Monday, November 8, 2010

Wanna Sail Away To A Distant Shore

I know the exact day that the United States will adopt a single payer health care system: It will be at high noon the day after the Catholic Church canonizes Karl Marx.

For those who don't know, the advantages of a single-payer system are myriad:
  • Since the taxpayer dollars that fund single payer comprise a finite budget, it forces efficiency.
  • A politically elegant approach to single payer can encourage improved outcomes and responsible fiscal management. For example, Finland raises, budgets, and spends most of its health care dollars at the municipal level. This is the largest part of a municipality's budget, meaning that the electorate can hold local officials accountable for health care system performance. Consider the advantages of mayoral and city council positions being dependent on voter satisfaction with medical care.
  • Public health is one of the two biggest bangs for the health care buck. Since the central government is ultimately responsible for the health of the population and since the health budget is finite, single payer creates a powerful incentive to invest in public health. And, indeed, strong public health programs are a signature of single-payer systems.
  • The second big buck bang is preventive care (such as physical examinations at recommended intervals). Preventive care tends to get short shrift in the United States because insurance companies have determined that policy holders are unlikely to hold a policy long enough for the expense of preventive care to justify offering it. That's why preventive care is typically not a part of standard policies, and why businesses usually have to pay extra to offer it as a benefit. But when considered from the perspective of general population health, preventive care is a no-brainer: It's cheap and effective. Thus, single-payer systems stress preventive care as part of the primary care around which single payer is built.
  • Because the central government ultimately administers a single payer system, it can develop a health policy for the nation that sets goals, directs funding, and monitors expenses. The U.S. has no health care policy.
Has single payer driven into bankruptcy the countries that have adopted it? Contrary to popular belief, single payer systems do not force countries into bankruptcy: Instead they save the taxpayer money hand over fist. Don't believe me? Read on.

We can all agree that 2009 was tough year economically for any country not named China. Nonetheless, Norway, with its double-platinum health care plan rated 11th in the world, ran a budget surplus. (Source: CIA World Fact Book.)

But, you say, that's not fair: Norway had the foresight to nationalize its immense petroleum reserves. These not only fund Norway's social services, they keep the country in the black. What about countries that don't have oil to do their blocking?

Fair enough. So let's take a look at the rest of Scandinavia. Single payer health in those countries must wreak havoc on their budgets. Sure enough, Sweden's ran a deficit in 2009 of around 2% of its revenue; Denmark and Finland check in at around 5%. In 2009, the U.S. deficit was a shade over 28% of revenues.

That's not a typo: 28%, not 2.8%.

And we spend a higher percentage of Gross Domestic Product on health care than any other country in the world. If any country's health care system is driving it to bankruptcy, it's ours.

Is adopting single payer health care the solution to America's health and fiscal problems? The grass in my lawn could solve many of my problems if only it sprouted blades of gold. I'm not counting on it, though. And the truth is that if our politicians miraculously agreed that America needed single-payer health care, we'd screw it up anyway: By the time the special interests finished with the legislation, every single cost-effective element would be stripped from it.

Take Finland's typically clever approach to the national pharmaceutical formulary. The Finns manage costs by controlling price: Drugs are sold on a cost-plus basis in which a profit margin is added to the wholesale price. They adjust the margin up for cheaper drugs, and down for more expensive prescriptions, which encourages use of less expensive medication. Moreover,nothing gets into the formulary without demonstrating both therapeutic value and economic sense. Combined with an ongoing physician education program, this approach gives the Finnish public a powerful voice in determining the use of prescription medications in their country and serves as an effective brake on the rising costs of drugs.

We should do the same here, right?

BUT...Finland is country of 5.25 million people with a GDP of less than $200 billion. The United States has a population of 300 million and a GDP in excess of $14 trillion. In short, the money is huge. In short, try to enact a program like the one described above -- exactly the opposite of what the pharmaceutical companies want -- and Big Pharma will go absolutely ape and strike back with everything they've got. Given the unrestricted access lobbyists have to our political system, any final legislation would likely increase Big Pharma profits at taxpayer expense.

Look no further than Medicare, Part D for evidence: Republicans put the federal government in a straitjacket by preventing it from negotiating Medicare drug prices. The single biggest piece of leverage that taxpayers have -- their sheer number -- was neutered to maximize Big Pharma profits. What do you think would happen if the government attempted to actually dictate profit margins?

The same would happen over and over to every single useful element of an imagined American single payer program. Which would eventually prove the nay-sayers right: Single payer does bankrupt a country.


13 comments:

Roy said...

Big Pharma isn't the only obstacle to a single payer plan; the state's rights people, including Tea Party people and libertarians, think health care should be dealt with at the state level or privatized entirely. A single payer plan says Big Brother and Socialism to these sociopaths. Big Pharma's propaganda hits home to these guys and makes them believe their fears are justified.

Rastamick61 said...

