Why Not Single Payer? Part 2. What's Wrong With The Clinton / Obama / Edwards Health Care Plans

In Part 1 of this multi-part Huffpost series on the health care debate, I criticized the leading Democratic candidates -- Hillary Clinton, Barack Obama, and John Edwards -- for surrendering, without firing a shot, to the insurance and drug companies by opposing universal single payer health care.

In this second installment, I elaborate on the difference between universal single payer health care and the Clinton/Obama/Edwards universal insurance mandate plans and argue that universal mandates are bad social policy.

First, let's define our terms:

"Universal Single Payer Health Care" (aka "Medicare For All"): From the moment that you're born until the moment that you die, you will be covered by single quasi-public non-profit health insurer that will pay for both preventative care and for all necessary medical procedures and medications. You choose whatever doctor you want to see and you and your doctor decide on the care you need. It won't matter whether you're employed or not or whether your employer offers health coverage. You can never be denied insurance.

"Universal Insurance Mandate": If you like your employer's health plan, you can keep it. If your employer doesn't provide health insurance and you don't qualify for Medicaid, the government will make you pay for your own health insurance out of your own pocket. If you're too poor to afford the premiums, at tax time every year the government will give you a credit to reimburse you for part of last year's premiums. If you're middle class, the government tax credits may be too small to make the insurance really affordable, or you may have to buy a less expensive high deductible policy in which you have to pay for your doctor visits out of your own pocket, unless you get really sick and need major surgery or an extended hospital stay. You and your doctor will still have to fight with your insurance company on whether it will cover procedures your doctor thinks are necessary. If you try to avoid buying your own insurance or think you can't afford it, the government will penalize you.

To be fair, the Clinton/Obama/Edwards plans have some positive points. By banning "pre-existing conditions", they would allow people to buy insurance who are simply uninsurable now. By requiring insurance companies to charge the same premiums regardless of age or health, they would make insurance more affordable to middle aged people. (Conversely, they would make insurance more expensive for younger people.) By providing tax credits, they would help lower middle class people afford at least lower priced, high deductible "catastrophic" policies. Most of the plans include a Medicare-like public alternative that individuals may purchase and whch competes with private insurance.

But overall, a universal insurance mandate is bad public policy compared to universal single payer health care. Some of the reasons:

1. It's a colossal waste of money. While the administrative cost of Medicare is about 2-3 percent, approximately 30 percent of private insurance premiums go to overhead, profits and executive salaries. In 1999, the last year for which I could find numbers, health care administrative costs totaled $294.3 billion or $1,059 per capita, compared to $307 per capita in Canada. With insurance premiums having climbed 87 percent in the past decade, it would be a fair guess that administrative costs now exceed $400 billion per year. That's more than enough to cover all of the uninsured without raising taxes.

2. Universal mandates punish the middle class who make too much to receive government subsidies, but too little to afford the cost of health insurance that the government will coerce them into buying. Massachusetts passed a state universal mandate program in 2006 which proponents of a universal mandate point to as the model for a national plan. According to recent a study by the Greater Boston Interfaith Organization, the premium for the minimum insurance plan is unaffordable for households earning between 300%-500% of the poverty level. Premiums for the minimum plan are free for those earning up to 150 percent of the federal poverty level of $10,210 for individuals and $13,960 for couples. Premiums are reduced for those earning up to three times the poverty level. Those earning more than that (i.e more than $30,630 for individuals, $41,880 for couples) must pay 100 percent of the premiums themselves. Premiums range from $1464 per year for young adults to $9600 per year for those over 55. So a 55-year-old couple earning $42,000 a year would have to pay $19,200 a year in premiums, nearly 46 percent of their pre-tax income, for a plan with deductibles of $2,000 per individual and $4,000 per family and out-of-pocket expenses of up $5,000 per year for individuals and $7,500 for families. A government mandate requiring people to pay these kinds of premiums, even if a national plan had somewhat higher subsidies, is effectively a huge hidden tax increase for the middle class and a huge boondoggle for the private insurance companies to whom the government delivers large numbers of new customers.

3. The universal mandate plans assume that most people will continue to be covered by their employers and therefore they won't have to reach into their pockets to pay the full cost of meeting the government mandate. But employer-based health insurance is a dying dinosaur. Each year fewer employers offer insurance. Between 2000 and 2006, the percentage of employers offering some type of health insurance declined from 64.2 percent to 59.7 percent and it continues to decline. Even many people whose employers now provide health insurance are underinsured -- according to a Consumer Reports survey, 29 percent of people with health insurance are "under-insured," with coverage so meager that they often postpone medical care because of cost. Moreover, as insurance premiums escalate at a far greater rate than inflation or wage increases, more and more employers increase their employee's share of premiums, raise deductibles and co-pays and reduce benefits. If you lose your job, you lose your insurance. In the larger picture, leaving the burden of health insurance on employers makes American companies less competitive in the world economy, compared to other capitalist democracies where the government pays for health care. Recently, Toyota named the savings in health care costs as the main reason for deciding to open a new auto plant in Canada rather than the U.S.

