved.
The Congressional Budget Office projects that single payer would reduce overall health costs by $225 billion by 2004 despite the expansion of comprehensive care to all Americans. No other plan projects this kind of savings.
Different Perspectives on the Benefits of Single-Payer
Each person, regardless of ability to pay would receive high-quality, comprehensive medical care, and the free choice of doctors and hospitals. Individuals would receive no bills, and copayment and deductibles would be eliminated. Most people would pay less overall for health care than they pay now.
Doctors’ incomes would change little, though the disparity in income between specialties would shrink. The need for a “wallet biopsy” before treatment would be eliminated; time currently wasted on administrative duties could be channeled into providing care; and clinical decisions would no longer be dictated by insurance company policy.
Medical endorsements include PNHP (18,000), the American Public Health Association (30,000), American Association of Community Psychiatrists, Massachusetts Academy of Family Practice, American Medical Women’s Association (13,500), Alameda-Contra Costa Medical Society, American Medical Student’s Association, D.C. Medical Society, National Medical Association (6,500), American College of Physicians (Illinois Chapter), Long Island Dermatological Society, Islamic Medical Association, National Nurses United (160,000), American Nurses Association, and the D.C. chapter of the American Medical Association.
The massive numbers of administrative personnel needed to handle itemized billing to 1,500 private insurance companies would no longer be needed. A negotiated “global budget” would cover operating expenses. Budgets for capital would be allocated separately based on health care priorities. Hospitals would no longer close because of unpaid bills.
The need for private insurance would be eliminated. One single payer bill currently in the House (H.R. 1200) would provide one percent of funding for retraining displaced insurance workers during its first few years of implementation.
In general, businesses would see Single Payer limit their health costs and remove the burden of administering health insurance for their employees.
Single payer would be the simplest and most efficient health care plan that Congress could implement.