Single-payer health care

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Health care reform in the United States
General
Debate for and against History Public opinion Drug prices Uninsured
Specific proposals
Health insurance exchange Healthy Americans Act United States National Health Insurance Act
Systems
Canadian and American health care systems compared National health insurance Publicly-funded health care Single-payer health care Universal health care
Reform advocacy groups
American Medical Association American Medical Student Association California Nurses Association/National Nurses Organizing Committee Healthcare-NOW! Physicians for a National Health Program Progressive Democrats of America
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Single-payer health care is a term used in the United States to describe the payment of doctors, hospitals, and other health care providers from a single fund. It differs from typical private health insurance where, through pricing and other measures taken by the insurer, the level of risks carried by multiple insurance pools as well as the coverage can vary and the pricing has to be varied according to the contribution of risk added to the pool. It is often mentioned as one way to deliver universal health care. The administrator of the fund could be the government but it could also be a publicly owned agency regulated by law. Australia's Medicare, Canada's Medicare, and healthcare in Taiwan are examples of single-payer universal health care systems.

According to the National Library of Medicine's Medical Subject Headings (MeSH) thesaurus, a single-payer system is:

An approach to health care financing with only one source of money for paying health care providers. The scope may be national, like the Canadian system, state-wide, or community-based. The payer may be a governmental unit or other entity such as an insurance company. The proposed advantages include administrative simplicity for patients and providers, and resulting significant savings in overhead costs.^[1]

Single-payer health care does not necessarily mean that the government or some government agency delivers or controls health care services. It may pay for health professionals and services that are delivered in either private or public sector settings according to the needs and wishes of the patient and his or her doctor.

Single-payer is one alternative proposed for health care reform in the United States, and as such, has been the subject of active political debate for decades. A national health insurance system, though not necessarily a single payer system, is the reform proposal that has the greatest level of support amongst medical professionals^[2] and the general public,^[3] though some in Congress and the health insurance industry have tried to deflect calls for such reform by insisting that the U.S. should adopt a "uniquely American solution"^[4] that would protect the profits of private insurers, thus ruling out a single-payer system.

Contents 1 Method of implementation 2 Intent 3 Types and variations 3.1 Canada 3.2 United States 3.2.1 State proposals 3.3 Netherlands, Belgium & Germany - multiple payers but with some single payer features 4 Proponents and support 5 Opponents and criticisms 6 See also 7 References 8 External links

[edit] Method of implementation

In some countries, medical practitioners in private practice may receive a fixed fee for service according to a fixed tariff negotiated between the government and the medical profession. Some countries allow doctors to charge more than this (with the patient paying the extra or charging it to a top-up insurance). Some governments make their payment conditional on it being the only charge that the doctor can raise. Some governments may simply reimburse the doctor's full bill, though this is rare because of the potential for fraudulent overcharging and to ensure that the system is fair to all contributors.

There are similar variations in hospital practice. In some countries, hospitals are publicly owned and therefore run to fixed budgets set by government. In others, a fee for service may apply. Many countries allow private and public hospitals to operate side by side and compete with each other. Often (e.g. in Australia or Finland), the cost of using private medical facilities is often not fully compensated by government, but is heavily subsidized nevertheless.

In Taiwan, every eligible resident has an electronic medical card which gives the doctor, whether in hospital or at a clinic, access to electronic medical records. It is also needed for the doctor to reclaim from the government the cost of services delivered to the patient. This gives the patient control over access to his medical records and limits the potential for fraudulent over-claiming. ^[5]

[edit] Intent

Those advocating the introduction of single payer health care in the United States do so on several grounds most of which address problems that are seen to be inherent in the current system where there are multiple insurers.

• Balancing lifetime risks and expenditures

The purpose of health insurance is to balance risk. With Single payer health care it is possible to balance risk across a lifetime of contributions to the single fund. This is important because health care demands tend to rise as people get older, but their earnings capacity is usually greater when they are younger and more productive. Single payer health care systems therefore balance premiums or contributions much more towards higher contributions when earnings are high and lower contributions when earnings are less, even though expenditures may be very high. This is usually achieved by linking the contribution to salary. Private health insurance however tends only to balance risks year on year. Thus younger people can be insured at very low rates because they tend to attract lower risks whereas older and sicker people are penalized through pricing. Because there are many smaller pools in private insurance, insurance companies are forced to price in this way in order to protect their own interests. Lifetime balancing of risks and expenditures are not usually possible with private insurance.

