The USA Goes Full Single-Payer. How Much Does It Cost, How Much To Raise Taxes, Etc.

[md2000]

ACA was about a minimum for people who did not already have insurance. As I mentioned, insurance in Canada is for a supplement for items not already covered. So the unions would simply ask for a health insurance plan that added additional benefits to the guaranteed minimum provided by the state.

So the question will be - what does the state single-pay cover, and under what circumstances is that allowed to be supplemented?

For example, doctors in Canada are forced to accept the fee schedule or not receive a penny (nor their patients) from Medicare. No billing above and beyond the fee schedule. Not fee to “jump the queue”. (In fact, one of the real fees I had heard about is to transfer your medical records to another medical facility- IIRC the province stopped that; or a fee for missing an appointment; after all Medicare does not pay that).

So why would the unions not want a single-pay system? It gives them leverage; “that $7,000 per employee per year you paid to the insurance company? Let’s talk about who get what from that now…”

Besides, Canadian Medicare is relatively comprehensive. All hospital and doctor visits are free; all medically necessary procedures (generally) are free. The only difference I saw where ACA was better - Canada does not typically have prescription coverage, it’s an employer benefit. Except, there are programs for the poor, and anything dispensed in a hospital is free.

Canada does twist arms with the big pharma, and the provincial health authorities have a huge amount of buying power, explaining why drugs are about half the price here as in the USA.

[adaher]

Some of those are pretty bad ideas and I don’t think any of that gets you to $1 trillion or even close, although the CBO would have to be the final judge of that.

The plan basically says, “Drug companies! Stop innovating, stop advertising, stop being good paying to your employees! Then we’ll save money!”

His idea to cancel patents on the most important drugs for public health emergencies is a great way to insure that no new drugs will ever be developed for public health emergencies. As an economist, he should really know better. If you strictly control the prices of what people need, but let prices of luxuries rise as high as the market will bear, than private investment will flow almost entirely into luxuries. Why invest in curing cancer when you can make more money off investing your money in curing male pattern baldness?

[Icarus]

The hole many of you are falling into in trying to calculate costs is assuming the current pricing of our medical industry. What is required to move to effective single-payer is to eliminate the wealth creation inherent in every step of our current system. Of course, this type of solution would negatively impact untold numbers of people and organizations where wealth is being concentrated. But purely from a cost calculation perspective, if you are assuming everyone still gets rich, you are missing the boat.

[adaher]

Doctors would take a major pay cut, which would mean medical school would have to get a lot cheaper. That’s some pretty powerful interest groups right there.

[puddleglum]

@Lemur866

Why exactly do you think preventative services will increase total costs? Prevention prevents expensive problems.

If preventative services don’t lead to better outcomes, then they aren’t worth doing, by definition.

So compare the costs of preventing one HIV infection to the lifetime cost of treating an HIV infection. Which do you think is cheaper?

And before you complain that the public shouldn’t have to pay the cost of treating HIV infection, what do you think we already do? This is what people who dread the cost of universal coverage can’t seem to understand. In this country we can’t commit to paying the medical bills of poor people, yet we can’t bring ourselves to throw them out of the hospitals to die in the gutter either. And so hospitals treat the homeless guy and eat the cost and pass the savings on to the people who can pay.

So congratulations, you’re already paying for the homeless bum, you’re just paying for it in a hideously inefficient and opaque process. But we’re happy to pay more for our own health care to keep the undeserving from getting health care.

It reminds me of the old Russian joke. Ivan the peasant is digging in his cabbage patch and he comes across a lamp. He rubs the lamp and a genie comes out. “I’ll grant you one wish,” says the Genie. “What, only one wish? I thought I got three?” “I’m a Russian Genie, I can only afford to give you one wish.” Ivan grumbles a bit, then says, “Well, you know my neighbor Vlad? He has this cow that produces so much milk, Vlad always has plenty for his family, even enough to sell the extra. And the cow produces calves every year, strong and healthy.” And the Genie goes, “Ah, so you want a cow like Vlad’s, eh? Not too difficult.” And Ivan goes, “No, of course not! I want Vlad’s cow to die!”

Preventative medicine can reduce costs to certain individuals while increasing the costs overall. For instance if a preventative procedure costs $1,000 and the cure costs $10,000 and five percent of people who do not receive preventative care will come down with the disease.
It is very dependent on the procedure but in generalpreventative medicine does not save money.

