This is not just wrong, it’s exactly backwards. The assertion that in systems of universal health care (UHC) funding providers have to audit individual procedures more carefully than ever because their budgets are lower reflects a profound lack of understanding of how such systems really work.
The reality is that health care costs are dramatically lower precisely because no such case-by-case scrutiny occurs. This is one of the most fundamental and important differences between private health insurance and UHC, particularly single-payer.
Every health care system has to control costs. UHC systems control costs through overall policy and primarily through fee schedules. Commercial health insurers primarily control costs by micromanaging each individual case, which necessarily means that they are always meddling in the doctor-patient relationship. In UHC, the physician and their patient are the final arbiters of appropriate treatment protocols. With private insurance, the insurance company bureaucrats are the final arbiters, approving or denying treatment as they see fit, often for mercenary reasons and to the detriment of the patient, and potentially costing the patient their life or degrading their quality of life.
The renowned health care economist Ewe Reinhardt made this point many times, and is quoted in this paper [PDF] from which I provide this excerpt:
It is Reinhardt’s assertion that the absence in the United States of an overall program of budgetary control over medical expenditures, as is characteristic of the prominent European systems, results in unparalleled micro-management at the clinical level to achieve cost control unattainable on a larger scale. He writes that “…if the bureaucrats cannot somehow impose upon the healers an overall budget constraint ex ante, then they will sooner or later be driven to control their outlays on an ongoing basis, by monitoring each and every transaction for which they pay – that is, by second guessing both the providers’ clinical and pricing decisions” (Reinhardt, 1988). This appropriation of the clinical dimension of autonomy would be regarded as intolerable by physicians in other medical care systems. He suggests that “European and Canadian physicians would be appalled at the numerous intrusions into clinical decisions now routinely made by these external monitors in the United States. They probably would rise up in arms over that loss in clinical autonomy” (Reinhardt, 1988).
It seems problematic that physicians in the United States would willingly and knowingly sacrifice the clinical element of autonomy that Freidson considered to be the more consequential element of his two-part definition of autonomy. Clinical autonomy, after all, constitutes the primacy of the physician in the health care division of labor and is the basis on which arguments for political and economic autonomy are formed. Reinhardt’s answer to this seeming paradox is that physicians in the United States have traded off clinical autonomy “in their tenacious fight to preserve the individual physician’s right to price his or her services as they see fit” (Reinhard~ 1988). This observation has been distilled into a formula referred to as Reinhardt’s “Law” or “Irony.” Reinhardt has summarized his law as follows: “In modern health care systems, the preservation of the healers’ economic freedom appears to come at the price of their clinical freedom” (Reinhardt, 1988). The application of Reinhardt’s Law to the late-20th-century United States scene would appear to indicate a priority on the part of physicians to pursue economic betterment at the expense of clinical autonomy.