Single-Payer is the American Way

As is customary for every administration in recent history, the Trump administration chose to impale itself on the national spear known as health care in America. The consequences so far are precisely as I expected, but one intriguing phenomenon is surprisingly beginning to emerge. People are starting to talk about single-payer. People who are not avowed socialists, people who benefit handsomely from the health care status quo seem to feel a need to address this four hundred pound gorilla, sitting patiently in a corner of our health care situation room. Why?

The all too public spectacle of a Republican party at war with itself over repealing and replacing Obamacare is teaching us one certain thing. There are no good solutions to health care within the acceptable realm of incremental, compromise driven, modern American solutions to everything, solutions that have been crippling the country and its people since the mid-seventies, which is when America lost its mojo. To fix health care, we have to go back to times when America was truly great, times when the wealthy Roosevelts of New York lived in the White House, times when graduating from Harvard or Yale were not cookie cutter prerequisites to becoming President, times when the President of the United States conducted meetings while sitting on the toilet with the door open and nobody cared. Rings a bell?

Single-payer health care is one such bold solution. Listening to the back and forth banter on social media, one may be tempted to disagree. We don’t have enough money for single-payer. Both Vermont and California tried and quit because of astronomic costs. Hundreds of thousands of people working for insurance companies will become unemployed. Hospitals will close. Entire towns will be wiped out. Doctors will become lazy inefficient government employees and you’ll have to wait months before seeing a doctor. And of course, there will be formal and informal death panels. Did I miss anything? I’m pretty sure I did, so let’s enumerate.

Single-payer is going to bankrupt the nation

We have $3 Trillion in our health care pot right now. We have 325 million Americans, men women and children of all ages. First grade arithmetic says we have almost $10,000 per year to spend on each American, the vast majority of whom is either young or healthy or both. For comparison, Medicare spends on average around $12,000 per year for the oldest and sickest population. Last year a platinum plan for a 21 year old cost less than $5,000 per year and this includes the built in waste of private health insurance. So please, tell me again how we can’t afford to pay for everybody’s health care needs at a Medicare actuarial level, which is slightly less than commercial platinum.

And no, we need not increase taxes either. You keep paying what you’re paying. Your employer keeps paying what it is paying. The government keeps paying what it’s paying. But instead of dispersing all that cash to all sorts of corporate entities standing in line with their golden little soup bowls ready to catch the last drop, we put it all together in one big beautiful barrel, and pay for care directly to those who provide care – one pool, one budget, and one accounting system for all. This is a national endeavor. It is irrelevant that Vermont failed and California bungled the whole thing. Do you think California and Vermont could afford to provide for their own armies, air force and navies? I didn’t think so.

Single-payer will cause millions to lose their jobs

Hundreds of thousands of people work for commercial insurers. Claims need to be processed, money needs to be collected and paid out, books need to be kept, customers and service providers need to be supported, computers have to be maintained, audits need to be performed, contracts need t be managed, lots and lots of labor and lots and lots of decently paying jobs. Do you have any idea how Medicare administration works? Or are you under the impression that Medicare runs itself with no human labor? Have you ever heard of Noridian or Cahaba? No? Then I respectfully suggest that you should refrain from opining about the horrors of single-payer.

Medicare is run by private administrative contractors called MACs, each assigned to specific geographical regions and specific portions of Medicare services. In addition to the MACs there are slews of functional contractors that specialize in one or more types of supporting services to the MACs. These are private entities no different from Boeing, Lockheed Martin, Hewlett-Packard, Booz Allen Hamilton, GE and many more. They employ thousands of people and if Medicare becomes our single-payer, there will be more MACs, more functional contractors, and hundreds of thousands more private employees.

That said, it stands to reason that consolidation from many payers to one, will introduce some efficiencies and the total number of available jobs will be reduced, so here is a solution to this potential problem. Currently all insurers including Medicare and Medicaid are offshoring claim processing and in the case of private insurers other functions, including clinical, as well. Change the regulations and bring those jobs back home where they belong in the first place, and offer them to those who will lose their commercial insurance jobs. This administration is especially well positioned to effect such changes to CMS regulations.

Single-payer will take away our freedom

What if Sam’s Club only carried General Mills cereal and Costco only carried Kellogg’s?  What if you had a Costco membership but stopped by another store to pick up some Cheerios and were charged ten times as much as Sam’s Cub sells it for? No it’s not exactly the same, but you get the idea. Would you consider this to be freedom of choice? Or would you rather have one big huge market where all brands sell their products directly to you competing against each other? The latter is how single-payer could work. Freedom to shop for an insurance plan is freedom to shop for your preferred rationing scheme and ultimately your own flavor of death panel.

Traditional Medicare allows you to choose your doctor and your hospital and it pays for all medically necessary services. No commercial plan can say the same unless it’s one of those platinum things nobody can afford. Traditional Medicare can do that because it sets the prices for all health care providers, instead of negotiating with a few preferred vendors. Medicare can take these liberties because it’s big enough and because it’s a Federal program. But Medicare doesn’t pay for everything. That’s why most seniors purchase supplemental plans if they can afford them, and if they are poor enough, Medicaid kicks in as the secondary payer. Being the safety net for the fixed price single-payer should be the sole function of a new and federally administered Medicaid.

Single-payer will destroy our health care

I think American medicine is the best in the whole world. Not because it’s expensive and not due to the corrupt ways in which it’s being financed, but in spite of these things. Finding a better way to pay our medical bills has nothing to do with the quality of American medicine. The concern here is that once Medicare becomes the only game in town, it will unilaterally cut its fee schedules and all hospitals will go bankrupt, all doctors will be driven into homelessness, no new drugs will be developed and we’re all going to die. On the other hand, the Federal government is the sole purchaser of aircraft carriers, stealth bombers, and weaponry of all types. How cheap are those items?  How powerless and decrepit is that industry?

Precisely because of the lessons learned from the mighty military industrial complex, single-payer reform will have to change three things in the structure of our current so-called health care system. First, all hospital consolidation and acquisition of physician practices will need to be rolled back. Second, petty regulations, vindictive carrots and sticks strategies and crude attempts at social engineering by clueless bureaucrats, will have to be dismantled brick by brick. Third, physicians will need to form a union of independent small contractors to negotiate fees and terms alongside the already powerful hospital associations. I have been a longtime proponent of a physicians’ union, even in our current system, to serve as check and balance to corporate greed and government arrogance. A single-payer system cannot and will not succeed without unionized independent physicians.

Single-payer is not the American way

We have been conditioned by large corporations to think that what they do to us is the nature of free-markets, and thus the only way to achieve prosperity for all. I would submit (for the millionth time) that what Apple is doing to the world has nothing to do with Adam Smith’s free markets. The actors in classic free markets must be approximately equal. When sellers are so big that they need artificially intelligent tools to even notice the existence of buyers, there is no free market. When the price of products sold exceeds the lifetime incomes of most buyers, there is no free market. When no one can muster enough moral turpitude to publicly say that if you’re poor, your babies should die, there is no free market. There is no free market and there can be no free market in health care.

There can however be competition. Perhaps not in sparsely populated areas, and perhaps not for highly complex procedures, but there can be competition for most health care services in most places. The uniform single-payer price should be set so that innovative hospitals and entrepreneurial physicians can thrive by charging less and those holding themselves in higher than usual esteem, or those who choose to provide luxury, are free to charge more. If all sellers are small enough, and if the standard single-payer price is fairly negotiated, we will have a real market, because people will shop to save money (in a rewards system like credit cards have) and some will shop for status and vanity.

Will there be a role for private insurance?  There could be, but private insurance should not be allowed to cover any services covered by the single-payer because that would take us back to where we are today. Let private insurance cover stuff nobody needs, but wealthy people like to flaunt, like fresh baked brioche for breakfast after having a baby, or executive physicals in palatial settings, and let those things become frightfully expensive, as these types of things usually are in a free market.

Single-payer will create a new set of losers. Health care executives making tens of millions of dollars every year for no particular reason will be losers. Perhaps they can find new careers at Boeing or Lockheed Martin seeing how their expertise is easily transferable. Health insurance stocks will tank and improperly managed pension funds will also lose bigly. People running for elections will see a major cash cow go dry after the initial struggle is over and done with. There will be powerful losers and it won’t be easy.

