Saturday, August 29, 2009
APPENDIX I. THE ECONOMIC CASE FOR A SINGLE PAYER SYSTEM
The following is the bullet point outline of the economic benefits of a universal single payer health care system. As noted in the introduction, this paper was presented to representatives of Congressman DeFazio's in his Eugene, Oregon office to the great skepticism of his chief aide in that office (and to the delight of the secretary taking notes).
It was only with great difficulty that the PNHP delegation of which I was a part persuaded the staffer who dismissed our presentation to send a request for DeFazio to meet with Washington PNHP representatives. He agreed to let them meet with staffers, who presented as bored and skeptical as well.
When I later questioned DeFazio about his position on a single payer system at a town hall in Coos Bay, Oregon he dismissed the idea as foolish because "Medicare is in serious financial trouble," neglecting to mention that the reason it was so expensive was because his Democratic colleague Ron Wyden in crossing party lines to cast the deciding vote in favor of the Republican-sponsored budget busting Medicare Modernization Act.
This was a major factor in my decision to run against Wyden for the US senate in 2010.
-Eliminates cost of subsidizing insurance company profits.
-Eliminates overhead from marketing, sales and inefficient review process designed to delay or avoid payment.
-Uses simplified and standardized claim forms and payment schedules or capitated formulae.
-Uses rational utilization guidelines derived from best practices, a benefit which cannot be imposed without government intervention. Such practices will save billions and produce health benefits, not just more medical care.
-Can impose reasonable formulary restrictions, like the VA.
-Maximizes benefits of electronic records to create single database and avoid duplication or delays in treatment decisions that could adversely affect outcomes (and thereby costs).
-The same unified records system has been used in Taiwan to virtually eliminate fraud and overutilization by tracking patterns of provider claims and patient utilization.
-POOLED RISKS CUTS AVERAGE COSTS OF GOVERNMENT FUNDED CARE-THIS WILL BE AMPLIFIED BY ELLIMINATING UNNECESSARY EMERGENCY CARE OF THE UNINSURED WHICH IS COVERED AT LEAST 85% BY THE GOVERNMENT
-In general, emphasis on primary care will decrease demand for secondary and tertiary care services.
2. OTHER ECONOMIC BENEFITS
-Cut bankruptcies by 60%
-Spinoff benefits include minimizing macroeconomic effects of recessions, encouraging entrepreneurship and career mobility. This is not just health insurance, but bankruptcy insurance.
-Removes a major incentive to get and stay on disability. This will cut cost in Social Security, VA compensation payments and state accident insurance funds and other disability funds.
-Other insurance costs will be slashed, since they are largely driven by the cost of insuring against medical loss. Automobile, homeowner, business and other insurance will suddenly become affordable. The dollars saved will reduce the cost of extending health care to the currently uninsured and underinsured.
-Cushions effects of job loss on the individual, giving breathing room to recover without losing home, etc.
-Encourages the retirement of older workers who hold on to jobs unwillingly because they must keep their insurance until they get Medicare. Their retirements free up jobs for willing younger workers.
-Reduces burden on business, increasing competitiveness and not rewarding the shirking of benefits for profits.
-Frees insurance industry employees to find productive employment, so that they add to real US productivity. HR 676 does not prevent their employers from reorganizing as nonprofits and competing to manage provision of a defined benefit package.This has been done effectively in Germany.
-Increased access-true universal care
-Increased provider choice-no PPOs
-Fairer cost sharing. Insured individuals already pay all health care costs way already through taxes, copayments, deductibles and foregone wages yet are still unprotected from catastrophic illness and preventable disease.
-More complete, more rational and consistently defined benefits.
-Virtually eliminates malpractice claims. Clark Newhall, a physician now practicing malpractice law, has stated that almost all tort claims are filed out of fear of bankruptcy. Taking out medical costs removes most of the profit for the sharks in this field of law and will put people like Clark out of the business of having to sue companies to protect his clients.
-Taxpayer contribution may increase from a present 60% of total costs. However, efficiencies may result in net savings. Canada’s per capita spending is approximately 50% lower and produces a comparable benefit package with high customer satisfaction, better health outcomes in general, and excellent access for most services. We may be able to do better.
-To function with maximum effectiveness, government will have to eventually increase subsidies for medical and nursing education. This can be used to create loan or grant programs for those agreeing to serve underserved populations, advancing the President’s goal of promoting public service.
-Capital costs. These could be substantial, depending on the model adopted. However, these would not be ongoing other than basic infrastructure maintenance, which is a fraction of what we would pay private insurers to provide the infrastructure at a profit.
-Retraining/unemployment benefits for insurance workers (and eventually, pharmaceutical industry employees). These could be avoided by any insurer that chooses to convert to nonprofit status.
These companies could then compete to provide a defined benefit package, a system that has worked well in Germany. To be competitive, they will probably have to reduce the multimillion dollar salaries enjoyed by medical insurance corporate CEOs.
We seem to have forgotten that there was a time when insurers were expected to be nonprofit and to utilize a shared risk pool, so that everyone was covered and we all shared the risks. For the conservative in us, we should regard that as an idea worth conserving.
Richard K Staggenborg, MD
3/12/09 (modified 7/30/09)