By Alec Pruchnicki, MD
The debate over the possibility and advisability of a single payer healthcare system often comes down to whether it is politically possible. (See the February 2016 issue of WestView and this current issue for multiple articles.) Its advocates, including this writer, are attempting to nationalize half of a three trillion dollar industry. This might appear impossible but a plan to do so appeared in the March 2014 issue of WestView (“Universal Healthcare: A Modest Proposal”), and it’s time for an update.
According to U.S. News and World Report, the ten largest healthcare insurance companies account for about 50% of the total healthcare market. A simple internet search indicates that these companies have a combined market capitalization, the total value of all their stocks, of about $220 billion. Extrapolating that to the entire healthcare market would give a market cap of about $440 billion. Corporate buyouts occur in the private marketplace, including healthcare, with insurers, hospitals, and medical practices which sell out, take a quick up front payment, and turn over their operation to the buyer. Since these buyouts are often in the range of about 10-25% of the market cap, $500 billion would buy out the entire healthcare insurance industry with about 15% over the stocks’ value. Non-profit insurers, which don’t have stock values, might not need a buyout since they can simply change from insurer/provider to just plain provider, as many previously were.
No individual or institutional investors would lose money. In fact, they would make a good, immediate profit, and the bought out companies could either convert to another business model, or just distribute the funds to stock holders, take the money, and close up. Although extended unemployment benefits and retraining for those who lose their jobs would be required, the loss of healthcare insurance costs would tremendously benefit every other major and minor company in the country. Presumptively, this money wouldn’t disappear but would be reinvested throughout the entire economy; these companies’ expansion would more than make up for job losses within the insurance industry.
Where would this money come from? It could derive from general deficit spending (like the bank bailout that cost $1.5 trillion) or increased taxes on the corporations that benefit from having healthcare costs taken off their backs. In any case, savings to the system would pay for this cost quickly. All providers (doctors, hospitals, nursing homes, etc.) would have major savings in administrative costs when dealing with one insurance payer instead of hundreds. A minimal decrease of 5-10% would save the entire system $150-$300 billion per year. And, if our system ever became as efficient as the European ones, we would save about 30%, equivalent to almost one trillion dollars a year, every year.
Is this politically possible? For this to work, the insurance companies who would benefit greatly from this proposal would have to unleash their army of lobbyists on Congress, grab their representatives by the collars, and shout in their ears “We want that money!” They’ve been able to stop reform in the past, so maybe now they can actually help it, if the price is right. We know from the bank bailouts that right-wing laissez faire ideology disappears when the price is right. At a half trillion dollars, the price is right.