The savings would come from cutting out insurers, third party administrators, CMS compliance vendors, all sorts of lawyers involved in compliance and coverage litigation, judges, court staff, HR personnel, HR outsourcing providers, and probably some industries I haven’t even heard of. They would likely also affect most medical providers, since reimbursement rates would likely be lower than the higher end of the private spectrum (though on the other hand providers wouldn’t have to worry about not getting paid at all in other circumstances.)
So yes, there will be a lot of unemployed people, including my wife and probably me too. We’re good with that.
[QUOTE=wolfpup]
If the government collected community-rated income-indexed premiums from everyone and just simply paid all medical bills – the classic single-payer model – costs would be cut in half, everyone would be unconditionally covered, and the insurance industry would cease to exist.
[/QUOTE]
Which illustrates one of the other barriers to UHC in the US.
We were sold Obamacare partly on the promise that implementing it would reduce the average family’s premiums by $1500 a year. So we implemented Obamacase, and it didn’t pan out that way. Obamacare is rather similar to the German system, as mentioned above. But implementing Obamacare did not reduce health care costs in the US to anything like the German level.
But UHC will cut costs in haf, because it will save costs on administration.
The industry average for administration in private health insurance is somewhere around 11-12% (cite). For larger company plans, it is lower - about 7% for companies with over 1000 employees (same cite). So let’s assume, since UHC would obviously affect more than 1,000 people, that 7% is more or less correct.
Medicare is 1-5%, depending on how you count it. I would be interested in someone who could crunch the numbers and let us know how cutting administrative costs from 7% to 2% cuts costs overall by half.
Or we could say that we will save money because of preventative care. Unfortunately, it won’t.
We are going to have rising health care costs in the US no matter what we do, unless we implement some form of de facto rationing. UHC might cut costs somewhat, although comparisons of the German system to Obamacare are not encouraging. But overselling UHC as Obamacare was oversold is counter-productive at best.
Who says UHC would cut costs by half? Medicare is not a very good test of UHC administrative costs, because Medicare’s administrative costs still include the largest one that UHC does away with: eligibility determinations and multiple-payer resolution.
To be fair, the real fear of “socialized” medicine as I’ve heard it described is more centered around the idea that the government will be making the decision as to who you’ll see for your malady and what treatments that doctor can prescribe for that malady. Then, combine all that with the mental concept of having to go to some kind of health clinic that’s essentially a medical version of the DMV or Post Office, and where the doctors, nurses and medical supplies are all US Govt. lowest bidder specified.
That’s what people are most afraid of, even if it’s not entirely rational or realistic, especially considering that insurance companies are ALREADY making the decisions on what doctors you can see (that they’ll pay for), and what treatments/drugs they’ll pay for.
That illusion of choice is still there though- you CAN go to Dr. Moneybags and get a Sriracha enema to cure your cold, but it’s unlikely that Cigna will pay for any of it.
If the government collected community-rated income-indexed premiums from everyone and just simply paid all medical bills – the classic single-payer model – costs would be cut in half…
[/QUOTE]
About ten blue states have pushed for meaningful health reform, but they are just token gestures to motivate the base. California had no problem getting enough legislators to support single payer as long as a Republican governor was willing to veto it. Now they they have a democratic governor they can’t get the votes despite having a bigger majority.
If Vermont cant pass meaningful reform I don’t know who can. Vermont is the most liberal state we have.
Either way, real reform will require reducing costs. The guys who designed Vermonts plan found that having a strong public option would reduce medical inflation by 16%. But no blue states are pushing for a strong public option. You don’t need to totally revamp the health system to see improvements, a public option could provide 2/3 of the cost savings of single payer and would be much less controversial.
Comparative effectiveness, state negotiations, public options, transparent prices, etc. Would all help. Blue states will hopefully do them. First and I’d they work they will go national.
Isn’t Vermont a good example? I am probably getting some of the particulars incorrect, but my understanding was they had approved single payer but after they realized it would be too expensive they scrapped the whole thing. The savings touted were not there.
Except that suggesting that the statutory health care system in Germany is anything even remotely like US health care either before or after the ACA is a ridiculous absurdity that only demonstrates the profound misunderstanding many Americans have about how health care actually works in the rest of the world.
Germany has had universal health care for more than 130 years, as an integral part of its social contract. The US may never have it. At the most basic level, that pretty much sums it up. More specifically, the German statutory health insurance system is at its core a community-rated model in which everyone essentially pays the same rates and gets the same services, and in which there is a uniform system of centrally negotiated provider fees (or what American conservatives would call “socialism” ;)). It isn’t really single-payer but it functions as a consolidated entity that pretty much acts like one. The only part of the German system that in any way resembles the American model is the private tier, which serves only about 10% of the population and provides much the same services as the public one.
