By Richard Master of Business Leaders Transforming Health Care on PNHP.
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The (Allentown, Pa.) Morning Call, August 1, 2017
With all due respect to President Trump, he is wrong about the single-payer model of health insurance.
Single payer — centralized public financing of a continued privately operated health system — will not “bankrupt the United States.” In fact, the opposite is true.
Single payer is the only internationally proven strategy to transition the U.S. out of its current crisis of runaway health care costs to economic sustainability, where overall system cost growth is consistent with overall economic growth and inflation.
At one-sixth of our economy and over 25 percent of the federal budget, health care will continue to be a focus in Congress until real progress is made and the angst of the American people about the system is resolved. It is clear to most Americans that runaway health care costs translate into flat wages and also a deterioration of real disposable income that drags down our 70 percent consumer-driven economy.
But recent efforts in Congress to confront the crisis have been misguided. Congress has focused on cost shifting — moving the burden of our health system away from the federal government to the states and also to employers and to working families across the country, who will pay higher private insurance premiums to cover the expected cost of increased uncompensated care as the system absorbs the loss of Medicaid funds.
Going forward, the focus of the administration and its allies in Congress should be on controlling the real drivers of cost of care, such as prices of pharmaceuticals, which are rising at double digits a year, and addressing wasteful administrative costs associated with our complex, multipayer-financing model, which costs U.S. private doctors $83,000 a year to interact with multiple health plans vs. $22,000 for doctors in Canada, according to a 2011 Commonwealth Fund study. And it costs hospitals nearly double in administrative costs vs. other countries, according to a 2014 Commonwealth Fund study.
We do not need to reinvent the wheel. Single payer is the recognized best practice. Warren Buffet points out that, in the 1970s, Canada and the U.S. had roughly equivalent health system expense — 7 percent of gross domestic product. Canada went the single-payer route; the U.S. did not. Canada covers all of its citizens, has better health outcomes and today spends 11.4 percent of GDP. Our cost went to 18 percent of GDP. France, the highest ranked health system in the world, spends 11.8 percent of GDP, and Japan, 8.5 percent
We need to investigate and follow the examples of successful health systems operating throughout the world where all citizens are covered, public health outcomes are measurably superior and the overall cost to society is less.
We need to also review closely the many in-depth studies by prominent American economists reporting overall system savings from a transition to centralized financing. Consider in particular the May study, “Economic analysis of the healthy California single-payer health care proposal (SB-562).” That study, from four economists at the University of Massachusetts, demonstrated how single payer would reduce California’s overall health care expense by 10 percent, even with universal care for all residents and assuming comprehensive benefits. (The bill has been referred to a legislative committee.)
The study found substantial savings in administration and pharmaceutical pricing and on mitigating the current high variance in fees for service providers. Today 7.5 percent of Californians have no health coverage and an additional 30 percent of those insured are considered underinsured and are particularly vulnerable to the economic consequence of serious illness. The status quo in California and throughout the country is unacceptable. The solution is single payer.
What do Americans want? According to an April Economist/YouGov poll, 60 percent of Americans favor a Medicare-for-all solution to replace the Affordable Care Act, and only 24 percent oppose it. Medicare for all is single payer.
During his campaign, President Trump promised to take on cronyism and refresh Washington. No better place to start than with the health care commercial sector. They spend more on lobbying Congress than any other business sector, and they get what they pay for — a Congress that focuses more on the commercial interests of an industry than it does on the well-being of patients, working families and the overall economy.
This is our big chance to do something great. Let’s fix health care with single payer.
Richard Master is founder and CEO of MCS Industries Inc., Palmer Township, and executive producer of two documentaries,”Fix It: Healthcare at the Tipping Point” and “Big Pharma: Market Failure.”