That American single payer dream

One by one, Democrats are moving on from the Affordable Care Act. And increasingly, they’re embracing a full transition to a single payer system as an answer.

OK.

But the most ambitious single-payer plans are probably dead in the water. The California, Sanders, and Conyers bills call for extraordinarily generous benefits that outstrip those offered by most real-world countries with universal health care. California’s bill, for instance, would have the state pay for all long-term care, nursing homes, dental, and vision, none of which the single-payer system in, say, Canada typically pays for (it doesn’t even pay for prescription drugs or therapy sessions with psychologists).

OK.

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.

Sure, you can make US health care cheaper by paying everyone in US health care less money.

In the latter analysis, they found that over time as employers adjusted to the new reality, 85 percent of Americans would ultimately be insured in AmeriCare, 10 percent in Medicare, 3 percent would be eligible for multiple government programs, 2 percent would be in the military’s Tricare system, and a mere 1 percent would still have private insurance.

AmeriCare doesn’t eliminate the private insurance system, but it does make it small enough to drown in a bathtub.

But here’s the thing: Lewin finds that AmeriCare would take over because they assume that almost every employer would choose it over private insurance, because it’d be so much cheaper. “The combination of lower administrative costs and lower provider payment rates under Medicare makes Medicare coverage very attractive to employers,” Commonwealth’s Karen Davis wrote in 2007, using “Medicare” to refer to the new AmeriCare program. “When given the choice, most employers would purchase coverage for employees through Medicare.”

Ah, but those very much lower compensation rates are going to mean that US health care won’t be as good as it was. Nor as good as is available through private insurance. Nor will there be as much public sector health care either.

The whole idea works by degrading current health care standards. Leaving rather a lot of room for private on top of it, no?

49 comments on “That American single payer dream

  1. Something most people seem to miss with the amount the US spends on healthcare is that it is, to a large degree, a reflection of what American’s want to spend on health care.

    I’ve seen plenty of people in the UK waiting for poor service from the NHS when they have plenty of money to have gone ahead and paid for private, good, fast service easily, yet they don’t because they are so wedded to the idea it should be ‘free’ on the NHS (praise be upon the envy of the world etc…).

  2. You know – you’d think they’d want to roll this out in a few of the richer states first to see how it goes. After all, if CA can’t manage SP on its own then how is it going to do so while supporting the shortfalls of states like Arizona?

    But it seems they all understand that the revolution can’t succeed until it meets itself.

    For some reason, having a free market *anywhere* in the world just completely destroys it all.

  3. In the UK, private healthcare doesn’t pay particularly well. Total compensation for a nurse in private is much lower than in the NHS because of pensions, maternity leave, sick leave, training, automatic pay increments, etc. At the top end there are specialist surgeons who can command huge sums; and dentistry is a case apart; but most rank-and-file healthcare workers are better off working for the NHS than for the private sector.

    The lesson here is that the AmeriCare approach, paying everyone in US health care less money, simply won’t work. Bevan famously boasted about “stuffing their mouths with gold” to draw doctors into his new NHS.

  4. Entirely predictable outcome of that proposed system: doctors won’t accept it and will only take cash.

    At which point a new private insurance scheme à la Bupa will spring up alongside.

    And then employers will start offering AmeriBupa as an employment benefit.

    And we’re back at square 1, more or less.

  5. “California’s bill, for instance, would have the state pay for…”

    Sigh,

    Even after all this time, the sainted Margaret’s words have not been heard; the State has no money. How long will it be before people finally understand this?

  6. Given the focus on paying healthcare providers much less, it sounds like it would turn into how many LATAM countries operate their healthcare systems. In Mexico the IMSS institution originated as publically provided healthcare for all private-company employees. It started off well but over time the small budget and the limited amounts it paid for healthcare meant the quality of care deteriorated. Now private employers pay the mandatory fee to cover their employees under the public system but then also pay for private insurance on top of that, which all of their employees prefer. This has led to a system where public healthcare only covers the poorest in society with the cheapest treatments available and with 6 month queues whilst anyone with a bit of money pays out-of-pocket or has private insurance. Can’t see this USA approach leading to anything different.