4. Large numbers of people opting for lower-cost, high deductible plans will lead to many middle class people avoiding preventive care and necessary treatment until they are already very sick, leading to worse health outcomes and in the long-run resulting in higher costs from waiting to treat preventable diseases until they become serious. If, after paying thousands of dollars a year in premiums, a middle class family has to pay $2,000-$4,000 in deductibles before their insurance kicks in, many won't go to the Doctor until it's an emergency. For example, someone with a chest infection won't seek care, thus infecting others, and possibly ending up in the hospital with pneumonia. Men won't get their PSA checked, women won't get pap smears and breast exams, people won't get colonoscopies, thus leading to cancers not being found at the early treatable stage.

5. The strongest argument by progressives who support a universal mandate is that the plan would include a Medicare-like public alternative that would compete with private insurance and, because it would so clearly be superior to private insurance, would eventually evolve into a single payer system. If this plan is modeled on Medicare, it would be a fairly generous plan in which you can choose your own doctor, in which most treatments your doctor recommends are covered, and in which deductibles and co-pays are low. This means that, even after greatly reducing the administrative costs associated with private insurance, it will still be expensive compared to high deductible plans. This leads to "adverse selection." The young and healthy would opt for the cheaper plans. The people who will buy the Medicare-like plan will be those who think their health care costs are likely to exceed their premiums -- in other words, the older and sicker. Far from slowly evolving into a single payer system, as its progressive supporters like Paul Krugman argue, the Medicare-like plan is likely to become more and more expensive as time passes, making it less and less affordable and forcing more and more people back to bare bones private insurance.

End of Part 2

Coming in Part 3: Why Universal Mandates represent not just bad social policy but a losing political strategy.

Comments

[Spoons]

1. Malcome Sparrow's last figure more than a year was $1900 per person in insurance administrative costs, so I round that up to $2000 this year (considering other cost inflation in health insurance ran more than that increase in percentage).
3. I don't type that well. The last sentence in my last post should have said "I guess they Al and O' in '08) would have to want to run".

[Spoons]

1. Check Malcome Sparrow, Harvard economist, for more timely figures for insurance administrative costs.

2. Hillary's skeletal plan DOES NOT REQUIRE INSURERS TO CHARGE THE SAME PREMIUMS. It says they will not be able to charge "large" differences based on "modified" community rating (whatever that means). I call it a loophole, and we know if we give an inch tehy'll take a mile.

3. Al Gore released a video at current.com (called "Health Care is a Right") stating unequivocably that we must have "Universal Single Payer Health Care". Am I dreaming to think that if we ran Al and O in '08 we could elect a white guy, an African American AND a woman? I ugess they would want to have to run, but I'm betting that wouldn't depend upon campaign donations.

[jlohman]

There is no such thing as price competition in the health care industry, at least not the way we might perceive it. And should we ever get to that point, few patients who are really sick will seek out the lowest bidder for themselves or their kids. It isn’t going to happen.

See http://tinyurl.com/ynkkr6

http://MoneyedPoliticians.net

[TXfemmom]

We should follow the French system. Every employer and every employee, and those self-employed must pay the tax, and that tax is far less than what we pay in insurance premiums now.

The French system is the finest in the world, and the French people and the government consider health care to be a basic, human right. People there are not afraid that some few people, whom they consider unworthy, get care and cut off care for those who deserve just because a few may not.

Their administrative costs are minimal, in line with Medicare here, and all the patients and providers are vigilant for fraud.

We could fund every single person in this country, and do it for far less than what is spent currently, by making every employer and every individual pay the taxes, and no opting out unless one purchases private insurance. They have the best system for basic, preventive medicine and they do not have long waiting lines or old facilities.

The United States is foolish to permit pharmaceutical companies, insurance companies, and others to cause us to have an unstable, and terribly expensive system which puts every single person in jeopardy from incuring costs which can bankrupt one.

[LeftRight]

The thing that gets me is that the insurance companies might make a little more off of a mandate, but they would make a much larger ammount off of single payer. How? Because they would simply create supplemental plans that you could buy if you wanted more than USCare would provide. The premiums would be very similar, the payouts less than 50% of current plans, and they wouldn't need to employ as many people to handle/deny claims.

