A Case For A Single Payer Healthcare System

Where do we take our healthcare from here? We have had free-market, ACA, government programs and uncovered citizens. We have a very patriotic dedication to our current system of care and an ideological leaning toward capitalistic medicine. Our aversion to government involvement shuts down alternatives as we quickly discount examples from other nations. To figure out what’s next we need to be open to an assessment of the current system and a consideration of alternatives absent preconceived judgements.

Are we really as well off as we think? Do we truly have choice, freedom of care? Are systems with heavy government involvement inherently flawed? To evaluate a system that may be better, we need to take an objective look at our current system and challenge some of our more closely held beliefs.

U.S. Healthcare vs others
Healthcare quality can be hard to judge. Outcomes are never guaranteed, diagnosis often comes to an inexact process of deduction, and the patient’s behavior can have as big an impact on treatment as the efficacy of the treatment itself. Looking at the United States in isolation to assess how good or bad the system is provides no benchmarks, no way to judge the potential upside or downside of alternate systems. To determine if the United States healthcare system is as good as it could be, we can look at international studies.

The primary arguments for maintaining the American healthcare system are

1) it is the best in the world
2) driven by market forces, it is the best way to drive innovation, reduce costs and improve service.

On both counts, the U.S. healthcare system falls behind other nations.

In the latest Commonwealth Fund study, the U.S. Ranks Last in the top 11 industrialized nations in healthcare for efficiency, access and equity. The U.S. did do well in the area of access to preventive care and patient centered care. Essentially, we get the attention we want from our healthcare providers but the outcomes are not improved as a result.(1)

Despite having the highest per capita spending on healthcare of over $9,040 in 2015(3) (45% higher than the next highest) the U.S. consistently falls behind other nations in outcomes.

2015 Infant mortality in the United States ranks about 38th in the world. Measured as deaths / 1000 births, the UN ranks us behind countries like Iceland, Norway, Sweden and other Northern European members. But, we are also lagging behind countries like Slovenia, Cuba, Malta, Croatia(5). The CIA projection for 2016 is no better, placing us 56th out of 225 countries(6).

Cancer survival rates in the U.S. vs 7 industrialized nations were on par. Where the U.S. excelled was in breast cancer and prostate cancer survival rates; these two cancers have extensive (non-profit promoted) early detection programs in the U.S., allowing for earlier intervention, increasing the chance of survival. In areas where we are not “promoting” early detection, like childhood leukemia, the survival rates are lower than other nations.(7) This indicates that our treatments are not superior, but our ‘marketing’ is.

The life expectancy in the U.S. is eighth in industrialized nations(3).

The U.S. has not been ranking well in the WHO as far back as 2000, the U.S. ranked 37 out of 100 countries.

Wait time perceptions
Often we hear wait times in other countries being cited as too long, because of universal healthcare systems, when compared to the United State. This too is a false perception. The U.S. has wait times just as other countries do.

Based on the 2013 Commonwealth Fund Survey, 26% of U.S. adults waited 6 or more days to see a doctor when they were sick or needed care. This is 8th out of 10, with Canada being 10th at 33% & Norway being 9th at 28%. In the 8 other countries surveyed, they ranged from 4% (UK) to 22%.

The metrics for wait times on specialist are tricky in that it was dependent on the area and specialty being sought. The U.S. generally did well with 78% of the respondents saying it took 4 weeks or less. Switzerland and the UK were better than the U.S., all others fell behind (Canada was the weakest at 39%.).

The reality is Americans are paying a significant amount more for healthcare and receiving less than people in other nations, with outcomes that are no better and often worse. Contrary to our excuses for the status quo, we are neither better nor more efficient.

The illusion of choice: The futility of consumer driven healthcare in the current system

The United States has experimented with Health Savings Accounts (HSAs) and High Deductible Insurance (HDI) as a way to invigorate the system with a new breed of buyers. With the elevated responsibility for costs, healthcare consumers would be more diligent about their care, shop for services and ultimately have market forces drive down costs. This did not work.

