Based on the responses, it seems as if the insurance industry would undergo a significant reduction in forces and reach. I also understand that some of the people in that industry might be re-employed by the government, and some companies would be repurposed to meet new markets. Still and all, I imagine that when and if the discussion in D.C. eventually starts to turn to a single payer system, the insurance industry will push back mightily and it will therefore be a significant uphill battle to get to universal coverage. Even if the majority of citizens could be convinced that, say, Medicare For All is a good idea, it’s hard to imagine congress moving large against such a mammoth industry as medical insurance.
Finally someone exposes the Elephant in the Room.
America is unable to reduce the costs of its health “system” because so much of the spending goes to vested interests — giant rent-seekers who have to be appeased given the American political system. Insurance companies, their stockholders and employees are a big obstacle to such efficiency, but so are pharmaceutical profiteering and junketeering, perhaps including tort plaintiff’s attorneys and so on. Labor groups often have vested interest in negotiated retirement health plans which might be voided in a single-payer system.
We, as Americans, do not seek the best overall plan for society:
[INDENT]We seek to appease vested rent-seekers, especially those with the most money to spend.[/INDENT]
lol … yeah, pretty much this!
The principle of UHC is that private enterprise has no business in determining access to medically necessary health care, not only because it’s morally wrong but because it doesn’t work – it’s not a market-oriented demand and it doesn’t respond to ordinary market dynamics. But that said, there are potentially a great many aspects of non-critical or non-essential medicine and/or small things that private insurance can still cover, like private hospital rooms, ordinary dental care, medications, and certain kinds of medical equipment. In Canada this is called supplemental insurance and is usually covered by the employer; the self-employed or retired usually don’t bother with it, and retirees have extra benefits anyway. Those insurance companies that remain are always trying to flog their supplemental plans but by and large they are usually employer group plans.
Another potential use for insurance companies is as payment-processing intermediaries. In the early days of single-payer in Canada, Ontario and perhaps other provinces used them that way because the government itself was not yet set up to run this kind of massive billing and payments system for health care and insurance companies were. But Ontario eventually established its own payment system.
Either way, the result would be much smaller insurance companies and many would probably choose to get out of the business altogether in view of the limited profit potential. It’s true that jobs would be lost except for those who remained to administer the supplemental plans or found employment with whatever entity(ies) ran the single-payer system, but in the long term these are essentially useless jobs in an industry that contributes no real value to the health care system and adds enormously to its costs, both directly and indirectly by making it impossible to systematically control costs across the board. You may as well pay half those people to dig big holes in the ground and the other half to fill them in again. At least it’s better than paying them to deny health care claims! For those who may not fully understand why this is so, a big and fundamental part of any insurance business is assessing risk, determining individual premiums, and adjudicating claims, and single-payer does none of those things. From the patient’s perspective there isn’t even such a thing as a “claim”, it’s all just an invisible part of the billing and payments system that they never see.
A bit of an aside, but a growing number of hospitals in the US are being built as or converting to exclusively private rooms based on improved patient outcome. I assume the cost is the same as the old double rooms otherwise the insurance companies would be raising holy hell.
That’s a very interesting question and thanks for bringing it up, aside though it may be. It raises a lot of complex issues and I’d love to hear more about it. To the best of my understanding, it’s obviously more costly upfront since you now need quite a bit more floor space per patient, hence fewer patients in the hospital. But that may not be the whole story if infection rates are reduced and hence patient isolation and infection treatment costs are reduced. In areas with excess hospital capacity, all-private rooms may also be a draw that increases “guest occupancy rate”, in the spirit of the traditional market-driven hotel paradigm, which indeed is apparently why some hospitals are doing it: for competitive reasons. And insurance companies are happy to eat the cost because they just pass it on to all their customers in the next billing cycle.
It’s potentially a good thing; it’s also potentially one that drives up costs and reduces hospital capacity. I haven’t seen definitive studies on it.
Basically, the American system is a river of money flowing by and everyone in the system dips their bucket in to pull out as much cash as they can.
Another point is that besides Medicare and Medicaid, the USA has a third public-pay system: anyone who shows up at a hospital with a problem receives the basic care necessary, and those $100 Aspirins and tongue depressors (for those who can pay) go toward paying for those who get treatment but have no way to pay… a horribly inefficient method.
There are a huge number of savings in the Canadian system. The billing system is staffed by civil servants, who make decent but market rate pay - including the administrators. There are no excess profits. There are no multi-million dollar CEO’s. The doctors have one place to bill, so no plethora of confusing forms. There’s a known list of what is covered and what the billing is, so no time-consuming back and forth or excessive secretarial work to determine if or who pays what. (Only more cosmetic stuff is not covered generally, so no questions.)
So yes, in the USA, if they go to Medicare for all, then the insurance companies will wither and go we don’t care whither.
