Original Content at
April 30, 2012
Single Payer Health
By Lewis Mehl-Madrona
In this article, I look at possible difficulties of implementing single payer health care in the United States. We review studies that show that the difference in health care costs between the U.S. and Canada are due almost entirely to administrative costs. We look at the administrative inefficiencies that already exist in the U.S. and amply them to start a single-payer system, supporting local control of health care.
I received enough comments on my last article that I thought I'd respond to all of them in a new blog! Here goes!
Who should pay for health care? If health care is a right and not a privilege and we should all contribute to each other's wellbeing, then how do we do that? Taxation is the main means for governments to raise money, though I suspect that the current profits being generated in our capitalistic health care could go far to reducing the actual cost of health care if we no longer had shareholders and owners to please and CEO's of hospitals and health systems were public servants instead of capitalists. The last time I checked the CEO of Health Care America was making an annual salary of 150 million dollars plus stock options and other perks. We wouldn't tolerate salaries like that in the private sector.I received enough comments related to single payer health systems on my last blog to make me want to write another essay on this topic (rather than respond to each comment one-by-one).
U.S. health care is the most expensive in the world by a factor of four and results in ratings that average about 27th in the developed world, all factors considered.
I think we should subsidize each other's health care because none of us are willing to sit and watch someone die in the waiting room because they haven't bought health insurance. The Republicans argue that it is their right to eschew health insurance, but I'm sure few people would renounce health insurance if they could afford it. Their argument is specious because few of them would stand by and let people die in the waiting room, either. I'm quite sure some would, however, as they would see it as the will of God. Like the Catholic Church in the Middle Ages, they would not want to interfere between God and man by helping a person to recover from God's punishment in the form of illness. Once most of us agree that people can't just be allowed to die, then we have to pay for their care and some people's care is more expensive than others. How are we to answer the question of people's own behavioral contributions to their ill health? Should smokers pay a higher tax than non-smokers or is that factored into the tax on cigarettes? Should people who regularly exercise pay a lower tax than sedentary people? Should vegetarians be taxed at a lower rate than fast food aficionados? The list is endless. Figuring out the nuances of human behavior and how they affect health occupies the lives of endless epidemiology departments in public health schools around the world.
The surprising downside (though maybe it's not) from some of single-payer health is that your health and your health related behaviors become my business. I have an interest (because I pay for your illness) in controlling your behavior because "bad" behavior costs me money. Therefore, matters that we have considered private are now public. We must debate the cost of providing contraceptive care to which some Republicans object. From a cost perspective, birth control is much less costly than children. Only poor people could not afford birth control and the costs of not using it are then borne by all of us in the form of paying for the cost of their raising their children or our raising their children. One Republican answer would be that many childless families (mostly white) are available to adopt children and should do so.
In the International Journal of Health Care Finance and Economics from 2009 (Volume 9, pages 1--24), in a paper on "Why U.S. health care expenditure and ranking on health care indicators are so different from Canada's", A. H. G. M. Spithoven writes about how the U.S. spends most of all developed countries on health care. Nonetheless, the U.S. ranks relatively low on health care indicators. This paradox has been known for decades. The turning point comparing the U.S. and Canada was in 1972. Health expenditure as a percentage of GDP was higher in Canada than in the USA from 1960 until 1972. Since 1972 expenditure on health care has been higher in the U.S. than in Canada. The U.S. and Canada are two countries that are sufficiently similar to make comparisons useful. The comparison of factors influencing health care expenditure in the U.S. and Canada in 2002 revealed that health care expenditure in the U.S. is higher than in Canada mainly due to administration costs, Baumol's cost disease and pharmaceutical prices. It was not inefficiency in providing health.
What is Baumol's cost disease? Assuming that wages in low productivity sectors must keep up with wages in high productivity sectors, prices for labor intensive goods or services will rise relatively to prices of goods and services produced by the high productivity sectors (McPake et al. 2003).
Productivity in health care is difficult to improve because health care relies for a large part on a direct face to face relation between the health care worker and the patient. For example, washing a patient needs time that cannot be reduced beyond a certain point. Health care, where a large part of cost comes from staff looking after patients, is a low productivity sector. Baumol's costs disease may be overstated because the "output" used in measuring productivity in health care fails to capture major improvements in quality or results. So, while the cost of medical spending shot up from 1960 to 2000, largely as a result of the development and wide-spread use of new medical techniques, the cost per quality-adjusted life year decreased. Health indicators for both males and females, such as life expectancy at birth and infant mortality rates, reveal that the quality of health care did not improve in the U.S. in comparison to Canada in the 1960--2000 period (United Nations 2005 data).