While there are many factors in the failure of HSAs to contain costs, not the least of them was the fallacy that consumers were able to negotiated and shop for service. With HDI, consumers were still tied to health networks contracted with the insurance companies. Out of network expenses would not apply to deductibles. As such, consumers could not truly shop for their services.

In the situations when consumers did try to shop for their services, the health provider networks and the insurance companies had previously negotiated rates; the consumer could not negotiate the rate. In other words the price had been set. Often these rates were kept private between the carriers and the providers. Even when a consumer was liable for the cost under their HDI, providers and carriers considered the rates proprietary information. Quite literally healthcare consumers would not know the cost until the bill arrived. Not logical, but real.

As long as insurance companies and healthcare networks control the negotiations of the transaction, and insurance companies dictate the terms of coverage, there can be no individual consumer affecting the cost of services. The system is capitalistic between large corporations, not the end consumers.

The scenario above plays out in the data. According to The National Library of Medicine (8), spending reductions occurred in the area of prescription medications; consumers decided not to fill or refill medications. For medical services, there was no cost reduction for HSA vs non-HSA patients. The provider and the carrier predetermined the cost and the allowable treatment.

The profit motive

Written into the Affordable Care Act, Insurance companies must pay out at least 80% of the premiums collected in care coverage; they keep a 20% margin. Perversely, when insurance carriers negotiate lower rates, they negotiate away their profits. There is little motivation to get the lowest cost.

The simple math of insurance
For $200 in medical service, the cost of insurance (to cover at 20% margin) is $250 billed to the patient in the form of the monthly premiums. The insurance carrier keeps $50, or 20% of the premium.

When the insurance carrier negotiates the rate down to $100, the most they can charge in premiums is $125 (20% margin). Same transaction, same labor cost. $25 less profit.

The system is not set up for insurance carriers to negotiate the lowest rates. It is set up so that they seek to collect the highest premiums consumers will pay.

If carriers are trending below 20% margin, they tighten the eligibility requirements for service.

There is nothing about insurance that incentivizes the carriers to negotiate low rates. Even without regulatory maximum margins, every dollar difference between the negotiated rate to the healthcare provider and the price of insurance to the consumer is a premium for care. Through insurance, people collectively pay up to a 25% premium (the equivalent of a 20% margin for carriers) for their healthcare.

Cost of no healthcare Insurance
As flawed as our healthcare system is when compared to the other Industrialized nations (and even many developing nations), lack of access to healthcare insurance was the cause of up to 45,000 deaths per year prior to ACA(4). The Harvard Medical School study is on the high end of the calculations vs. studies from 10 years prior. The risks associated with not having health insurance were growing prior to ACA.

The breakdown of the capitalistic healthcare philosophy
The notion of a truly capitalistic healthcare systems has a nice philosophical ring to it. We each are responsible for our own health, decide our own services and pay our own bills. To the pure capitalist, this sounds great.

Among the many problems, and perhaps the most concerning, is that healthcare consumers are not in the market by choice. It is not a house they decided to buy that they can’t afford, or a car they bought but can’t handle the payments.

Asthma, cancer, heart attack. These are not choices. These happen to people without their input or consent.

Capitalism requires two willing participants, the buyer and the seller. For healthcare, at least one of those participants is coerced by forces beyond his or her control. Even the most adamant free-market enthusiast must acknowledge the imperfect fit with true capitalism.

Private health insurance systems can’t cover everyone
The very nature of insurance is to spread the financial risk of any single event over a wide group of payers. As long as there are not too many simultaneous events, the system works.

For property insurance, this makes sense. The premium paid is directly related to the value of the property protected. If the premium is too high, either find a lower value item (car, home, etc), or risk losing the item.

Health insurance is not tied to an item’s value. The risk factors are not based on controllable factors for the individual (smoking is the exception). Yes, people can and should eat well, exercise and get the proper rest. But, the nature of our bodies, and our lives are such that the big expenses for healthcare may have nothing to do with these factors.