That’s called “insurance company accounting”. But the reality says different. And to see the reality all anyone has to do is look at any chart or table of what any advanced industrialized nation pays for health care, either on a per-capita or GDP basis. How do they do it? Is it magic?
To the typical conservative this reality creates such cognitive dissonance that they have to rationalize it through some of the kinds of reasoning we’ve seen here – perhaps costs are low because every medical service is run by the evil government, in the fashion of a DMV. Every doctor and every nurse is an uncaring government drone. People die waiting in lines. They ration health care. Perhaps they have death panels. How else could they possibly save money?
Here’s the reality. I’ll use Canada as an example because I know it best but it’s much the same everywhere else. Imagine a health care system that looks and functions almost exactly like the one that most Americans are used to, with private doctors, private clinics, and independent hospitals that also do teaching and research. The only difference is that when you use any of the services, you never get a bill, and never have to deal with an insurance company, because the public insurance system pays for it. That’s it. A succinct description.
So where do the cost savings come from? “Administrative overhead” is a major misnomer, to begin with, because it’s about a lot more than just filling out forms and dealing with complex masses of potentially different payers, co-pays, and so forth. It’s also about the insurance company’s efforts to meddle in the clinical process to try to avoid or limit payments. Which then leads to expensive collection efforts and doctors and hospitals potentially not getting paid. It leads to hospitals being forced under EMTALA regulations to sustain losses by treating the uninsured. All of which leads to absurdly high pricing policies, driven by a combination of administrative and collection overhead, losses, and the complete absence of any effective means of price control. It’s a cascading series of self-reinforcing disasters that a term like “administrative overhead” doesn’t even come close to adequately describing. Nor does it address the very important fact that in every UHC system in the world, there is an explicit means of negotiating and controlling a standardized, uniform and sane schedule of provider fees. The enormous cost savings come from the synergy of all those factors.
They abandoned it because the tax hikes were too high. It would require an 11.5% payroll tax along with an income tax up to 9.5%. I have no Idea about the savings but small businesses would end up paying much more under that plan than they do now. Plus Vermont would lose out on $300 million in federal funds if they enacted single payer. Not sure if that is an annual figure or one time but if annual that is $500 per resident.
I’m assuming the long term savings of single payer were still there. The prediction that single payer would result in a system 25% cheaper by 2027 etc. I don’t think that was disputed but I’m not sure.
The health insurance industry is not very efficient and employs a ton of people, many have been off shored, but many many jobs are here in the U.S. Simplify health insurance and go to single payer, and jobs disappear.
True enough, and during the recent Federal stimulus it was suggested that they could pay people to dig holes, and then pay others to fill them back up. At the end of the day, the workers are the net winners and the taxpayer/citizen the net losers.
Similarly, it’s not unreasonable to think that a more efficient system would benefit far more consumers than would adversely impact those working in the industry. As the link I posted earlier suggested, much of what is called 'administrative costs aren’t just useless bureaucracy.
As Ezra Klein noted on the Wonk Blog (and this guy is pretty far left, and presumably a single-payer fan), “It’s also important to note that you don’t necessarily want administrative costs as low as they could possibly be. Some activities that are considered ‘administrative’ are useful. Disease management, for instance, which accounts for some of the difference between Medicare and Medicare Advantage. Mental health counselors who are available by phone. Good-faith investigations into waste, fraud and abuse. Care coordination. Nurses who use e-mail or telephones to remind patients to take their drugs. Administration is not always wasteful.”
rationing again? Really? Do you really still think the rest of the developed world - democracies all - would put up with “rationing” in the 21st century?
How about looking at over-prescribing, the need for so many scans, so many of everything - each generating profit for someone. Excess is the issue, not rationing.
And yet, oddly enough, when Saskatchewan became the first province to enact single-payer, the touted savings were there – so much so that the ensuing experience became national policy and today reflects the same cost savings experienced by every country in the world that runs some form of UHC.
Isn’t it funny how the history of health care reform is full of these contradictions, where apparently miracles happen in other countries that can never be reproduced in the US. I wonder why?
I don’t know a lot about what Vermont tried to do but even the most superficial examination reveals many reasons that it could never fly. In a nutshell, it wasn’t single-payer at all, regardless of what they tried to call it. It was a convoluted, half-assed scheme with layers and layers of complexity, exactly the opposite of what single-payer is. Businesses took a direct hit because the only option that even came close to single-payer – to decouple insurance from employment and pay for it out of taxes – was abandoned for political reasons. But lots of exceptions and compromises were made, loading up on complexity and cutting down on both revenue and cost savings.
