The debate over “Medicare for All” goes on and, presumably, will through the 2020 presidential election. Today I’ve found a debate of sorts, an affirmative and negative argument. The affirmative is taken by economist Jeffrey Sachs at CNN. He states his case succinctly:
M4A would reduce health care costs for three reasons. First, Medicare pays hospital and doctors at lower rates than private insurers. Second, drug prices would be lower. And third, there would be administrative savings.
The negative is taken by physician Marc Siegel at The Hill. His arguments aren’t quite as clearly stated as Dr. Sachs’s but they boil down to a) it will inevitably result in rationing; b) there are other, less expansive means of addressing the problems with our present system and c) it will be opposed by physicians, insurance companies, and, in all likelihood, voters.
For 30 years I supported a single-payer system for the United States but over the last 20 years I have become skeptical. Without a commitment to cost control a single-payer system will be unaffordable and the singular lesson of Congress’s ritual of passing “doc fixes” to override their own affordability criteria is that there is no commitment to cost control.
I also find the arguments of both sides dismaying—facetious and laden with sophistry. There is no free market system here to defend. If costs are to be controlled some form of rationing will be necessary—we already have rationing. The savings in administrative costs are likely to be much lower than proponents of M4A suggest. The assumptions that produce savings under M4A are unlikely to materialize.
Most importantly, current proposals for “Medicare for All” are not really comparable with any system anywhere in the world other than, possibly, British National Health, because there is an explicit requirement for no cost-sharing measures.
Take Canada’s system, for example. Canada’s system is administered by the provinces, paid for through personal and corporate income taxes, and there are many things that Canada’s Medicare system does not cover, notably pharmaceuticals. Private hospitals, whether for profit or not, are something of a rarity. Furthermore Canada has much tighter immigration law than we do. In the absence of tight immigration controls there is a risk of underwriting the health care of the entire world.
France’s system by comparison is administered by the national government and covers even less of total expenses than the Canadian system does.
Germany’s system is tremendously different and administered by hundreds of insurance companies.
In other words there is no singular “single-payer” system to emulate. Every country has its own. That’s what makes pointing to the savings of single-payer facetious. Which system? And, importantly, they are systems. You cannot treat their features as a cafeteria.
The United States is vastly larger in population, enormously larger geographically, and not only more diverse than any European country it is more diverse than Europe. It is less centralized and far more individualistic. Those factors affect the politics of health care. It also affects the cost of administration since the cost of bureaucracies do not increase linearly but at n log n.
More Americans have private insurance than did in any European country when they adopted their social insurance-based systems. That affects the politics, too.
Health care was much cheaper when European countries adopted their systems and began controlling costs. And they do control costs and they do ration.
Finally, everything the government does is more expensive here than anywhere else. We pay more for every foot of bridge constructed and every foot of road built. Not to mention that our military costs more than any other.
We will just have to disagree on admin costs. As I keep pointing out, nearly all of the estimates on admin savings deal solely with costs on the payor side. For providers, the savings could be huge. Medicare is generally easier to deal with than the privates, and if were down to one payer it would be easier and cheaper.
Medicare currently covers about 45 million people, more than is covered in some of the countries you mention. If we did it stepwise, I don’t think it would be all that difficult.
Agree that controlling costs is key, but note that we have not been doing that in our current system. The private system is as bad or worse.
Politics? In our current system politics keeps us from doing much about costs. Special interests dominate in each sector of coverage. Medicare? No one wants to touch it because the old folks actually get out and vote. The VA? No one wants to be seen as anti-military? Private insurers? They want their market share. They just pass along costs and aren’t going to take on big pharma. Could the politics with this kind of change actually be worse? Who knows, but for sure, this affected will definitely fight like hell. However, if we aren’t willing to kA eon that fight, the alternative seems like we just roll over and go on until we really have a crisis.
Steve
I think we could save 20-30% on costs. Not nothing but not enough to pay for the expansion let alone produce actual savings. To me cost is not just key. It’s the sine qua non.