  7. I was under the impression that US health care was so expensive, because it had to factor in legal costs.

    Funnily enough, the NHS does sometimes work properly. I am about to have a minor op and waited the same time as the private version that I had had a few months ago (in fact I could have had it even earlier, but wasn’t ready). I don’t know what the service is like, I suspect that the brandy will be Metaxa rather than Napoleon and Ill have wood to bite on rather than leather, but as long as the surgeon rinses the saw off first…

  8. I read an article some weeks ago about clinics in the USA only accepting cash and doing very well indeed as their prices were so much lower than clinics being paid by insurance. The reason for lower prices: no large fixed costs to manage insurance claims.

  9. BnliA

    The main reason why healthcare in the US costs a lot is the fact that they pay for a lot of cutting edge stuff.
    Secondly the administration costs are astonishingly high – hospitals employ legions to deal with hundreds of insurers – who have legions to make sure that the provider does not pay for things not in coverage. One could probably provide basic healthcare coverage for the poor in the US by going to single payer and getting rid of some of the admin overhead. (say 1-2% of GDP). Note that this would give them really basic healthcare not the absurd fantasies of California etc.

  10. ‘One by one, Democrats are moving on from the Affordable Care Act. And increasingly, they’re embracing a full transition to a single payer system as an answer.’

    That was always the plan. Obamacare is a poison pill on the way to single payer.

    The socialists don’t like American health care. They intend to remake it. They have no knowledge of health care, nor business. But think they are smart enough to design a system, a good system in their minds, to replace it. ‘AmeriCare’ is them day dreaming, out loud.

    As always, people will die.

  11. monoi and ken have nailed it.

    Round here, an MRI costs $3000 to $5000, if you have it done at a facility that takes “insurance” (sneer quotes because what we call insurance is actually pre-paid medical).

    Or, you can go to this one place that doesn’t take insurance. It costs $500 and they still make a profit. In California, there’s a chain of clinics that charges $300 for an MRI and remains profitable.

    Similarly, our GP charges $150 for an office visit. I recently asked him how much he would have to charge, in order to make the same amount of profit, if he didn’t have the expense of the overhead from dealing with insurance companies. He replied “$65”.

    Get rid of a few unnecessary regulations and I bet you could get that $65 down to $50 and that $500 or $300 down to $250.

    In a world where office visits cost $50 and an MRI cost $250, who would need expensive, over-comprehensive, “insurance”? Most of us would carry cheap catastrophic cover and pay out of pocket for the routine stuff, much like the way that PetPlan works. Those too poor to afford that would likely be on Medicaid anyway.

    And that’s why it will never happen. What CEO of an insurer wants to be in charge of a multi-million dollar fund, instead of a multi-billion one? What CEO of a hospital would rather run an outfit valued in the millions than the billions? (Numbers pulled out of my backside, but you get the picture).

    That’s the real reason that repeal and replace never went anywhere. Too many interests vested in keeping healthcare insanely expensive.

  12. @the other rob,

    > our GP charges $150 for an office visit … $65 without the overheads

    That’s awfully cheap either way. In the UK there are a handful of private GPs; one in Bournemouth charges:
    – £40 for a 10-minute telephone call;
    – £80 for a 20-minute face-to-face consultation;
    – £145 for a 40-minute consultation;

    A quick search around other private GPs reveals that £70-80 for a 20-minute consultation is the standard price point.

  13. @Andrew M

    20 minutes is about average for an office visit and 80 quid is currently about $108, so it’s actually cheaper in the UK.

    Just to be clear – I don’t want to give the impression that he charges $150 if you use insurance, $65 if you pay cash.

    That is not and could never be, possible. He has the overhead of the special computer systems, all the girls in the billing department, etc. regardless of how the patient pays.

    The only way that he could get it down to $65 would be to stop accepting insurance altogether.

  14. “I’ve seen plenty of people in the UK waiting for poor service from the NHS when they have plenty of money to have gone ahead and paid for private, good, fast service easily”

    Have you tried getting private medical care at all? I can tell you from the person experience of immediate family members, having the money doesn’t come into it. Getting to see a private doctor means getting ‘referred’ by your GP, some of whom hate private medicine on principle and won’t refer you. Private doctors won’t see you unless you are referred to them (presumably to preserve the doctors closed shop union rules), and there are no private GPs (I’d use one like a shot if they existed in the sticks, they may do in London). So you can have money coming out of your ears, but getting a doctor to treat you in return for some of it is no easy task.