[Shodan]

Here’s a 10-point plan Congress should consider.
First, move to capitation for Medicare, Medicaid and the tax-exempt private health insurance plans. Under capitation, hospitals and physician groups receive an annual “global budget” based on their patient population, not reimbursement on a fee-for-service basis.
Second, limit the compensation of hospital CEOs and top managers. The pay of not-for-profit hospital CEOs and top managers, for example, could be capped at $1 million per year.
Third, require Medicare and other public providers to negotiate drug prices on a rational basis, taking account of research and development incentives and the manufacturing costs of the medicines.
Fourth, use emergency power to override patents (such as compulsory licensing of patent-protected drugs) to set maximum prices on drugs for public health emergencies (such as for HIV and hepatitis C).
Fifth, radically simplify regulatory procedures for bringing quality generic drugs to the market, including through importation, by simplifying Food and Drug Administration procedures.
Sixth, facilitate “task shifting” from doctors to lower-cost health workers for routine procedures, especially when new computer applications can support the decision process.
Seven, in all public and private plans, cap the annual payment of deductibles and cost-sharing by households to a limited fraction of household income, as is done in many high-income countries.
Eight, use part of the annual saving of $1 trillion to expand home visits for community-based health care to combat the epidemics of obesity, opioids, mental illness and others.
Nine, rein in the advertising and other marketing by the pharmaceutical and fast-food industries that has created, alone among the high-income world, a nation of addiction and obesity.
Ten, offer a public plan to meet these conditions to compete with private plans. Medicare for all is one such possibility.

An interesting proposal.

First, as mentioned, Medicare and Medicaid patients, on average cost more than the hospitals get paid. If there is a cap at all similar on patients with private insurance, this would be a mandate that hospitals either limit care, or go out of business.

Second, how much do hospital CEOs and top managers make now, how much does that exceed one million a year, and how much, total, would that free up?

Three and four kind of go together - negotiate on a “rational” basis, and if the pharma companies disagree on what is “rational”, the government just takes it.

Fifth - does that mean approve a knock-off for any drug that gets to market and is successful? Also might run into patent issues, although given number four, perhaps that’s not a concern.

Sixth, might work, providing it is coupled with a willingness to refuse to allow a patient to see a specialist, and to put up with the screaming from doctors who are losing income.

Seven is price regulation, which was one of the drawbacks of Obamacare. Insurance companies tend to withdraw from markets where they are required to offer coverage but not allowed to raise prices.

Eight - what is the evidence that home visits work better for obesity, opioids, and mental illness?

Ninth, also needs evidence that marketing is why we have problems with obesity and addiction, and that limiting advertising will help.

Tenth - again, Medicare loses money. The government would have to subsidize it so that it costs, one way or another, as much as private insurance.

As ever, it always sounds like when something costs too much, we just pass a law saying that the seller should charge less and the problem is fixed. It doesn’t always work out that way.

We need rationing. If we implement rationing, in the sense of saying “No, we are going to let people die so as to save money”, many different systems would work. If we don’t, then many different systems will fail.

Regards,
Shodan

[puddleglum]

@XT

Well, according to CNN in an article today, the US could potentially save $1 trillion by going with a single payer.

The steps are:
Here’s a 10-point plan Congress should consider.
First, move to capitation for Medicare, Medicaid and the tax-exempt private health insurance plans. Under capitation, hospitals and physician groups receive an annual “global budget” based on their patient population, not reimbursement on a fee-for-service basis.
Second, limit the compensation of hospital CEOs and top managers. The pay of not-for-profit hospital CEOs and top managers, for example, could be capped at $1 million per year.
Third, require Medicare and other public providers to negotiate drug prices on a rational basis, taking account of research and development incentives and the manufacturing costs of the medicines.
Fourth, use emergency power to override patents (such as compulsory licensing of patent-protected drugs) to set maximum prices on drugs for public health emergencies (such as for HIV and hepatitis C).
Fifth, radically simplify regulatory procedures for bringing quality generic drugs to the market, including through importation, by simplifying Food and Drug Administration procedures.
Sixth, facilitate “task shifting” from doctors to lower-cost health workers for routine procedures, especially when new computer applications can support the decision process.
Seven, in all public and private plans, cap the annual payment of deductibles and cost-sharing by households to a limited fraction of household income, as is done in many high-income countries.
Eight, use part of the annual saving of $1 trillion to expand home visits for community-based health care to combat the epidemics of obesity, opioids, mental illness and others.
Nine, rein in the advertising and other marketing by the pharmaceutical and fast-food industries that has created, alone among the high-income world, a nation of addiction and obesity.
Ten, offer a public plan to meet these conditions to compete with private plans. Medicare for all is one such possibility.

