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« Texas and Unemployment Insurance | Main | Message for These Times: Grapes of Wrath »

The Truth About Health Care Reform

By Pamela Jean
June 10, 2009

Dr. Martin Luther King, Jr.: "Of all the forms of inequality, injustice in health care is the most shocking and inhumane."
We want health care equality. We also want our health care to be more affordable and better quality. To achieve all of that, we will need to reform our current system by retooling the methods of financing. By changing the way that health care is paid for, single payer health care can eradicate the disparities and inequalities while simultaneously improving quality of care for everyone. This increase in quality will also cost less. I'm eager to talk to you about how this can only be accomplished with single payer.

But before I do, let me clarify something very important. Single payer health care is very different from socialized medicine. The two are just not the same. 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.

Are you (at least a little) confused by the many different health care reform proposals you are hearing about in the news? If so, let's sort it out together. Follow me!

I've been meaning to write this post for some time. The words 'socialized medicine' and 'single-payer health care' get thrown around with such gleeful abandon that they've both become a bit unmoored from their actual meanings. In the American health-care debate, they tend to refer to 'whatever the Democrats are proposing.' But that's not what they mean.

Socialized medicine is a system in which the government owns the means of providing medicine. Britain is an example of socialized system, as, in America, is the Veterans Health Administration. In a socialized system, the government employs the doctors and nurses, builds and owns the hospitals, and bargains for and purchases the technology. I have literally never heard a proposal for converting America to a socialized system of medicine. And I know a lot of liberals.

Single-payer health care is not socialized medicine. It's a system in which one institution purchases all, or in reality, most, of the care. But the payer does not own the doctors or the hospitals or the nurses or the MRI scanners. Medicare is an example of a mostly single-payer system, as is France. Both of these systems have private insurers to choose from, but the government is the dominant purchaser...

Meanwhile, what we're actually going to get is not socialized medicine or single-payer health care. It's a hybrid system. Private insurers, hopefully competing with a public option. Private doctors and private hospitals. Government regulation and subsidies. It's going to be complicated and messy and inefficient... (excerpted from Ezra Klein's blog)

What Ezra means when he says "what we're actually going to get" is - Congress is not actually giving much attention to the idea of reforming our healthcare system. Congress is offering mild incremental change, at best. And, if it's not single payer healthcare, then, it's not efficient, and it doesn't really reform anything - at all.

Am I saying that Congress is failing to adequately address healthcare reform? Yes! So far, it appears that we are squandering the most important opportunity we have. Congress is tinkering around on the fringes. Until they address the way that our healthcare system is financed, nothing much will change.

It looks like (at least so far) that Congress is reluctant to address the real problem in our system - the high cost of healthcare created by the exorbitant profits taken by the insurance industry.

If we want to resolve the high cost of our health care "system" and we want to find a way to maintain and increase the quality of care and the access to care (two different things: quality and access), then, the only way we can improve both simultaneously is through reforming the system. AND, the only way to reform the system is to create single payer healthcare.

Let me explain. See, currently, the U.S. health care system is outrageously expensive, yet inadequate.

Although the United States spends more on health care than other industrialized nations, those other countries provide health insurance to ALL their citizens.

In contrast, 47 million Americans are uninsured and are unable to avail themselves of health promoting services like mammograms, flu vaccines, health checkups or physicals. When they get really sick, they are denied access to lifesaving procedures like heart surgery, chemotherapy, blood pressure medications or antibiotics.

The citizens of France, Germany or Canada aren't treated like that. They aren't discriminated according to income in their nation's hospitals and clinics. In those countries, all the citizens have access to health care - equally. According to a World Health Organization (WHO) report in 2000 (nine years ago when healthcare was actually better in US but still behind the all of the rest):

In North America, Canada rates as the country with the fairest mechanism for health system finance - ranked at 17-19, while the United States is at 54-55. Cuba is the highest among Latin American and Caribbean nations at 23-25.
Dr. Brundtland, Director of the WHO, said this:
"The poor are treated with less respect, given less choice of service providers and offered lower- quality amenities. In trying to buy health from their own pockets, they pay and become poorer."
About 50% of all personal bankruptcies in the U.S. are a direct result of medical problems. A Harvard study performed in 2005 and published in the respected peer reviewed journal for health policy, Health Affairs, showed that these "medical debtors" (who end up in bankruptcy) are primarily middle class and employed and were demographically typical prior to becoming sick. While many were insured, they blame high copayments and deductibles for their financial ruin.
To our surprise, half said that illness or medical bills drove them to bankruptcy. So each year, 2 million Americans -- those who file and their dependents -- face the double disaster of illness and bankruptcy.