Further, the word I keep hearing is "socialized medicine" Now, I'm not necessarily opposed to socialized medicine, but first, nothing said so far is socialized medicine. Socialized medicine means that the government not only pays for everything, but it also owns everything. The doctor's office, the hospital, everything. This is basically what we have now, except that it's not the government owning them. Under single payer, the doctor owns his own office, the hospital is either private or public, but not owned by the feds, and you and your doctor choose what's best for you.

However, one thing that needs to happen is that people need to stand up and force those who call it socialized medicine to admit that they're wrong.

[Dantheman99]

If Clinton, Obama and Edwards would all make acceptable nominees to you, but you support the medicare-for-all option, then vote for Kucinich in the primaries. It will increase his number of delegates, demonstrate support for his views, and increase his ability to shape the party and influence the platform.

Or vote Green Party, a party that doesn't see universal health care as yet another opportunity for a giveaway to insurance corporations who don't need it.

[LateDave]

To Miles and all the posters:

Superb! The best summary I have seen. The comments are even civilized, for a change. You know as well as I that the premise is doomed, but it's nice to see it presented succinctly and clearly. Thanks, Miles, for calling up the statistics from the Massachusetts model so we can see that it is a sham ensuring insurance industry rakeoff. The Toyota flash is a gutslammer: is real industry (manufacturing) listening at all, or are we abandoned to decline with scavengers picking over the bones?

[MSB]

I personally feel we could fund an enormous portion of it by cutting funding precipitously from our insanely bloated defense budget including all of the crazy riders and exceptions which it receives so that the true funding doesn't appear on our budget.

I'd like to hear a rational defense for policing the world's energy supplies while we can't even cover children's health needs in this country.

Private healthcare makes billions. This is why it exists and why it will be hard to defeat. Money buys politicians - it doesn't even represent us unless we are, in fact, monied. In addition it would represent the unemployment of an enormous number of folks in administration of private health insurance. I don't think this is reason not to do it. These people should find employment in the ideologically burgeoning renewable energy field amongst others. All it takes is some courage and a government which actually represents our best interests.

Competition with EVERYTHING is nuts. The earth is a finite resource. If we insist on winners and losers it is just a matter of time before we all are dead. We need some collective answers. Healthcare is just the first, most pressing among them. It WILL hash itself out one way or another, be it through negotiation or war. It seems prudent to take the least violent solution (to all but those getting rich off of arms dealing.) Is health so much to ask for? Why should anyone make a buck off of that?

[AmericanSon]

Excellent article. Thank you for stating the obvious so well. I guess it can only happen if we elect Kucinich, who seems to be the most in line with my positions on just about everything.

[dchavern]

Who pays for it -- and how do you manage costs? Cost is a much bigger issue than government verses private insurance. Single payer systems are better at primary/pr­eventative care -- and that is affirmatively a good thing -- but I don't know of any of these systems that provides more and better options for complex or serious surgical issues. No system gives everyone access to everything -- and "Medicare for all" will just lead to the development of a supplemental insurance system for wealthy people. We will still have two systems.

Also, I have more sympathy for the "Medicare for all" argument when proponents are willing to say "I will personally be willing to pay substantially more in taxes to support the system." I have less sympathy when the argument is made that some vast number of unnamed "rich people" will foot the bill. If you aren't willing to pay more, don't expect someone else to pay the tab for you.

[Merlin7]

Excellent summary. Here's the sad part: The entire health care debate is a joke. The candidates know perfectly well that their plans would never be adopted, because the insurance industry virtually owns Congress.

In fact, our entire "democracy" is something of a joke, since in every election we merely trade one gang of well-connected shysters for another. Is it really a democracy if only insiders have any chance of winning? You figure it out.

[herronsmith]

I guess that leaves Dennis Kucinich as the lone candidate with any sense.
Thanks for the great post. I am fed up with the Democrats using smoke and mirrors to try to convince the voters their mandates will be good for all. I will most likely fall into the catagory of the individual who has to pay 100% of my premium and it now comes down to which country I would rather live in.
The US, sans Kucinich and a few others, just doesn't get it and it is doubtful they will in my lifetime.

[indypete]

We will never get a fair systrem of health care... the insurance companies simply won't allow it. They'll keep instructing their hired hands in both parties to scream that any national health system is socialism. Resistance is futile, Big Brother has taken over.

[JudyGee]

Single payer government healthcare, like every civilized country, is the only plan we want or need. As soon as I heard the words Insurance out of Hillary's mouth I knew, oh oh, we're screwed, those bastard insurance companies have wormed their way into these so-called plans. These aren't plans for us, these are the insurer's plans for continuing to suck us dry.
I am so disgusted with the democratic party.
They just stink of fear, what an inglorious defining moment.