What the evidence says about Medicare for All and other single-payer healthcare plans
Single payer health care – in which the government pays citizens’ medical bills – is a divisive issue this campaign season. Such a system is, in the popular mind, more or less synonymous with socialism, but the idea has been around since health insurance went mainstream during World War II.
Insurance, pharmaceutical, doctor, and hospital lobbyists have stifled efforts to adopt a single payer system ever since, even as nearly every other developed democracy in the world has moved to a single-payer system or to multiple payers with identical rules and rates. The United States has health outcomes that are no better, and often worse, than those in countries with single-payer systems.
The Democratic presidential primary debates have seen continued sparring over whether and how to refine the Affordable Care Act or combine all insurance into a single improved “Medicare for All.” A series of UCSF events are taking a serious look at the costs and benefits of single-payer systems to offer quality evidence and analysis for the debate.
One such event, on January 24, was a day-long conference called “Medicare for All: How to Do It Right.” The conference, held at International House at UC Berkeley, brought in many U.S. and international experts. Big names included Jeffrey Sachs, PhD, author of The End of Poverty, and Pramila Jayapal, D-Wa., the lead sponsor of a Medicare for All bill now in the House of Representatives. James G. Kahn, MD, MPH, a professor in the Department of Epidemiology and Biostatistics and the Philip R. Lee Institute for Health Policy Studies, was the driving force behind the event.
Papers presented at the conference examined the estimated costs and savings of various national single-payer plans, flagging problems that have emerged with the plans and the way their costs are analyzed.
Kahn talked about his paper published earlier in January with UCSF colleagues Christopher Cai and Justin White in Robert Pollin and Gerald Friedman from the University of Massachusetts, Amherst, both high-profile modelers for U.S. national and state single-payer proposals whose studies figured in Kahn’s review. Friedman explored the various factors that drive the differences among analyses. In addition to simpler administration, savings would come from a single insurer’s ability to negotiate prices more effectively than many insurers. The use of care would go up, reflecting pent up demand for doctors visits among those not currently insured, but savings would win out.
Pollin – who did a well-known analysis of Sen. Bernie Sanders (I-Vt.) 2019 Medicare-for-All bill – argued that the Urban Institute model on which Elizabeth Warren (D-Mass.) bases her Medicare-for-All proposal put costs significantly higher and savings significantly lower than most other rigorous analysis. Some of the numbers in the Urban Institute analysis have been revealed (after some poking and prodding by single-payer advocates) to stem from the Institute’s assumptions about which rather large political compromises Urban Institute concluded would have to be made before Sanders’ or Warren’s plan became law. Others, such as the assertion that there would be no administrative savings among providers, simply defy the consensus view.
According to Jeffrey Sachs: “Bernie is the one telling the truth.”
2. Replacing private payments with public
Even with savings, if the government is to pay healthcare claims as the insurer of record, the United States would need new taxes. What a given family saves in out-of-pocket spending on healthcare insurance premiums, co-pays and out-of-pocket expenses would be offset – but not wiped out – by an increased tax bill. This point is complex, and the Democratic candidates have struggled to make it clearly.
Gabriel Zucman – a UC Berkeley economist whose work on wealth inequality with colleague Emmanuel Saez generates Nobel buzz – offered the clearest way to help Americans follow the money. Say your salary is $60,000. Your employer is actually paying about $72,500 to employ you, but $12,500 goes to a private health insurer. You also pay in the ballpark of $1,500 a year out of your salary to cover your share of the insurance premium. If instead the law required that the $12,500 go to the employee and added a new flat 6% income tax, you would see your after-tax pay jump from $54,000 to $66,500. The 6% tax deducted would be enough to pay for Medicare for All.
3. Private insurers make trouble
But it wouldn’t be easy to switch over to a single-payer system in the United States, and a few of the speakers hinted at why. In areas of coverage where for-profit private insurers continue to play a role ugliness may ensue. That was the takeaway of the international comparisons offered by Sarah Thomson, a Senior Health Financing Specialist at the World Health Organization, and Danielle Martin, MD, MPP, of the University of Toronto.
Thompson offered Ireland as an example of a system that allows private insurance to coexist with national insurance. Private insurance poached healthier patients while benefiting from hospital infrastructure that public money supports, hamstringing the public system. Once these trends began, they formed a vicious cycle despite the government’s efforts to bring them back into balance with tax incentives and policy. So how did the Emerald Isle get itself into this mess? Like the United States, it had a powerful insurance industry that lobbied lawmakers not to put them out of business.
Martin gave an insider’s view of the Canadian system, showing that there, too, problems have emerged in areas – notably prescription drug coverage – where private insurers fill gaps in the public system. Martin pointed out that Canada stymies for-profit insurers for standard medical care not by banning them outright but by forbidding doctors to bill both private and government payers. To keep the system humming, fees for service are negotiated with medical professional groups every year or two. Single-payer is not, Martin reminded, a set-it-and-forget-it approach to healthcare. It needs ongoing refinement.
The speakers at the conference seemed to agree, then, that a single-payer system would save money while improving health outcomes. Their data suggest that private insurers should be allowed to compete with the public plan only in narrowly defined areas such as vision, dental care or cosmetic surgery. And they suggest that, politically speaking, the United States will have a rocky road to get there – if it ever does.
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