I think the second part of the equation isn’t accurate. Insurers aren’t necessarily operating on a cost+ reimbursement model. I also am unclear that the 20% is applied to profits. The limit was imposed on the medical loss ratio.
The biggest issue is there are certain costs that are very high in our system, if you implemented singe payer you would have to make a choice. Does the government forcefully lower those costs by lowering reimbursement rates, or does it simply cover them?
The answer seems obvious, right? It’d just lower the costs. But most people don’t understand where the costs are coming from. It’s the evil insurance companies. It’s the evil pharmaceutical companies. It’s the evil medical device manufacturers.
In 2010 (the most recent year for which I could easily find these numbers), here’s the actual share of healthcare costs:
[ul]
[li]Hospitals (37.3%)[/li][li]Doctors & Other Health Professionals (31.7%)[/li][li]Drugs & Medical Devices (15.4%)[/li][li]Nursing Homes & Caretakers (9.7%)[/li][li]Other (5.8%)[/li][/ul]
These numbers aren’t much different than they were in 1970. In 1970 hospitals were a bit larger share (43.1%), doctors were a little lower (31.3%), drugs & devices were a little higher (16.7%), nursing and caretakers were lower (6.8%) and other was a good bit lower (2.1%.)
Inside that other are things like the insurance companies evil profits. You could wipe them out tomorrow and we’d still have the most expensive health system on Earth.
So now that we know where the real costs are, let’s go back to the beginning, “does the government lower costs” or does it “just cover them?” If option A, whose salary are you cutting? Doctors? Nurses? Hospice workers? That’s why this is such a problem, the hospitals and healthcare workers are generally very popular, respected people/organizations. But they’re frankly, vastly overpaid. We know they’re overpaid because they make tremendously more in America than they do in other countries–particularly at the high end.
Let’s look at some real numbers here.
In America, going off of the BLS Occupational Outlook Handbook, general practitioner doctors (your family physicians) earned a mean annual wage of $192,000/yr. Now, most people who know anything about general practice is it’s the least rewarding, financially, branch of medicine.
How much does the NHS pay a similar doctor? £55,965 to £84,543 is the official pay grade range. Multiplying these values by 1.5 (going off long term trend exchange rate, not factoring in the current price of the pound), that puts British doctors, at the top pay grade as GPs, at around $126,000/yr. Now, in Britain a doctor can choose to not be an NHS employee and work as a consultant, they are also allowed to work in Britain’s (relatively small) private health industry on the side if they do this. An analysis in the Telegraph (in response to a consultant doctor’s letter about how he was paid less than minimum wage) suggested a typical consultant would bring home about £7,000/month, or £84,000/yr. They also could get bonuses, sometimes tens of thousands of pounds. In Britain it is possible, but relatively rare, for the very best specialists, in areas of high demand, with many years of experience, can earn say, $500,000/yr roughly. But this is a very, very small number. The vast majority of British doctors earn somewhere around the typical NHS salary or the typical consultant salary–both numbers that are less than what a median salary GP makes in America.
Recent survey data has shown that dermatologists earn a mean salary of $300,000 in the United States. The average orthopedic surgeon, cardiac surgeon, earns $500,000/yr. That’s the average, and it’s equal to basically the “top 1%” of very best doctors in the entirety of the United Kingdom.
The OECD released a report in 2011 on comparative pay, this report showed Specialist, GP and Nurse pay. For some reason the United States and Japan, no data was reported for Specialists and GPs, but we did report data for nurses. Our nurses then had an average pay of $65,130 a year. The highest paid average specialist pay of countries that reported, was Ireland at $182,766, and GPs was Luxembourg at $108,793. So, knowing what we do from American sources, we know that our specialists make 2-3x as much as the highest paid specialists, on average, from other countries. Our GPs make around 50-70% more on average than the next highest. Our nurses are a little closer to international norms–but they make more in America than any other OECD country that reported numbers other than Luxembourg (which reported $73,600 for nurses.)
Then there are hospitals, along with doctors/medical workers the other giant pillar of cost.
