by Physicians
for a National Health Program
Single-payer national health
insurance is a system in which a single public or quasi-public
agency organizes health financing, but delivery of care
remains largely private.
Currently, the U.S. health care system is outrageously
expensive, yet inadequate. Despite spending more than
twice as much as the rest of the industrialized nations
($7,129 per capita), the United States performs poorly
in comparison on major health indicators such as life
expectancy, infant mortality and immunization rates.
Moreover, the other advanced nations provide comprehensive
coverage to their entire populations, while the U.S.
leaves 46 million completely uninsured and millions
more inadequately covered.
The reason we spend more and get less than the rest
of the world is because we have a patchwork system of
for-profit payers. Private insurers necessarily waste
health dollars on things that have nothing to do with
care: overhead, underwriting, billing, sales and marketing
departments as well as huge profits and exorbitant executive
pay. Doctors and hospitals must maintain costly administrative
staffs to deal with the bureaucracy. Combined, this
needless administration consumes one-third (31 percent)
of Americans’ health dollars.
Single-payer financing is the only way to recapture
this wasted money. The potential savings on paperwork,
more than $350 billion per year, are enough to provide
comprehensive coverage to everyone without paying any
more than we already do.
Under a single-payer system, all Americans would be
covered for all medically necessary services, including:
doctor, hospital, long-term care, mental health, dental
vision, prescription drug and medical supply costs.
Patients would regain free choice of doctor and hospital,
and doctors would regain autonomy over patient care.
Physicians would be paid fee-for-service according to
a negotiated formulary or receive salary from a hospital
or nonprofit HMO / group practice. Hospitals would receive
a global budget for operating expenses. Health facilities
and expensive equipment purchases would be managed by
regional health planning boards.
A single-payer system would be financed by eliminating
private insurers and recapturing their administrative
waste. Modest new taxes would replace premiums and out-of-pocket
payments currently paid by individuals and business.
Costs would be controlled through negotiated fees, global
budgeting and bulk purchasing.
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by Physicians
for a National Health Program
Is national health
insurance “socialized medicine”?
No. Socialized medicine is a system in which
doctors and hospitals work for the government and draw
salaries from the government. Doctors in the Veterans
Administration and the Armed Services are paid this
way. Examples also exist in Great Britain and Spain.
But in most European countries, Canada, Australia and
Japan they have socialized financing, or socialized
health insurance, not socialized medicine. The government
pays for care that is delivered in the private (mostly
not-for-profit) sector. This is similar to how Medicare
works in this country. Doctors are in private practice
and are paid on a fee-for-service basis from government
funds. The government does not own or manage their medical
practices or hospitals.
The term socialized medicine is often used to conjure
images of government bureaucratic interference in medical
care. That does not describe what happens in countries
with national health insurance. It does describe the
interference by insurance company bureaucrats in our
health system.
Won’t
this raise my taxes?
Currently, about 64% of our health care system
is financed by public money: federal and state taxes,
property taxes and tax subsidies. These funds pay for
Medicare, Medicaid, the VA, coverage for public employees
(including teachers), elected officials, military personnel,
etc. There are also hefty tax subsidies to employers
to help pay for their employees’ health insurance.
About 17% of heath care is financed by all of us individually
through out-of-pocket payments, such as co-pays, deductibles,
the uninsured paying directly for care, people paying
privately for premiums, etc. Private employers only
pay 19% of health care costs. In all, it is a very “regressive”
way to finance health care, in that the poor pay a much
higher percentage of their income for health care than
higher income individuals do.
A universal public system would be financed this way:
The public financing already funneled to Medicare and
Medicaid would be retained. The difference, or the gap
between current public funding and what we would need
for a universal health care system, would be financed
by a payroll tax on employers (about 7%) and an income
tax on individuals (about 2%). The payroll tax would
replace all other employer expenses for employees’
health care. The income tax would take the place of
all current insurance premiums, co-pays, deductibles,
and any and all other out of pocket payments. For the
vast majority of people a 2% income tax is less than
what they now pay for insurance premiums and in out-of-pocket
payments such as co-pays and deductibles, particularly
for anyone who has had a serious illness or has a family
member with a serious illness. It is also a fair and
sustainable contribution. Currently, over 41 million
people have no insurance and thousands of people with
insurance are bankrupted when they have an accident
or illness. Employers who currently offer no health
insurance would pay more, but they would receive health
insurance for the same low rate as larger firms. Many
small employers have to pay 25% or more of payroll now
for health insurance – so they end up not having
insurance at all. For large employers, a payroll tax
in the 7% range would mean they would pay less than
they currently do (about 8.5%). No employer, moreover,
would hold a competitive advantage over another because
his cost of business did not include health care. And
health insurance would disappear from the bargaining
table between employers and employees.
