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HEALTH REFORM: Reality Check...This Is Not Socialized Medicine!

March 5, 2009 - 4:43pm

I am disappointed to hear the health reform conversation devolve once again into a contrived debate about a single payer, government-run health system. This is an old dispute about "socialized medicine" and one that has already been settled in the minds of a critical mass of policymakers.

In my 20-plus years in the health policy business, the debate about health reform has evolved dramatically. In the 1990s, we talked about coverage far more than cost and quality. Yet today we realize that the success of health reform hinges on a credible roadmap to increasing value and controlling cost growth. In addition, Americans who followed the health reform debate throughout the 2008 presidential race witnessed history. For the first time in my lifetime, Republicans proposed supply-side incentives like payment reform, and Democrats emphasized cost control and the need to build on the current system to cover all Americans.

Let me be clear: there is no serious proposal for a single-payer, government-run health system being discussed in Congress or within impactful policy circles.

Democratic leadership believes in a patient's right to choose their insurance plan and their doctor and they recognize the value in market competition. Leaders from Senator Max Baucus to Senator Ted Kennedy to Speaker Nancy Pelosi to President Barack Obama support a private—public approach to improving our health system and ensuring that all Americans have quality, affordable health coverage.

This is simply the latest distraction from the real issues in the health reform debate. Today, the health reform debate faces a new, important challenge: should a public insurance product be allowed to compete with private health plans for the business of the under-65 population? And if so, is it possible to structure the rules so that public and private plans can compete fairly?

While these questions are legitimate, they are leading the health reform conversation to what could be a premature impasse. In the coming days, John Bertko and I will be releasing a policy brief that explains how we can achieve many of the goals of public plan advocates while preserving fair and effective market competition, negating the risk of excess cost-shift, and avoiding a potential progression toward a single-payer health system. In short, I submit there is a credible policy solution to this emerging standoff.

A couple of years ago, Republican Sen. Chuck Grassley stood on the Senate floor during the SCHIP debate and questioned the Bush White House over its decision to veto the children's health insurance program legislation he had painstakingly negotiated on a bipartisan basis. "How intellectually dishonest can you be," Sen. Grassley asked. This is a moment I think of often. I still have his speech on my wall. As we approach this important conversation in our nation's history, we owe it to ourselves and to the nation to be intellectually honest about the policy choices we have before us and reasonable about what it will take to achieve our goals. To do this, we must engage in the policy debate of today, not yesterday. Stay tuned, and do not be distracted from the real issues.

Comments

Honest yes...

Yes let's be honest. During your 20+ years of studying this topic, did you learn that Medicare was financially insolvent by 1972, requiring ever more creative and ill-founded funding stopgaps? Are you familiar with the increasingly punitive - financial and criminal - sanctions faced by physicians who accept Medicare assignment? Did your review of these matters demonstrate the effects of unrestrained demand i.e. cost inflation, budget overruns, and diminishing supply of health care providers, hospital beds, and available clinics? Medicare IS the tumor of socialized medicine that has corrupted the "private" third party payers to the point where there is little serious competition anyway. How laughable that me might now think of government competing with an industry it has already thoroughly infected. No sir, intellectual honesty means that any government mandate of coverage will be attended with over-usage, cost shifting in the form of increased taxation and rationing, and ultimately, further loss of freedom for patient and physician alike. Unless you can prove otherwise, I respectfully submit you paint in euphemisms.

Sorry, Pat

Nice try, Pat. You make Len's point perfectly. You raise tired and long disproven bogeymen about Medicare and creeping socialism, just like the Republicans and Ronald Reagan in particular did during the original fight for Medicare.

That dog may hunt on some talk radio shows, but not in the real world, where the rest of us have to find real solutions to real problems.

More to Len's point, however, is that single payer does seem to be off the table. It was only through the extraordinary efforts of grass roots organizations that (only) two single payer advocates were added to the Health Care Summit at the last minute. I advocate for single payer being involved in the negotiations because it is important to listen and learn from all perspectives.