But the bigger surprise was that three-quarters of the medically bankrupt had health insurance. (Washington Post)

Had insurance? 75% of those that went bankrupt over medical debt had insurance!

Insurance is expensive and drains money away from actual medical care. It does not even "ensure" that the "insured" will receive the care they need. Because of our insurance industry:

The quality of the U.S. health care is simply not the best in the world.

So, if we want to reform our system, we are simply going to have to do something about the inefficiency and high expenses caused by the insurance industry. If we want to reform our system, we have to take insurance out of the mix by going to single payer. Single payer solves the insurance drain on our system.

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 one out of every six Americans completely uninsured and millions more inadequately covered. It is estimated that 50% of all Americans have either no access to medical care at all, or have very little access to healthcare.

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 (insurance companies interested only in their profits).

If we do not go to the single payer system, we will still be giving the insurance industry so many more unnecessary dollars - dollars that could instead (and should instead) be wisely spent on actual care to patients.

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 Physicians for a National Health Program (a large and growing group of American doctors) say this about Single Payer:

Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or “payer.” In the case of health care, a single-payer system would be setup such that one entity—a government run organization—would collect all health care fees, and pay out all health care costs. In the current US system, there are literally tens of thousands of different health care organizations—HMOs, billing agencies, etc.

By having so many different payers of health care fees, there is an enormous amount of administrative waste generated in the system. (Just imagine how complex billing must be in a doctor’s office, when each insurance company requires a different form to be completed, has a different billing system, different billing contacts and phone numbers—it’s very confusing.) In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services.

This alone reduces administrative waste greatly, and saves money, which can be used to provide care and insurance to those who currently don’t have it.

Hospital billing would be virtually eliminated. Instead, hospitals would receive an annual lump-sum payment from the government to cover operating expenses—a “global budget.” A separate budget would cover such expenses as hospital expansion, the purchase of technology, marketing, etc.

Doctors would have three options for payment: fee-for-service, salaried positions in hospitals, and salaried positions within group practices or HMOs. Fees would be negotiated between a representative of the fee-for-service practitioners (such as the state medical society) and a state payment board. In most cases, government would serve as administrator, not employer.

The General Accounting Office (a non-partisan government office) projects an administrative savings of 10 percent through the elimination of private insurance bills and administrative waste, or more than $150 billion. That savings would pay for providing medical care to those currently underserved.

The Congressional Budget Office (another non-partisan government office) projects that single payer would reduce overall health costs by more than $225 billion despite the expansion of comprehensive care to all Americans. No other plan projects this kind of savings.

The PNHP also help to clarify the ways that single payer healthcare will benefit everyone:

Patients Benefit from Single Payer

Each person, regardless of ability to pay would receive high-quality, comprehensive medical care, and the free choice of doctors and hospitals. Individuals would receive no bills, and copayment and deductibles would be eliminated. Most people would pay less overall for health care than they pay now.

Doctors Benefit from Single Payer

Doctors’ incomes would change little, though the disparity in income between specialties would shrink. The need for a “wallet biopsy” before treatment would be eliminated; time currently wasted on administrative duties could be channeled into providing care; and clinical decisions would no longer be dictated by insurance company policy.

Medical endorsements include PNHP (9,000), the American Public Health Association (30,000), American Association of Community Psychiatrists, Massachusetts Academy of Family Practice, American Medical Women’s Association (13,500), Alameda-Contra Costa Medical Society, American Medical Student’s Association, D.C. Medical Society, National Medical Association (6,500), American College of Physicians (Illinois Chapter), Long Island Dermatological Society, Islamic Medical Association, American Nurses Association, the Nurses’ Network for a National Health Program, and the D.C. chapter of the American Medical Association.

Hospitals Benefit from Single Payer

The massive numbers of administrative personnel needed to handle itemized billing to 1,500 private insurance companies would no longer be needed. A negotiated “global budget” would cover operating expenses. Budgets for capital would be allocated separately based on health care priorities. Hospitals would no longer close because of unpaid bills.

Businesses Benefit from Single Payer

In general, businesses would see Single Payer limit their health costs and remove the burden of administering health insurance for their employees.

Congress Benefits from Single Payer

Single payer would be the simplest and most efficient health care plan that Congress could implement.

So if there are all these benefits, why are we not moving right into single payer right now? It's because of the insurance lobby. Remember, the insurance industry is tangled up with the financial industry and the banking industry. The insurance industry is virtually indistinguishable from Wall Street and the big banks.