• Lower administrative costs

Proponents of health care reform argue that moving to a single-payer system would reallocate the money currently wasted on the administrative overhead required to run the hundreds^[6] of insurance companies in the U.S.^[7] An often-cited study by Harvard Medical School and the Canadian Institute for Health Information determined that some 30 percent of U.S. health care dollars, or more than $1,000 per person per year, went to health care administrative costs.^[8] Insurance companies dispute this figure, citing an industry average of 15 percent within their industry for administrative expenses and profits. However, health care providers must also absorb the cost of staff time for dealing with the insurance companies, which adds to the cost of the insurance-based system. Some countries such as Taiwan have introduced Single Payer system in which the entire cost rebate system absorbs less than 2 per cent of health care costs.

• Tackling of moral hazard

Moral hazard arises when an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions. In the medical sphere, medical practitioners are sometimes accused of using the insured person's medical insurance to insure themselves against medical malpractice by doing more tests than are strictly necessary. This increases the overall cost of health insurance. Some insured people may ask an insurance provider to pay for the cost of medical treatment that they would not have chosen to pay for themselves. Some medical providers, keen to recoup their investment on medical technologies such as medical scanners, may recoup their investment by recommending scans which may not be strictly necessary. Whether single payer systems avoid problems of moral hazard rather depends on how the system is organized.

In the North American system of paying for-profit institutions via Medicare type systems (which effectively pay for volume of work in the same way as private insurance), the system may retain some issues of moral hazard. Medicare itself recognizes that the present system rewards failure. For example some hospitals were found to provide excellent service with low re-admission rates, but others had poorer medical performance with higher re-admission rates. Because the system pays for the volume of work done and not the quality of outcomes, this results in the good hospitals receiving LESS funding than the bad ones. Because in this system a doctor in general practice only gets paid when a service is delivered, even general practitioners tend to run tests and treat the "worried well" because giving advice to the patient is not well rewarded by the payment system whereas performing tests is. The doctor earns nothing if patients do not come through the door.

In the British/Scandinavian/Spanish system of single payer, health care providers are simply salaried by the community and have to deliver health care within a fixed budget. This means that there is every incentive for them not to waste funds on unnecessary tests and the use, for example of expensive medical scanning in situations when cheaper and as effective alternatives are available. Comparative effectiveness between hospitals is measured and publicly reported. Ineffective practise is rooted out. Because hospitals are public institutions they cannot profit by providing more care. The system of gatekeeper access ensures that patients themselves do not waste public money demanding unnecessary services. General practitioners in the British/Scandinavian system have no income worries because their incomes are assured as they are primarily salaried by the community. They are gatekeepers which keep the "worried well" away from the more expensive hospital system and provide advice on staying healthy as well as treating simple ailments. Some systems such as the British NHS even rewards doctors if their patients lead healthy lifestyles, stop smoking and lose excess weight. Such incentives save money in the longer term.

A good illustration of the way the organization of payment affects costs in the system and distorts medical priorities is the difference in practice of prostate cancer screening. Prostate cancers are common in men but most are non aggressive and most men with prostate cancer actually die of something else. A test does exist (the PSA antigen test) which can detect the presence of such cancers. The test is indicative but not certain and many more invasive tests are needed to determine if the cancer is the aggressive type. Such tests are not without risks and must be performed on many healthy men to discover the few cases that are dangerous. In North America, prostate cancer is regularly screened and creates many costs which are borne by the insurance company and the patient. In Britain, doctors do not routinely screen but may perform a PSA test if there are other indications of a prostate problem. As a result fewer men have to undergo the test and follow up tests to find the few that have the aggressive type of cancer. The British view is that on balance, the benefit of not causing potential harm for the majority of men who would not benefit from the screening outweighs the benefit of finding and treating an aggressive cancer in the much smaller group that would benefit. North American doctors would probably fear a lawsuit if they did not at least offer their male patients the PSA test^{[citation needed]}. Death rates from prostate cancer are very similar in Britain and North America. ^[9] Some health care systems have "no fault" compensation schemes for situations where the patient suffers a problem undergoing treatment. This means that the health care system pays for all the health care and other consequential losses of medical accidents without the need to go to court to prove medical negligence. Keeping the lawyers away from health care saves a lot of money^{[citation needed]}.

