Friday, October 19, 2007

Alternatives/Paths to Single-Payer Healthcare

I support a complete overhaul of health care spending that includes shifting administrative costs associated with the dissolution of multiple payers, the money from costly premiums, and the generated revenue from allowing the Bush tax cuts to expire in 2010, into a single-payer health care system that keeps corporations from dictating the type of care my patients receive (care synonymous for "medical losses" in the lingo of the HMO).

There is a broad recognition that our health care funding system has failed, mostly brought upon by the realization that even middle-class workers with "good" health insurance are being bankrupted by high costs and denied coverage. This epidemic of underfunding (even with high costs to employers and workers for premiums) is likely to go further than the epidemic of unfunded (close to 60 billion) people in this country.

In addition, my vision of a real single-payer system is integrated into a number of other economic reforms and increases in social insurance. Since it is unlikely for all those necessary reforms to occur in this conservative/corporate climate, it is necessary to find other ways to put America on a path to universal health coverage.

On the even of the 2008 elections, we can already see that health coverage and health care spending will play an important role. Republicans such as Mitt Romney have designed semi-progressive models in their platform and past experiences (as governor of Massachusetts) that do serve as some improvement. In addition, all of the Democratic candidates for President have offered some form of health care reform (although only Denis Kucinich has proposed a true version of universal health care).

The major problem with the Obama, Edwards, and Clinton plans is that insurance is still tied to employers. This allows - forces - employers to seek the cheapest, not the best coverage. In addition, tax subsidies to employers for offering health care, combined with the tax-free status of a health care benefit to an employee, do not allow us to collect appropriate revenues that could lead to a more broad restructuring of health care. And, of course, this does nothing to correct the flaw in a model of health care that puts patients and physicians against HMOs since those groups have two very different groups (improving patient health vs. increasing profits by denying coverage). One of the worst aspects of the Democratic health care proposals is that, by setting a mandate that everyone must have insurance, the candidates have essentially said "You must have health care. Now, go out and buy it! Good Luck!"

Having acknowledged these flaws in the potential reforms, there are also some positive aspects of these plans that move us much closer to 100% health care coverage (and 100% reimbursement for the physician). A mixed-model approach can put the pieces in order to -- eventually -- get us to true single-payer universal health care while maintaining - or even decreasing - current per capita spending.

This path is best presented by Paul Krugman who outlines 4 components of the current proposals that may reduce costs and might lead to increased and adequate funding.
These 4 components are community rating, subsidies for low-income families, mandated coverage, and public-private competition.

The idea of community rating allows us to move past the "Go out and buy some health care - Good luck trying to afford it!" aspect of current policy. How? Currently, insurance companies try to minimize loss by first screening out any person with risk factors for health problems, or charing them exorbitant premiums (they also minimize loss by denying coverage once a person is accepted for underwriting). Anyway, the community rating (which is already in place in New York) prohibits health insurance companies from charging different premiums to different people. Some models of community rating also prohibit denial of coverage if there is any penetration of that company within a given community.

Next, subsidies exist in the form of medicare and medicaid. These programs can be slowly expanded (lowering the age for medicare eligibility and increasing the % of poverty to quality for medicaid).

Community rating and subsidies create a lower burden for low and middle income workers in the context of mandated coverage. However, public-private competition (laid out best in John Edwards health care reform proposals) might go furthest to eventually creating a true single payer health care system.

To understand why public-private competition may lead to a lower spending burden per capita on health care, it is first necessary to understand the differences in administrative costs between govt programs and corporate health care. More specifically, Medicare/Medicaid provides health care to a large number of Americans and operates with a 2-3% administrative cost. On the other hand, health care spending associated private insurance companies, as a whole, operate around 15% administrative costs. In Canada, the percent of administrative costs as a total of all health care spending is under 5%. Thus, the elimination of multiple private insurance companies and the consolidation of spending into a single agency could, effectively, reduce administrative fees from 15% of health care spending to 2-3% of health care spending.

Furthermore, if govt programs can operate with lower overhead/admin costs they can also operate with lower premiums and costs to patients. Therefore, if patients are allowed to chose between the govt plan and the private plan, they will likely chose the cheaper plan (assuming it offers the same level of coverage). The govt plan is likely to be cheaper and this will, in effect, out compete the private plan. In addition, some have proposed caps on % of health care spending per capita that can be made up by premiums. Thus, if premiums were capped, this might also limit a profit making company's ability to bring in an adequate margin.

The ideas for health care reform are out there and many of them, while not perfect, are quite good. If the house and senate Democrat majority is retained and one of the leading Democrat candidates are elected in 2008, there is a real chance that some type of broad change will take place in health care spending.

As Krugman points out, there was also a good chance for this to occur in 1993 with Clinton health care reform proposal. However, the failure of the Hillary Clinton health care plan and the beginning of the era in the context of increased economic growth, allowed the urgency of universal health care to fall further and further away from public concern. Plus, total health care spending did stop rising for a brief period in the early-mid 90s. Now, however, we are again seeing drastic rises in health care spending as %GDP (now over %16), an increase in unfunded/underfunded individuals, and no clear economic boom insight. Even though unemployment rates are indeed low, the existence of employer based health care has decreased drastically. Thus, the next 10 years are critical for the direction of health care spending in this country and for the possibility of escaping a true health care crisis that has already begun.

If you haven't read Krugman's work yet, you should. Even though the writing is a little sloppy and the writing is double spaced, the basic argument is sound (that we need a new new deal with universal health care at the center combined with increased taxes on high income earners in order to redistribute wealth and decrease inequality by growing a middle class). I just wish he would have had a better editor - there are missing commas after transition words and plenty of independent clauses simply smashed together with dependent clauses during long run-on sentences (like the ones you see in this blog!). Anyway, Krugman is not the most camera friendly person or best orator. His writing is reflective of those two things. However, his logic is strong and his vision should be commended.

Paul Krugman. The Conscience of a Liberal. 2007.

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