  15. “and then employers will start offering AmeriBupa as an employment benefit”: the American system of getting ‘health benefits’ paid for by the employer started in the wage control era of The War – you weren’t allowed to attract and retain workers with pay rises so you offered them ‘free’ health insurance.
    Why wouldn’t employers now just offer higher pay? Is there some tax advantage in getting health insurance?

    “The main reason why healthcare in the US costs a lot is the fact that they pay for a lot of cutting edge stuff.” But what if you need a physician rather than a surgeon?

    P.S. A friend was recently quoted £500 for a private GP visit (London, weekend). By “GP visit” I mean that the GP would visit the patient.

  16. Absolutely and totally off topic, but has anyone noticed that Murphy is now affiliated with a new organisation, Tax Justice UK, which is advertising for an Executive Director in London (paid 45-50k and no need to be a tax specialist – ab initio at least).

    You could be Murphy’s “boss”.

    No need to be a tax specialist? Sounds like Murphy is qualified to take the position himself. Actually, he’s probably overqualified.

  17. Single Payer is nothing more than a symptom of how out of touch much of the Democratic Party is with reality. It is useful only in measuring the leftward drift of the party.

    At the state level, moderates have left the Democratic Party, leaving a vacuum that has been filled by the sort of people who take Robert Reich, Dean Baker and Paul Krugman seriously. If anyone thinks boobs like Bernie Sanders and John Conyers are going to really get anything done, well, I have an ocean view property here in Westerville I’d like to sell them.

    Right now Republicans completely control (governor, house and senate) 26 of 50 states. Democrats control a total of 6. There is no desire for SP amongst the majority of the electorate… Especially as the disastrous failure of Obamacare is obvious to just about everyone except Paul Ryan and Mitch McConnell.

    A non-starter.

  18. There are private GP services available in London as I’ve been making use of one such provider since I moved here from the sticks. The local NHS GP doesn’t even know I exist.

  19. As I understood t one of the big problems with
    US health care costs was that doctors were paid for running tests, whether they were needed or not. This led to patient expectations of having loads of tests, a bit like UK patients expecting to leave their GP with a prescription for antibiotics, no matter what ailment they went in with.

    I did hear some praise of a part of the ACA from an unlikely quater, the Cato podcast IIRC, which focused on this problem and had led to some savings.

  20. “The whole idea works by degrading current health care standards. Leaving rather a lot of room for private on top of it, no?”

    Yes.

    But perhaps more fundamentally, most American “health policy” leaders are still not making necessary distinctions between medical care and medical insurance.

    Just read X number of articles – general media and journals, scholarly sources – you will find this curious analytical mistake repeated. Everything tends to be called “health care” which misses the obvious fact than one cannot reduce the cost of medical care by reducing the cost of its insurance. That’s exactly backward.

    Is this done out of ignorance or out of some intent to deceive? Yeah, I think probably so.

    American health policy has been wandering around in this wilderness for more than 60 years. Moses led his people out of their wilderness in only 40 years. One would think some American health policy Moses would have emerged by now. One would think.

    I think Americare will turn out to be a national medical welfare scheme, offering lower prices for providing decidedly less comprehensive and less accessible medical care. Continued escalation of medical and legal demands on physicians, in exchange for lesser incomes, will result in fewer talented young people choosing to enter the medical professions. Seems inevitable to me that an Americare scheme will degrade the delivery quality of whatever medical care remains available. Medical welfare.

    Could that possibly be what most Americans really want? Well, maybe, if they are duped into buying it under this assumed name. Especially if Jonathan Gruber’s notorious strategy of exploiting the ignorance of the American people is used once again.

    I can barely contain my enthusiasm.

  21. As I understood it … (which is doing a lot of work around here just now 🙂

    The excessive testing conducted by US doctors was a legal “due diligence” complaint. If you tested for the usual things relating to the patients’ symptoms, but 1 in 100 was actually suffering from rare condition “x” that either presented similarly (see nearly every episode of House) or whose symptoms were masked by those of common condition “y”, then beware of infalling law suits.

    YMMV

  22. dearieme,

    > A friend was recently quoted £500 for a private GP visit (London, weekend)

    Try gpdq.co.uk; £150 for a weekend home visit.

  23. Dearieme: “is there some tax advantage in getting health insurance?”

    A US employer may deduct premiums paid for employees health insurance, but the employees are not required to treat either those premiums or benefits received as income.

    Americans who purchase their own health insurance get no deduction for premiums. I don’t know if they must report benefits as income, but would not be surprised.