Forms of cost sharing such as co-insurance, co-payments, and deductibles are intended to reduce the risk of moral hazard by increasing the out-of-pocket spending of consumers thus giving the insured person a financial incentive to avoid making a claim. But they also effectively reduce the value of the insurance policy to the insured. Physician and health economist Edith Rasell has reviewed the literature on cost sharing and found that it reduces necessary care, discourages use of preventative services and has a negative effect on health outcomes, especially among the sick and poor. She concluded that over-utilization is insignificant as a cost driver: far more important are huge levels of administrative waste, inefficient delivery of services and the United States’ comparatively high level of costly, high tech procedures.^[10]

Others would point out that consuming health care is also not really akin to other types of consumer behaviour because it has a negative utility of consumption. A person who consumes more health care is not fundamentally better off than a person who consumes less. An examination of health care consumption in Winnipeg, Canada, where there is a single payer health care system did not find that escalating health care costs there were exacerbated by patients facing no costs when they visit doctors or use hospital services. It found that those incurring high health care costs are sick by every measure used. These high-cost users were drawn from every neighbourhood and every socioeconomic group, and their health care expenditures were driven by hospital costs.^[11]

• Avoid problems associated with medical underwriting - premium loading, caps and exclusions

When there are multiple insurers competing for business, medical underwriting protects insurers from adverse selection. Medical underwriters scrutinize applications for health care and apply differential conditions to policies according to the risk associated with the individual. Competing private health insurers naturally seek to attract young and healthy patients whilst simultaneously seeking to avoid or price out the sick and elderly. These processes go against the general principle of health insurance which is that the healthy pay for the health care needs of the sick and that persons pay into insurance when they are young so that they can be assured of receiving health care when they are old.^[12] Some call this process "cherry picking" ^[13][14] A single payer insurer would not be faced with the competitive pressures to engage in medical underwriting practices which negate the benefit of insurance. With single-payer, the entire population would insure itself, ensuring that the costs of meeting the medical insurance of the sick was paid for by the healthy and that the young would be compelled to contribute to an insurance scheme at a rate that ensures that the care they may need when they become old will be available to them.

• Introduce Universal health care

Nearly 45 million Americans, about 15 percent of the population, lacked health insurance in 2005.^[15] The lack of universal coverage contributes to another flaw in the current U.S. health care system: on most dimensions of performance, it underperforms relative to other industrialized countries.^[16] In a 2007 comparison by the Commonwealth Fund of health care in the U.S. with that of Germany, Britain, Australia, New Zealand, and Canada, the U.S. ranked last on measures of quality, access, efficiency, equity, and outcomes.^[16]

• Avoid medical bankruptcies

A recent Harvard University study found that medical bills are a leading cause of bankruptcy in the United States. The study found that many declaring bankruptcy were part of the middle class and were employed before they became ill, but had lost their health insurance by the time they declared bankruptcy and that about 2 million Americans live in families that have experienced medical bankruptcy. ^[17] In the U.S., people leaving a job can continue with their former employer's health insurance plan under the COBRA but usually at a rate that is double what the employee paid while employed, and only for a limited time. When an employer-insured person loses a job due to illness and does not have sufficient resources to continue to pay for COBRA health insurance, they also lose their health insurance coverage. A single payer system, it is argued, would avoid medical bankruptcy, which is almost unknown in other advanced western industrial countries.

• Encourage preventative medicine

People often discover that although their doctors recommend screening and other forms of prevention, they find that their insurance company does not reimburse the cost of the procedure. ^[18] Some have argued that it is not in the interests of the insurer to go looking for problems that could result in a medical claim which, if delayed until the problem becomes serious, would most likely fall upon a different insurer. A single insurer however would be incentivized to discover problems earlier because they will be cheaper to deal with in the long run if the cost of screening is cost effective.