I happen to think a Social Health Insurance Model with mandated insurance will be our path to universal health care. BUT, in order to make it a significant leap away from the private insurance dominated industry it has become, a PUBLIC option must be available. This option will be familiar to single payer advocates and would provide them with an option they could get behind. It would allow individuals to buy insurance from a public agency IF THEY CHOSE, rather than only having private insurance options available.

This is a critical way to make sure that health insurance becomes as lean an enterprise as possible. Private insurers with large overheads will not be able to compete with a leaner more efficient public payer. If the private insurers can compete, then many of us will have to tip our hats to true market efficiency.

But I wouldn't hold my breath.

Cheers,

Christopher, you're right...

...regarding the the ultimate path to this process. But though you may find my assessment tired, it is no less true and you did not effectively treat those specifics I laid out. You will have a conglomerated private-public system that will more rapidly accelerate to single-payer. ANd that will necessitate the use of force against patients, doctors, and taxpayers, something today's enlightened doctors seem to relish.

Just like Fanny and Fredie?

Reading the first half of this article and scanning the rest on my way to this comment box, I have to ask: how would such a public ran health insurance scheme going to avoid the economic and market risks that Fannie Mae and Freddie Mac ran into? They were public companies setup to provide loans in competition with private banks. They undercut private banks and the resulting mess in the past year should hint that such schemes are a bad idea.

A better idea is to let private insurers compete for the over-65 crowd and get the government out of that "market". I'm with the first commenter, the problems with Medicare have been noted for at least 30 years. Leonard Peikoff wrote in the 1980s about how Medicare would increase the costs for the privately insured. It's a typical sausage effect with Medicare paying doctors and hospitals less than the cost of a procedure, forcing private insurers to increase their rates. And so it goes.

public-private

I am absolutely fine with private insurers offering insurance, as long as there is a public option as well.

For those who wish to buy in the private marekt, so be it, but allow the rest of us to at least take our chances on a public option. If it eventually proves to be less efficient and private insurers out perform it, so be it. It will have won in the market place, which should make everyone happy, including people like me who don't think that will happen.

Regarding "Medicare paying doctors and hospitals less than the cost of a procedure, forcing private insurers to increase their rates."

I don't believe this occurs. If you look at Medicare reimbursement around the country for various procedures and DRGs, there is very little variation. What is different is what the private insurers pay. In my area (PA) the reimbursement is almost the same, and in southwest PA, private insurers pay LESS than Medicare. In other parts of the country, Private insurers pay far more than Medicare.

Now, why the Medicare reimbursement is "less than cost" in some areas and not in others, is a mystery to me.

I do have a theory, but I haven't been able to find a study to confirm it. My theory is that the massive overhead required to obtain reimbursement from private insurers including time spent on pre certifications, formulary compliance, etc., etc., makes every PCP practice so inefficient that Medicare reimbursement, being relatively low for many office visits, seems to be "less than cost." But perhaps what would happen with out that massive overhead (i.e., Canada's Medicare system), is that Medicare reimbursement would be more than adequate.

Just Like Fanny & Freddy . . . .

YOU SAID, "A better idea is to let private insurers compete for the over-65 crowd and get the government out of that "market". I trust you are one of the very "fortunate few" that can pay for huge healthcare premiums/costs after age 65 (lucky dog!) . . . . and, as you may not know (since it sounds like you're one of the "fortunate few" that can afford huge premiums/health care costs) . . . . that as an individual ages (and health issues increase), so do the premiums!!! I don't know about you, but where I live, my individual policy at age upper 40's with no medical issues is $600 plus per month (so much for the private insurer competition debate). Don't know where you're from or what your income brackett is but . . . . do the math . . . .