But Obamacare has its losers too. Hard working, taxpaying middle class citizens were the designated losers of Obamacare. Some by commission and most by omission, because Obamacare made no attempt to solve the health care problems facing the vast majority of workers with employer sponsored health insurance. That bomb keeps ticking away at a steady pace. The newly empowered Republican Party has nothing to offer either, and I can’t blame them. There is nothing more we can do here. We tried everything else, and now it’s time to do the right thing. It’s the American way.

107 replies »

  1. I don’t care if people want to get high – really, I don’t. If enough people want marijuana to be legalized, then it will be. If not, it won’t.

    But, please, for God’s sake – stop this nonsense about medicinal effects.

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  3. War with North Korea. Coming soon. Trump’s ultimate Bright Shiny Thing. Rally Behind The Manly CIC.

  4. Margalit, the negative side of Kaiser is that by having the physician partners share profits with the hospital corporation and having a global fee for both, this means that physicians might deny medically necessary care. In fact that is what they have been accused of.

  5. Barry, I appreciate what you are trying to say, “With health insurance, once the deductible is met, we’re right back to third party payer where the sky is the limit”.

    But I believe you to be wrong in the more important larger sense.

    It appears that you assume that all people will buy the same insurance. I look at the solution utilizing the willing buyer and willing willing seller. Not only can the person be the willing buyer of healthcare, but he can also be the willing buyer of insurance to cover his needs. Likewise the insurance companies can be willing sellers where they formulate insurance policies that people want and can afford.

    I recommend a standard American healthcare policy so that prospective purchasers can use that policy as a reference when choosing exclusions or inclusions. That by itself limits liability. I am not saying that this method is affordable to all, but I am saying that the persons payments towards premium, deductible or copay can be subsidized. I am also not ridding us of Medicaid for those that are the most needy or unable to manage their affairs.

  6. Health care financing is a tremendous world puzzle. It is actually fun to play with intellectually. At its root, it seems to be about the level of altruism we want to express. But the army of stakeholders keeps butting in and swaying our thoughts….E.g. there are so many people on the insurance side of the sector, that it is difficult to talk about making portions of health care a public good.

    I think we are going to have some orthogonal health care problems hitting us–problems that we did not anticipate coming to us from right angles–that will clarify our path forward: possibly a tough flu strain and epidemic; astonishing discveries in the biology of aging and cancer; a molecular solution to depression, perhaps even a shutting down of demand because of unaffordable prices; some terrible war, whatever….add your own guess here.

    When puzzles are too tough, good advice is to work on some other problem on the edge of the big puzzle.

  7. Since the Clinton Administration looked to the German healthcare system as a model for its reform plan, I’ll mention some significant differences between the German culture and ours. First, homeownership rates in Germany are around 40% as compared to about 63%-64% in the U.S. suggesting that Germans just don’t think the same way we do about owning a home. Second, retail square footage per capita is 24 sf in the U.S., 16 sf in Canada, 11 sf in UK and only 2 sf in Germany! Germans are savers and we’re consumers. While I lack specific data, I suspect that Germany is a much less litigious society than the U.S. is and the German people are more accepting of death at the end of life than Americans are.

    German healthcare is largely financed by a payroll tax of 14.5% nominally split between the employer and the employee but it only applies to the first $65,000 or so U.S. equivalent of wages. Most people get their health insurance through their employer from an insurer called a sickness fund. If you’re unemployed, the unemployment insurance fund pays your premium and if you’re retired, the pension fund which is their equivalent of social security pays your premium. Payroll taxes that finance health insurance, retirement benefits, unemployment insurance and long term care add up to 40% of payroll on the wage base to which they apply. Children are covered by general tax revenue on the grounds that they are a national treasure.

    If you’re relatively wealthy and healthy, you can opt out of the public system and buy your health insurance privately if you want to which is less expensive especially when you’re young. If you do that, however, you can never get back into the public system unless you can prove you’re destitute.

    Separately, in Switzerland, there is a powerful mandate to buy health insurance. If you don’t buy it, the government will find out and make you buy it by garnishing your wages. Everyone older than 25 in a given canton pays the same price for the same coverage which can only vary slightly based on the deductible so it’s effectively priced on a pure community rated basis. The premium for 18-25 year old people is only about 15%-20% less while children cost significantly less to insure.

    Much of this just won’t translate to U.S. culture in my opinion.

  8. Reading the comments about why we could not repair perceived unworkable single pay problems in other countries, I would think, since Americans have a need to keep reminding themselves they live in the greatest country in the world, that we could design the best single pay system in the world, learning from other countries.

  9. Switzerland, a country of about 8 million people and the size of Connecticut, has 26 cantons which are similar to our states. As of a couple of years ago, there were 84 health insurers though the six largest controlled about 75% of the market. Within each canton, all insurers negotiate fees with all providers to create a uniform fee schedule within each canton. However, the cost of a similar health insurance policy can easily vary by up to 100% between the most expensive cantons and the least expensive. For the U.S. to replicate the Swiss system of fee negotiation between insurers and providers, at least on a state or regional basis, would require an anti-trust exemption which is unlikely to be forthcoming anytime soon even if both insurers and providers wanted to pursue that approach. A single payer would not negotiate fees. It would dictate fees just like Medicare and Medicaid do today.

    One thing some people like about the Swiss system is that the insurers cannot make a profit on covered services though they can make money on supplemental plans. In the U.S. all of the Blues except the 14 owned by Anthem are non-profits. The non-profit Blues and other non-profit entities control 35%-40% of the commercial non-Medicare and non-Medicaid market and the profit margin earned by the for profit insurers is pretty low. Beyond that, over 70% of United Healthcare’s non-Medicare and non-Medicaid members are in self-funded employer plans on which the potential profit dollars that the insurer can earn per member is roughly one-fifth of what it can earn on full risk members but again, the pretax profit margin even on full risk business is in the mid-single digits at best. That’s pretax. So, while highly compensated CEO’s make for a nice anti-insurer sound bite, insurer profits contribute very little to healthcare or health insurer costs.

  10. I don’t really see anything magical about single payer. There are many countries with single payer with high quality medicine and costs lower than ours. Other countries do not have singe payer and still have high quality. Commonalities that I suspect are important would be that they have essentially everyone in the same system, there is more rather than less government involvement (or at least more trust in it) and a belief that health care for everyone is of value.

    Will have to say it is interesting to see zombie ideas percolate through the thread. Ideas like people hate care in Canada, when we know that patients there like the care they get better than people here like ours.



  11. Marglait:

    You hit the nail on the head with this “fee for services” comment. In the US there is little control of the services sold to a patient regardless of the quality of outcome.

  12. Stephen,
    Both Germany and Switzerland have fixed fees for services. The payers cannot alter the fees and cannot restrict members to networks. This makes them little more than utilities. I don’t see much difference between paying a utility directly or paying a federal agency that disperses payments to those utilities.
    I like the Swiss system a lot, but I decided to go here with a French twist because the French allow doctors to balance bill if they so choose. I thought that could appeal to those who seek competition where it counts: at the doctor level.

    Either way, something needs to be done and spending months doing what the GOP has been doing is not helping any. If we keep doing nothing on health care, nothing on education, nothing (or worse) on poverty, sooner or later there will be violence in the streets, and the worse part comes after that.

  13. hey… Your analysis of the problems with social security may be premature. What if we:
    use anti smoking funds to give tax breaks to rich people,
    further reduce the power of the FDA to define soda as unhealthy,
    cut health insurance for the sick, disabled and poor
    allow the FDA to use “proxy end points” for clinical tests of meds and devices
    remove restrictions on lethal pesticides, herbicides, and millions of other pollutants
    remove the US from the Paris accords on global warming
    deny evolution — including evolution of bacteria to medications
    prohibit urban and state planners to even consider rising sea levels,
    remove restrictions on diesels and other internal combustion engines
    encourage use of SUVs and other high polluting conveyances
    defund public transport
    defund insulation payments for low income homes in the winter
    cut education funding for all but for-profit schools
    etc etc.

    I’ll bet we can dramatically reduce the number of sick and elderly who use social security.
    While many claim that Trump and the Right are without a coherent ideology, and while they deny Darwinian evolution, they are committed to George Herbert Spenser’s social Darwinism. And it may work.

    So you must have faith that evil will triumph—even if inchoate and mindless. There is hope yet for government insurance, although it may only be for a few remaining rich folks.

