The single-payer debate we should be having - Vox

The single-payer debate we should be having - Vox

Comment by Don McCanne

Matthew Yglesias tells us that “the overwhelming preponderance of the cost savings in a Medicare-for-all plan comes from the lower reimbursement rates,” thus “adopting a single-payer structure is neither necessary nor sufficient to achieve the gains.” He then criticizes single-payer proponents for not stating this publicly. What Matt does not seem to understand about PNHP is that we are meticulous with our facts, so we would never state something that is so misleading as to be untrue.

A well-designed single payer system includes multiple features that contain health care spending. The most important is the administrative efficiency. Under the Affordable Care Act, the private insurance industry is allowed to keep 15 to 20 percent of the premiums for administrative services and profits. The administrative costs for Medicare are about two percent, and that includes costs of other government programs that support Medicare. Adopting an improved Medicare for all would eliminate much of the excess administrative waste of the private insurers.

On the provider side, our highly inefficient multi-payer system also places a tremendous administrative burden on physicians, hospitals and other providers. In fact, administrative work consumes about one-sixth of U.S. physicians’ time (while eroding their morale, precipitating burnout). U.S. physician practices spend nearly four times as much money interacting with health plans and payers as do their Canadian counterparts.

Administrative costs consume about 31 percent of total U.S. health care spending. That is about twice that of Canada - 16.7 percent. Much of that difference is due to the financing systems - single payer in Canada and a dysfunctional multi-payer system in the U.S. - and thus most of that portion would be recoverable if we switched to single payer.

Yglesias says that we would have to reduce physician payments by 20 percent to achieve the spending goals of a single payer system. But when Canada changed to single payer, not only were physicians’ incomes not harmed, they remain among the top earners in the country.

There are several other policies of a single payer system that control spending. Hospitals are placed on global budgets - a process that works well as demonstrated by public services such as our fire departments. Excess capacity in the delivery system drives up spending, but that can be controlled by regional planning and capital budgets. The prices of pharmaceuticals and medical supplies can be negotiated just as the VA Health system already does so quite successfully. A single payer system incentivizes primary care which has been shown to spend health dollars more efficiently.

The United States and Canada followed the same trajectory in health care inflation until they adopted the Canada Health Act, providing a single payer system in each province. Since then health care inflation has been less in Canada than in the U.S. Likewise, adopting single payer in the U.S. would truly bend the cost curve, putting us on a more sustainable trajectory. Merely cutting prices 20 percent would continue us on a parallel inflationary trajectory.

Of course, there are some other advantages of single payer, besides the cost savings, which would not be achieved merely by cutting prices 20 percent - like truly universal coverage, free choice of physicians and hospitals, removal of financial barriers to care, and better access through capital planning.

We know what we know, but we don’t know what we don’t know. Although Hillary Clinton finds it politically expedient to leave out crucial facts in her critique of single payer, I would assume that Matt Yglesias, as a journalist of high integrity (and for whom I have great respect), would welcome a more thorough understanding of PNHP’s single payer model. We hope he reads this. The we can have that debate that we should be having.