Politically speaking, who is going to be the one to take the hit for telling every doctor in America they’re going to see their salaries cut in half (for GPs) or reduced to 1/4th or 1/3rd what they make today for specialists and surgeons? Who is going to tell the hospitals "you don’t need all this new equipment, you don’t need a state of the art trauma center, you don’t need a state of the art surgical center, you don’t need specialized tools to do minimally invasive surgery, you don’t need lab work done in a few hours or days?
FWIW–I think the economic reality is we need to rein in the money that goes to doctors and hospitals. But I’m talking political reality. This is why single payer is so difficult. It’s not American exceptionalism. It’s a “genie out of the bottle” situation.
Britain passed single payer back when doctors carried black leather bags with no more than a few simple tools and did very basic work. Most serious ailments still couldn’t be effectively treated. Life expectancy was much lower, treatment for most chronic conditions was minimal–only twenty years prior diabetes was still an effective death sentence. Britain and most of the West implemented these systems when healthcare was a much, much smaller percentage of spending as a percentage of GDP. That made it easier and frankly, more effective. It’s far easier politically to stop costs from growing out of control than it is to start cutting the paychecks of hundreds of thousands of highly compensated, respected, and politically powerful people–and make no doubt, that is the only way possible to realize the costs savings seen in other country’s single payer systems versus our own, it is the only way.
This is why people like myself prefer instead a system similar to what Germany uses. Each German state has a quasi-public organization that offers public health insurance, the premiums are based on ability to pay, with the poorest paying nothing (although most people pay at least some premium, you have to be destitute to pay nothing.) In addition, Germany still has a private health insurance market place, but if you opt out of the public system it is permanent, so you have to be quite sure that’s the right move for you. Instead of being NHS style single-payer, the German system is more akin to “Obamacare+” or Obamacare maybe as it was originally conceptualized (with a public option and cost controls.) The big thing is the German scheme has cost controls, and they can be very effective. Obamacare, with its frankly weak cost controls, has been estimated to have saved us from $2.1 trillion dollars in health care spending since its inception.
A move to such a system, with more robust cost controls, would allow us to start responding to the exploding costs of healthcare in a way that is more politically and realistically feasible. If we can slow the growth down, it’s possible some day it’ll “sort itself out” as the rest of the economy grows. But we’ll still probably need some way to “pop” the bubble on the hospital and doctors, but with stronger cost controls in place we can do it in a less draconian, much more gradual way. It may also come with things like public funding for medical educations, which will help justify lower pay.
Maybe. I think you’re bundling in some assumptions, though. Single-payer health care does not have to be universal health care, nor does it have to be paid for through taxes. In fact, since third-party insurance companies are profitable at current price levels, there’s no reason for any increase in any cost paid by the residents or any immediate change in doctor compensation.
A minimally disruptive move to a single payer yields some immediate benefits and lays the foundation for future revisions. Presumably, the government would have long term goals of cost controls and universal coverage paid through taxes, but you don’t have to swallow the whole cow in one bite.
Also, I would point out that states can negotiate policies between themselves without the federal government having to do it for them. Adoption of the UCC is one example.
We actually have a lot MORE to show for it.
The US has a higher per-capita number of MRI machines than any other country.
The US develops far more drugs than any other country.
Now, a lot of people point to our relatively poor outcomes on infant mortality. But what most people don’t know is that definitions vary by country.
https://mpalumbo.liberty.me/why-is-americas-infant-mortality-rate-so-high/
This is gonna be long. It seemed replying to lots of different things at once would be better than a lot of short replies, but apologies for the TLDRness.
Medicare is essentially where the US system sets recommended prices and evaluates cost-effectiveness of treatment. Private insurers look to Medicare’s rates, formularies, etc., to determine what they will cover.
It’s true that the US system has been primarily a volume-driven business model. The ACA has really shifted a lot of that, though the seeds were already there. Capitated models (you get paid a set amount for caring for X individuals, no matter how much it actually costs to care for them), outcome models (you get paid more for keeping patients out of the hospital or other positive outcomes), cost-sharing (you get paid more for reducing costs), etc. are being pushed very strongly. Medicaid (I won’t continue to define things unless people need the definitions) is shifting strongly toward managed care, usually a capitated model, in most states. There is also a stronger push toward rebalancing between institutional and home care which saves money, but may be more cost-shifting than cost-savings, really. More about that in a minute.