Another consideration is that everyone would have the
same comprehensive health coverage, including all medical,
hospital, eye care, dental care, long-term care, and
mental health services. Currently, many people and businesses
are paying huge premiums for insurance that is almost
worthless if they were to have a serious illness.
Won’t
this result in rationing like in Canada?
The U.S. Supreme Court recently established that rationing
is fundamental to the way managed care conducts business.
Rationing in U.S. health care is based on income: if
you can afford care you get it, if you can’t,
you don’t. A recent study by the prestigious Institute
of Medicine found that 18,000 Americans die every year
because they don’t have health insurance. That’s
rationing. No other industrialized nation rations health
care to the degree that the U.S. does.
If there is this much rationing why don’t we hear
about it? And if other countries do not ration the way
we do, why do we hear about them? The answer is that
their systems are publicly accountable and ours is not.
Problems with their health care systems are aired in
public, ours are not. In U.S. health care no one is
ultimately accountable for how it works. No one takes
full responsibility.
The rationing that takes place in U.S. health care is
unnecessary. A number of studies (notably the General
Accounting office report in 1991, and the Congressional
Budget office report in 1993) show that there is more
than enough money in our health care system to serve
everyone if it were spent wisely. Administrative costs
are far higher in the U.S. than in other countries’
systems. These inflated costs are directly tied to our
failure to have a publicly-financed, universal health
care system. We spend at least twice more per person
than any other country, and still find it necessary
to deny health care.
Who
will run the health care system?
There is a myth that, with national health
insurance, the government will be making the medical
decisions. But in a publicly-financed, universal health
care system medical decisions are left to the patient
and doctor, as they should be. This is true even in
the countries like the UK and Spain that have socialized
medicine.
In a public system the public has a say in how it’s
run. Cost containment measures are publicly managed
at the state level by an elected and appointed body
that represents the people of that state. This body
decides on the benefit package, negotiates doctor fees
and hospital budgets. It also is responsible for health
planning and the distribution of expensive technology.
The benefit package people will receive will not be
decided upon by the legislature, but by the appointed
body that represents all state residents in consultation
with medical experts in all fields of medicine.
How
will we keep costs down if everyone has access to comprehensive
health care?
People will seek care earlier when diseases
are more treatable (and affordable). We know that the
uninsured delay or avoid seeking care because they are
afraid of health care bills. This will be eliminated
under such a system. Undoubtedly costs of taking care
of the medical needs of people who are currently doing
without will cost more money in the short run. But we
will be spending proportionately less on administration
to compensate.
In the long run, the best way to control costs is to
negotiate fees and budgets with doctors, hospitals,
and drug companies and to set and enforce an overall
budget.
How
will we keep drug prices under control?
When all patients are under one system, they
wield a lot of clout. The VA can purchase drugs for
40% discounts because they are a bulk purchaser. This
is called monopsy buying power and it is the main reason
why other countries’ drug prices are lower than
ours. The same could happen with medical supplies and
durable medical equipment.
Why
shouldn’t we let people buy better health care
if they can afford it?
Whenever we allow the wealthy to buy better
care or jump the queue, health care for the rest of
us suffers. One need only look at the example of the
nation’s health insurance program for the poor,
versus the National Naval Medical Center in Bethesda,
MD, that serves members of Congress. Access to care
for the poor is deteriorating because Medicaid is a
grossly underfunded health care program. Because it
doesn’t serve the wealthy, the payment rates are
low and many physicians refuse to see Medicaid patients.
Calls to improve Medicaid fall on deaf ears because
the beneficiaries are not considered to be politically
important. On the other hand, members of Congress have
completely free access to care at National Naval, where
the quality of care couldn’t be better.
What
will be covered?
All medically necessary care, including doctor
visits, hospital care, prescriptions, mental health
services, nursing home care, rehab, home care, eye care
and dental care.
What will happen
to all of the people who work for insurance companies?
The new system will still need people to administer
claims. Administration will shrink, however, eliminating
the need for a large bureaucracy. The focus will shift
to those who deliver health care. More health care providers,
especially in the field of long-term care and home health
care, will be needed, and many insurance clerks can
be retrained to enter these fields. Many people now
working in the insurance industry are, in fact, already
health professionals (e.g.nurses) who will be able to
find work in the health care field again.
How
much of the health care dollar is publicly financed?
Previous calculations of the percentage of
the health care dollar that is publicly financed were
estimated to be around 50%. That was from federal and
state taxes to fund Medicare, Medicaid and the VA. 30%
was out-of-pocket and 20% from employers.
Estimates differ depending on how they factor in certain
costs. For example, recent studies put the tax subsidy
offered to employers into the public spending column.