The federal government hindered rather than helped – there was little if any financial aid, and the system had to coexist with Medicare and other federal programs, greatly increasing its complexity. Private insurance could continue to operate, creating more complexity, and greatly undermining the ability to standardize and control provider costs. And it just goes on and on. Meanwhile, as in Saskatchewan, the health care provider industry and the insurance industry furiously lobbied against it and did everything possible to undermine it – despite the extreme compromises and pandering that Vermont had to do. But unlike in Saskatchewan, here they had overwhelmingly more power. The poor sad thing was DOA practically from the start, but almost entirely for political reasons and not because single-payer isn’t efficient and cost-effective.
With the exception of investigations into waste and fraud, which is always necessary no matter what kind of system you’re running, those mostly sound like clinical activities to me. How does someone consider mental health counseling or following up on drug prescriptions to be “administration”? Administration is stuff the health care industry does that has nothing to do with improving your health – e.g.- pretty much everything that insurance companies ever do, and that everyone else is forced to do when they deal with them. And speaking of waste and fraud, for some reason this never seems to be a big deal in single-payer systems AFAIK. Over-utilization, unnecessary testing, and clinical profiteering seems to be a side effect of how the US system is structured, specifically the lack of oversight.
I already made my argument here about why the seemingly “small” issue of administrative overhead, when combined with lack of cost controls, losses from underpayments and non-payments and, really, lack of much regulatory oversight at all, really does account for the huge difference in cost between health care in the US and everywhere else.
There seems to be some unsupported assumptions here. First, this seems to assume that the US does better on research and development than other nations, which is unsupported.
Second, that this would be due to the US system of health care financing and delivery, rather than other aspects of the US setup.
And finally, that research and development is a large enough part of the US healthcare economy that the research is a significant factor.
Just briefly, on the first assumption, while the US is the most populous developed country, and I can believe the US had a period of dominance after WW2 as the only developed nation who had both the finances to support serious research and the intact infrastructure for it. However, today Europe spends more on biomedical research than the US.
As for the second the US goverment is by far the largest single contributor to US medical research.
And on the third, the entire planets biomedical research budget is approximatly one-fifth of the overspending in the US system.
Part of the US problem is trying to run every single system under the sun, with all the duplication of work, paperwork, billing, liasing etc that results. Medicare is a national insurance system, like Canada and Japan, the VHA is a Beveride type system like Scandinavia, Spain and the UK runs, employer-based insurance is a Bismarck system like Switzerland, Germany etc runs, and pay cash is the model of choice for rural Africa.
There are no savings in adding another layer of government financed healthcare on top of that.
You need to replace the government systems with a single one, not add yet another one. But I don’t think a state can do that.
Every other nation has treated it as providing a vital in-house service for a big company and picked one system and run with it, with private healthcare filling in any gaps (except one for the last bit. Canada, I am looking at you)
Canada does have private insurance systems to “fill in any gaps”. It’s called supplemental insurance, is generally a standard employer-provided benefit, and covers small things like eyeglasses and prescription drugs and amenities like fully private hospital rooms. However, private insurance is not allowed for any basic essential medical services, which are universal and guaranteed to everyone at no cost. And there’s a very good reason for that. Perhaps I can frame it in terms of a comment to the previous poster …
The word “thriving” may be misinterpreted by those who don’t realize that the private system in the UK is used by only about 10% of the population, or roughly the same proportion who use the private system in Germany. Moreover, the UK private system doesn’t usually cover primary care, but is typically used for specialty services and surgeries.
I just think it should be clear here that the NHS is the essential foundation of health care in the UK, just as the statutory public system is in Germany. It would be a mistake to think – as some conservatives try to argue – that there’s some significant functional aspect of the private component that contributes to the success of the overall system, except to the extent that it lets the wealthy buy faster access to non-urgent specialty consults and get themselves esconced in luxurious private hospitals.
There’s also a cultural component in both countries that keeps the public system thriving and viable, namely its strong support by most of the medical establishment. There’s a good reason that private insurance for medically necessary procedures is not permitted in Canada, where the opposite dynamic exists: the pressure of American big-money insurers and their lobbies and the for-profit medical establishment from just the other side of the border is so intense that there are already private “executive clinics” operating on the fringes of the law, sometimes making it feel like the massive American for-profit medical establishment is like a maelstrom of floodwaters being held back by a creaking dam that is constantly springing leaks. It’s not that anyone really wants a private health system, except for the very wealthy who would probably get some marginal benefits, and the providers who stand to get very rich in an unregulated marketplace. It’s the irresistible lure of billions of dollars – so close they can almost smell it – that is pounding on that dam, and the biggest cheerleaders are the big health insurers whose sorry asses were so justly kicked out of the country, and who would come roaring back in at the first glimmer of opportunity.