None of these steps require single payer. Some of these are good ideas and some are horrible but the government could have done these at any time, and has chosen not to.

[GIGObuster]

@adaher

ACA exists and it’s not causing unions to want to drop their plans. It doesn’t even make them want to pay to support ACA.

That is nice for an argument that could oppose what we have now, but not an argument when we get (as the OP proposes) a single payer system in place already. I do think that a few unions will still keep their sweet deals, but those deals will have their days numbered when new industries come that do not have the extra costs of those special insurance deals.

[PatrickLondon]

@adaher

I don’t think any country has even close to 100% of health costs covered by the government. Everyone’s spending extra money outside the system at some point.

Indeed, if only to the extent that a lot of things don’t require hi-tech medical investigation and treatment, but can be dealt with just as easily with OTC medicines (which can be cheaper than the flat rate NHS prescription charge) - and, in our system at least, your point of contact is the GP, who acts as your adviser on self-care as well as the gatekeeper to the specialists in hospitals (but because they’re paid on an annual flat rate per registered patient, they have no personal financial incentive or disincentive for or against any particular course of treatment).

[jasg]

Vox published an article today that is worth a read.

In 2006, Rep. Pete Stark (D-CA) introduced the AmeriCare Health Care Act. And it provides a much more promising path the US could take to universal coverage.

<snip>

You can think of the AmeriCare approach as a public option on steroids. It would create a new single-payer program called AmeriCare that would take on everyone ensured by Medicaid and SCHIP, and would automatically enroll all children at birth. It would pay the same rates to providers as Medicare, meaning it’d be considerably less generous to doctors and hospitals than private insurers.

AmeriCare involves cost sharing very similar to what you’d find in a private plan, but more affordable. There are deductibles ($350 for individuals, $500 for families), co-insurance (20 percent of spending above the deductible), an out-of-pocket spending cap ($2,500 for individuals, $4,000 for families), and premiums.

However, cost sharing would be sharply limited for low-income families. Individuals and families living on less than twice the poverty line ($48,500 for a family of four in 2015) wouldn’t have to pay premiums, deductibles, or co-insurance, and there would be premium subsidies and lower deductibles for people between two and three times the poverty line.

Here’s the kicker: Employers could buy into the plan. They’d have to pay 80 percent of the premium, leaving 20 percent to employees, but it’d be an alternative every company got to their existing private plan.

[Wesley_Clark]

@RealityChuck

The big issue is controlling costs. The cost of healthcare have been skyrocketing for many reasons, but the lack of control has been a big one.

This shows up most obviously in drug prices. Everyone knows about Martin Shkrelli and the big increase in the cost of epipens, but drug companies have been raising their prices across the board for years. Even generic drugs are going up and there certainly seems to be some signs of collusion on generic drug prices (but enforcement of antitrust laws has been weak for years).

But, ultimately, the US has the most expensive medical costs of any developed country (I’ve seen the story that you could move to Spain, spend two years there to establish residency, then have your surgery and it will cost less than getting it in the US). One thing about single payer is that you can restrict price increases. That’s one reason it won’t go into effect: too many wealthy people and corporations stand to lose out.

The US is a total outlier regarding medical inflation since 1980.

http://www.commonwealthfund.org/~/media/images/publications/issue-brief/2015/oct/squires_oecd_exhibit_01.png?h=720&w=960&la=en

Since 1980, US spending on medical care has gone up by 9% of GDP (from 9% up to 18%). In every other wealthy nation it has only gone up 2-5%.

[Northern_Piper]

Like md2000, I disagree with elbows’ comment that Canadians pay premiums, and so do their employers.

I’ve never paid a premium in my life, and nor did the small business where I used to do bookkeeping and payroll.

Healthcare in my province is paid for by general government revenue, not premiums.

[md2000]

Medicare only does not pay its costs in US hospitals when you consider “soft costs” and markups. Excessive fees by doctors, profit for the hospital, markups for the non-physician executives, high drug prices, advertising (who the hell ever hear of advertising a hospital in Canada?), a complicated accounting department to bill patients and insurance companies, sort out the standard “rainmaker” tactics where the insurance companies reject initial submissions (at worst, delaying the actual payment).

Canada - single payer, single billing system, totally clear what is and is not covered, government budget for the extras and management salaries.