What's wrong with public

What's wrong with public health care. In Denmark with a health care system with the same overall performance than the health care system in the USA, the cost pr citizen in 2006 was about 4.000 USD, while the system in the USA had a cost pr citizen of about 6.000 USD, due to the size of the overhead in private financed multiplayer systems.
The real problem not whether health care is public or private but rather that 45 million people in the USA have no health care. The main problem is, that the minimum wage for a full time worker gives a yearly income, that is the same as the price for health care for a family, namely about 10.800$ a year, so for many families health care is virtually out of reach.
That is depressing and unworthy for a modern wealthy society.
The most depressing is that the difference in the administrative costs of the American system with many agents and therefore much bureaucracy, is so much more expensive than a public one-stringed system would be, that the difference could feet the bill for the today uncovered without using one cent more.
An example. The administrative cost of the private American health system is 31% of the total costs. In Canada that has a semi-public system, it is 16.7%. That means that 309 billion dollars or 17.2% of the total American health budget is the price of excess administration costs for having a privatized system.
Totally the health system cost is 1800 billion dollars a year of which 1242 billion dollars was for the basic health care and the 558 billion dollars was paid for administration.
The Canadian model with the same basic health costs of 1242 billion dollars would have administration costs of 249 billion dollars totalling 1491 billion dollars a year.

With a number of households of 114 million of which about 18 million is not covered, given 2.6 person per household in average, the total cost of each of the 96 million covered household today is 18.750 USD.

US Today Can model today US all included Can model all included
$ 1800 bill. $ 1491 bill. $ 2138 bill. $1770 billion
Health costs
$ 1242 billion $ 1242 billion $ 1475 billion $ 1475 billion
Administration costs
$ 558 billion $ 249 billion $ 663 billion $ 295 billion
Source for the percentages:

Volume 349:768-775
August 21, 2003

Number 8
Costs of Health Care Administration in the United States and Canada
Steffie Woolhandler, M.D., M.P.H., Terry Campbell, M.H.A., and David U. Himmelstein, M.D.

As you can see from the numbers above, the surplus by using the Canadian model amounts to a little more than 300 billion dollars a year. For that money it would be possible to secure health care for the uncovered part of the population. In fact you pay today 30 billion $, or about 310$ per secured household a year, in order to keep the uncovered out of the health system. So the reason not to do it is not the money, but purely ideological and an extra punishment on poverty.
Paying 310$ a year for the pleasure of kicking the poor is utterly distasteful.

so why hesitate? the answer is simple. Today the USA has the worst cost-to-care ratio in any developed nation, so you have everything to gain and nothing to loose.
Mogens

America, baby.

It doesn't matter if you are right and if your math all works. We are primarily a nation of conservative fools who see only the trees, never the forest. Where the idea of helping fellow citizens would be somehow doing a disservice to onesself. Plus, insurance companies make way too much money and have way too many lobbyists throwing money around in DC to just give up the business and walk away.

Socialized Medicine

The arguments for socialized medicine, aka single-payer health care, are seductive, but what about the 'side effects' of this radical treatment?
See http://mdwhistleblower.blogspot.com/search/label/Health%20Care%20Reform%...
With the government or any single entity in charge, what level of medical quality can we expect? Let's not kill the patient we are trying to cure.

If it is so hard to figure

If it is so hard to figure out, why has every other civilized nation? We are fat greedy pigs. The reason we have no money for this new system is because our "free-market" greed has destroyed the middle class, leaving them with no jobs and therefore no cash to give to the government. Are we so stupid we don't see what is happening?

The argument that there is enough money FOR ANYTHING is laughable. We are over a trillion dollars in debt, our banks and corporations are owned by foreign countries (who by the way have "socialized" health care, some socialized government), and we use money THAT DOESN'T EVEN EXIST to keep our failing companies afloat. Our economy is teetering on the brink because the companies (including medical ones) that employ us are more worried about their stock price than their own solvency.

As a people we follow the same logic. We are generally more worried about buying a new iphone and showing it off to our friends, than whether or not we can afford it.

Why not? Our government is in on it too. Lets buy up failing companies and build missiles and send rockets to Mars and in the next breath complain about how broke we are. Guess we'll just have to borrow some more.

I think it is time to worry more about how we plan on keeping our citizens employed and keeping our very future as a nation on solid ground, than whether our bankrupt government can afford a health care plan.

For those scared of socialism, you may want to think about anarchy.