  14. I whole heartedly agree, but the good news for the free-market side is that those who seek it don’t necessarily need permission. Ten of thousands are getting it through cost sharing arrangements as of now. I expect that number will grow.

  15. think you’re missing my point Stephen. And many miss it, too, because they mistake the way the world is with how it ought to be.

    I’m not saying change isn’t imperative or urgent. Nor am I saying single payer is communist – political labels mean very little to me.

    I’m saying there can’t be, not “can’t” in a quantum or Newtonian sense, but “can’t” in a political sense, be any meaningful change in US healthcare, because it is caught in a regulatory and Pareto trap. It can’t be fixed democratically. And given that the vast majority seems to be enjoying reasonable healthcare, there’s unlikely to be much of a non electronic revolution.

    Healthcare/ social security costs can’t come down when people are living longer, need more long term care.

    I say make peace with reality and work on other sectors of the economy, or use healthcare to spur jobs (Keynesian multiplier).

  16. Well health care expenditures per capita rose exponentially from $150 in 1960 to a touch below $10,000 in 2015. Are you honestly saying we can’t fix this for another 50 years? The CMS cost data just gets worse and worse.

    Also, why the national mania over “single payer” which means “Communist medicine” to many and is doomed in the near term?. There are other private models that make our country look silly in the C-E department.

    I don’t think we can continue like this. The ACA didn’t touch the spiral because it didn’t touch the system except to spend billions on useless ACOs, PfP, wellness penalties, readmission penalties, preventable adverse outcome penalties, MACRA, etc., etc. . TrumpCare would keep this manipulative crap and cut the essential care.

    The outlook is bleak unless we actually do something rather than only criticize a single alternative.

    Sorry for the tone. I don’t think the US single payer experiments will work without real cost controls. I don’t know why we aren’t educating people that some of those European models (eg, Germany and Switzerland) cost half as much per person and keep competing payers. Some of them have more effective mandates than the ACA’s and share many features with us. S

  17. Saurabh, what makes you think the Dems want single-payer? They have the same financiers as the GOP.

    Bernie is not a Democrat. The two current parties will never entertain single-payer. Historically speaking, parties are fluid in this country though…..

  18. Margalit, the country is locked in a hyper regulatory trap, with more administrative rules than ANY country in the world.

    It is perennially condemned to the status quo. Although we’ll see a lot more musical nomenclatures. HMOs became ACOs. ACOs will become Mutual Healthcare Management Organizations.

    That’s all you can do! Change names

  19. Remember, the Dems couldn’t even pass a “public option.” Trying to pass single payer when you can’t pass a public option is like saying you’ll climb K2 when you can’t even get a third of the way up Mount Washington.

    It’s even more unlikely that healthcare will a free market, free of insurance.

    So, the advice I’d give is the advice Indian couples who have an arranged marriage receive from their elders. Get to know each other, compromise, be nice, because there’s no alternative.

  20. Nice piece Margalit.

    Whatever the pros & cons here of single payer, it’ll never pass in fifty years. Never. It’ll be like making the French celibate, the Russians teetotalers, or Indians ballroom dancers.

    But we’ll never stop talking about how great single payer could be. It’s like jam tomorrow, never today. It’s like the raptures on judgment day, when everything will be fine, & we’ll all be in utopia.

    Which is why it’ll never happen.

  21. David, I couldn’t agree more re: putting the (non)system on a budget. I’m finishing a piece on that very topic for THCB that I hope to publish shortly.

    As for single payer in America, it’s tempting to adapt a line from Game of Thrones: That which is dead may never die.

  22. True. “Fixing” health care, if there is such a thing, is most likely a continuous process extending into the future…..until Google fixes death 🙂

  23. We are not talking about health care here. We are talking about benefits accruing to you from living in a relatively healthy society. This is about health money, not health care.
    And I am starting to get a funny feeling that if we take this discussion to its logical conclusion (and I’ve been trying to avoid that), we will end up discussing Mr. Darwin in one context or another.

  24. Suppose everyone had a high deductible catastrophic health insurance plan to cover medical events that very few people could afford to pay for out of pocket. I’m talking about a deductible of at least $10K or maybe even $20K or $25K probably with means tested subsidy help inside the deductible.

    If my house is completely destroyed by fire, wind or some other covered disaster, my insurer will only pay be up to the insured amount stated in my policy. If my car is totaled in an accident, the insurer will only pay me the book value of my car assuming I have collision coverage. If I carry life insurance and I die, the insurer will only pay my beneficiary the amount of coverage that I paid for in premiums.

    With health insurance, once the deductible is met, we’re right back to third party payer where the sky is the limit, and, under single payer, there will be no maximum lifetime or annual benefit limits. Even if there were a lifetime or annual benefit limit, it’s not so easy to tell a patient and family that the limit was reached and treatment will cease unless someone can pay out of pocket on the patient’s behalf. This is just one more area where health insurance and health care are different from other areas of life.

  25. I’m not sure I understand the antipathy for fee-for-service. If “When you pay for services, you get more services” is a mantra to be believed, then it should apply to any service that is offered on a FFS basis. But I don’t see any crisis generated by fee-for-service accountants, housekeepers, gardeners, attorneys, consultants, etc.

    The mantra is obviously false. The more likely reality is “When someone else pays for services, you get more services.” In that context I agree that FFS is a runaway train, but there is no data to show that capitated payments can reduce spending significantly without also seriously impairing genuinely needed care.

    The other problem with bashing FFS is that it assumes that patients are completely helpless and incapable of judging the value of individual services. But that is only true by virtue of the fact that third-party payment disorients them to value. It then becomes a self-fulfilling prophecy.

  26. “Some things don’t need experiments.”

    We used to say that about bloodletting and radical mastectomy as well. No madame, everything needs to be tested and determined scientifically, because modern healthcare has no room for faith healing. But it is important to return to basics, because the fundamental point remains; there are enormous parts of the population living carelessly in sucrose and nicotine induced baths of serotonin, while I and many others toil away on rice and beans and five kilometer jogs. And as punishment for their biologically luxurious living, it is I who is expected to pay for their healthcare? Absolutely not, it is unjust and unacceptable.

  27. Janet, my spouse, before she came here, lived under a government controlled system where the doctors were paid by the government.

    Unless the doctor is satisfied with that amount he has to earn his living elsewhere so the evening before seeing the doctor a check would be dropped off so that when the clinic closed the next day she was one of the lucky that was seen.

  28. The abilities of the medical profession to ensure health are limited; to cure the depressed and insecure are even more limited.

    For the most part medicine treats significant medical illnesses such as cancer and heart disease. In general it doesn’t rid the body of disease except where a pathogen is concerned or a part of the body is removed surgically or otherwise.

  29. I think Michael makes some good points. If I had to point to one thing that had devastating consequences in the evolution of our healthcare sector I would say third party payer . Third party payer did not adhere to the principle of willing buyer and willing seller. The buyer was not the user and much of the cost spent by the buyer was distributed over the entire population. The user was subtantially kept out of the loop.

  30. I agree with the latter half. The former is a question mark. I don’t know that the Presdent has strong ideas on this subject. That is where I believe Democrats made a mistake. The President looks towards enhancing the business environment and thus enhancing the standard of living. Single payer in the long term would have a negative effect on business because single payer cannot distance itself from political cronyism.

  31. But Margalit, each component of this HMO is reliant upon the other. Both make money because their incentives are in concert. If that financial bonus disappeared from the physician group then things would radically change.

  32. No you didn’t Margalit, but there are many prerequisites and some will lead to more and many will not be able to be fulfilled properly. Too much central control leads to a lack of flexibility. Take note how some countries require flexibility to get certain difficult jobs done and without that flexibiity they likely wouldn’t exist.

  33. Margalit, I didn’t suggest a pool of 1,000, but you do realize there is such a thing as reinsurance, right?

    Many of the absolute needs of some are not the needs of others which makes healthcare cost a lot more.

    I appreciate what you are saying, but a single payer pool of over 300 million people under the auspices of the government is dangerous. I note that some countries might be getting away with “single payer” for now, but look at their populations, their diversity and the future problems they are facing. Even one of the highest ranking healthcare programs in a country of less tha 10 million has 4 underlying insurers plus private and that country has an abundance of some of the best trained doctors in the world.

  34. I don’t know, Barry. The latest report from the Commonwealth Fund (Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care) shows that all that legendary waiting is true for some but not for other countries (look at appendix 3 – Germany rocks).
    I think we need to discard the mythology about health care system organization and just look at how things really are. We could fix a lot of stuff even if we just took a few partial lessons learned from other systems (e.g. Germany is practically all small private fee-for-service practice).