[edit] Types and variations

The United States, Canada and Australia have single-payer health insurance programs named Medicare; however, Australia's and Canada's programs provide universal health care, while U.S. Medicare is only for senior citizens and some of the disabled.^[19] Government is increasingly involved in U.S. health care spending, paying about 45 percent of the $2.2 trillion the nation spent on medical care in 2004.^[20]

According to Princeton University health economist Uwe E. Reinhardt, Medicare, Medicaid, and SCHIP represent "forms of 'social insurance' coupled with a largely private health-care delivery system" rather than forms of "socialized medicine." In contrast, he describes the Veterans Administration healthcare system as a pure form of socialized medicine because it is "owned, operated and financed by government."^[21]

The Veterans Administration is a single-payer system and provides excellent quality, said Reinhardt. In a peer-reviewed paper published in the Annals of Internal Medicine, researchers of the RAND Corp. reported that the quality of care received by Veterans Administration patients scored significantly higher overall than did comparable metrics for patients in the rest of the U.S. health system.^[22]

Some writers describe publicly administered health care systems as "single-payer plans." Some writers have described any system of health care which intends to cover the entire population, such as voucher plans, as "single-payer plans,"^[23] although this is an uncommon usage.

[edit] Canada

Canada has an example of single-payer health care.^[19] The national government provides part of the funding, provincial governments manage the hospitals (and provide the bulk of the funding), and doctors in private practice contract with the government for fee-for-service payments. Although a majority of Canadian citizens have supplemental private health insurance from their employer, this covers expenses not covered by Canadian Medicare, and meets only 12% of national health care spending.^[24] Fees for doctors, hospitals and other providers are set by negotiations among doctors' associations, provincial or regional governments, and the national government. Global budgets eliminate the cost of billing individually for huge numbers of products and services.

Health care provision in Canada is a mix of private and public services, although most hospitals are public.^[25] Patients may go to any doctor or hospital in the country.^[26]

[edit] United States

Health care in the United States
Government
Centers for Medicare and Medicaid Services Medicare Medicaid Military Health System TRICARE Department of Veterans Affairs (VA) Indian Health Service State Children's Health Insurance Program (SCHIP) EMTALA Federal Employees Health Benefits Program
Private
Health maintenance organization (HMO) Managed care Medical underwriting Preferred provider organization (PPO)
Private consumer driven
Flexible spending account (FSA) Health Reimbursement Account Health savings account High Deductible Health Plan (HDHP) Medical savings account
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Physicians for a National Health Program (PNHP) supports a single-payer system which would be an expanded and improved version of U.S. Medicare (Medicare for All), and would cover every American for all necessary medical care.^[27] In 2007, The American College of Physicians, the second largest group of physicians in the USA, called for legally mandated coverage of all Americans and urged lawmakers to consider a single payer system as one option for achieving that goal.^[28] The American Medical Student Association also supports single-payer.

In Congress, Rep. John Conyers, Jr. (D-MI) has introduced the United States National Health Insurance Act (HR 676). The bill has been introduced in every term of Congress under the same name since it was first introduced 2003 in the 108th Congress with 38 cosponsors.^[29]

Converting to a single-payer system is seen by proponents as a solution to the flaws in the current U.S. system. The U.S. health care system is the most expensive in the world on both a per-capita basis and as a percentage of GDP.^[30] Despite this expenditure, the current U.S. system fails to provide universal coverage. More than 45 million Americans, about 15 percent of the population, lacked health insurance in 2007.^[31] The lack of universal coverage contributes to another flaw in the current U.S. health care system: on most dimensions of performance, it under performs relative to other industrialized countries.^[16] In a 2007 comparison by the Commonwealth Fund of health care in the U.S. with that of Germany, Britain, Australia, New Zealand, and Canada, the U.S. ranked last on measures of quality, access, efficiency, equity, and outcomes.^[16]

The U.S. ranks 42nd in the world for low infant mortality ^[32] 46th in life expectancy, between Cyprus and Denmark,^[33] and 37th in health system performance, between Costa Rica and Slovenia.^[34]

The U.S. system is often compared with that of its northern neighbor, Canada (see Canadian and American health care systems compared). Canada's system is largely publicly funded. In 2005, Americans spent an estimated US$6,401 per capita on health care, while Canadians spent US$3,326.^[35] This amounted to 15.3% of U.S GDP in that year, while Canada spent 9.8% of GDP on health care.