Administration costs prove to be a significant variable to explain the difference in health care expenditure between the U.S. and Canada. America's health care is characterized by a fragmented payer system, while Canada has a single-payer system. The first has less economies of scale in administration than the latter because competition among providers of health care, on the one hand, and competition among insurers of health care on the other, result, among other things, in extra expenses in billing and administrative operations of health care providers who have to deal with 100s of payers and different rules and prices.
Overhead costs in Canada's single payer system are much lower than in the U.S. with 72 US$ health care administration expenditure per capita in Canada in 2002 and 367 US$ per capita in the U.S. For 1999: "In the United States, health care administration cost $294.3 billion, or $1,059 per capita [. . .] In Canada, health care administration cost $9.4 billion, or $307 per capita [. . .] After exclusions, administration accounted for 31.0% of health care expenditures in the United States, as compared with 16.7% of health care expenditures in Canada". Using the same broad definition, this big difference is also reported by Himmelstein et al. (2003): "The U.S. wastes more on health care bureaucracy than it would cost to provide health care to all of the uninsured. Administrative expenses will consume at least $399.4 billion out of total health care expenditure of $1,660.5 billion in 2003. Streamlining administrative overhead to Canadian levels would save approximately $286.0 billion in 2003, $6,940 for each of the 41.2million Americans who were uninsured as of 2001. This is substantially more than would be needed to provide full insurance coverage."
Another surprising public debate becomes for what should we pay? In Canada, the National health system does not pay for dental care. Apparently, teeth are superfluous. In Holland, from where I am today returning, the government is about to decide that psychiatrists will no longer be paid for psychotherapy, only for prescribing medications for depression because medication is more cost-effective than psychotherapy and people can get cheaper psychotherapy from others. I learned this at a Dutch hypnosis conference attended by a number of psychiatrists and family physicians. Actually, the evidence in the literature does not support this contention. A number of studies have shown that psychotherapy is more effective than medication or medication plus psychotherapy at 16 weeks. For depression, a 2010 meta-analysis using the Freedom of Information Act to obtain all the clinical trials ever done on antidepressants (all must be reported to the FDA but not necessarily published) found no difference between medication and placebo. A 2010 study compared behavioral activation (prescribing behaviors that cause the person to become more active) to cognitive-behavior therapy and to medication over 16 weeks. Most antidepressant studies last 6 weeks, not long enough for psychotherapy to show its full effect.
However, how much control should the payer have over how we physicians choose to treat people? Typically, there are many equally good ways to treat a problem, though bureaucrats are not apt to notice this. They wish the best way. They wish a quick and easy answer. And a bias exists! Therapies that involve human interaction are always less trusted than technology. We live in a world in which the bias is toward technology solving problems. Payers for health care have an interest in what is provided just as do recipients of health care. Where do the two intersect? Her again, I would prefer Bernie Sanders (Senator, Vermont) solution of giving control of health care to local governmental units. I think I would have a better chance of arguing my methods and why they should be compensated to a local board than to a faceless, nameless government agency.
Thus, in thinking about a single payer system, we must consider the politics of power. Who decides what will be covered. Who decides what we physicians are allowed to do and what we are not allowed to do.
Even as we consider who pays for health care, we must consider the kind of health care that we wish to have and how to insure that we get it. Today's health care relies extensively on technology which often fails to achieve its desired goals. Some of us at the margin of health care want more human-oriented care. We believe that health improves in the context of relationship and that physicians need to take the time to develop relationships with patients. We need to have the time to develop the relationships to help people change the way they live and to change the way they see the world. We need ways to provide care that allows us to spend time with patients and provide care that we and the patients believe will help. The downside of single payer systems that are far removed from the doctor-patient relationship is that the control lies far from the relationship. Bureaucrats don't necessarily even make evidence-based decisions, and evidence changes constantly. Doctors and patients need some autonomy over what they decide to do to improve health.
Himmelstein, D. U., et al. (2003). Administrative waste in the U.S. health care system in 2003: The cost to the nation, the states and the district of Columbia, with state-specific estimates of potential savings. Cambridge MA: The Division of Social and Community Medicine, Department of Medicine, The Cambridge Hospital and Harvard Medical School; Washington, DC: The Public Citizen Health Research Group.
Lewis will be in Maine, May 11-13, 2012, for Changing Story, Changing Self: The Power of Personal Narrative for Self-Healing. For details : Dr. Magili Quinn, DO 207-450-7151, Email address removed