Let's say US Nationalized Health Care is considered - What are the real world costs & issues?

In My Humble Opinion
1

Just as a hypothetical exercise let’s assume US medical care continues to flounder along and at some point in the future it’s dysfunctional enough that the US starts talking seriously about nationalized, single payer type health care.

A few questions.

1: Based on the lessons of other industrialized nations that do this what “do this - don’t do that” lessons can we learn from the way they did it?

2: How do the above nations pay for it?

3: How would or could a US specific plan be structured?

4: What are the likely costs going to be on a per person basis with respect to the tax burden each person can expect?

5: How can that that tax burden be allocated fairly?

2

It need not be federally administered. Canada’s isn’t.

In Canada, each province has their own health care scheme. In order to quality, each province’s plan must meet the minimum standards imposed by the federal government. All provincial taxes in Canada are collected by Revenue Canada, then redistributed back to the province. That includes the funding for the provincial health care plan.

It originated in Canada when Saskatchewan established theirs, and as each province recognized the benefit, they all eventually followed suit. A few US states have already started in that direction.

3

Simply extend Medicare to everyone. You can pay for it simply by increasing existing taxes or increasing the existing Medicare tax…

The real issue is the damage to the profits of the health insurance industry. They own too many politicians so nothing is going to happen.

4

The real problem with our health care is that it costs 2-3x more than any other wealthy nation. We spend 10k per person, most other wealthy nations spend closer to 3-5k per person per year. That is what needs to be fixed. Lots of nations have private, multi payer systems, but they keep prices low because they run their systems better.

As far as how to pay for it, various states and the federal government have proposed bills for single payer health care. The tax structure is laid out for the Vermont and Colorado plans, as well as for a national plan (HR676). Usually a mix of payroll and income taxes.

5

In Canada, the budget for the ministry of health in each province is usually about 40% of the provincial budget, typically followed by the budgets for the ministries of education and highways. All three are funded out of general provincial revenue, raised by provincial taxes. As well, the Feds give a block transfer of money to each province for the health budget.

6

It’s not quite that dire. US Healthcare was about 17.5% of GDP in 2014, whereas a number of the larger industrialized countries ran at around 11.5% of GDP or so. So the US is running about 50% over. But the basic point is fair; any system implemented needs to bring that overall cost down, regardless of how the payment structures shake out.

7

And to follow-up on that question about funding - in most Canadian provinces, neither the employer nor the individual pays any specific payroll tax to fund the Medicare system. It’s paid for out of general revenue, just like police, schools, roads, or any other public service. There is one province that I know of, BC, which charges some Medicare premiums, I think in the range of about $100 per year.

8

As someone who is currently receiving government healthcare in the United States, VA healthcare, let me tell you it sucks. The medication they give you is inferior, you have to wait long periods of time to see a doctor, you have to drive long distances to see a doctor, you’re treated poorly by the staff, and the list goes on.

9

I think the biggest issue would be lack of competition. Therefore no incentive to keep customer service high or prices low.

10

VA hospitals and health service in general has been poorly funded for ages. A poorly funded public system along the model of the VA, one that isn’t properly funded to serve the size of the population it’s required to serve, will function poorly. Obviously a national model would ideally work much better. It’s also possible the VA is too centrally controlled, instead of things being decided more by local VA entities and providers.

The biggest reason American healthcare is 17.5% of GDP instead of 11% has nothing to do with insurance companies (their profits / administrative overhead are actually a small, small part of healthcare costs), it’s all about the prices providers charge. In many areas a single hospital has incredible supplier power, and even negotiating rates down with a private insurer, the prices they charge are exorbitant.

Are American hospitals vastly better than those in any other country? Eh, I’ve been around the world. I think we have more fancy machines per capita than most countries other than, I believe, Japan, but otherwise our hospitals aren’t anything that you couldn’t find in Canada in terms of getting your needs met. But our hospital administrators (CEOs) are millionaires, many of our specialists make $400,000 or even $500,000 a year, surgeons make similar amounts of money. Also, have you ever seen how nice any private hospital is? (As opposed to some of the few that are truly government ran in America.) I don’t mean nice as in quality medicine, I mean like expensive art on the walls, immaculately and beautifully landscaped grounds, expensive finishing on everything. Some of these hospitals look like something Donald Trump would build, and a hospital isn’t a work of art or a civic monument, it’s role is utilitarian.

Under Medicare, we pay out a rate based on the national average cost of a thing, and for that reason Medicare is often the least lucrative “insurer” for a hospital to work with, much less lucrative than private insurers–whose networks look bad and less attractive if they can’t get into important/prestigious hospitals. Only Medicare and to a lesser degree Medicaid have so much purchaser power they can counteract the immense supplier power of hospitals.

So the single biggest problem with Medicare for all is simple: all that shit I just talked about, salaries, hospital niceties etc, there’s a fuckton of rich doctors with deep political connections that are going to fight you to the last man to stop this. Also Big Pharma, they’re the other big entity making it so expensive, they’re going to fight too, and are. It’s amazing for the providers (biggest cost producers) and big pharma that most of the focus is on insurers, with secondary focus on Big Pharma and none on exorbitant provider charges.

11

Another point of evidence that providers are the reason healthcare is so expensive, and why they’re quietly the biggest opponents of healthcare reform: Blue Cross Blue Shield, by far the biggest insurance network, was basically invented by the hospitals to guarantee hospitals a consistent revenue stream, additionally the AMA was and always has been an instrumental part in keeping costs high–their members are becoming far richer than is the norm for doctors anywhere else in the world, and they want to protect that wealth.

12

And sorry for chain posting–but part of the reason I think we focus so much on health insurance costs and Big Pharma, as opposed to the real root of it, is for a long time the actual data on what private insurers were paying for things was a “trade secret” and functionally a black box in terms of being able to look at the aggregate data.