An important point - in Canada, the health authorities for the provinces took over the hospitals. They are all non-profit. One friend of mine in medical school years ago made some comment about the cost of replacing unpaid nuns in the administration of St. Michaels with high paid civil servants, but that would be an exception. The lower and mid-level people get union civil servant wages (we hope). The hospital’s expenses are paid with a budget supplied by the province - except for doctors’ fees which are billed to the provinces according to the fee schedule. (Although some are just employees of the hospital - how do you bill for “doing the rounds?”)
Think of the simplicity of not having to itemize every bit of work done for a patient, and then generate (and chase for payment) individual bills. I’m told a simple hospital bill in the USA can run for pages and itemizes every little detail. And… they have the same joy of dealing with dozens of health insurers with back and forth over what is and is not covered, renegotiating and splitting bills, answering questions about them, etc. All that is replaced here by a simple accounting department that pays for supplies and runs a payroll.
I should also mention that for the NHS in Britain - one comment I saw was the sort of thing about waiting for months for an opening with a specialist “Oh, you have private insurance? Why didn’t you say so. In that case, he can see you next Tuesday.” The Canadian All-in-or-all-out prevents this. A doctor cannot be paid by medicare nor will his patient be reimbursed if he also does the same work for a fee outside of medicare. There is no way to pay the same doctor to bump you forward, and the doctor cannot extort more money for preferential treatment.
I appreciate having no sympathy for these large impersonal corporations, however they are public traded in most cases … we tend to stereotype the shareholders as a bunch of heartless and wealthy fat cat one-percenters … unfortunately, this is not always the case …
Pension plans are involved in these stocks as well … insurance companies in the general sense tend to have low risk-of-default, they belong to the insurance pools so if any one company gets nailed with a greater percentage of the claims in any given year … all the other insurance companies chip in to pay the claims … right, insurance companies have specific exemptions from anti-trust laws, they can sit down together and set prices to a limited extent …
It’s easy to see the shareholders as folk who deserve to have their money taken away … but we have to remember there’s also many hard working middle-class out there paying into their pension plans … IRAs and 401(k)s … does it matter that We the People promised Joe the Plumber fair returns on his retirement investments these past 40 years, or is it okay to just take $(some amount) in capital and return nothing? …
The counter-argument to the above is that if Joe the Plumber invested all his money in health care insurance companies, then he might deserve to lose everything … smart money is invested in a diversified portfolio so that if disaster happens in one sector of the economy, the investor still maintains most of his assets …
But still … there’s a principle involved here … once government takes their tax money, they should never come around years later and take more … there’s an implied promise they won’t …
The slave trade was banned some time before slaver itself, and the slave owners were generally paid compensation for their lost property.
I’m not sure how expansive your “possible outcomes” question is, but I have some input.
Anyone who genuinely understands capitalism (most who promote it in forums are thoroughly ignorant about it), recognizes that a great deal of the excessive costs of American health care, are the direct or indirect result of the decision eons ago to follow the “insurance” model of paying for everything. It is insurance company influence which drives the AMA to micromanage care delivery, and to require a lot of the excessive testing that goes on. Overcharges for smaller things, such as hundreds of dollars for single doses of aspirins, is the result of insurance companies limiting what they will allow as charges for other items.
How much effect a single payer system has on us, would depend on the exact details of how it is carried out. Many of the opponents of single payer, insist on only one way to do it: have tax money pay any bills presented, without question. That would certainly cause the explosion of expense that they insist is inevitable. And it would put a lot of medical insurance companies out of business. If instead, medical providers have to allow the IRS to inspect their billing practices in detail, and tax them higher for overcharges, more rational actions might result.
What about malpractice? It’s said that a lot of medical providers charge the exorbitant amounts they do, in order to be able to pay the humongous cost of malpractice insurance. That’s why Republicans have (pretended) for decades now, to want to “solve” medical cost, by limiting lawsuit payouts. If malpractice insurance is unaffected by a single payer system, many of the existing problems will not be dealt with, but a lot of insurance companies will remain in practice.
If single payer will cause an “explosion of expense”, you need to explain why that has not happened, and why in fact every country with single payer or its functional equivalent has just a fraction of the per-capita health care cost of the US. It turns out that there are structural reasons within the systems (such as non-profit hospitals and common fee schedules) that eliminate incentives for overbilling or make it difficult to hide. Paying bills without question is fundamental to how single-payer works, because otherwise you’ve got the deplorable and wasteful insurance model of scrutinizing every clinical decision.
And yet studies have shown that medical liability is actually a very small contributor to total medical costs, and that the focus on it as a means of cost control is mostly a misguided fantasy advanced by those trying to rationalize a means of cost control while retaining the unregulated private insurance model. Rothstein (2010) even suggests that “one of the leading reasons why individuals bring medical malpractice claims is to ensure the availability of funds for future medical care”, a motivation that disappears under single payer.
You don’t solve the problem of excessive medical malpractice suits (if in fact it is a problem, not just anecdotal) by capping payouts.