A tax subsidy to help employers buy health insurance
for employees means the public helps pay the bill. Another
factor is that many employees pay the full cost of the
premiums for their health insurance at work –
not the employer. Newer analyses of these factors put
the public financing estimate at 64%, out-of-pocket
at 17% (for uncovered services, premiums not paid for
by an employer) and employers’ contributions at
19%. (Health Affairs 1999;18(2):176.
Why
not use tax subsidies to help the uninsured buy health
insurance?
The major flaw of tax subsidies is that they
would be used to help purchase plans in our current
fragmented system. The administrative inefficiencies
and inequities that characterize our system would be
left in place, and we would continue to waste valuable
resources that should be going to patient care instead.
In spite of tax subsidies, moderate and lower income
individuals would be able to afford only those plans
with very modest benefits, and with higher cost sharing
that might make health care unaffordable. Instead of
perpetuating our current inequities, tax policies should
be used to create equity in contributions to a system
in which everyone is assured access to comprehensive
beneficial services.
If the tax subsidies are granted to individuals, employers
would be motivated to drop their coverage, and most
individuals covered would have merely rotated from employer
coverage to individual coverage. The net reduction in
the numbers of uninsured would be close to negligible.
If the tax subsidies are granted to employers, a major
shift in funding passes from employers to taxpayers
without significant improvements in the inefficiencies
and inequities of our current system. We can use the
tax system to create equity in the way we fund health
care, but we should also expect equity and efficiency
in allocation of our health care resources. That is
possible only if we eliminate the private health plans
and establish our own publicly administered system.
Won’t
competition be impeded by a universal health care system?
Advocates of the free market approach to health
care claim that competition will streamline the costs
of health care and make it more efficient. What is overlooked
is that competitive activities in health care under
a “free market” system have been wasteful
and expensive and can be blamed for raising costs. Not
only have they NOT contained costs, they have raised
costs. In fact it has been shown that in some states
where competition among insurers and HMOs is fiercest,
such as California, costs are higher than the national
average.
There are two main areas where competition exists in
health care. Among the providers, and among the payers.
When, for example, hospitals compete they often duplicate
expensive equipment in order to corner more of the market.
This drives up overall medical costs to pay for the
equipment. They also waste money on advertising and
marketing. The preferred scenario has hospitals coordinating
services and cooperating to meet the needs of the public.
Competition among medical care providers can be beneficial
in terms of improving the quality of medical care. Take
for example, three primary care doctors in a certain
area “competing” for patients for which
they will receive equal reimbursement from every patient.
The doctor who is most competent in different areas
will attract the most patients in that area. One doctor
may make house calls to see the elderly. Another may
be very good at mental health care. This is competition
based on quality not on price. Competition among insurers
(the payers) is not effective in containing costs either.
Rather, it results in competitive practices resorted
to by private payers such as avoiding the sick, cherry
picking, denial of payment of expensive procedures,
marketing, etc.
Why
not make people who are Higher Risk pay Higher Premiums?
Experience rated insurance requires higher
risk people to pay higher premiums. This approach says
that people who have had cancer or other problems in
the past, or who have chronic conditions like diabetes
and hypertension, must pay more because they are at
higher risk of getting cancer again or having a stroke
or other health problem. Experience rating allows insurance
companies to “cherry pick” the healthiest
people and either refuse to insure the sickest or, what
amounts to the same thing, charge prohibitively high
rates.This approach makes no sense. The whole point
of insurance is to spread the risk so that everyone
is covered. If you raise premiums – and thereby
exclude from coverage – those people unfortunate
enough to have been sick in the past, you defeat the
point of both insurance and the health care system.
Genetic conditions, childhood diseases, accidents, injuries
and income distribution (or how much equality there
is in a society) play a much bigger role in people’s
health than so-called “lifestyle” factors.
It costs much less to care for a smoker than a driver
who has a paralyzing accident. (Of course, we need public
health and education programs to try to prevent both!).
Community rated health insurance is the socially fair
approach. It spreads the risks evenly among all the
insured. It removes the punitive element. It does not
discriminate against the very sick, nor against those
of us who are at higher risk because of our age (say,
over 50) or our gender (females have higher health expenses
in their 20’s and 30’s than men do).
It appears that for what should be a broad social service
an insurance-based approach does not work. For it to
work at all society is asked to surrender all control
of the system and what is left is both discriminatory
and unaccountable to anyone. At some point in our lives
all of us without exception have needed or will need
some level of health care. Health insurance is unlike
any other form of insurance. We all are involved in
it. It is profoundly intertwined with social principles
of decency and fairness. A system that punishes the
sick is neither. Any reform of the health care system
must begin from a principled approach.
More information can be found at: Physicians
for a National Health Program
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