A 2007 review of all studies comparing health outcomes in Canada and the U.S. found that "health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent."^[36]

Advocates say that a U.S. single-payer health care system would provide universal coverage, give patients free choice of providers and hospitals, and guarantee comprehensive coverage and equal access for all medically necessary procedures, without increasing overall spending. Shifting to a single-payer system would eliminate oversight by managed care reviewers, restoring the traditional doctor-patient relationship.^[37]

[edit] State proposals

California's Legislature has twice passed a state-level single payer bill, SB 840, "The California Universal Healthcare Act" (authored by Sheila Kuehl), in 2006 and again in 2008^[38][39][40]. Both times, Governor Arnold Schwarzenegger vetoed the bill^[41]. State Senator Mark Leno re-introduced "The California Universal Healthcare Act" again in March 2009, newly renumbered as SB 810.^[42]. SB 810 is set for its first legislative hearing on April 15, 2009.

In April 2008, the Illinois House of Representatives' Health Availability Access Committee passed the single-payer bill HB 311, "The Health Care for All Illinois Act,"^[43] favorably out of committee by an 8-4 vote.^[44]

Several single-payer referendums have been proposed at the state level, but so far all have failed to pass: California in 1994,^[45] Massachusetts in 2000, and Oregon in 2002.^[46]

[edit] Netherlands, Belgium & Germany - multiple payers but with some single payer features

These countries have a type of imperfect single payer health care that employs a large central fund, largely hidden from public view, plus multiple funds that jointly pool their risk via this hidden fund. This operates through a process of risk equalization. Funding overall is via a mix of taxation and insurance premiums paid by the individual.

For instance in Holland, each insurer sets its own premiums but has to provide at least one policy covering the national standard level of care but may also offer additional, less regulated policies over and above this, e.g. for prescription benefits. By law, insurers have to set the same price for all adults living in a given region regardless of the age and health status of the insured. They cannot refuse an applicant. All insurers can be compensated from a central risk equalization pool if the health care demands of the sum of their customers is higher than would be expected. The risk equalization pool is funded by health care levies on employees and employers, as well as from other taxes). Insurers may have to pay into the equalization pool if their customers' risk profile is below the norm. Thus, not withstanding the higher than normal cost of insuring the elderly and the sick for the same fixed premium, insuring these people becomes an attractive business proposition because of the additional transfers going on in the background. This risk sharing encourages insurers to compete by give good customer service and by lowering their administration costs (so they can attract more premiums) and they will not attempt to penalize the elderly or the sick in the way they might otherwise have to do if the equalization pool was not there. Thus although there seems to be multiple funds, risks are mostly managed centrally and inefficiencies within an insurer soon show through in its pricing. The taxation element of funding ensures that people pay more when they are young and earning and the relatively wealthy helps to subsidize the health care costs of the relatively poor in society. Health care pricing is mostly negotiated by the insurers with health care providers withing a region. Thus the insurers that negotiate the best prices will tend to be more profitable. This price competition is aimed at encouraging efficiencies in the provider sector. Because insurance is personal and not related to an employer, a person will never lose insurance if they change their job. An individual can always be assured of being insurable at the same rate as everyone else even if they have higher health costs than other people. Premium pricing is level at all ages. In Holland, changing insurers requires only the filing of one simple form.