That’s pretty much what I think is going to happen.
A point I have made from time to time. It exists in the context of private insurance paying 40% more. Again, you can’t cherrypick.
As I have said before Medicare functions like a price support. It can buy as much as providers will sell at the support price. For private insurance to buy, it must pay more than the support price. Why 40% more rather than 10% more? Beats me.
If my analysis is right, the way to cut costs is to cut Medicare reimbursement rates slowly. The Congress knew that 20 years ago but didn’t have the guts.
Consequently, my prescription is slowly cut Medicare reimbursement rates and control the borders. Then we can implement health care via social insurance. If we do it in the opposite sequence, it will be financially ruinous.
“As I have said before Medicare functions like a price support. It can buy as much as providers will sell at the support price. For private insurance to buy, it must pay more than the support price. Why 40% more rather than 10% more? Beats me.”
I think it may be because your theory is wrong. So commercial insurers will have to pay more just because it costs more for the billing. I don’t know what it is for everyone else, but for us that would cost an extra few percent. So, assuming billing is more costly for PCPs as a percentage, lets say a worst case of 10%. Why so much more? I think it more likely that Medicare is setting its prices to stay close enough to the private insurers so that providers will still be willing to see patients. Please note that when Medicare has periods of slower growth, commercial rates don’t necessarily track down with it. (This always gets hard to sort out because sometimes, like recently, when Medicare reimbursement rate growth has been very slow, utilization leads to more spending.) So the key may be to get the privates to slow their growth.
To be sure, Medicare can still help some with that. There are a number of procedures, just as an example, that we know have no medical utility, but insurers still pay for them. They don’t want to deal with he negative publicity. Better just to pass on the costs. If Medicare can actively lead and say they won’t pay, that might take enough pressure off so the private insurers can stop paying.
Steve
steve,
I think Medicare is a price support for two reasons:
1. Providers keep insisting that they would go out of business if they were limited to Medicare reimbursement. If that is true then it is a price support. If they are lying then that opens up a different can of worms.
2. physician salaries exploded after the introduction of Medicare along with medical costs generally. How can private insurance be the driver of high costs when the increase appears to have been precipitated by the creation of Medicare?
I do think there is a lot to your argument about the administration of all the various insurance plans. You look at some administrative professions that are dedicated to this like medical coders. That may at least partly explain the huge rise in the number of administrators compared to actual providers over the last several decades.
I’m skeptical, though, that single-payer will reduce administration much because we’ve seen a similar rise in the administrator-provider ratio in other areas, like education (which is single payer).
And speaking of education, if we can’t control costs there via a single-payer system, what hope do we have for medical care?
Andy,
I don’t think number 1 is an indication of a price support. From my POV it looks more like docs are saying increase Medicare to private rates so I will want to see Medicare patients. We need to lower private rates, not Medicare. (Maybe eventually Medicare too, but first privates.)
On 2, I think this was mostly utilization. A large number of elderly went from getting no or little care, to being insured and having everything covered. Providers could jack up their private rates because they were in short supply, so they did.
Is education really single payer the way we would think of national healthcare? It looks to like education has thousands of payers with each individual school district setting policy, tax rates and paying most of the bill, with some coming from the state and some coming from the feds. Broadly, I guess you say government pays, but it doesn’t functionally act like a single payer. If anything, education might be a good case for a single payer to cut out all of the revenue streams and special interests that affect it.
Steve
We have the next-best thing to free market in medical care as long as Amerikans are free to spend their own dollars on Medical Tourism instead of insurance. Indeed, the way to end the monopolies of the medical industry here is to require that health-care insurance payments be available to cover medical treatment and drugs bought overseas, where prices are advertised on the WWW and where they cost from 1/9 (India, Thailand) to 1/3 (Mexico, Costa Rica, Brazil) what they cost in the USSA, even net of the insurance premium of 25%.