The United States is the only nation in the industrialized world without a universal health care system. The oldest universal health care system is in Germany, which had its inception in 1883 under Chancellor Otto von Bismarck.
Let’s lay an important ground rule before we begin. Traditional insurance policies cover unexpected but predictable occurrences. For example, an auto policy covers an unexpected collision. But that policy does not cover maintenance costs which are a normal part of owning a vehicle. Health insurance has become maintenance insurance over the years, paying for everything from regular checkups and tooth cleaning to heart transplants. And, with some group insurance copays at $5 to $20, the concept of deductibles is becoming archaic.
So, in considering a single-payer cradle-to-grave government healthcare system, the old concepts of insurance and risk must be put aside. Single-payer healthcare is NOT INSURANCE in the strictest sense. It is a massive Social Security-type program, into which tax revenues flow and from which health care payments flow out to health care providers.
This article does not advocate a single-payer government-run healthcare system. But it does look at what a single-payer system might look like, and reasons why it will not work.
In December 2008 The McKinsey Global Institute issued an exhaustive 122-page report on health care costs in America, entitled “Accounting for the costs of US healthcare: A new look at why Americans spend more.” The best estimate of American healthcare costs is about $2.1 trillion annually.
Here is a summary list of its findings:
1. Administration costs in the US are much higher than in most countries around the world. This partly due to the privatization of some health care, resulting in profits for shareholders.
2. Pharmaceutical costs: Direct-To-Consumer Advertising encourages use of newer, more expensive drugs, a practice only allowed in the USA. Also, pharmaceutical lobbyists were successful in getting Congress to ban collective bargaining for Medicare Part D, resulting in the highest drug prices in the world. Also, the patent system for new drugs allows drug manufacturers to patent and charge more for non-novel medications.
3. The absence of a universal system that prevents risk-pooling, and the selective underwriting done by insurers. This leaves millions uninsured, and the uninsured avoid treatment until problems are more critical and more expensive.
4. Huge fees of specialist physicians for their procedural skills, rather than primary care that emphasizes preventive health care, early diagnosis and disease management.
5. Defensive medicine: Excess costs and duplication of health procedures in order to protect medical providers from malpractice lawsuits. Lawsuits and jury awards themselves don’t cause a large amount of monetary damage, but the tort system creates a culture in which physicians are paranoid and make health care decisions with lawsuits in mind, rather than patient interests first.
6. ICU Care: The costs of care at the end of life are wildly inflated, many times eclipsing the health care costs incurred in an entire lifetime. This is partly due to heroic efforts of lifesaving, pain management, and poor records.
7. Electronic Medical Records (EMR) systems would be of great benefit in managing living wills, advanced care directives and previous treatment records. Without EMRs, doctors regularly order redundant tests and procedures because medical information management is so inefficient.
The McKinsey report doesn’t recommend a universal healthcare single-payer system. It simply tries to provide accurate information to those who will be making policy regarding healthcare in the USA.
Here is what a universal healthcare system might look like. This takes the best characteristics from healthcare systems around the world.
1. Funding through individual taxation for wage earners and self employed persons. Low income persons subsidized. Should tax be based upon age? Should the tax be calculated as a percentage of income, like in the IRS Tax Tables and FICA payments?
2. Medicare, Medicaid, the VA healthcare system and all other Federal healthcare systems would be rolled into the universal system. That would include the healthcare benefits for Federal workers and members of Congress.
3. No individual underwriting. All living persons of US citizenship are covered. Non-citizens with taxable earnings could be taxed and covered.
4. No deductibles. Copay for any doctor visit of $5-$20.
5. Prevention-based health care at the General Practitioner level. Compensation based upon health of the patients. Healthier patients, doctor makes more money.
6. Medical school 100% paid by government in exchange for 10 years service as a Federal employee. This would include additional training in medical specialties. Compensation levels could be set lower since there would be no school debt.
7. FedGov sets minimum standards for care. Insured persons are free to choose their own doctors. Patients can choose specialists without first seeing Primary Care Physician.
8. No insurance company precertifications necessary.
9. System includes mental health, nursing home and hospice care.
10. FedGov sets prices for pharmaceuticals, medical procedures and medical supplies. FedGov sets wages for all medical employees, including administrators, nurses, med techs and doctors.
11. Tort reform. If health care was universal from cradle to grave, torts would be limited since the patient would automatically be eligible for additional medical care required by malpractice, an unintended consequence of treatment or a medical complication. Doctors would still be liable for negligence, but awards would not need to compensate the individual plaintiff/patient for anticipated medical care into the future.
12. Electronic Medical Records, a database of all medical records for each patient, accessible by all medical providers. Would eliminate all duplication. Living wills and advance care directives would be part of every patient file. This has the potential to drastically reduce end-of life invasive care and duplication of procedures.
13. Individual health insurance policies would still be available for those that wanted a higher level of care, and would be excess insurance, like a Personal Umbrella policy.
14. Private medical providers, including doctors and hospitals, would still exist, offering custom care for those willing to pay extra for it.
I know this is a cursory look at universal healthcare. I know I’ve left out important features and benefits. But I’m trying to wrap my mind…and yours…around a concept that I fear is in our immediate future.
The big insurance companies have completely screwed up the health insurance marketplace in the United States. So, if they get left at the dock when this new ship sails, I won’t shed any tears. They get what they deserve.
Now, here is why I don’t think that the system outlined above will work.
1. The Federal Government is broke. They are already running trillion dollar annual deficits. In order to stave off governmental collapse, the Federal Reserve is printing paper money as fast as it can. Eventually, inflation will sink the ship of state. To absorb the healthcare system into the Federal Government which represents about one-seventh of the economy, is a bridge too far.
2. Funding this new healthcare system would require increasing taxes significantly. Insurance premiums would be turned into tax payments. There is presently an IRS business deduction for insurance premiums for corporations. The business lobbyists won’t want to give up this deduction and will fight it.
3. Pharmaceutical companies lobby Congress. They will fight any system that controls drug prices and threatens their profits.
4. Trial Lawyers have a powerful lobby in Congress. They will fight medical malpractice tort reform.
5. Medical providers, the American Medical Association and other medicine-related groups have powerful Congressional lobbyists. They will fight reforms, just like they do now.
6. Insurance companies will be forced out of business if the Federal Government takes over the healthcare system. Insurance companies hold trillions of dollars in US bonds and other municipal securities. They will threaten Congress with the collapse of the bond market if Congress passed a new system that leaves them out. All the insurance companies would have to do to crash the bond market and cause the collapse of the Federal Government is to sell off a small percentage of their bond holdings all at once.
In conclusion, I recommend looking at any Obama Administration proposal for universal healthcare in light of the competing groups in the medical field. Each group must be bought off for their cooperation, and in turn each one will buy off Congress to get what they want. Some things never change.
The single payer healthcare system that emerges from Capitol Hill, the system that will affect the healthcare of each American, should adopt as its logo the duckbilled platypus.
That’s the animal that looks like it was designed by a committee.