Pneumonia, meningitis, cardiac diseases and others ailments strike the seemingly healthiest among us. It is flip, dismissive, and ignorant to simply assert that people just “need to take care of themselves.” Except in the extremes, this is not the issue.

Lower income people simply cannot afford “their share” of the risk.

Philosophically, we have to make a choice:

Either our values compel us to care and therefore cover these people, or our values allow us to dismiss them and consign 45,000 of them to die each year(4).

With private insurance, the only way to cover the lower income people (about 25MM), is to force insurance companies to cover them. To do this, carriers must raise the rates on all other insured. While not necessarily motivated to negotiate lower rates, insurance carriers do recognize when the cost of premiums becomes too much. They must begin to implement draconian policies to contain costs as much as possible.

This has lead carriers to drop entire areas of the country. In some geographies, there is only one carrier, a monopoly. Premiums are surging while coverage requirement are becoming more strict. Patients are forced to drop the caregivers when insurance companies decide to drop markets, or renegotiate fees with new networks and exclude previous networks.

For those of us who were buying private insurance before the ACA, we saw the trend starting over a decade ago, only to be exacerbated by the the ACA.

The single payer system
Anecdotally we can point to situations in which one system failed while a corollary scenario in another succeeded. But this is not about the media grabbing story, or the headline that supports our preconceptions. This is about our ability to maximize our chances for successful medical outcomes while reducing our costs. Looking beyond the ideology, beyond the ‘news’ anchors and into the real world lives of people around the globe, it is difficult to present a comprehensive argument for capitalistic medicine. In the data, it simply has not proven to be better than other systems.

In a single payer system, patients relationships with their doctors are not disrupted when carriers change.

With a single payer system, efficiencies can more easily be built into the administrative systems. The U.S. pays more than any other country to ‘process’ a medical claim and payment(9). Despite the efficiency of capitalism, we have the most inefficient use of funds.

A person’s access to healthcare is not tied to their financial resources. If our moral compass allows us to let people die because they are poor, then this may not be a compelling argument.

The financial stress related to healthcare is removed. Even insured U.S. residents are saddled with the stress of affording and paying for medical treatment.

A person who is ill is not a willing participant in the ‘purchase’ of healthcare. The very fundamentals of capitalism are not present when one person is coerced by circumstances to ‘make the purchase or die’.

I believe a single payer system is at the very least one to be seriously considered. We have examples across the globe to model, and we have seen that they provide equal or better outcomes to our current system. The only thing keeping us from accepting this path is our inherent dislike of government (not totally unfounded) and our desire to see capitalism and free-market forces as the driver of all things good.

It is time to let compassion and reason direct our decisions rather than blind faith to ideology. It’s time for a single payer system.

For information on how to move  Single Payer Healthcare forward, visit https://www.healthcare-now.org



(1) http://www.forbes.com/sites/danmunro/2014/06/16/u-s-healthcare-ranked-dead-last-compared-to-10-other-countries/#7e209c81b96f
(1) http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror
(2) https://mha.gwu.edu/blog/us-health-care-vs-the-world-2016/
(3) http://www.commonwealthfund.org/publications/press-releases/2015/oct/us-spends-more-on-health-care-than-other-nations
(4) http://www.pnhp.org/excessdeaths/health-insurance-and-mortality-in-US-adults.pdf
(5) http://www.un.org/en/development/desa/population/theme/mortality/
(8) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2910568/
9) http://www.commonwealthfund.org/~/media/files/publications/in-the-literature/2013/nov/pdf_schoen_2013_ihp_survey_chartpack_final.pdfs

other text
The Social Progress Index 2014 rates the U.S. as 70th among 132 nations in health and wellness.

USNews article:  http://www.usnews.com/opinion/articles/2014/05/30/no-the-us-doesnt-have-the-best-health-care-system-in-the-world