On the Moral Superiority Of a Single-Payer System

David DeGrazia has sketched out a health reform proposal that combines the monopsony purchasing power of a single public payer with managed competition among health plans and implicitly among providers, alone or in groups. The proposal differs from the archetypal “Medicare fee-for-service for all” model in creative ways, and indeed it is developed to address some of the standard fears about whether a single-payer system squelches choice and incentives for innovation. But DeGrazia’s truly novel claim is that this version of single payer is the “most morally defensible reform model.”

That is a strong statement, and difficult to prove or disprove, not least because the paper does not argue that the features and predicted outcomes of the model are consistent with any particular theory of distributive justice or any other moral yardstick, scriptural or secular. Rather, the paper essentially argues that a single-payer system with managed competition would do a better job, on balance, of achieving the widely accepted goals of universal coverage, containing costs, protecting patient freedom, and delivering high quality care. I consider each in turn.

The author agrees that most of the plans discussed by Democratic presidential candidates represent mixed models of individual plus shared responsibility among employers and government. He also agrees that with purchase mandates, adequate subsidies, and market reforms, universal coverage could be attained through some of the mixed models. Thus, universal coverage is not the reason reform plans differ in moral impact.

Ability to control cost is the main reason for asserting that a single-payer system with managed competition is morally superior. Cost control is morally important because savings permit us to cover more people with less personal and collective sacrifice. In other words, cost control (while holding quality constant or even improving it) is equivalent to exercising appropriate stewardship over our collective health system’s resources.

No one disputes that the current U.S. health care system has not controlled costs. And little doubt exists that archetypal single-payer systems would lower administrative costs -- of insurers, by ending underwriting, marketing activities, and the need for profit, and of patients and providers, by dispensing with copayments and multiple billing and coding forms, respectively. A single-payer system with managed care, however, could end up very near where we are today, especially if health plans are allowed to impose cost-sharing to reduce moral hazard, as the model as outlined seems to permit.

Thus, the power of the argument hangs on whether a single payer with managed competition would control delivery system cost growth over time better than any other reform model. Since virtually all the Democratic plans would utilize some more or less aggressive form of managed competition among health plans and implicitly among providers, the claim about superior cost control must have to do with the single-payer aspect of the proposal -- with the monopsony power of the government in specifying the conditions and price of health plan participation. Indeed, DeGrazia rules out charging premiums to people (they would get a voucher good for basic coverage from any insurer), so health plans are forced to compete based on their demonstrable quality and service to enrollees. Since the government buyer can dictate what services will be covered, superior cost performance would be guaranteed if unproductive variation in medical practice could be eliminated and if technical advances offering little clinical value added were not approved for future use.

But this is exactly what the “regular” mixed, managed competition plans of the candidates propose. Those proposals would create comparative effectiveness or “best practice” institutes, payment reforms, and quality transparency throughout our health delivery system. Some argue that a single-payer system with managed competition is more “provider friendly” because it eschews micromanagement and interference with clinicians’ preferred methods of practice. Yet it is these preferred methods of practice that have led to such stunning inefficiency throughout our health care system, as well as such inferior cost growth performance over time. Thus, the claim of superior cost performance over time must be answered with, compared to what?

To today, perhaps, but the essentially identical performance of Medicare and the private sector since 1970 would cast some doubt even on this claim. The reality is that, because a single-payer system would turn coverage decisions into purely political decisions, it would subject the process to the same provider-promoting lobbying and marketing that plague the Medicare program (and less monopsonistic buyers in the private sector) today.

DeGrazia may be implicitly assuming that coverage decisions, governed as they might be by elites focused on population health, would be more efficiency-enhancing than under any other current or proposed system. I do not share this assumption, for I fear Congress will never delegate sufficient authority to those in charge of any “public” plan.

Finally, can a single-payer system with managed competition control costs better than the best of the new proposals for system reform? It seems unlikely to perform better, since the cost control mechanisms are similar, yet the mixed plans have more private sector discretion built in to “say no” when the evidence for coverage is demonstrably weak. The key to any coverage mechanism’s success at promoting efficiency is for the process to be based on high quality evidence and accepted by the plan’s enrollees in the case of a particular firm, and by the citizens of the country in the case of any single-payer variant.

This may be the true test of morality: do a majority of the relevant stakeholders accept the way “no” is conveyed? I fear that Congress, responding as it must to providers who are, after all, also constituents, is more likely to override weak evidence than are clinicians and health plans working to earn enrollees in a competitive marketplace, reformed with the principles of transparency and accountability firmly in place.

The ability to protect patient freedom again seems similar, since DeGrazia’s single payer with managed competition would have competing private and public insurer options, as do the mixed models of the mainstream Democratic candidates. DeGrazia suggests that the basic required benefit package might have to be scaled back to allow more freedom, but again these are ultimately political decisions in both frameworks, so I don’t see much difference arising here.

In any system, quality of care will depend on whether new comparative quality information and payment incentives drive provider behavior and patient choices. I see very little reason to think that a single-payer system with managed competition will do better than the straight managed competition envisioned by most Democratic candidates, or for that matter than the type envisioned in the Healthy Americans Act, S. 334, cosponsored by Senators Wyden and Bennett (a Democrat and a Republican, respectively), and eleven others on both sides of the aisle.

I agree that a single-payer system with managed competition is the best form of single-payer system around. I do not think the case has been proven that it is technically or morally superior to the best reform plans being proposed on the campaign trail or in Congress already.