The insurance industry is calling the shots in Washington because if we get single payer healthcare in the U.S.,the need for private insurance would be eliminated.

But what about the workers? One single payer bill currently in the House (H.R. 1200) would provide one percent of funding for retraining displaced insurance workers during its first few years of implementation.

So, even the insurance workers would be taken care of. But that's not who the lobbyists represent. They represent the powerful insurance executives.

Single payer national healthcare would cost less. Again, from the Physicians for a National Health Program:

Currently, about 60% 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 police and teachers), elected officials, military personnel, etc. There are also hefty tax subsidies to employers to help pay for their employees’ health insurance. About 20% of health 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 21% 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 in the following way: The public funds 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, which would be eliminated. The income tax would take the place of all current insurance premiums, co-pays, deductibles, and 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 out-of-pocket payments such as co-pays and deductibles, particularly if a family member has a serious illness. It is also a fair and sustainable contribution.

Currently, 47 million people have no insurance and hundreds of 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 those who currently offer coverage would, on average, pay less. For most large employers, a payroll tax in the 7% range would mean they would pay slightly less than they currently do (about 8.5%). No employer, moreover, would gain a competitive advantage because he had scrimped on employee health benefits. And health insurance would disappear from the bargaining table between employers and employees.

Of course, the biggest change would be 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 so full of gaps like co-payments, deductibles and uncovered services that it would be almost worthless if they were to have a serious illness.

Why are people currently uninsured? To answer that question fully for yourself, please read this.

For more about single payer, click here.

If you care about real health care reform and you are persuaded to support the true reforms offered by single payer - now is the time to let everyone know your opinion. Right now, the bills being considered in Congress are not offering single payer. In order to put single payer on the table, citizens will need to make their opinions known. Frankly, you are needed in this fight. It can't happen without your voice.

Tell your senators and your congressmen and congresswomen that:

Now is the only window of opportunity to really reform our healthcare system. We may never have another opportunity like this again. If we squander this opportunity by simply giving more profits and more power to the insurance industry, we will not come any closer to reform. We need single payer national health care.
Then, tell everybody you know that you are in support of single payer. Tell them why. Explain to them that:
An incremental approach will lead us AWAY from national healthcare, not towards it. An incremental approach will lead us nowhere new. Only a reform of the financing of healthcare will lead us to reform. Reform requires that we stop allowing insurance companies to profit from our healthcare dollars and we institute a single payer system.
To investigate this important topic more fully, please explore these links too:

And, finally, check out this side-by-side comparison of the major proposals. This handy widget here compares all the bills that are under serious consideration by Congress right now.

Don't let the insurance industry decide what's best for you.

This is a fight you need to get into.

Comments (3)

Stuart Elliott Author Profile Page:

An excellent and extremely informative post. Still, I don't dismiss the argument that the battle over the public option is too important not to fight.

Jerry Jacobs Author Profile Page:

It's my understanding that Pres. Obama is not presenting a plan for single payer healthcare, nor is he supporting one.

His plan is for a continuation of "for profit" insurance but with the addition of a "public" insurance (like Medicare) for some. The conservatives are fighting this "public option" which is really just an addition but not a retooling.

This was one of the reasons why I was slow to support Obama during the primary season - because Obama preferred to use the "incremental" approach rather than the "re-design" approach. I agree with Pam that a re-design is the way to go.

In other words, Obama has never intended to rework the financing of healthcare. In his campaign speeches, he talked about making sure all children are covered by private insurance - and he talked about letting the unemployed and underemployed "buy into" insurance plans.

I've always asserted though that until we rethink how insurance is financed, the costs of both private and public plans will be too expensive. In my way of thinking, we currently have a "class system" in healthcare and this caste system is likely to be perpetuated with Obama's plan. It will be better than what we have now, to be sure, but by my way of thinking, Obama's plan does not go nearly far enough.

But many experts believe that Obama is not approaching this problem with the right tool. IN other words, many believe (including me) that the healthcare system needs a brand new motor (new financing mechanism) but Obama thinks that it just needs a tune-up.

Actually, Obama's approach is much more palatable to the conservatives than single payer would be. But, I still submit, that only single payer will - 1) improve access, 2) improve quality, and 3) lower costs.

Angelo Lopez Author Profile Page:

Thanks Pam for this post, and thanks to Jerry and Stuart for describing Obama's plan of a government insurance option and it's strengths and weaknesses. I have to plead ignorant on the best way for universal health insurance, but reading a debate on the merits and faults of Obama's plan as compared to single payer helps clarify things for me. I'll have to look at past posts of yours Pam to learn more about single payer.

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