Nathan Sass

Single Payer Healthcare – Been There, Done That

In Economics, Health Care Reform, Politics on April 10, 2012 at 6:00 AM

The left is committed to the concept of a single payer health care delivery model similar to those in Europe.  “Committed” is actually not a strong enough term – religiously obsessed is probably more accurate.

Their devotion to this concept is as deep as the Pope’s devotion to the Catholic Church…maybe even more so.  Everything in their world revolves around the effort to enact this system in the US under the direct control of the federal government.

They claim that this system is the ONLY solution to the economic issues in the health care sector.  They further claim that we haven’t tried it yet, and no one can know that it will not work as they describe.

They are either lying or ignorant beyond imagining.  We have “tried” single payer health care models in numerous ways, large and small, and they are all less effective in every measure than the private market model in place in (most) of the US today.

The single largest attempt at a “single payer government run” health care program has been in place since the 1960’s.  Everyone knows about it, and has heard of it.  It is also inarguable that it is on a path of economic self destruction.  Anyone that has had experience using it can relate tales of bureaucracy run amok.  That program is Medicare.

Medicare is, or soon will be, insolvent.  The incoming revenue from payroll taxation is already insufficient to support the claims payments (and administrative overhead), and every year the imbalance gets worse.  In the next 10 – 15 years, or less, Medicare will collapse under its own weight – destroying the federal budget in the process.

But that isn’t the only problem with Medicare.  Physicians are now starting to refuse to accept Medicare patients due to the reduced rates of compensation for most services.  Doctors and hospitals have, for years, accepted pennies on the dollar for Medicare patients, and passed on the shortfalls in payment from the government to privately insured patients.

That means that for at least 10 years or more, Medicare has made insurance premiums more expensive than they should have been because the government decided to pay less than market rates for almost everything to keep deficits down.  The other option for the government would be to pay market rates for patient care, and have to increase payroll taxes (perhaps by as much as 100%) to cover the increased costs.

Politically, raising payroll taxes is a non-starter, so the only real option is to just pay less every year to doctors and hospitals.  Doctors and hospitals passed on the costs to privately insured patients for a while, but as time has passed the gap has gotten too big to just pass along to other people.  The only choice left is to stop taking patients on Medicare and avoid the problem entirely.

Eventually, Medicare will be accepted by fewer and fewer providers, until it is almost impossible for a Medicare patient to be seen at all.  At that point, Medicare will be largely useless to those people who were promised that they would be covered in their old age.

Medicaid, the government run single payer program for low income individuals, can be described almost the exact same way.  Already many hospital systems and doctors refuse to accept patients on Medicaid (Badgercare if you are in Wisconsin).  It is their right to do so, and it makes perfect economic sense for them to act in this fashion.

Why would you accept customers who pay you only $0.60 – $0.70 for something that they should pay $1.00 for?  No sane business in the world would allow customers to regularly skip out on 30% of their bill.

And make no mistake, contrary to leftist “thinking” (I use that term loosely), health care is a business and patients are customers.  Just like grocery stores, health care providers are in business to satisfy a key need for human existence.

Health care, like food, is a product – not a “right”.  If you believe otherwise, I suggest you test your theory and attempt to take some of a farmers crop without paying and see what happens to you.  Fair warning: most farmers are pretty good with firearms, so please use caution.

Our experiments with a “single payer” system are not limited to bloated and ineffective government programs, either.  For a period of time, health care co-ops tried to use a single payer type model to deliver health care.  Family Health Plan (or as many people came to call it, “Family Death Plan”) in metro Milwaukee is one of many such cases.

Family Health Plan went out of business in 2000 as costs rose and patients demanded more and more freedom.

The market changed in southeastern Wisconsin from a market that was accepting and satisfied with a tightly controlled, managed HMO, to a demand for greater openness and flexibility,” said Phil Dougherty, now senior executive officer of the Wisconsin Association of Health Plans, Madison. “Family Health Plan didn’t have the systems or infrastructure in place to adapt as rapidly as necessary.” emphasis added (source)

Read that again.  The “market” (customers) had the nerve to demand “openness and flexibility” in exchange for their money.  How DARE they!!!

People demanded more choice, and the single payer system couldn’t deliver.  As long as “customers” of Family Health Plan were willing to be told what they could buy, when they could buy it, and where they could go to get it, there were no problems.  As soon as those “customers” dared to demand that they have the ability to decide what they wanted for their money, the whole system collapsed.

This perfectly describes the end state of every single payer system that has, or ever will, exist.  As long as you, the public, are willing to let other people tell you what you want or need, everything will be fine.  As soon as you refuse to accept the control of your health care overlords, the system will implode.

Medicare and Medicaid will eventually destroy themselves because they are flawed concepts.  No single entity can ever manage the decisions of millions of people, nor can it be as efficient as millions of individuals acting independently.  In order to succeed, these systems need to make you a slave to the system, with no freedom to act as you believe is best for you.