I think our current system is injured, but I do see some signs it is healing, at least somewhat. Single-payer would not, in and of itself, be the cure. The things that go along with single-payer would be the cure, but with one exception. More about that in a minute!
It took years for CMS to overcome that idiot’s death panels when trying to allow for compensation for end-of-life conversations. Millions of dollars wasted and thousands of lives harmed because one stupid person got a microphone.
Many people don’t want the amount of care that is covered. There’s a hope that allowing for the reimbursement for end-of-life care conversations will at least help identify those people. Right now, people who do not want extraordinary measures are often getting them because their wishes were not clear.
Also, the shift I mentioned above might eventually help with this idea of encouragement of overproviding care.
It’s dangerous to assume that health care must be about making someone healthier. Very few of us are getting healthier as we age. We want to slow decline, or stop it when possible. But there is no cure for aging, and no cure for disability, in addition to there being no cure for some significant diseases and disorders like Alzheimer’s and Parkinson’s.
No. You have to account for who is being covered through what source. Just saying it’s 50% for half of the people doesn’t address whether the government is covering the most expensive people.
For example, over half of long-term care is being paid for by Medicaid. Well over half of the hospital stays each year are being paid for by Medicare and Medicaid.
Do call in those circumstances. When someone is homeless, especially, bankruptcy is not a problem, nor is a hospital likely to even try to collect.
The “more about that in a minute” I mentioned above is about the shift in care from institutional (which would be mostly nursing facility and hospital) and toward community (which is intended to be mostly home, but also includes other “community settings” such as assisted living, adult day care, etc.). This is both an attempt to save money directly because the care simply costs less than a nursing facility, and also to conform to legal and ethical requirements not to warehouse people away.
But this cost savings for the government may be shifting major costs off onto caregivers and families.
My point is that the US system right now spends lots of money giving NF and hospital care to individuals who would be happier and better off at home, but our other social systems do not pay to help out those families or caregivers. So, two thoughts about this:
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Single payer is not going to help this at all, and
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It’s possible (I have not done any research on this and would welcome thoughts) that other countries save money on health care by helping families and caregivers give care. In the US, those people are often hung out to dry. If you combined the amount the US does spend on health care with the amount it does not spend on safety net programming, and then compared those numbers with the same numbers from other countries, it’s possible some of the disparity in money would disappear.
So, for example, Outer Wampomia spends 8% of its GDP on health care and 8% on programs that enable families to have the flexibility to provide care at home, that combines for 16%. Lots of people would stay at home.
If Inner Wampomia spends 15% of its GDP on health care and 1% to support families, that’s also 16%, but it’s a 16% that will tend to lead to less overall satisfaction (people like to stay at home) and makes medical what need not be medical. Lots of people would be out of home.
Now, the plain fact is that NF/hospital care is inherently more expensive, so this breakdown is not likely. But I think it is likely that some of what in the US ends up being “health care” would be, in a more sensible place, not explicitly defined at “health care” at all but “social support” like better safety nets.
Is that really a good thing, or just a waste of money? I’ve worked in hospitals. (As a PC technician) The MRI machine sits idle the vast majority of the time. Are people in Japan, or Europe, or Canada dying from a lack of MRI machines?
The health insurance industry employs about a half million people:
The US pays almost double for health care as the next country and over double what the average OECD country pays:
So imagine that in a one year period, we fired those half million people and told the medical community that they had half as much money to spend, now, as they were expecting.
Some of the half million would, presumably, be hired back on by Medicare to handle the extra demand. But since there’d be a single hierarchy and a simplified payment system, the total employment need would be much reduced. It’s likely that you wouldn’t get more than a 1/3rd of the laid off workers back into employment this way.
So, on the one hand, yes you would no longer be spending a lot of money to have children running around throwing rocks through windows, so that you could then fix them. The wasteful spending would be gone. But what do you do with all the unemployed children and window fixers?
The total spending on health care in the US is 17.4% of the GDP:
Any change made, which actually did a lot, would be significantly disruptive to the economy of the country.
Overall, it makes a lot more sense to take the system we have and figure out how to make it less stupid, than to try and supplant it.
Personally, my recommendations are:
- Stop health care from being a perk of employment. Individuals have to get a plan on their own, so they are judging it in the context of money out of pocket, instead of as a bigger-the-better perk of employment.