I read in the NYTimes, for example, of someone getting surprised by their bill after an operation for the anesthetist - $8,000. They never warned the guy ahead of time that physician wasn’t part of his network, so they instead hit him with the bill afterwards. I don’t care how many hours a doctor works during a relatively routine operation, nobody is worth $8,000 a day. That’s $1,000 an hour, or $2M a year. You’re not the discoverer of a heart transplant procedure, you’re an ordinary friggin’ doctor. (Back when I was in college, 1975 I think it was, Ontario published a list of government paid incomes over $C100,000 and not a lot of doctors were on it - it filled two pages of the newspaper. Back then minimum wage was $2.75, so maybe inflation has hit 4 times since then. $400,000 is a very comfortable income on either side of the border.

Of course, there are two other aspects of the Canadian system - with all medical bills already paid, there’s a lot less to sue for in accidents, you don’t get set for life thanks to pain and suffering awards here; plus generally, the losing party has to pay the legal costs of the winning party, so frivolous lawsuits are discouraged. So malpractice insurance is a lot less of an issue up here.

And to get back to the OP - the France numbers sound about right for Canada. We probably spend about a bit less than half what the government takes in to pay for medical care. Hence, we don’t spend a lot on NATO as no doubt you’ve heard.

[md2000]

In fact, if you google “Ontario budget distribution graph” you will see Ontario health spending is 38% of budget. The Federal government contributes a “transfer payment” of 18% of income (varies by province to equalize revenue, Ontario is one of the richer provinces, gets less)

To be fair, I did not realize there is an “Ontario Health Premium” which starts at $0 for anyone earning $20,000 or less, and goes up to $900 (per year) for those earning $200,000 or more. It’s included in income tax, so not obvious.

But again, there are no fees or co-pays or deductibles for the system. Attempts to introduce these general result in the backlash that it will simply stop the poor from visiting their doctor when they really need to. (It’s kind of funny - down south they hold up the Canadian system and ask if you want a “disaster” like ours, and up here we hold up the American system as an unqualified disaster which simply does not work, that nobody wants. )

[Muffin]

Hey, this is Canada we’re talking about. One one side, md2000 and Northern Piper are correct, and on the other side, elbows is correct. We’re Canadians, and under single payer health care, we’re all correct all the time, even when we’re not.

The various provincial health care systems are funded through the federal and respective provincial governments whose biggest revenue source is taxation. In that sense, md2000 and Northern Piper are correct. We pay tax (personal tax or corporate tax, goods and services tax, excise tax and duty), and the government uses part of that to pay for almost all of our medical treatment.

In Ontario, when you fill out your personal income tax return, the provincial part of it will include a section where you plug in your taxable income, and are then told what you will have to pay to the Ontario government as a health premium (if your taxable income is under $20,000 then your premium is $0/yr, and it tops out at $900/yr if your income is $200,600 or more). In this sense, elbows is correct, for technically it is a premium, in the sense that it is extra income tax on top of the regular income tax.

Once you look behind the curtain, it really is both a tax and a premium. Income tax goes into the province’s general revenue fund, and the province will direct it wherever it wants. The health care premium portion of your income tax is directed to the health budget rather than the general revenue fund, but of course what the right hand gives the left hand takes away, in that the premium sets off amounts that otherwise would come out of general revenue.

Apart from that, in Ontario there is an employer health care tax that ranges from 0.98% on Ontario payroll less than $200,000 up to 1.95% for payroll in excess of $400,000, with small businesses being exempt.

---

For you southern colonists wondering what the numbers would be if you move to single payer, go through that WHO breakdown that I posted up-thread. Pick the countries that are most similar to the USA (e.g. EU countries and G8 countries) and then determine which ones have universal health care that is either single payer or hybrid, and look at the outcomes (life expectancy, healthy life expectancy, private expenditure on health as % of total expenditure on health, per capita government expenditure on health, and total expenditure on health as % of GDP). That will give you the basic metrics to help determine what sort of health care at what sort of cost you could reasonably expect to get under various health care systems.

The take-home will be immediate and obvious: you are being hosed by your private insurance industry.

The typical response by many Americans when pressed with the WHO’s data are (1) to assert exceptionalism – well buck up, Buttercup, yer not special, let alone exceptional, and (2) to assume that gub’mnt funded health care will be about as good as gub’mnt cheese – but you’re forgetting that if everyone is in the same system, not just the poor, then the government will fund an excellent health care system or face the wrath of the all the people rather than just the whimpers of those who don’t count politically or economically. It really is that simple, and the proof is in the WHO stats’ pudding.