  35. I think there’s something else. This is a good list of supply & demand issues and certainly it is important, but the sheer existence of such list is indicative of something less tangible and perhaps as important.
    Medicine is quickly becoming more and more scientific and transactional to the point where it is somewhat dehumanized. Gone are the days when a trusted doctor could say “it’s time” and the patient/family would accept that because they knew the doctor most of their lives. Now it’s Google and some big box “team” of strangers that must deliver that message, so nobody believes them. Why would they?
    There is always another expert and another website and another news article and another unlikely miracle that may be possible….and no one in a position to check technology induced optimism.
    Google is “working” on immortality, seriously working on the holy grail, with business plans and billions of dollars. Others are too…. It’s easy to buy into this crap, because we want it to be true and they are exploiting this human condition all the way to their banks in the Cayman Islands.

  36. Why not start a company and make sure you employ sick, depressed and insecure people? See how that works out in terms of productivity and profits. Some things don’t need experiments.

  37. One could argue that specialists who do procedures could rack up from fee-for-service, however, the whole point of specialty care is thorough evaluation of the symptoms which usually requires a procedure.
    For primary care doctors, ordering more tests or scans doesn’t add a lick to their bottom line, so the theory that FFS gets more services from Primary care is patently false.
    I agree with you totally Michael.

  38. The confounding argument is specious because any data that could be used to show economic benefits of health redistribution would suffer from the exact same confounds. So one must use the confounded data, the data that exists, or dismiss and forget universal healthcare as an idea entirely because there’s no way to test whether it is beneficial or harmful in a true experiment.

  39. When assessing the quality of various healthcare systems, academics tend to focus on criteria like universal coverage, life expectancy and infant mortality. By contrast, I think most Americans instinctively think in terms of the big stuff that Don Berwick calls rescue care — heart, brain, hip and knee surgery, cancer treatment, kidney dialysis, organ transplants, ICU, CICU, NICU care, etc. even if they don’t need it at the moment and never needed it in the past. They don’t think about primary care especially if they can just go to the ER and be treated under EMTALA.

    While I don’t have specific data, I suspect that the healthcare systems in other developed countries provide far less rescue care than we do and much of what is provided require longer wait times to access than we require in the U.S. Perhaps one or more of the doctors on the blog could speak to this aspect of inter-country healthcare system comparisons.

    Our biggest problems, in my opinion, are high costs and too many people who lack health insurance because they don’t get it through an employer, Medicare, Medicaid or the VA and can’t afford to buy it out on their own income or can’t pass medical underwriting (pre-ACA).

  40. Thank you. That’s like Mexico’s system, except there are private hospitals, too. One type of corruption in this set up is doctors can, and do, solicit clinic patients to get ‘better service’ in their private practice.

  41. What are the nascent problems of health care finance…i.e. those problems that are built into the structure of our health care system (and many in the world)?

    1. Too much technological imperative. The science and our altruism demands that we try to do too much for our resources to fund easily.
    2. Moral hazard and almost infinite demand. Patients in general, and because of education, want too much medical intervention in their lives, thinking it will bring happiness.
    3. Provider and stakeholder induced demand. Everyone except the patient–and sometimes including the patient–wants more money to circulate through the health care sector.
    Our consuming one sixth of the GDP means essentially that we are feeding 1/6 of the folks in the country.
    4.Third party payers. Means no patient or doctor really cares about prices and costs because it doesn’t hit our picketbooks directly.
    5. Too many patents are issued to bio-equivalent drugs and devices and 20 years for intellectual monopoly rights seems a little long.
    6. Government regulations add thousands of distracting costs and opportunity costs. E.g. meaningful use.
    7. Tax deductibility for employees and their employers is inequitous and unfair and adds to total demand.

    Are there others? Which are most important?

  42. Yes, well, I’m afraid the validity of your arguments is rather questionable. The number of confounding variables in your comparative theory is large enough to render the conclusion meaningless, and I think you know that.

  43. I’m not sure what you mean by “Our problem is not the insurance plan but how we dole out services”, but it sounds interesting. Could you expand a bit, please?

  44. This collectivist rhetoric would be more palatable if it had any evidence to support it. All the economic data, however, points to the contrary. If universal healthcare had large and important benefits to social stability and productivity, wouldn’t we expect at least one European country outperform the US economically as a result of this competitive advantage? None of them do. In fact, they’re all substantially behind. Despite being at the same level as the US in 1980, Germany and France today have the same gdp per capita as the US did in in 2004 and 2000, respectively. Despite the US waging two stupid wars and being the home of two major crashes, France is still 17 years behind us! If they were were ranked against US states, they would be the 40th and 48th poorest states in the union. So the reality is quite contrary to what you’d like it to be. There is no economic competitive advantage from collectively improving the health of the herd, such a thing never materializes. On the contrary, the redistributive policies in these countries are an enormous burden on growth that ultimately punishes the regular people by keeping them poor and stuck.

  45. I do, because you do benefit from their health. It’s really not that different from immunizations. No one individual is important, but all of them together are. It’s the herd that counts. And for general health, it’s the “work force” that counts. If enough people are sick, or enough people are depressed because their children are hurting, or enough people stay up at night worrying what will happen to their family if they get sick, work force productivity goes down the toilet. I assume I don’t have to explain what happens to your economy when labor productivity is low. Whether you like it or not, economies are structured by country. If our country becomes a cesspool of despair, there will be no profits for capital, no investments, no opportunities, no nothing for anybody else. So you see, our best bet is to keep each other safe and sound, so all of us can enjoy the freedom to pursue our happiness. We figured that out 250 years ago.

  46. Yes the doctor group is “separate”. I think it should be a totally independent entity free to provide services to anybody and it should probably be diced into smaller groups. It’s too big..

  47. I didn’t say that there are no prerequisites to single payer… 🙂

  48. Not everybody has the same needs and desires until they find themselves God forbid in the NICU or ICU with an older child. At that point everybody has the same needs and desires and a pool of 1000 will be wiped out at very short order at current rates.

  49. Besides being a strawman argument, this series of comparisons is incorrect because it pretends that health is a public good. Health is a private good. Each one of us is the sole owner of our bodies and therefore the sole owners of our health and the only ones responsible for maintaining it. With the exception of infectious disease the majority of health is an exclusionary good. There is absolutely no benefit to me when you maintain or improve your health and there’s no way for me to access those improvements. Cross subsidies are not at all like taking taxpayer money and investing them into an open access park, it is taking taxpayer money and giving it to an individual to buy a private yacht, that only they can use, and nobody else has any rights to. Furthermore, public goods only work because they are protected by the law. If an individual starts destroying a park, they can be arrested. Should we be arresting the obese and forcing them to exercise in health gulags? No, obviously not. So if I have absolutely no means of benefiting from others health, no means of forcing them to behave constructively, no means of punishing them for behaving destructively, how exactly do you justify me paying involuntarily for their healthcare?

  50. This is awesome, Dr. Chen. I mean not awesome, but you know what I mean…
    Thank YOU.

  51. Like a lot of social topics, health care suffers acutely these days from the “Ich/Du/Sie” problem:

    (Ich) I deserve first dollar indemnification from life’s misfortunes;
    (Du) YOU need to have Significant Skin In The Game to keep you from driving up MY costs;
    (Sie) HE/SHE is a mooch, a parasite, egregiously impinging on MY Freedom.

    More broadly, it is again ascendantly fashionable to deny the very existence of a “commonwealth,” a “society.” As Margaret Thatcher once patronizingly clucked, there IS NO “society,” only a huge n-dimensional mass of economically transacting dyads.

  52. Yes, we do need to rethink the entire system, so I thought I’d get the ball rolling here…. 🙂

    So Canada is no good. How about the wealthy European countries? I am originally from Israel. It’s not half bad there… Maybe we can pick and choose the good ideas from each, discard the bad things, add our own Yankee ingenuity, and build ourselves a nice little system that’s better than all of them put together…
    We can start by dumping all the crazy expensive regulations. That in and of itself should put a huge dent in both access and quality, and maybe even costs.
    Point is, we can’t just sit back and accept what is being perpetrated on us.