- Define a system where total amount of money paid in to any insurance program can be moved from one carrier to another, across or within state lines.
- Set up a ratings agency - like the one which rates car safety - that rates insurance programs for cost / years of life saved.
- Allow pharmaceuticals companies to file for an extension of their patent, equivalent to the amount of time spent seeking FDA approval.
With those four, things would slowly migrate back into a sane realm over time, without having to instantaneously disrupt the whole market.
Anecdotal data point: I’ve had a couple of MRIs over the years, and the hospital staff advise at the outset when taking the requisition that you have to be ready to be called on weekends and evenings if that’s when it comes open. The MRI seems to be running full-time.
Agree. In the US, CMS (medicare) currently isn’t allowed to even consider cost-benefit analyses in its decisions about what to cover, and most third-party payers don’t either, they just cover proven technologies/drugs and toss the rest. However, NICE (UK) definitely considers cost-benefit in its decisions and I think the people actually benefit from that. Just because you the person want this or that does not mean it is the best thing for your health. When it comes to health, more is not necessarily better.
Why would it work that way if we assume efficiency in a single payer system?
IOW, let’s assume that the arguments for single payer are correct: That we can massively cut health care costs if we eliminate third party insurance companies and have the government pay directly through tax dollars.
If I live in Vermont under single payer, my tax dollars may go up, but the end result would me paying less overall because I do not have to pay for health insurance or other medical treatment. Plus I would be living in a state where I had better medical treatment as well.
So, if single payer is the answer, why would people be flocking to other states when it is implemented?
What criteria do you use for “seems to work pretty well”? If I had the power to “tax” my clients and get whatever working capital I needed for my business, it would damn sure at least work properly. Whether I did it at a reasonable cost would be another matter.
Sure, Medicare provides health insurance to the elderly insofar as they are not dying in the streets. However, it is vastly expensive. It and Medicaid pay doctors very poorly. Many doctors take these patients because it helps pay the bills, but if it not for cash patients and those with private insurance, they would shut the doors.
So, at least in that sense, if everyone was covered by the government with the same shitty reimbursement rates, there would be shortages in coverage.
Spain is “single collect, distribute, manage at the regional level”. We used to be single-payer, but management of Seguridad Social is one of the things that’s been “devolved”.
I don’t have figures, but there is a general tendency to move people to less-hospitalized hospitals (not quite a contradiction, explained below) or to home care as soon as possible. The main reasons given are to avoid hospital-borne infections and for the family’s ease. Those lesser-hospitals are places that for example do not have surgeries or doctors receiving patients, but exclusively residents (long or short term, with greater or lesser degrees of care); often it’s a local old folks’ home. Home care may count as a remote hospital room: the hospital provides things such as heart monitors, oxygen-delivery systems, wheelchairs, cranes… often the chairs, cranes and similar won’t be top of the line (no motorized chairs from the hospital) but hey, they’re paid for; if you’re only going to need one for a few weeks or months you don’t need to buy or rent one.
Even if all (“all”) they do is avoid hospital-borne diseases, that in itself is a very big source of cost and pain, and they tend to spiral. Add having a more convenient and nicer location to visit, and you’re lowering economic and emotional costs (and don’t sneer at those, less ulcers in the caretakers are less ulcers in the population).
MRI anecdata, for Navarre’s single MRI nights and weekends are emergency only; I understand it’s the same in general for our public systems (at most you’ll get a saturday schedule at your request and with much grumbling). I usually schedule my specialist visits on vacational periods: since most people don’t want to go to the doctor over Christmas, it’s a perfect time to have a wide range of hours to choose from.
Your arithmetic doesn’t work. I don’t know where you get “double the money raised via taxation.” :smack:
The main source of funding for healthcare would be, just as it already is with Medicare and SocSec, regressive payroll taxes. Yes, Bernie’s plan calls, in addition to the regressive payroll taxes, for income tax rate increases on capital gains and at the top marginal rates, but no “doubling.”
And this claim
“US income tax system is so much more progressive than most of the rest of the world”
needs a cite. There’s a high state income tax in California, but for most of the states the combined (federal AND state) marginal income tax burden on America’s rich is less than that of most European countries even on earned income — and of course most of the income of the super-rich is low-taxed gains or dividends.
