Single Payer Healthcare
This is a follow-up to Kate Harveston’s excellent article on single payer health plans. This is a subject near and dear to my heart. In my Prudential days I ran 31 HMO’s covering 1.7 million people and created the DMO for dental from scratch which covered 6.9 million people in the U.S. In addition, I lived in several countries which had single payer healthcare and experienced first hand the quality of medical care in those countries.
First of all, healthcare in the U.S. is far and away the most expensive in the world. Here is a sample of per capita health expenses for 2015 ( the last complete years statistics are available) in U.S. Dollars. I am picking countries similar to America in standard of living,
1 – U.S. = $9,451/person
2 – Germany = $5,267/person
3 – Canada = $4,608/person
4 – Australia = $4,420/person
5 – France = $4,407/person
6 – Japan = $4,150/person
7 – England = $4,003/person
8 – Israel = $2,503/person
All of these countries have medical outcomes similar to the United States in terms of life spans, infant mortality etc. Yet most of them spend half of what the United States does on healthcare. Why the difference? Part of the reason is we pay our GP’s an average of $161,000 per year while in France, Germany, England, Australia etc they earn an average of 65% of the American doctors. Another large factor is our obsession with testing, our concept of leaving no stone unturned even if the doctor knows the test has nothing to do with the medical symptoms. This difference is reflected in HMO rates. Most HMO’s are IPO models where individual doctors are contracted to provide the medical care. There is very little in the way of effective management of medical care in this environment. In the Group Practice model, the HOM rents the building, provides all the equipment and pays the doctors and staff a salary. Based on Pru’s experience the Group Practice model produced rates 31% less than the IPO model.
Group Practice models were never very popular in America because Americans don’t like anyone telling them where they can go and who they can see. Any restrictions on American’s freedom is condemned even if it means they will die. I’ve encountered hundreds of situations where Americans have rejected the doctors advice only to die the same day. I had to testify in court about a man who went to our HMO and had a blood pressure reading of 295/164 and refused the doctor’s advice to call an ambulance and go to the hospital immediately. Instead he wanted to go play in his town softball game and said “Go to Hell – HMO doc” He walked 5 feet out the front door and dropped dead of a heart attack. His widow sued and we lost $1.7 million on it. The plaintiff attorney actually argued we should have prevented the man from leaving, even if we had to tie him up.
Our health care system wastes tremendous amount of money. Salaries are high, unnecessary tests cost a bundle. Every doctor wants to be an independent business man even if his rent is inefficient, staff turnover and salaries are high and more staff is needed just to handle the zillion different insurance companies they have to deal with, all with different forms and requirements. This latter issue based on our experience costs the doctor an unnecessary 12% of his income.
In any event, the key to a single payer system is the money it will save with little to no difference in medical outcomes. While America has a first rate medical systems, IT IS NOT ANY BETTER than other first world countries. We spend enormous amounts of money on heroic medical treatments. When one’s life is threatened, everything is justified no matter the cost. Yet when someone is poor, even the expenditure of a $5.00 for generic blood pressure medicine is a hill too high for America to climb. Keeping a person alive, even when the cost is small, is a major difference compared with single payer countries. I believe a true single payer system in the U.S. will save 30% of our healthcare costs. It would reduce our costs from $9.500/person or about $3.2 trillion to about $2.2 trillion. Yes taxes would go up by a couple of trillion but employers, Medicare, Medicaid and other health plans would save a $1.0 trillion. The big question is most of the money saved would be by employers cancelling their group insurance. How much of those savings would go into employee pockets to offset the higher taxes. I would suspect employers would keep the savings to themselves so a special corporate tax would have to be enacted.
In summary, knowing the U.S. political system we can look forward to a single payer plan being implemented in the year 2525.
After a long career as a Senior Executive with Prudential, jdledell took early retirement to teach piano with his wife of 48 years, Cinder. The two of them established Castle LeDell Music in their home and have 130 weekly students spread out over 7 days a week. In spite of teaching being literally a full-time job, jdledell finds the time to consume vast quantities of Internet commentary and to communicate with his children and other relatives scattered around the globe. While jdledell got polio when he was two years old and now uses a wheelchair full-time, it doesn’t keep him from leading a rich and fulfilling life in Basking Ridge, NJ.