[edit] Proponents and support

Physicians for a National Health Program^[47] the American Medical Student Association^[19] and the California Nurses Association^[48] are among those that have called for the introduction of a single payer health care program. In Congress, Rep. John Conyers, Jr. (D-MI) has repeatedly introduced The United States National Health Insurance Act (HR 676). As of August 2008, HR 676 had 91 co-sponsors.^[49]

The issue has often been debated, most recently in the 2008 presidential elections, and there are signs that the American public has warmed to the idea. A CBS News/New York Times poll published in February 2009 reported that 59% say the government should provide national health insurance (up from 40% thirty years earlier) ^[50] A study published in the Annals of Internal Medicine concluded that 59% of physicians "supported legislation to establish national health insurance" while 9% were neutral on the topic, and 32% opposed it.^[51]

[edit] Opponents and criticisms

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Several criticisms have been leveled against the idea of changing the U.S. health care system to a single-payer system. Some proponents argue that perhaps the largest obstacle is a lack of political will.^[52] While polling data indicate that U.S. citizens are concerned about health care costs and think the system needs reform (see Polls, below) most are generally satisfied with the quality of their own health care. According to a Joint Canada/United States Survey of Health in 2003, 86.9% of Americans (though only 63.6% of uninsured Americans) reported being "satisfied" or "very satisfied" with their health care services, compared to 83.2% of Canadians.^[53] In the same study, 93.6% of Americans reported being "satisfied" or "very satisfied" with their physician services, compared to 91.5% of Canadians.

Some medical researchers say that patient satisfaction surveys are a poor way to evaluate medical care. Researchers at the RAND Corporation and the Department of Veterans Affairs asked 236 elderly patients at 2 managed care plans to rate their care, then examined care in medical records, as reported in Annals of Internal Medicine. There was no correlation. "Patient ratings of health care are easy to obtain and report, but do not accurately measure the technical quality of medical care," said John T. Chang, UCLA, lead author.^[54][55][56] It should also be pointed out that according to the above Joint Canada/United States Survey of Health in 2003 (a telephone survey of households, using randomly dialed land lines), "approximately 11% of Americans do not have health insurance."^[57] However, the US Census Bureau reported a far larger number of Americans, 15.7%, as not having health insurance during the same time period^[58].

For this reason, some U.S. reformers argue for other, more incremental changes to achieve universal health care, such as tax credits or vouchers.^[59] However, supporters of a single-payer system, such as Marcia Angell, M.D., former editor of the New England Journal of Medicine, assert that incremental changes in a free-market system are "doomed to fail."^[60]

Leif Wellington Haase argues that converting to a single-payer system could be a radical change and might create administrative chaos.^[61]

An opinion piece in The Wall Street Journal by two conservative Republicans argues that government sponsored health care will legitimatize support for government services generally, and make an activist government acceptable. "Once a large number of citizens get their health care from the state, it dramatically alters their attachment to government. Every time a tax cut is proposed, the guardians of the new medical-welfare state will argue that tax cuts would come at the expense of health care -- an argument that would resonate with middle-class families entirely dependent on the government for access to doctors and hospitals."^[62]

[edit] See also

• Monopsony
• National health insurance
• Publicly-funded health care

[edit] References

[edit] External links

• 1payer.net. Citizen action site for single-payer universal healthcare.
• Health Care for America NOW!
• Health Revolution Petition
• Healthcare-NOW!. A nonprofit advocacy group for single-payer healthcare.
• Institute of Medicine Committee on the Consequences of Uninsurance. Hidden costs, value lost: uninsurance in America. Washington, DC: National Academies Press, 2003. Frequently-cited source.
• Physicians for a National Health Program. Advocates for single-payer system. Extensive source material from peer-reviewed journals.
• Progressive Democrats of America Advocates for single-payer system.
• Republicans for Single-Payer Universal Healthcare Republicans who support single-payer healthcare.
• Sick Around the World: Can the U.S. learn anything from the rest of the world about how to run a health care system? from Frontline, PBS.
• Single Payer Action. Activist nonprofit organization supporting single-payer universal healthcare.
• Single Payer Central. An independent/unaffiliated central clearing house of information (groups, legislation, etc.), for single-payer.
• Single Payer Healthcare Now. An activist blog supporting single payer healthcare
• States Moving Towards Comprehensive Health Care Reform in the U.S., The Henry J. Kaiser Family Foundation.
• The Case For Single Payer, Universal Health Care For The United States
• The Socialists Are Coming! The Socialists Are Coming! by Phillip Boffey. Editorial on U.S. "socialized medicine" in the military, the Veterans Health Administration, and Medicare, The New York Times, September 28, 2007.