Some sort of taxes will have to go up; this creates an incentive to leave. Though puddleglum ignores that regressive taxes would be the major source of funding, some funding would be on the Marxist principle:
“To each according to his needs, from each according … oops! the ones with the ability to pay moved to New Hampshire!”
Here is a citethat quotes an OECD report that the US has either the first or second most progressive tax system in the world depending on how you measure progressivity.
The US raises 1.5 trillion dollars in income taxes. The private sector in the US spends 1.7 trillion on healthcare. That means in order to raise enough taxes to pay for single payer the US would have to double the money raised on income tax. To do so through a regressive payroll tax would be slightly easier. But if a rich taxpayer is paying 40% marignal rate in income tax and 5 in state tax then a 15% healthcare tax would mean he is paying 60% of income and is a reduction in take home pay of 27%.
I can’t prove a damn thing but it seems to me Americans under 30s have a very different view of society - in some considerable part due to a more ‘world’ view via the Internet - and, in time that will prevail over the vested interests who have bought policy for decades.
Dumb ass policies have survived because of international provincialism and a bought political class. As the old white guys die, it’s changing.
Even if single payer is less expensive the initial setup for the infrastructure would be expensive and any savings would not occur until later. Plus the whole purpose of most of these plans is to cover the uncovered and that would take more money.
If the system is going to be paid for via taxes that would mean that people pay a certain percentage and not a flat fee. This means that everyone who makes above an average wage plus the percentage of efficiency would pay more under the new system. Moreover, since the high earning tend to be healthier they would be paying more and getting less. The higher they earn they less value they would be getting.
For instance if a person earns 100K and currently pays 10K for great health insurance they would be losing 5K a year under the new plan that has them pay a 15% tax for the health insurance. If they pay 25K in taxes then their take home pay after health insurance premiums has gone from 65K to 60K, a decline of 7.7%. This person could raise their living standards by almost 8% simply by moving to New Hampshire.
From your cite.
Your claim that the U.S. would need a 1.l7 trillion rise in income taxes ignores that
- most of the needed revenue would come from regressive payroll taxes,
- income tax rises on the very rich need not, as your own cite shows, raise their rates above European levels,
- these taxes would be in lieu of present payments for health insurance,
- required funds would be less, due to savings (e.g. elimination of insurer bureaucracies),
- the rich taxpayer, for sufficiently rich values of rich, pays not 15%
, but a very low percentage of his income in payroll taxes - et cetera
I don’t get it… why would infrastructure be so expensive? The government already has a massive health care infrastructure in the form of Medicare. Furthermore, if you’ve put the health insurance industry out of business, you have a glut of people who already know how to administer health insurance plans. It’s not like the proposal is for free, unlimited passenger travel to the moon.
Furthermore, why stay stuck on funding it through taxes? If the system breaks when you fund it through taxes, the logical solution seems to be: don’t fund it through taxes. If you must, keep the ACA mandates in place, and the healthcare.gov marketplace. The only difference will be that every plan offered will be from one company.
If (as you assert) half the patients (private payers) are already subsidizing the other half (Medicare and Medicaid are 49% of patients seen by doctors), then why would that subsidizing end in a single payer system? Why would Medicare 2.0 not charge you (or your employer) the same premium, provide you the same health care, pay doctors the same money, and reap the same profit the insurance companies do?
The end result is the same system we have now but with only one insurance company.
Other improvements to the system could come later. We don’t have to implement the UK’s NHS in a single legislative coup de gras.
From this Canadian’s perspective one can do a personal cost/benefit analysis and I think that the worst issue is probably wait times. But personally, I’ve never had any major problems but that’s probably because physiologically I’ve never had any major health problems.
My wife, on the other hand, had an absolutely ferocious cancer battle five years ago and, superficially, the health-care system looked bad but, inside the walls of an aging hospital building that is now due for demolition, she got four months of outstanding care, tons of chemo, and a subsequent regimen of radiation treatment. She’s been cancer-free almost five years.
And then there are the people we read about in the media who have to wait two years for a knee replacement (or something like that anyway).
What I’ve never understood, however, is why dentistry, arbitrarily, isn’t considered health care and why drugs aren’t either.
My apologies for the hijack btw.