  53. Margalit, you are getting there…

    As a physician who also happened to have treated and worked with many children and families affected by truama (child abuse); below is the chain of events which if you look at it from all sides, single payer is key to addressing most that ills us. It’s circular but it has to start somewhere. I’m going to reprint a Twitter feed that I generated several months ago about this. Yes these are generalizations but I see this also as a family physician taking care of patients with chronic illness…

    Start with Economic Inequality
    Economic inequality -> stress & insecurity
    Stress & insecurity -> anxiety & depression

    Choose a path:
    1) Anxiety & depression -> suicide (recent example NPR report of middle-aged white people without college degrees are likely to die of suicide or drug/alcohol abuse)
    2) Anxiety & depression in the family -> trauma to children

    trauma to children -> anxiety & depression in children and into adulthood (ACES study)
    Anxiety & depression to adults and children -> inflammation (WHO recognizes depression as top cause of ill health)
    Inflammation -> Heart disease, cancer, stroke
    Heart disease, cancer, stroke -> Cost to society ($$$) widening economic inequality
    And around and around it goes…

    Any viable healthcare solution thus requires addressing 2 key interventions:
    Address economic and health inequality: everybody in, nobody out -> single payer
    And trauma informed decisions regarding protecting and provide services for children

    The US has none of these 2 interventions where most first-world countries have at least 1 (universal health care, single payer) and some progressive countries have recognized the importance of children’s health and mental health as being a top priority being the second step. Wonder why we’re stuck with a never ending cycle of rising health care costs? Tinkering around the edges will get us nowhere because it starts with inequality and ends with never-ending cycle of trauma that is unfortunately preventable if we start with single payer.

    Thanks, Margalit, for bringing up this important topic.

  54. Than you. I like fee for service. It’s fair, it’s simple, it’s widely used for everything else we do, and it doesn’t assume that patients are of a bovine class that must be prodded and threatened to do what the lords of the land want them to do.
    (also, see Dr. Accad’s earlier comments on this)

  55. Thank you. As I said in another comment, I don’t see the evils of fee for service. I don’t see them in other service industries and frankly I don’t see them in health care. Other countries operate mostly on FFS (e.g. Germany) and are doing pretty well comparatively speaking, so FFS cannot be the most pressing problem we have.
    I do however understand why the higher ups prefer capitation – it manipulates behavior of both doctors and patients to benefit somebody else’s bottom line.
    Some cash docs also like capitation or rather subscription fees better, and I do understand that from a business perspective.

  56. I am of course not suggesting anything like that. It would be..ummm…unamerican…… 🙂 🙂

  57. Yes, I agree, we have all sorts of problems, most all affecting health and therefore medical care, but that doesn’t mean we absolutely have to solve everything in one swoop. We can try partial solutions to partial problems. If I had my pick for a silver bullet, I would make sure that poverty is eradicated like small pox, and every child gets a solid college education. Something tells me that many health care problems will be resolved then.

  58. Yes, Jeff, I know single-payer is not on the table…. yet. And I know it will be a miracle if it ever does, but…. Between Medicare, Medicaid, the VA, DoD and the Obamacare exchanges, over half the country has government paid and administered health care. Is it such a big stretch of imagination to see that this fraction will only grow in the future, considering socioeconomic and technology trends? If not, then wouldn’t we be better served if we replaced a bits and pieces system with a more coherent one? And if so, why not think about it now?

  59. Yes, the French system is supposed to be excellent, so maybe we can learn a thing or two. It is over budget because they don’t budget enough, I would assume.

    But I really want to talk about your second paragraph. Every person paying for their own care means no health insurance at all, right? Because if you buy private insurance, you are ultimately paying for all those disgusting sinners.
    So here are a few questions: should those obese, smoking alcoholics, pay for the tennis & basketball courts, bicycle paths and hiking trails of the pure and righteous? Should they pay for the tax exemptions of the YMCA?
    Many of “those people” and their children probably didn’t go to college, should they be paying for State universities? Should bad people have to pay for libraries, museums, symphonies, opera houses and all those things that highly educated good people use?
    Who should pay for ballparks? Playgrounds? Airports? Public transit?
    Who should fight in wars and die to “protect our freedom”?
    Why do we need a country at all? Or are we there just to take what we cannot provide for ourselves easily. We are taking those things from someone and logic says that we should return the favor.. In my humble opinion…..

  60. Very well stated. But so many otherwise smart people are completely taken with the notion that fee for service is the root cause….to me evidence that in spite of our education, erudition and think tank creds, stupid ideas still prevail and are seldom questioned.

  61. I’m not sure I understand the antipathy for fee-for-service. If “When you pay for services, you get more services” is a mantra to be believed, then it should apply to any service that is offered on a FFS basis. But I don’t see any crisis generated by fee-for-service accountants, housekeepers, gardeners, attorneys, consultants, etc.

    The mantra is obviously false. The more likely reality is “When someone else pays for services, you get more services.” In that context I agree that FFS is a runaway train, but there is no data to show that capitated payments can reduce spending significantly without also seriously impairing genuinely needed care.

    The other problem with bashing FFS is that it assumes that patients are completely helpless and incapable of judging the value of individual services. But that is only true by virtue of the fact that third-party payment disorients them to value. It then becomes a self-fulfilling prophecy.

  62. Jeff’s comment is of course practical/relevant. (I also worked on the Hill for “leadership.”)
    That said, re: the merits of single payer, I doubt I’ll live long enough to hear some ask the president, a Senate Finance Chair or other germane committee chair this question, nevertheless, why is it our leaders force Americans to pay annually a purposeless $1.2 trillion tax, i.e., the approx. amount of money we waste annually on valueless health care.
    If we re-spin “single payer” to “put America on a health care budget,” like most civilized countries do, maybe we’d get somewhere.

  63. In the UK hospitals are government run, but GPs are private. The NHS waiting times are pretty bad so some GPs are starting to play with fee for service with higher rates in exchange for premium service.

  64. You are proposing France, which is a mostly fine system.The private insurance system on top of the assurance maladie provides enough breathing room to not have massive queues like the NHS. It’s only flaw is that despite the breathing room the federal assurance maladie is still constantly over budget.

    But whether it’s feasible is irrelevant, because it’s unethical. 35% of Americans are obese, why is it American for me to involuntarily pay for their healthcare? 20% of Americans are smokers, why it it American for me to involuntarily pay for their healthcare? 8% of Americans are alcoholics, why is it American for me to involuntarily pay for their healthcare? No madame, I much prefer we move into the direction where you pay for your care and I’ll pay for mine, instead of permanently enshrining this cross subsidy nonsense.

  65. I don’t buy a Lexus because I don’t have the funds to do so. The car I buy, then, is dependent on the amount I have to spend, on some level. So, country comparisons of costs seems a bit specious. The amount available to pay varies so the total amount spent varies? True?

    Also, I see striking graphs depicting growth in costs of medical care in many countries. These countries have varied systems, but they seem to face the same growth curve, rising nearly in parallel.

    I was interviewed for Governing Board of CMS at one time and on that Board were business leaders and insurance leaders? Why? Does the Government have a non-transparent conflict of interest precluding leadership of a public resource?

    I have a sense that we are missing the underlying problems and the debate about this or that insurance is poorly thought out and communicated. Our problem is not the insurance plan but how we dole out services. No matter how we insure, if we practice as we are, we will continue to suffer. Our problems are conceptual and philosophical, not economical.

  66. As a political veteran, I have trouble with arguments like Margalit’s.
    Senate Finance would have to write the bill and CMS administer the resulting system.
    Lotsa luck with that.
    We would need a GIGANTIC boost in public esteem of governmental competence to make this feasible.

  67. It’s easy to sit and dream and type.

    But, there is a lot more to healthcare than acute medical and surgical. And some of these other parts are giving fits to the entire world’s health systems:

    What can we do about long term care? Just leave it to Medicaid and
    forget that their nursing homes, in general, are outrageous? What do we do about dental? Talk to dentists who have seen what coronitis from infected partially-impacted wisdom teeth can do?…especially in the poor countries. Teenagers must have some assessment–at around 15-19 yrs–of their third molars. It can mean their survival. What do we do with drugs and alcohol? How much can we really spend on rehab services?… services that often need repeating? What do we do with autism and ASDs, now that one in 49 of newborn males seem to be diagnosed with this? (Science Mag…recently). What about obesity in 1/4 adults and many of our children? Should we pour money into bariatric clinics and surgery? And, finally, mental disease? Good heavens, this, just in itself, could be a black hole for costs….sucking every penny of the national fisc into its maw.

