There is a lot of talking going on about reforming the way health care is delivered in this country and how solving this dilemma is an essential part of our economic recovery. Unfortunately, the one solution that will do the most to reform health care is not on the table. This is single-payer health care. In a single payer system, one entity—usually the government—acts as the “payer” for health care. This is medicare for all—the most efficient government run health care system in the world. That may come as a surprise, but the administrative burden in medicare is a few orders of magnitude lower than the burden of our private system.
Similar to most of the industrialized world, each American would be entitled to comprehensive health care. All hospitals, doctors, nurse practitioners, nurses and other health care providers would bill one entity for their services. Care would be based upon need, not upon the ability to pay, what kind of job you have or if you have insurance.
Hospital billing would be eliminated. Instead, hospitals would have an annual lump sum global budget. Medical providers would either receive a fee-for-service, salary or negotiated fee. Where we now have gigantic billing departments at hospitals, at doctor’s offices and at insurance companies who sent out those difficult to understand EOBs. Under a single payer program, much of this overhead and administrative burden would be eliminated.
We are already using public financing to pay for over 50% of the cost of health care via medicare, medicaid, government employees and local government taxes (i.e. school taxes). A single payer plan would save over $150 billion in administrative costs according to a GAO report in 2002. Further, a report by the Congressional Budget Office projected that single payer would reduce the total health care cost by $225 Billion by 2004—despite the expansion of comprehensive coverage to everyone.
There simply is no other plan that provides this type of savings and this type of universal coverage. The notion of mandates on individuals or companies does not save this money and the loopholes will be abundant. The Band-Aids that are being considered maintain a huge dispersed bureaucracy to handle collections and payment and will not provide the savings, much less the universal care that everyone professes to desire.
How does this relate to economic recovery? The single most uncontrollable element of overhead is health insurance. The automakers are saddled with health care costs that represent a great cost in the value of a car than the steel it is made from. The cost to cover an employee and family exceeds the minimum wage in many states. When I started in business, I was able to cover an employee and their family for $1500 a year. Now, that same coverage (actually, inferior coverage) costs over $14,000!
The most common source of labor strife is health care costs as employers try to push more of this cost burden onto their employees through higher deductibles, co-pays and premiums. Worse yet, the system is voluntary and an employer can simply drop coverage or reduce benefits without recourse. In fact, it might be a competitive advantage in seeking business. If your overhead is lower because a company does not offer its employees health insurance, it can bid lower for business.
Economic recovery will be significantly hampered and slowed if we do not address health care reform and I applaud President Obama for recognizing this fact. I find, however, his reluctance to even give single-payer consideration to be short-sighted and dooming health care reform to ‘fiddling around the edges.’
It is time to join the rest of the industrialized world and adopt universal health care with a single-payer health care system. Of the 27 industrialized nations in the world, only one does not guarantee its citizens universal access to comprehensive health care. That one is the USA and resolving that is one of the first steps to full economic recovery.