3rd party payer systems like today’s “insurance” model are only marginally better, but still starting from the same flawed premise of centralized control.  They differ from single payer in that they allow for more patient choice, but still fail to allow market forces to impact price through consumer activity.

People keep searching for a solution to the rapid rise in health care costs, and so far have refused to consider stepping away from a centralized system, be they insurance companies or governments.  Until we have the courage to tell ourselves the truth, and admit that we must be individually responsible for paying most of the price for what we consume, nothing will improve.

And if you are still not sure that this is true, imagine if you had to shop for food using the same insurance rules and restrictions you deal with in the health care world.

If you think “grocery shopping day” is an expensive pain in the rear now, imagine if you had to pre-approve that steak, hope that your plan covered Ribeye, and that the grocery store nearest you was in your “network” and still had some in the meat case to sell you.

Call me crazy, but I think I would rather pay cash for my food, and know that I am the only one who decides what I can, should and/or will buy.

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  1. Wow. Were I a private, for-profit insurance executive I’d absolutely love your assessment. Problem is, I’m not, and before retiring spent 25 years as a CEO of a cardiac monitoring service that billed both Medicare and the privates.

    We provided a mobile echocardiogram service and charged doctors $300 per test. And you are right in one respect; they billed Medicare $400 and the private insurer $1800. So yes, Medicare was not as gullible. And yes, when doctors reached a certain patient level they started getting choosy. But 60% of them support a Medicare-for-all system. Go figure.

    But they made 20%+ on Medicare, and didn’t lose money. And they didn’t need all the extra billing personnel for private billing.

    You have a very warped view of reality. In Canada’s single-payer system they spend 10% of GDP and have better outcomes than the US (which spends 17.5% with its partially-privatized system). If they increased their costs to 12% of GDP they could also eliminate their wait times (which exist only on non-emergency patients). And easily 80% of their people prefer the Canadian syetem to ours.

    I suggest that you quit listening to the insurance industry that wants only to protect its turf, and look into the single-payer model. We could provide health care to 100% of Americans and save the country $400 billion dollars that could instead be spent on education or whatever.

    Jack Lohman
    http://moneyedpoliticians.net/medicare-for-all/

    • With all due respect, you continue to allege that I am “pro private insurance”, which is demonstrably false.

      The plan I have advocated for the last 3 plus years (which has been on my front page for the life of this blog) eliminates “health insurance”, per se, entirely. It also removes ANY third party from the decision making process regarding choice of provider, treatments or any other health care related decisions.

      This plan also eliminates any ability for any third party, including governments, from imposing any restrictions, caps, waiting periods, or other forms of rationing on anyone, while simultaneously allowing for universal access to care for every patient, regardless of economic circumstance.

      It also returns current premium payments to employees in present employer sponsored group plans in the form of increased cash compensation, while at the same time reducing the cost of every employee for all impacted employers.

      It therefore increases income tax revenues, without increasing rates or reducing “take home pay”, eventually eliminates an entire class of payroll tax, and increases disposable income for almost 75% of working families, directly impacting economic growth in the positive.

      It also protects against financial hardships for individuals with catastrophic or chronic conditions, while simultaneously using the market forces of consumers to reduced prices and improve quality and outcomes, as is done in every other sector of the economy.

      The single payer systems allow for, and actually rely upon, rationing regimes to restrict consumption, where this plan does not. No system can exist to distribute a “free” product without rationing consumption, as demand for a product with a price of 0 is unlimited.

      Worse yet, single payer systems require all individuals to pay for services they will never consume, and allows them to also consume services they will never pay for.

      Single payer systems do not promote innovation of care that result in improved outcomes and also cost savings, as there is no economic incentive to innovate. Without competition, the desire to improve a product is 0. This is not a radical statement, but simple economics.

      I HAVE explored the single payer model, examined it in detail, and determined it is essentially the same system as the current 3rd party system, writ large.

      The biggest differences are in the naming of things like premiums (aka taxes), the name of the external 3rd party payer (Insurance Company X vs. US Dept. of Health and Human Services), and the relative power of the rationing body (insurance policy provisions vs. government laws). In a single payer system, the power to ration is absolute as it is done under force of law, and consumers have no alternatives. Therefore rationing is actually worse in a single payer system than current rationing regimes under insurance plans today.

      In every measurable manner, the plan I have proposed outperforms 3rd party AND single payer systems in the metrics of price control, quality, availability, patient choice, and economic impact.

      You ask if I have explored single payer, and I will respond with a similar question:

      Have you explored a decentralized consumer centric system that relies on free markets, incorporates extremely limited safety nets, and naturally requires individual responsibility?

      Or have you closed your mind to alternatives in the manner you falsely accuse me of doing?

      • Excuse me, then, you are for NO insurance instead. And if everybody were independently wealthy that’d be great. But they aren’t, and many people would have to worry about taking their kid to the doctor or putting food on the table. And independent studies have shown that even co-pays deter medical care until it becomes more costly to treat.

        But obviously you have a job, or are otherwise insured or independently wealthy. Some of us are lucky. But I have friends and family that are not so.