    No nation is doing all this stuff correctly. There are lots of challenges for all of us. It would be fun to really contribute some new and slick US system that could help everyone figure out some of these dilemmas.

  68. I hate to bring up Charlie Gard, but how not? The UK’s socialist single payer made the decision for his family. Insofar as it provided for palliative care and did not call for the withdrawal of food, water, warmth, and cleanliness (thank God, for that was GOSH’s first impulse, but the courts denied it) it was not the worst decision, but wouldn’t it be better to have a system where we citizens choose and pay doctors directly, and are paid well enough to do so? Raise our wages, and many problems will disappear, not just the health care issue. I’m not sure about the government setting costs but am willing to entertain the idea, but pay us enough to make these decisions for our own family, or, as in Charlie’s case, appeal to charity. Many diseases now are already partially subsidized by charities–breast cancer, AIDS, a whole list.

    One benefit, almost the one single critical outcome, is that if we were able to pay for our own healthcare, there would be a direct, immediate incentive to stay healthy. This impulse is quite lacking in some of the biggest users of our health care resources. How much money we pour out collectively to people who continue to abuse common sense because they are on a free ride! Our condo has a living example.

    Just for the record, Catholic teaching is this: any person is allowed to reject the prolongation of life by what are called ‘extraordinary means,’ being too painful, too expensive, or not likely to affect the expected outcome of the disease from which the person is dying (not the government’s decision; Catholic theologians never envisioned a world where the government would make these decisions for people, and perhaps neither should we, when the remedy is wages sufficient to pay for medical care and we ought to be getting those anyway!).

    But no one is allowed to reject the ‘ordinary means,’ food, water, warmth and cleanliness. Modern theologians include pain control in the ordinary means, with this caveat, that it not sedate the person so much that he cannot communicate, nor on the other hand sedate him so little as to make him unable to communicate because of the pain. In waiting for the body’s processes to follow their natural order we thus can die a natural death, by which I personally think of, death on God’s time. (This teaching may be found all over the internet at the various bishops’ websites for their dioceses; Maryland’s organization of bishops’ website is well done.)

    To entertain the notion of giving our own US government, associated now with euthanasia and abortion on demand, the power to make these decisions is really quite unthinkable, although that is the point to which, pushed by models of health care like both Obamacare and the GOP’s rendition of it, we have almost come. Only a government that intends for its citizens to die a natural death should, ever could, be trusted with power over those decisions.

  69. Allan
    You are correct
    Many actuaries believe 1,000 people selected randomly constitute a credible group

  70. If I am correct at one time a Canadian physician couldn’t earn more than a certain amount. What physicians frequently did was to earn their max and then go on vacation. Government is not as smart as all the people it governs so in the gaming game government is always trying to catch up.

    “ Doctors in Kaiser Permanente and other group model HMOS have had to learn how to do the same. They’re paid salaries,”

    As I mention below Physician partners at Kaiser get 50% of the profits tacked onto their total benefits. That means they have a strong incentive to deny treatment.

  71. My understanding is that in essence Kaiser is already two separate companies, the hospital system and the physician partners. The denial of treatment increases profits and 50% of those profits go directly to the physician partners that control what care is to be denied.

  72. Margalit, You have just touched on political cronyism a major and one of the many reasons single payer will not provide the desired results.

    I understand our politician’s affinity to making deals on their own behalf. That is human nature, but what I never understood was how they could sell their souls for such low prices.

  73. “and one giant pool is better and much cheaper than thousands of little poos ”

    If I am correct there were studies done that show the numbers in a pool don’t have to be that large to provide the maximum cost efficiency. In fact I believe that sometimes as pools get bigger cost rise.

    Not everyone has the same needs or desires so there are good rationals for smaller pools and choice.

  74. Barry, though frequently we are at odds, at present you are presenting a case based upon economic principles so I agree with your analysis. One addition that you touched on is that single payer and most other ideas that don’t rely upon the general principle of willing buyer and willing seller do not focus on actual reductions in the rate of growth of actual healthcare service costs. Instead they focus on those things that have in part been created by government intervention.

  75. Margalit, great article–and very timely, as single payer seems to be generating more discussion than it has in years. I especially appreciate the attention you gave to the problem of how to deal with people who become unemployed as a result of replacing private insurance with public insurance. But I’m not sure that your solution–bringing back outsourced jobs–is adequate. Remember, it’s not just the insurance industry that would lose jobs. Every practice and hospital in the country has staffers who do nothing but bill and collect. Many of those jobs would also become redundant under single payer. And if we could ever improve the efficiency of health care by cutting the 20-40% of care that experts say is wasted, many more people would become unemployed.

    Your vision for a single payer system would maintain fee for service, which is the main driver of that waste. So perhaps we don’t have to worry about so much unemployment, but our country would eventually go broke if the cost of healthcare continued growing on its current trajectory. So we do need something like value-based reimbursement to bend the cost curve. I doubt that the current government initiatives will achieve that because the countervailing forces are too great. You put your finger on one of those forces: the rapid consolidation of large healthcare organizations and their absorption of many physician practices (although the latter seems to be slowing down).

    You could argue that Canada allows fee for service within a well functioning single payer system. But Canadian doctors know that only so much is budgeted for their services each year (the same is true for hospitals). If the cost of care rises too much, their fees will be cut the next year. So they practice conservatively. We could do the same here, but it would be a wrenching transition if we tried to do it all at once.

    Alternatively, we could do what Germany does, and have groups representing hospitals and physicians negotiate fees with the government each year. But again, as in Canada, our providers would have to get used to the idea of living within a budget. Doctors in Kaiser Permanente and other group model HMOS have had to learn how to do the same. They’re paid salaries, but still have to deal with utilization management.

    Essentially, there’s no free lunch or magic bullet. Single payer is the way to go, but it must be coupled with a government-imposed framework to curb costs, and physicians and hospitals must learn to be wise stewards of healthcare resources.

  76. “Single-payer CAN put the physician-patient relationship first with the patient truly at the center. ”

    Anything CAN, but will it? Single payer would work great but for political cronyism and … and …

    “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” ___Archimedies Yes Archimedes CAN move the world, but…

  77. So confusing! The UK does not have Direct Primary Care, for example. They have government run hospitals, right? That’s what I thought Single-Pay was, but the structure described in this article seems otherwise. Would you (or anyone!) bring me up to speed with a very skinny summary of how THIS iteration of Single Pay would work?

    I lived in Mexico for four years before I was old enough for Medicare and used both my own Blue Cross/Blue Shield and the government insurance. I found that many people in Mexico pay the doctor directly, as one would a dentist or a lawyer, and those too poor to do so enrolled in government health care (the fee must have been low, only one elderly lady at my church was too poor to enroll) and went to a clinic run by the government. Those were not chaotic or cruel or inefficient, the staff was smart and willing, but they were bare bones. I’m just describing it as one alternative to consider. I envision Direct Primary Care to function similarly, with that safety net for the very poor.

    I hope someone will explain what is being advanced here simply enough for me. I am just out of touch, I’ve been on Medicare for several years now, and don’t even understand very well how that works, since one sees copies of the bills without Medicare’s negotiated price being also put, for example, my heart surgery was billed at over a quarter of a million dollars. I didn’t know for years that Medicare paid less (I felt guilty all those years!). I do think hospitals, however, know well that Medficare pays less and even though they don’t refuse service, I think Medicare patients get treated less well–downright badly, in fact. It’s the only way I can explain the poor care with my most recent hospitalization.

  78. “The Pentagon has a budget and it is smaller than what we shell out on health care.”

    Yes it does and it’s about 3-4X higher as a percentage of GDP than most other OECD countries spend.

    Medicare and Medicaid, by contrast, don’t have budgets because they’re open ended entitlements. Whatever they cost, they cost. That would be the case with single payer as well which would inevitably lead to rationing similar to what we see in Canada and elsewhere.

    Every system is different. Japan, for example, has a national fee schedule so services, tests and procedures are priced the same in high cost Tokyo as in other much less expensive parts of the country. That wouldn’t work in the U.S. UK decided decades ago to spend a smaller percentage of GDP on healthcare than their Western European neighbors and their population apparently accepts the rationing and limited choice that’s part of the bargain.