Texas republicans are also looking hard at a way to withdraw from medicare and institute a state run program. Wonder whose buddies will get that fat contract and treat it with all the due diligence of KBR and Halliburton in the war zone? I heard this morning they want to see if they can out-extreme Arizona on immigration law too. The state's rights loonies are really drunk on their tea in some places.

K. said...

I grew up in Texas. I would not want my old age subject to the tender mercies of the Texas Republican party.

And I don't care what they feel like they have to say publicly, few businesspeople along the Rio Grande want a tightened or closed border. They depend on a free flow of back-and-forth traffic for a large part of their customer base as well as cheap labor. People have no idea how much the economies of South Texas and southern portions of the border states rely on Mexico.

K. said...

Roy, you are quite right. I cited Big Pharma as an example of how and why special interests would mutilate systemic reform. There are other forces at work, and the pharmaceutical and insurance companies would use them to further their own ends.

paula said...

Profit margins for all types of insurance were regulated in Massachusetts until former Gov. Mitt Romney got his hands on the industry, and "opened up" the insurance market to out-of-state companies. Since, there's a cap on how much profit they can make, most aren't interested. So, we do fine with the dozen or so companies based here, all of which seem to make enough to pay people like Charlie Baker (former Republican gubernatorial candidate) millions as CEO at BC/BS. Profit margin is regulated, but not how the company divides up its profits. I believe VT has similar regulations.
When I lived in NYS -- where there were no caps -- I paid much more for similar health care, auto and homeowners insurance.
PS, as far as I can tell the world has not come to an end up here in the People's Republic of MA, but I can't swear to it.

K. said...

The demonization of Massachusetts is like the dire warnings about the "Europeanization" of America. Me, I've spent time in Massachusetts and Europe, and rather like both places. My son, who lives in Boston, calls Massachusetts "the most conservative liberal state in the country."

It turns out that whenever someone in a European country wants to tinker with health, the first bit of demagoguery that's thrown out is that he or she wants to "Americanize" health care. That's usually enough.

Darlene said...

I think the insurance companies have as much to do with the misinformation being spread about health care reform as bit pharma. Both spend millions on buying the legislators and on false ads to defeat any and all reform. Not funding the Health Care Reform is number one on the Republican agenda. God help us!!!

K. said...

Republicans should be careful of what they wish for. If they succeed in repealing or gutting the Affordable Care Act, health care will become their issue. Democrats will throw up their hands and walk away from HCR until the system collapses.

I'd argue that even with the AFA to buy time, resistance to their approach (and a relative absence of support for it) has exhausted Democrats and would impede any efforts to improve the act. The dysfunction of the political process likely means that government can't act quickly enough or effectively enough to head off the financial problems of Medicare or the growing tendency of business to cut benefits and increase co-pays and deductibles.

With the AFA in place, the Democrats own that problem. Without it, fingers will point at Republicans when the "system" breaks down.

Another thing to think about: The ranks of the retired are dominated and will continue to be dominated by whites. The workforce, on the other hand, will be increasingly comprised of minorities. How will they feel about paying for the retirement of whites who don't much like them?

TAO said...

I think the biggest impediment for Americans to accomplish anything is the fact that everyone seems to be looking for an angle from which to profit from.

As an employer I find that if an employee is hurt on the job vs. one that got hurt at home even if they have the exact same diagnosis receive totally different treatment.

Medicare and medicad fraud, are all perpetuaded by healthcare professionals! One of which, the biggest, is now the governor of Florida.

There is no way you can justify the salaries of the insurance company executives...just no way.

We really are not all that much of a civil society and that might be why we cannot accomplish anything near what the european countries have accomplished.

K. said...

Profit Worship goes back the post-Reconstruction Era. It's one of the reasons that the north turned its back on the freed slaves: It had become bored with their problems and saw them as a distraction from the greater good of concentrating wealth into the hands of a few. The paramount right to profit is so instilled that when some people are told that a legislative proposal will be bad for business, they automatically assume that it is a moral wrong.

Me, I like what Franklin Roosevelt said: Government should comfort the afflicted and afflict the comfortable.

TAO said...

Locally we have two very big business leaders, one got hit with a prison sentence for tax fraud and the other got hit with a prison sentence for insider trading...

They are not scorned...

We are actually a country that worships bandits and take enjoyment in the suffering of others...

For FDR to be meaningful you have to have a sense of what is right and what is wrong....

Right now GWB polls higher in popularity ratings than Obama...

K. said...

Once we liked Robin Hood. Now adulation is saved for those who rob from the poor and give to themselves.

Ginny said...

Re Republicans prevented the federal govt from negotiating Medicare drug prices. My mother (a liberal Dem at 91) was talking to a church friend (on Medicare) recovering from cancer, who complained about not having enough money to buy the medications both she and her husband needed. The woman said "it" was Obama's fault. What's wrong with the Democratic Party that it can't get its message across? (Rhetorical question.) I'm frustrated that Obama seems to assume we're all rational thinkers