Fixing healthcare: Which single-payer system would be best for California? - LA Times

Fixing healthcare: Which single-payer system would be best for California? - LA Times
Comment by Kip Sullivan:
"This article in the Los Angeles Times http://www.latimes.com/business/lazarus/la-fi-lazarus-single-payer-california-choices-20170307-story.html uses "single payer" to describe the German health care system and Medicare Advantage (the privatized portion of Medicare). It's easy to see why a reporter without much knowledge of health policy would make that mistake, especially now that "single payer" advocates in CA are calling SB 562, a German-style and Medicare Advantage-style bill, a "single payer" bill.

The reporter, David Lazurus, interviews several experts and concludes the German system is the best one for CA because it would allow Kaiser Permanente and other private insurers to continue to function. One expert tells Lazurus the "German-style approach ...would make it easier to incorporate Kaiser." That's accurate. The German system would leave the insurance industry in place; SB 562 leaves some of the existing CA insurance industry in place and will create new insurance companies by shifting total insurance risk onto them.

As I have noted here before, SB 562 contains an enormous loophole for Kaiser. The loophole doesn't refer to Kaiser, but instead to "integrated delivery systems" that would bear all insurance risk just as Kaiser does now -- in other words, Kaiser is still the same old gigantic HMO under 562 it's always been. SB 562 proponents, however, have long made it clear Kaiser is what the authors of SB 562 have in mind when they wrote the words "integrated delivery system."

Under a single-payer system, all insurance risk stays with the government (as it does, for example, in the fee-for-service Medicare program and in Canada). Under single-payer systems, insurance risk is NOT palmed off onto private-sector entities like Kaiser and some of the enormous hospital-clinic chains calling themselves "integrated delivery systems." When private-sector entities bear insurance risk, they incur all the costs insurance companies incur (with one or two exceptions, notably the cost of collecting premiums), and they have all the incentives to screw patients that insurance companies have now.

That doesn't mean that a German system in CA can't cost less than the crazy system CA and the rest of the country suffers now. (This is especially true of the German system prior to about 1995.) Multiple-payer systems like Germany's cut costs as single-payers do with one obvious exception -- the savings in administrative costs that come with one payer paying doctors and hospitals directly.

A recently released study of SB 562 http://www.healthycaliforniaact.org/wp-content/uploads/Pollin-Economic-Analysis-SB-562.pdf concludes it would insure all Californians and yet reduce CA's total spending by 8 percent. I have only scanned the summary of this study. I get the impression the study treats CA as if it were a German system even while calling it a single-payer system. Since I haven't read the study, I can't say how the study arrives at its conclusion that total spending will fall by 8 percent. I do think a German-style system could easily cut spending in an American state by 8 percent.

But a huge caveat is in order. The system that SB 562 will create will be unlike any seen anywhere on the planet. The distinguishing feature of the CA system under 562 will be enormous aggregations of hospitals, clinics, pharmacies, nursing homes, ambulance services, equipment suppliers, and God knows what else, with an insurance department on top of all that to manage risk. No other nation -- not Germany, Holland, Switzerland -- with multiple-payer systems has allowed or encouraged the formation of such gigantic fiefdoms. SB 562 not only allows horizontal and vertical merging of all players, it encourages it.

So as we contemplate whether a German-style system could work in CA or MN, we have to ask whether we're talking about the German system or the SB 562 version of the German system. If we mean the latter, then we have to think about more than a projected 8 percent cut in total spending. We have to ask whether it's politically possible to control the merger madness SB 562 will encourage, and whether it's politically feasible to audit and otherwise hold accountable corporations as big as Kaiser as well as the monster corporations that will gobble up every thing in sight in order to compete with Kaiser."