For years, a lot of our thinking has been shaped by Medicare data (which is public record), except Medicare is uniquely able to enforce lower charges from providers because it represents 16% of the population, and is backed by the might of the government. Medicare is also run very efficiently, so the assumption is the administrative overhead and insurance profits must be a big part of why medical care costs so much, but this overstates the inefficiency of administering health plans and understates the superior price reductions Medicare gets from providers. Additionally, Medicare is more restricted in how it can negotiate with Big Pharma, so pharmaceutical costs look exaggerated if you look only at Medicare data, also since Medicare isn’t a cross section of the population, but instead the elderly, it exaggerates the role of pharmaceuticals (people under 65 generally use less prescriptions per capita than the elderly.)

But in the last few years several of the large insurers have released anonymized data to various researchers, which have helped flesh out the real meat of where costs are coming from.

13

A similar thread on the subject, from 2012.

14

I hear this about the health insurance industry a lot, and wonder how true it is.

If Medicare was extended to everyone (which is what I’d like to see), wouldn’t there be a large market for supplemental insurance, just as there is today with Medicare? Given the amount of advertising insurance companies do to get this business, it must be pretty damn lucrative.

15

Averages
Inpatient Charge, Medicare: $6,607
Inpatient Charge, Average Negotiated Price w/Private Insurers: $12,361

Difference: $5,754

Hip Replacement Charge, Medicare: $13,195
Hip Replacement Charge, Negotiated Price: $24,046

Difference: $10,851

PTCA (angioplasty procedure), Medicare: $13,050
PTCA, Negotiated Price: $25,010

Difference: $11,960

Private insurance profits aren’t why we’re paying so much as a population, it’s the huge price private insurance has to pay for procedures that sometimes cost almost 2x as much for private insurers to cover. Private insurance covers 60% of the population, Medicare covers 16%. Just imagine how much money we’re talking about here, the difference in the Medicare charge versus the private insurer negotiated charge, times 60% of the population. Hospitals alone are 8% of GDP.

If you want to fix American healthcare and have a single payer or nationalized care of some form, you better be ready to fight every hospital and the AMA, they’re the enemy, not Humana or Blue Cross.

16

A good starting place for seeing how other countries similar to ours deal with health care is the PBS show Sick Around the World. It’s a bit dated now, but it will give you a basic idea.

The biggest problem we have is cost - it’s the most difficult and urgent issue we have, and to date no one has advanced any realistic policies at all about how that might be effectively managed.

Another issue for us is the sheer size of what we’d have to implement if we were to go single-payer - the population of our country is much larger than any other governmentally-comparable country that has single-payer healthcare. In some ways (such as negotiating drug prices) that might work in our favor. But in others (being able to get appointments when and with who we want) it might not. Becoming a doctor in this country is expensive - will we have enough to cover the demand for healthcare if everyone has equal access? Everyone should have it, but are we ready and able to supply it?

This is an incredibly difficult problem - no one system is perfect, there is a huge amount of nuance, people are incredibly resistant to change … and I expect it to get a lot worse until it gets better.

If you’ve never read any of Atul Gawande’s articles in The New Yorker about the state of healthcare in the U.S. he offers some interesting insights on what’s wrong with our system and how we might fix it too.

17

What competition exists now? For most Americans, health insurers’ customers are HR departments, not the insured. God knows my own health insurance has done everything possible to avoid paying even the slightest amount for anything–last year, I couldn’t even get them to pay for a flu shot, because absolutely no one offering them was “in network”. Not CVS, not Walgreens, not Jewel, no one. A fucking flu shot. At least if my insurer is the government, be it federal or state, I would have some recourse through voting.

18

It depends where you see the lack. In NZ, GP medical practices have subsidised fees, but are not free for most of the population. Typical fees for an adult are $45-$60 per visit. Below, is from this website, which is not official but pretty accurate.

The hospitals are a mix of public and private. We do have medical insurers as many people want the certainty of receiving treatment without having to wait for a specialist appointment, and also having to meet criteria for getting treated, also known as health rationing! I won’t detail the lot, but it does involve being assessed by the specialist as being serious enough to go onto waiting list which means getting treatment within 3 months. That’s typical for things such as major orthopaedic surgery (joint replacement). Time sensitive treatment such as in oncology is started much sooner. That said, some chemotherapy that is available in the US is not publicly funded here, so if you believe it will help you, you pay for it yourself. As a single treatment could be tens of thousands, there is still a divide between those who have insurance or money and those who don’t. That’s one of the ways of keeping costs contained.

Pharmac is the pharmaceutical buying agency for all prescription medicines that are publicly funded. It negotiates with pharmaceutical companies to provide the subsidised drugs at a fixed price. The prescription part payment (what the consumer pays) is $5 per item for prescriptions written by a GP and $15 for those written by a specialist. Once you’ve paid for $100 in a year, February to February, you don’t pay for further prescriptions.

19

Piggybacking on Martin Hyde’s comments, that’s the gist of it. Insurance companies, for all the focus on them, are pulling in 5-9% profit margins for the largest insurers, and lower margins for the smaller ones. That’s something, but you’re not going to get to a 35% reduction in cost just by eliminating the profit motive of the insurance providers.

You need cost transparency, competition, and bargaining power with the providers and drug manufacturers themselves.

20

It’s not quite that simple. If insurers are making a margin of 5%-9% on turnover, then the bigger the turnover the more they make. With insurance, turnover isn’t financed by the enterprise; it’s financed by policyholders funds. So selling health insurance in a market where health costs are high will earn you more money than selling insurance in a market where health costs are low. Hence insurers have no long-term interest in using their bargaining muscle to drive down the costs charged by service providers.