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Single Payer Health Care – As Seen by Its Advocates
ETHAN ALLEN INSTITUTE POLICY BRIEF 017 March 24, 2005
The Vermont advocates of single payer health care argue for changing our present health care system into one in which all health care expenses (less minor co-payments) are paid and controlled by the government, and raised from taxpayers. The leading advocacy organization is Vermont Health Care for All, headed by Deborah Richter MD of Montpelier. Its conception of the workings of a universal, single-payer health care system is explained in detail in its document “Health Care From a Different Perspective”, found on the organization’s web site at www.vthca.org/NewPerspective. (the following quotations are from this document, with emphasis added.)
The VHCA document posits a cost and affordability crisis. “The majority of what we spend on health care goes to infrastructure costs (that) are largely fixed. Therefore, the single effective way to control total health care costs is to control the size of the health care infrastructure itself and not by controlling utilization. Payment for health care is a collective investment in the health care infrastructure… The important question is exactly how much we are willing to invest in our health care infrastructure. Decisions cannot be left to chance.” As the proposal makes clear, decisions will largely be left to the government.
A major problem, says the document, is oversupply of services, and “the importance of matching supply to need, not demand…Stability [in health care] comes by looking at the health infrastructure as a whole, determining its reasonable costs, and implementing an overall budget in a fiscally responsible manner.” Demand, initiated by patients who may not understand what they really need, will be replaced by government-controlled allocation of services on the basis of what patients are determined to reasonably need.
“The only efficient way, in fact the only feasible way, to modify and control long-term costs is to impose a budget across the entire infrastructure. Such a budget’s main functions would be to allocate annual hospital budgets based on available financing for the coming year, negotiate uniform reimbursement rates within specialized sectors of medical care, and engage in planning and distribution of health care services… Explicit public policy rationing should take into consideration the available money for a certain service, the benefit of the treatment, and the expense of the treatment.”
“A universal health care system pays for all necessary medical care for everyone, is largely publicly financed, employs an overall budget across the system, manages health planning, and is accountable to the public.”
Thus, some all-powerful entity must have complete control over the infrastructure (hospitals, nursing homes, physician and nursing services). This entity, and not consumer demand, must determine what “investments” are “reasonable” and what services are “necessary”. This entity must establish and enforce overall budgets, ration services to patients, fix reimbursement rates for all doctors and nurses, and be “fiscally responsible”.
That entity – a monopoly Health Maintenance Organization (HMO) - can only be the Government.
The document says that the government will not run the health care system, only coordinate it. “Medical decisions are determined by doctor and patient without bureaucratic interference.” It is hard to believe that a doctor working for a cost-conscious HMO, and subject to utilization pre-approval and an end-of-year drawback for overprescribing tests and medications, would believe this. The report says that “physicians’ worst fears about bureaucracy, interference, and erratic reimbursement rates already are here in the form of managed care.” Why the proposed single payer system, funded by taxation and required to be “fiscally responsible”, will be any sort of improvement over an HMO is not explained.
The document claims that such a system will be affordable for taxpayers by citing the 2001 Lewin Report. This report claims that installing a single payer system in Vermont would cause an initial cost increase of $63 million, but this would be more than offset by $153 million in administrative savings (health insurers and premiums would disappear, and providers would no longer bill for services) and $30 million in drug formulary savings (all prescription drugs would be purchased at Medicaid prices.) The total projected savings of $118 million was about 5% of Vermont’s 2001 health care expenditures. To pay for the benefits, employers would pay an additional payroll tax of 5.8 percentage points, and employees an additional 2.9 points.
Whether a state health care authority could purchase prescription drugs for all patients within the state, regardless of their incomes, at Medicaid prices is legally very doubtful.
The single payer backers have not shied away from their goal: complete government control of all health care facilities and providers, explicit government rationing, and full taxpayer financing.
References: Richter, Deborah, Marilyn Rothwell, Terry Doran, “Health Care from a Different Perspective” (2004) (Posted at www.vthca.org.)
The Lewin Group, “Analysis of the Costs and Impact of Universal Health Care Coverage Under a Single Payer Model for the State of Vermont”, August 28, 2001 (prepared for the Office of Vermont Health Access, Agency of Human Services).
Woolhandler, Steffie and David Himmelstein, “The Deteriorating Administrative Efficiency of the U.S. Health Care System”, New England Journal of Medicine 324:5 (1991)
Woolhandler, Steffie and David Himmelstein, "The Corporate Compromise: A Marxist View of Health Maintenance Organizations and Prospective Payment”, Annals of Internal Medicine 109:494 (1988).
Ethan Allen Institute, Health Care in Vermont: A New Prescription (2004)
Pipes, Sally, Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer. (San Francisco: Pacific Research Institute, 2004)
Vermont Single Payer bills, 2005: S. 147 (Flanagan); H. 30 (Obuchowski); H. 216 (Fisher).