    Insurers are in the business of assuming actuarial risk associated with covered healthcare services in exchange for a premium. If they price policies too low for too long, they will go out of business. A single payer system would be an unlimited check writing machine and a public option as an alternative would not be required to compete fairly on a level playing field with private insurers as they would not have to cover their costs solely from premiums though premiums could certainly be subsidized by taxpayers in both cases.

    The U.S. healthcare system is more expensive than others for a number of reasons and the existence of insurance companies is not one of them in my opinion. Our doctors earn more money than their counterparts in other countries. We are the most litigious society in the world so medical practice patterns incorporate significantly more defensive medicine than you will find elsewhere. At the end of life, lots of family members can’t or won’t let go so we give lots of marginally useful or futile care at high cost. Even experts in other countries tell us we don’t know when to stop. In the socialist countries, by contrast, part of the social compact includes not imposing unreasonable costs and expectations on your fellow citizens. A single payer healthcare system won’t fix any of that.

    All single payer advocates extoll the potential for savings in administrative costs, price controls that will lower drug prices probably at the cost of future innovation, and further squeezing provider payments even though Medicare doesn’t cover provider costs now and Medicaid doesn’t come close. Medicare works as well as it does because there is still a large commercial insurance sector to shift costs to.

  79. Very nice discussion, Margulit

    Baring dramatic a dramatic political upheaval, single payer would appear unlikely to be enacted as a single legislative proposal. The physicians, pharma, insurance companies and hospitals would all find common ground in defeating it. Having it as “the public option” in competition with private plans would make more sense. The cost advantages that you cite would likely allow it to become the dominant payer before long. Those that worry about “big government healthcare” would have alternatives which would reduce the opposition.

    I don’t share your enthusiasm for fee for service medicine. I would agree with Ian Morrison’s comment that getting physicians off FFS is like getting addicts off crack cocaine. When you pay for services, you get more services. You don’t have to delve into much health services research to see that. The “delegated model” which puts allows for decision making at the medical group level makes much more sense to me.

    I don’t think you need to change Kaiser for Medicare patients. They take care of Medicare patients now and their outcome data is quite good.


  80. Margalit is on the right track with her enumeration but her analogies are distracting. Healthcare is the ultimate “Fake Market” http://anildash.com/2017/03/tech-and-the-fake-market-tactic.html for all of the reasons she enumerates.

    I have never met a person from Canada, England, or anywhere else in the rich world that would trade their system for the US system. We can do better than the military industrial analogy and we can reach parity with other rich nations in terms of cost and in fairness to the disadvantaged by working to create a real, transparent market for healthcare services through decentralized information technology.

    Decentralized health IT enables the physicians that write the $3 T of orders and prescriptions to work directly for the patient as in Direct Medicine (or concierge, if you prefer). The services the direct medicine practitioners order would be under to a national fee schedule, as Margalit points out. Extras could be paid-for out-of-pocket or through supplemental insurance.

    The primary care physicians would be detached from the integrated delivery networks and ACOs of today (a variant of what Margalit is suggesting) and my analogy would be more like lawyers or accountants, competing for patient business with no more need for unions than other fiduciary professions have. (Pilots are also a profession but they are not chosen by the passenger and they do not have a fiduciary responsibility to any one passenger so the market for pilots is very different than for doctors or lawyers.)

    Modern network and computer technology such as standard, open source patient-centered longitudinal health records owned by the patient and standard, open source blockchain based credentialing and reputation systems for the doctors can now create a real market for direct medicine for all. (Standards and open source software provide extreme substitutability with no vendor lock-in, no walled gardens, no institutional overseer in the physician-patient relationship.) Also, with the physician and patient as peers in the network, practice innovation that benefits from transparency of quality and cost can emerge without the stifling bureaucracy associated with Medicare and 20th Century centralized IT as in the EU and other nationalized systems.

    Single-payer can put the physician-patient relationship first with the patient truly at the center. The tech for non-proprietary, self-sovereign longitudinal health records is here as Michael Chen and I have demonstrated. Physicians and patients just need to want it enough.

  81. Margalit, while I can’t remember where I read it several years ago, Medicare’s actuarial value was pegged at 56%. Remember that there is a roughly $1,200 deductible for each hospitalization and a limit on the number of lifetime hospital days. While Part B has a modest $150 or so deductible, there is 20% coinsurance with no out of pocket maximum limit. Part D has a $300+ deductible plus the donut hole. Custodial care in a nursing home is not covered except under very limited circumstances following a minimum three day stay as a hospital inpatient and then only for 20 days at 100% and the next 80 days at 80%. After that, patients are on their own. Supplemental plans don’t come cheap either.

    Meltoots above is a doctor with many years of experience and what he says makes a lot of sense to me. The administrative burden is most impactful on primary care but even the specialists have to deal with increasingly onerous documentation requirements imposed by CMS. Before you put all the private insurance companies out of business with a single payer system, be mindful of the consequences of being wrong about the ability of such a system to reduce costs and avoid rationing..

    Finally, the percentage of GDP that other countries spend on healthcare has a lot more to do with the amount the country feels it can afford to spend in a political context as compared to what patients actually need or expect in the way of care. I just think single payer would be a disaster in our choice loving society.

  82. The money for taxpayers instead of government or insurers is appropriate for the citizens are the source of the wealth, not the government
    Why give that away for goods and services to be paid by a third party
    These dollars could be used to self fund more of the first dollar expenses through Health Savings Accounts or Health Matching Accounts
    HMAS come in 11 different levels ranging from $2,500 at $40 a month to $60,000 at $725 a month
    A $60,000 account covers 98 percent of the claims

  83. Sure, why not? He who controls the fee schedules is the single payer. The single decision maker. Medicare has lots of actual “payers” contracted (MACs) and they even have the liberty to set some of the rules in their region, but they cannot touch the fee schedules. These are utilities. They don’t advertise and they don’t compete.

    This of course doesn’t stop a corrupt politician from promising to pay for that wonder drug if elected. We need a strong system of checks and balances, hence the need for a physician union. And possibly other rules as well.

    I’m not sure states have these capabilities and State politics is even more corrupt than federal politics.

  84. “Healthcare, by contrast, lends itself to different approaches by different states as they try to develop a healthcare system that works best for them and their population.”

    Assumes that people should be confined to the political borders of their street addresses for their healthcare services.

    Yeah, I know… “vote with your feet if your KansasCare doesn’t suit you.”

  85. “Rethink the entire system?” OK, you got ANY specific, comprehensive proposals?

    BTW, I agree with your “insurance” gripe. No amount of calling for-profit 3rd-party intermediated pre-payment schemes “insurance” will make it so.

  86. Barry,
    Why wouldn’t our health care priorities be the same as defense? Why would we not prioritize “performance” or quality as high as they do? After all both things supposedly are about protecting American lives, no?
    The Pentagon has a budget and it is smaller than what we shell out on health care. If they can do it, so can we.

    We have been having this argument about resources for years, you and I. I am fine discussing limitations, constraints and such, after we discuss what is possible first. We can’t just sit and do nothing other than continue to pay ransom to the industry because we are afraid that all the money they collect won’t be enough.

    Also I am not suggesting a system that pays for everything. I am talking about a system that has the same actuarial value as Medicare, supplemented by means tested assistance like dual eligibility for Medicare and Medicaid as secondary payer. That’s a far cry from a free-for-all, but we have to start somewhere, and I don’t believe we need to start lower than that.

    As to the States, I think we need national scale to counteract the entrenched industry power accumulated over decades of helpless acquiescence to their excesses.

  87. Why not go further? and get rid of all billing functions–put everyone on salaries–and make Medicare-For-All a public good? It would be like Emtala-for-all but would include the full medical job, not just the emergency room stabilization.

    But, but…

    It seems you are giving too much power to the central government: 1/6 of the GDP. There is too much opportunity here to channel single payer buying power and hence all health care policy to sway voters and buy votes. Look at the IRS delaying tax deductibility status of conservative groups. Don’t you think that if the government can do something, it will….eventually?

    Imagine there is some magnificent bio-molecular goody that is discovered….say it is some giant improvement in the survival of breast cancer. If a political party needed more feminist votes, do you think they would not use this health care benefit in any way they could? …by moving its priority higher?

    Therefore, why not do your health care socialism in smaller jurisdictions. It is much safer. A single payer is just a slogan.

    Japan has hundreds of payers, but it keeps costs at the world’s average by a national fee schedule and services are uniform and access is 99%. It is a good national system with many payers. You don’t need to give any single payer that much power.