You solve it by reducing the need for such malpractice suits to cover the cost of future medical care. Single-payer guarantees no medical bills, regardless of the cause, so you don’t have to look for a deep-pockets defendant, like the doctor’s insurance, to cover the future medical costs.
The perspective in this post is flawed in several ways.
First: Nobody wants to lay off insurance workers, or degrade the wealth of insurance stockholders, because they are bad people. :smack: The insurance companies are bad for society because they are a drain on the economy — they are the reason a medical procedure costs $1000 instead of $700.
Second: Buying stock is essentially a gamble. Johns-Manville was one of the Dow-Jones Thirty Industrials for a full half-century, but was driven to bankruptcy by asbestos lawsuits. The pensioners who had stock in J-M were not bad people. Did you advocate at the time for continued use of asbestos to avoid hurting these employees and shareholders? Mayor Bloomberg tried to reduce the consumption of non-nutritious soft drinks in his city. Many fought this; did they fight it out of concern for Coca Cola stockholders?
Third: The sentence “once government takes their tax money, they should never come around years later and take more” is neither comprehensible, nor correct! 
I would support a gradual switch-over to government-paid health, to reduce the impact on insurance companies. No, I lack a clear idea of how to accomplish this. But for the government to continue funding the purchase of buggy whips, or asbestos, or private health insurance, out of sympathy for stockholders, is not part of a path toward economic prosperity.
I definitely support single payer but I do wonder about how to get there from here without disrupting people’s healthcare.
If we flip a switch on 01/01/20xx and say everyone is now covered by Medicare, what are the effects?
It seems like the knowledge that this was coming would cause a crash of insurance stock prices quite a while before that date, possibly bankrupting the companies and leaving people with no coverage for a period before the changeover.
So how would this be handled? I assume that there would have to be some kind of gradual changover.
I am sure I posted this in another thread but this Vox article is about well studied proposed legislation that would gradually transition to single payer.
A more recent article covers funding options.
How would we (you Americans) get there? perhaps, raise the qualification bar for Medicare/Medicaid income level each year. Offer the employers the opportunity to sign up with Medicare if they have less than X employees, too. This would give the existing insurers time to adapt and reduce their business over time. But yes like the brokers whose major businesses evaporated with eTrade-type low fee transactions, health insurers have built themselves a giant golden castle on a fragile sand - they should know, if things can’t keep going on this way… they won’t.
It’s not a matter of “single payer pays all bills presented”. They will publish a fee schedule -what is covered is covered and the amount published. They will pay that. They will not pay a doctor or reimburse the patient (or hospital) if the doctor attempts to charge additional fees for a covered service. (I assume this is how your medicare/medicaid works now.) All persons covered by the system will be registered. It could be run at the state level if some states were not obstructionist to the point of reckless disregard for their constituents’ health. (Canada - the provinces run the systems, the feds provide supplemental cash and a set of operating guidelines that prevent the system from being nibbled to pieces)
You could have a much more civilized civil lawsuit court system if you adopted the Canadian system, where the loser 99% of the time pays the winner’s court costs. Canada also strongly frowns on contingency fees. Right now, a high component of the lawsuit cost and malpractice insurance is based on the fact that it is often cheaper to pay someone to go away, regardless of the merits, that to fight to the win. (Assuming the other side doesn’t play the rich fat cat vs. poor, helpless cripple card to a jury.) Plus, the amount is inflated by the lawyer’s exorbitant cut. When the government pays all injury bills, there’s not a lot more claims left to go after. (Canada also seriously limits “pain and suffering” awards, IIRC).
You jumped to conclusions after misreading what I said. The other systems you describe did NOT do as the opponents pretend the only option is. They did NOT simply start paying whatever bills were presented.
Calm down.
No, this isn’t the case. Contingency fees for personal injury lawsuits are accepted in all provinces.
No. The amount awarded by the Court is based on the quantum of the loss proven by the plaintiff: lost income, health costs not covered by the medicare system, lifestyle changes like mobility aids, home renovations. The award is not inflated to cover the lawyer’s costs, because it’s based on the itemized bills that the plaintiff proves.
What happens is that the plaintiff doesn’t benefit from the full amount of the award, because of the need to pay the lawyer, either on a retainer or by a contingency share.
There are caps on “loss of enjoyment of life”, but those are not tied to health care costs or the health care system. They apply to all personal injury torts and were implemented by the Supreme Court to ensure uniformity in the amounts individuals would receive, rather than let it vary greatly from court to court, province to province, jury to jury.
Let’s move this over to Great Debates.
Colibri
General Questions Moderator
Not counting the things that had to be sorted in advance, it would mean that everyone would then have a low-cost comprehensive insurance plan, administered by insurance companies, financed and controlled by the government.
As it is now, Medicare is not free health care. It doesn’t cover all things. Providers are not obligated to accept it. I think it is a terrific program, but it doesn’t solve all problems.