        And incidentally, even under a skimpy single-payer system, nothing says that you cannot opt for care outside of the system. But single-payer healthcare is treated like fire and police coverage. You get sick, you get care, and the caregiver gets paid. Simple as that. Nobody is left out and nobody gets rich. At least, not unfairly.

        A single-payer system dictates payment, it does not dictate care. It is not a “right,” it is a commonsense and humane system. It is the best business model that could exist.
        >>> Have you explored a decentralized consumer centric system that relies on free markets, incorporates extremely limited safety nets, and naturally requires individual responsibility?

        No, experience demonstrates that “consumers” are not physicians or even know what is medically best for them. Health care should not be “free market” controlled. So yes, I have closed my mind to things my 40 years in medicine have shown does not work and will cost lives. Especially the lives of my loved ones.

      • It is obvious that you did not even bother to read the plan, as your allegations have no basis in fact. There is no capacity for restrictions on delivery care under a medical financing system, as the plan clearly lays out – no matter what economic strata you occupy.

        Patient payment occurs apart from treatment, and the physician/provider is the first one made whole by financing company, immediately after treatment. Therefore there is no reason for any provider to ever deny treatment to anyone over monetary concerns.

        The patient self censors his consumption based on his desire to pay for it, as they do in every other area of life. If the patient feels the treatment is worth the price (i.e. life saving measures), he or she will receive it at the time and place of his or her choosing, at the price they are willing to eventually pay, without regard to their income or any other factor.

        I also remind you that no one apart from a doctor and a patient can offer any opinion on said treatment, unlike any other system in place today.

        You constantly advocate for Canada’s system, and under Canadian law, it was illegal to pay for care outside of the single payer system. This only changed due to a Supreme Court ruling that the Canadian system violated Quebeckers’ rights to life and security of person under the Quebec Charter in the province of Quebec, Canada. (http://www.cbc.ca/news/canada/story/2005/06/09/newscoc-health050609.html)

        Even then, the government of Quebec declared its intent to use every ability at its disposal to ignore the ruling, as the article discusses.

        The New England Journal of Medicine details the results of this ruling, including the increasing use of a private system due to the excessive delays in treatments in the public system. Delays, I remind you, that result in DEATH for so many people the Canadian Supreme Court ruled it was a violation of the right to life. http://www.nejm.org/doi/full/10.1056/NEJMp068064

        Your beloved “single payer system” in Canada is now no such thing, because the private sector has had to step in to prevent unnecessary deaths due to government incompetence. Certainly you cannot argue that a long wait for a cardiac bypass ending in death is beneficial, proper, or even moral. Or perhaps you are just an advocate of “reducing the surplus population” as Dickens once wrote in the voice of Scrooge.

        A single payer system, as the Canadian court ruled, does in fact dictate care, including the timing of delivery of that care, as well as payment. Anyone with Medicare in the US can testify to that as well. Medicare simply refuses to cover certain things at all, or at certain ages or times, and there is nothing you can do to change their minds.

        Medicare dictates treatment, just as every single payer system does, with its money and power. In the US it is not illegal to pay out of pocket, thank God, which is the only thing saving Medicare patients from Canadian rationing and possible DEATH.

        Finally, the fact you admit that you “closed your mind” makes your comments largely worthless, as they are admittedly uneducated. You are nothing more than another of many people who actually know far less than you believe you do. As Reagan said, “It isn’t that are liberal friends are ignorant, it’s that they know so much that just isn’t so.”

        What you “know” on this subject is as limited by your intellectual curiosity.

        Incidentally, you remind me of many “important people” (i.e. CEO’s politicians, and other assorted “big shots”) who are under the mistaken impression that their importance alone makes them “intelligent” on any subject they choose to opine on.

        It does not impress me that you had a big title once, nor does it infuse your arguments with any intelligence. Simply because you were a CEO someplace, or managed to get elected to some office, does not make you smart, intelligent, or even well informed. You, and many others like you, continue to labor under the delusion that you are “one of the smart ones”, whereas I and others like me are not, due simply to title.

        So smart, in fact, you can NOT investigate a subject, and still know all there is to know about it with 100% accuracy and authority.

        I certainly hope you were more intellectually curious as a CEO. To think my chief executive would be so arrogant as to never even bother to look into something that they didn’t think of first would make me very uncomfortable as a shareholder or as an employee.

        NOTE: I would also point out that between the two of us, I am the only one to sight evidentiary sources supporting my positions, while you just make unfounded and unsubstantiated claims. Remind be again who is the “smart” one???

  2. Nate, you are quickly becoming my favorite blogger, especially when you discuss healthcare (my husband is in the field, so it’s a topic that comes up a lot around our dinner table). Keep up the great work of both the original posts and you kicking the intellectual hide off of “moneyed politics,” it is much appreciated by our family!

  3. […] and again, I have written about the nature of the problem of the costs of health care.  (Read more here, here, and especially […]

  4. […] and again, I have written about the nature of the problem of the costs of health care. (Read more here, here, and especially […]

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