    Yet another crony capitalist scam which the Republicans wilfully ignore.

  24. Jim

    Granted I live in Kensington, not the Sticks, but my GP is private and I didn’t need to be referred/recommended to him. He charges me £110 for 20-30mins and refers me to whomever i wish to, or need to, see.

    i am registered with an NHS surgery, but they are worse than useless.

  25. The fastest growing area of medicine is self diagnosis on Google. A trite point perhaps, but as costs escalate people are going to turn to this, or internet diagnosis by foreign doctors. Cheap pills etc.

  26. Jim, my experience exactly with private healthcare in the UK. I actually managed to blag treatment, with a note ( in Latin and German) from an Austrian GP.
    I lost faith in the NHS when my local hospital ballsed up a relatively straightforward issue and left me a near-cripple for 10 years. But ( so far) with this next procedure it has all come together nicely, although I do find myself constantly explaining to the right hand what the left hand has been doing.

    In Austria, because I didn’t live there 100% of the time, I didn’t have proper insurance but just walked into a sawbones and paid the 50 or 80 Euros for a consultation. MRI scans costed about 150 Reichsmarks in a clinic above a shop in suburban Vienna. That was 10-ish years ago and I suppose that they’re a bit more expensive now, but also there was (is) a real insurance crisis in Austria and scans were being rationed by the insurers.

  27. Good posts, rob.

    “we call insurance is actually pre-paid medical”

    I prefer to call it third-party payer. Same effect. The marketplace is skewed when the user of service has no stake in the cost. The provider must deal with getting paid from elsewhere.

    Insurance should mitigate against severe loss, not pay for routine expenses.

    “He has the overhead of the special computer systems”

    Mandated by government. When my GP of many years retired, I asked him why. All the computer crap was the first thing he said. Computerization of medical records is a multi-billion dollar boondoggle providing nothing for the customer but a vast invasion of their privacy.

  28. ” but my GP is private and I didn’t need to be referred/recommended to him. ”

    I should have said ‘private specialist doctors require referrals’ – if you have a bad shoulder complaint you can’t rock up at the nearest private hospital and ask to see a specialist, regardless of how much money you wave under their noses. They require a GP referral, and as there are no private GPs other than in large urban areas, you’re stuck with being referred by your NHS GP. Which often won’t until you have been through their Kafka-esque ‘healthcare’ process first.

  29. “Fred Z
    A US employer may deduct premiums paid for employees health insurance, but the employees are not required to treat either those premiums or benefits received as income.”

    Whereas here in the UK the employer gets a deduction but the employee pays tax on the value of the benefit.

    TaxFact (because tax is fun).

    If your employer pays for an inoculation for a seasonal illness (the annual flu jab) then this is not considered a tax benefit BUT if it is for a non-seasonal illness (deadly Zombie Plague or such-like) then it IS a taxable benefit.

    I keep meaning to ask HMRC if there would be a rebate if tax were paid and the employee died anyway.

  30. Americans who purchase their own health insurance get no deduction for premiums. I don’t know if they must report benefits as income, but would not be surprised.

    Not quite. If a taxpayer does not itemize, the do not get a specific deduction for health insurance premiums. It is factored into the amount given as a standard deduction. For those who itemize, health insurance premiums, along with all health care costs paid for by the taxpayer, are reported on Schedule A.

    As a practical matter, though, Fred is correct. Deductibility is subject to a floor, which is 10% of the taxpayer’s adjusted gross income. So, if the taxpayer has an adjusted gross income of, say, $100,000, his floor is $10,000… Meaning the first $10,000 in health insurance premiums and health care costs are not deductible. My guess is that a majority of filers do not incur enough in deductible costs to end up with a meaningful deduction after the floor has been applied.

  31. Oh yes, in the vast majority of cases the benefits from a health insurance policy are not taxable to the recipient. Health care costs paid for by an insurer are a nontaxable event to the holder of the policy.

  32. Jim,

    You seem to be doing badly with GPs in your neck of the woods. On the couple of occasions I needed to invoke my work private health care my GP couldn’t get me off his hands fast enough.