[md2000]

@Muffin

…
In Ontario, when you fill out your personal income tax return, the provincial part of it will include a section where you plug in your taxable income, and are then told what you will have to pay to the Ontario government as a health premium …

Once you look behind the curtain, it really is both a tax and a premium.
…
Apart from that, in Ontario there is an employer health care tax that ranges from 0.98% on Ontario payroll less than $200,000 up to 1.95% for payroll in excess of $400,000, with small businesses being exempt.

…

but you’re forgetting that if everyone is in the same system, not just the poor, then the government will fund an excellent health care system or face the wrath of the all the people rather than just the whimpers of those who don’t count politically or economically. It really is that simple, and the proof is in the WHO stats’ pudding.

THANKS…

You can also google Ontario budget income graph and see that the health care premiums are nowhere near the amount spent on health care. The vast majority of heath care payment is from general taxes.

That last point is the biggest. Everyone screams (and the politicians take notice) whenever anything is suggested to make the system less egalitarian, that money or influence will give one an edge. When Dalton Camp - noted Conservative party insider - got his heart transplant, there were accusations that had to be deflected whether he jumped the queue. The claim, which was not refuted, was he just matched a donor. But people are watching. There was a claim during a recent election out west in Manitoba that NHL players and health care professionals could jump the queue for procedures like MRI’s that have wait lists. (Turned out health care workers just happened to be handy for immediate fill-in when there were no shows, and hockey players got emergency treatment if there was a suspected concussion.)

[Muffin]

@md2000

There was a claim during a recent election out west in Manitoba that NHL players and health care professionals could jump the queue for procedures like MRI’s that have wait lists. (Turned out health care workers just happened to be handy for immediate fill-in when there were no shows, and hockey players got emergency treatment if there was a suspected concussion.)

Oh-oh . . . you might have stumbled on something. I never have to wait for an MRI. I mean no wait at all. Ever. Just walk in, hand over my health card, strip into a hospital gown, and get inserted like a human tampon into the warm click-and-thunk machine for a comfortable snooze.

I had always thought that it was simply a resource allocation issue, but now you’ve got me thinking, for I live in Thunder Bay, the Hockey Capital of Canada, where everyone is within one or two degees of an NHLer. Coincidence? I think not!

[erysichthon]

Colorado’s proposed single-payer system (which failed at the ballot box last fall) included a 10 percent flat tax on all income. People with jobs would only have paid 3.33 percent, though; employers would have picked up the rest. Non-payroll income (such as investment income and self-employment) would be taxed at the full ten percent. Retirees, due to various exclusions, would have ended up paying around seven percent. Anything above $350K ($450K for joint filers) wouldn’t be taxed.

There was widespread skepticism as to whether this would provide sufficient revenue for the program. I believe there were projections showing that ColoradoCare was unsustainable at the proposed taxation level.

[PatrickLondon]

@Muffin

if everyone is in the same system, not just the poor, then the government will fund an excellent health care system or face the wrath of the all the people rather than just the whimpers of those who don’t count politically or economically.

“Excellent” is perhaps a contestable term, but it’s always been understood in the UK that it has to be “good enough” to secure the support and use of the better-off. The current government has just seen the electoral results of squeezing NHS budgets (among other public services) to the max.

There are still 10% or so who take out private insurance or get it as a perk of the job, but almost always they would be using NHS services and just using the private insurance to get quicker treatment for things that are not life-threatening. Very few indeed would “go private” on principle or because they don’t want to mix with the lower orders, or imagine that we’d all be better off without the NHS and with trying to do our own deals.

[md2000]

@Muffin

Oh-oh . . . you might have stumbled on something. I never have to wait for an MRI. I mean no wait at all. Ever. Just walk in, hand over my health card, strip into a hospital gown, and get inserted like a human tampon into the warm click-and-thunk machine for a comfortable snooze.

I had always thought that it was simply a resource allocation issue, but now you’ve got me thinking, for I live in Thunder Bay, the Hockey Capital of Canada, where everyone is within one or two degees of an NHLer. Coincidence? I think not!

The trouble with free health care is that everyone uses it when they need it. Thus some resources are overtaxed. Getting to see a specialist (which requires a GP referral) can mean a wait of weeks for an opening. Some places MRI can be lined up for weeks, whereas driving out into the boonies (or living there) will mean a much shorter wait. The US detractors are right - the result of this sort of care is waiting lists for less immediately urgent treatment. My boss found himself on the 8-month hip replacement waiting list; whereas an 80-year-old relative who fell and shattered his hip got a new one that night.

I tend to think there’s a difference between a pro athlete, whose career depends on physical condition, vs. some politician or rich CEO when it comes to jumping the queue. Others may disagree. Besides, if I recall that argument was about favouritism, not payments.