  88. I agree with Barry Carol below. The fallback to single payer is a disaster in the hands of our US gov. Half my family is from Canada, and I can tell you, single payer long waits, different doc every time, long lines, the “MD” is gone for the day, come back another day, etc would never work here. NHS in England is literally broken at this point. All the other single payer systems in Europe are a mess and if you want ANYTHING done in a reasonable amount of time, and with the MD you want, you HAVE to bring in a bag of cash. Period. In other countries vodka and coffee has to be given to even see an MD. I agree that the military example does not fit, completely different priorities. It would be more like the postal service or IRS or DMV. And the VA? Yikes, that is our best example and it has VERY big problems, and I know, I did a third of my training at one. Scary,very inefficient, bureaucratic, would be adjectives I would use. Though single payer sounds easy, efficient, reassuring, in the US, it would be a nightmare. Look at the click box hyper-regulatory nightmare CMS has already piled on just vanilla Medicare providers with MACRA MU certEHR, could you imagine if they held ALL the cards? There is already a huge shortage of MDs, and that deficit would just go into overdrive. Before you ask, we should do it more like car insurance, insurance doesn’t pay for tire changes, gas, oil changes. Insurance should pay for the engine failure, the crashes, major problems. Why do I have to send a bill through this maze of middlemen for $20 for an X-ray. Thats a huge waste and ridiculous. We need to completely rethink the entire system.

  89. Margalit, with all due respect, I think your comparison of single payer to aircraft carriers and fighter jets is inappropriate. The reason is that when new weapons systems are developed, there are three major priorities that are in conflict with each other. Those are performance, delivery time and cost. Since performance is always the top priority and cost targets are most likely to be sacrificed, the bottom line is that the government is very willing to pay for innovation in the defense area, largely out of necessity.

    In healthcare, cost control is most likely to be the top priority even if it comes at the cost of innovation and quality of care. Providers already complain that Medicare doesn’t reimburse them for their full costs and Medicaid doesn’t come close to covering costs. Medicare also overpays for some procedures like cardiac and cancer care and underpays for others like mental health and primary care. Then, of course, there is the issue of fraud which is likely to increase with single payer. Administrative savings are easy to see and quantify but fraud isn’t and it will always be there in our society.

    Finally, if you add up all the claims plus associated administrative costs currently paid by Medicare, Medicaid, VA, the employer sponsored insurance market, and the individual insurance market, it comes to $2.2 – $2.3 trillion. Throw in another $250-$300 billion paid out of pocket by individuals and families and we’re up to a maximum of $2.6 trillion. There is at least $600 billion less than the $3.2 trillion number widely publicized for total healthcare costs in the U.S. that is not accounted for in what we think of as healthcare. Some of that is dental care, NIH spending, medical education and research, and hospital construction among other factors.

    If single payer is such a good idea, I think an individual state or states should be able to make it work first. Defense is a national function because it has to be. Healthcare, by contrast, lends itself to different approaches by different states as they try to develop a healthcare system that works best for them and their population. CA accounts for one-eighth of the country’s population. If they can’t make it work, I don’t think the country as a whole can either.

  90. Sure, so this is another thing that needs changing.

    I don’t see how you give the money back to individuals to pay for their own care. It would work if we all had approximately the same medical needs, but we don’t, because some are luckier than others. Insurance is one way to deal with this and one giant pool is better and much cheaper than thousands of little poos that must also support lifestyles of millionaire CEOs and ROI for shareholders.

  91. Giant charade is right! Decisions for millions of people are made by career politicians looking first and foremost to maintain or advance their careers and the amount of benefits they derive from said careers. I think that’s another thing the framers could not foresee, seeing how they all drifted in and out of political life. I’m not saying they didn’t have ambitions, but they all had something else going before and after public service.

  92. Why should government receive the taxes rather than infivuduals to be used for medical expenses?
    Why should insurers receive the subsidies directly under the ACA rather than individuals to be used only for medical care?
    When government receives the taxes as in Medicare, these taxes are not deposited in the Medicare trust fund so we know they are used for mrducsl expenses
    Rather they go into the Treasury’s general fund where they are spent on general appropriations. The Medicare trust fund receives debt in lieu of cash so every dollar withdrawn increases the $20 trillion debt
    Google Medicare trust fund intragovernmental debt

  93. Great questions! Thank you, and I don’t think your job needs to be eliminated.

    If I were king of the world, Kaiser would become three separate companies:
    1) The physician group
    2) A hospital system
    3) A Medicare administrative contractor (so you can keep your job :-))

    I don’t see any reason to go to capitation which will limit beneficiaries to a certain network of providers, and keep the doors open to the shenanigans of risk assessments and quality bonuses that make Medicare Advantage a cesspool of corruption. Fee for service is clean, simple and I for one am willing to trust that physicians are practicing medicine ethically, certainly more so than the big insurers. There can be and there are programs to ensure periodically that this is indeed the case. Maybe we need to have better ones….

    As to cost sharing, sure, there should be cost sharing within reason and with a Medicaid (emphasis on aid) to help people who cannot carry the additional burden of cost sharing (means tested, secondary payor of last resort, as it currently works for dual eligibility). I am not suggesting 100% AV. Maybe something like 85%. Maybe some employers would want to cover the difference (after tax). What I don’t want to see is $6,000 deductibles for a family with $150k or less income. Stuff like that just comes back to bite us down the road because people will skip care.

    I also think there are other things that need to be put in place,such as primary care clinics next to the ED with triage at the door (they have that in Holland I think and the results have been good). Increasing fee schedules for primary care so they can see less patients and do more in house instead of referring stuff out. Increasing primary care residencies and incentivizing people to choose that (lower tuition, loan forgiveness, etc. in addition to higher pay). I’m sure there is more…

    Obviously there are pitfalls and lots of other stuff needs to be thought through, but we know it’s possible. There could also be other variants, like using sick funds to administer insurance with full price setting for health care services (the German or Swiss model). I think that’s fine too (and maybe that’s what something like Kaiser plans or other payers morph into), but it does add a level of complexity and hence cost. I think the key ingredients are everybody gets it, standardized negotiated fees, no profiteering and no gratuitous harassment of doctors.

  94. Margalit,

    You’ve been thinking about this for long time, an admirable exposition. My first year of residency, 1969-70, was at a New York City hospital. The house staff at all of the NYC municipal hospitals had been unionized in 1957. Historically, they instituted the first ever physician union strike in the spring of @1968. I went to several of the meetings during my one year at Harlem Hospital. It was amazing to learn about collective bargaining. Safe to say, union bargaining is focused on working conditions and benefits. If the hospital’s leadership was incompetent, it was not something a union could bargain about. The meetings were basically run by their attorneys. Yep, I hear what your probably saying about that.
    You hit on the local employment issues. Each and every State governor would be up in arms about any major employment shifts within their insurance industry. Since the private insurance industry is largely managed by each state, the loss of the payer’s ability to be the payer and the determinant for benefits would jeopardize their co-dependent business plan, especially in conjunction with the large medical centers.

    Our nation’s Federal government represents the expression of its framers as a result of their fears to avoid an autocratic, onerous and highly centralized Federal government. Basically, the current state of affairs is paralyzed by that government structure of 250 years ago because it has now become autocratic, onerous and highly centralized. Its interesting that the political process has elected a president who also seems to be autocratic, onerous, and highly centralized.

    My own take is that the resulting Paradigm Paralysis is the result of heavily funded vested interests. It seems to be a giant charade, especially when the Federal government begins to talk about the solvency of the Medicare trust funds, especially since they don’t exist other than on paper….spent by President Johnson to fund the Viet Nam War, OFF THE BOOKS with an Executive branch IOU.


  95. Margalit, thanks. This is the best explanation / defense of single payer I’ve seen. 2 questions for you:

    1. Where would cost sharing fit in your vision? Would it be similar leves to FFS Medicare or MA plans today? The total lack of cost sharing kills the CA proposal both in terms of budgetary implications and criticism about patient incentives.

    2. How would Kaiser Permanente participate in your single payer vision given they are accustomed to being paid via capitation? Would they (and perhaps look a likes like Geisenger) be allowed to choose a capitation option? Or would they be broken up in order to convert them to simplified FFS?

    Full disclosure: I work for Kaiser on the health plan side. And I understand your plan would likely eliminate my job.