    I recently had a flare up of a Sciatica type back problem. The policy is that my GP needed a physio to refer me to the MSK clinic. That was going to take 6 weeks but she was more than happy for me to get a letter from my private physio who I use for exercise and sport related problems. (I suppose that makes me an evil NHS queue jumper)

  33. I simply don’t get the fascination with single payer. American’s will have spent roughly $11k per capita on health care for 2017. Insurance profits will be counted in the billions, a couple hundred per capita. Even if we devise a single payer system that removes the necessity for profits, which doesn’t bloat away the savings, we aren’t going to see dramatic savings.

  34. I just reread Timmy’s post. Who are the idiots that want to mess up vision care? Currently I eschew vision insurance as the little it does cover, basically an eye exam and glasses/contacts, is far cheaper purchased without insurance. $69.95 for two pairs of glasses and the eye exam is cheaper than $16.17 per month. Note that the $16.17 figure does not include the amount my employer pays.

    I have similar views on dental insurance but, as I’ve never had a cavity, let alone anything more expensive, I have not inquired about the cash price of treatments.

  35. Dear Mr Worstall

    In next week’s news: tired of paying out all that cash for steaks and pizzas? We’ll do it all for you: AmeriNosh – the single payer for all your food needs.

    I wonder how that would work out.

    DP

  36. “I simply don’t get the fascination with single payer.”

    It’s the socialist’s wet dream. Control of health care means control of everything.

  37. @Liberal Yank – where do you get two pairs of glasses for $69.95?

    Last time I tried, with this place called “$39 Glasses” it ended up costing me around $140 for one pair. And they were crap.

    I do agree that vision insurance is a mugs game, though. I even have a stock example that I trot out to illustrate the worthlessness of it and other overbroad aspects of so-called health insurance.

    “Consider your cat. I’ll say, “Her insurance doesn’t cover her annual shots, does it? Have you ever wondered why? It’s because those shots are something that you know is going to happen and you can’t insure against a certainty. Say they cost $100 every year. The only way that your insurer could cover them would be to charge you an extra $200* a year. Why would you pay somebody $200 to give $100 to your vet, when you could just give him the $100 yourself and save the other $100?”

    *Numbers, as usual, are plucked from my fundament.

  38. @Gamecock – You’re exactly right about the way that third-party payer cripples the market.

    Yet I think that there’s a subtle difference between it and pre-paid medical.

    I’d argue that the latter is a subset of the former, which comes into being when “insurance” gets into areas where it has no business being (see my feline illustration, above). I see that you agree, given your statement that “Insurance should mitigate against severe loss, not pay for routine expenses.”

    With that said, while pre-paid medical might be the most egregious failing of the current system, third party payer may well be the most pernicious.

    Consider that, at any given moment, only a tiny fraction of the pool will be receiving acute care in a hospital. Just as only a tiny fraction of an auto insurer’s pool will have their cars in the body shop.

    In the latter case, body shops are in a competitive market, competing on price, service and a host of factors. In the former, we get $100 aspirins. I eschew conspiracy theories, but it’s hard to ignore the perverse incentives for hospitals and health insurers to both act in ways which drive up the value of their market sector.

  39. the other rob,

    America’s Best. $69.95 gets you basic frames and lenses. I spend more for better frames and lighter lenses. I think I paid ~$160 for the two pairs I have now.

    I wouldn’t expect insurance to pick up the difference though. The $70 glasses are functional so anything more is a fashion statement.

  40. “In the latter case, body shops are in a competitive market, competing on price, service and a host of factors. In the former, we get $100 aspirins.”

    I think you’ll find there is a very different price if the dent in your car is being repaired on your own dollar vs if insurance is paying for it. Its a renowned feature of the car repair market – they always charge an insurance company more than a cash payer. The latter is someone spending their own money on their own asset, and will seek out the best price/quality of work. The former is someone spending someone else’s money on someone else’s asset. Never going to be the same degree of scrutiny of cost and quality.

  41. ‘No, it means different restrictions to access health care at the same high prices.’

    Government, having control of restrictions to access, can demand behaviors of all who want health care.

  42. It’s intriguing that California is lobbying for this. Its current Medi-cal program for the low paid or unemployed doesn’t even cover drugs for chronic diseases such as insulin for Type Diabetics

  43. The real socialist wet dream in this would be the outlawing of private health care. As usual with socialism, the government system cannot abide competition. There would, of course, be special dispensation for the commissariat. The Democrats would be slavering over the thought of all those new, unionized government employees.

    The only problem would be which constituency group to annoy. The unionized doctors or the malpractice lawyers? As the current malpractice system would cost too much for the government run medical care.

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