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Sunday, December 31, 2006

Single-Payer Health Insurance: You Don't Know What's Good for You

According to this, there's one big obstacle stopping us from implementing a single-payer health care system - the belief that doing so can reduce costs without compromising overall health:

Health Care Problem? Check the American Psyche, by Anna Bernasek, Economic View, NY Times: What is the most pressing problem facing the economy? A good case can be made for the developing health care crisis. ... There is a solution, proven effective for hundreds of millions of people: single-payer health insurance.

[S]ingle-payer ... calls for everyone to pay into one insurer, typically the government or a public agency. The insurer then pays doctors, pharmacists and hospitals at preset rates. Patients who want unapproved procedures and doctors not willing to accept the standard payment remain free to deal with one another directly, outside the system. ...

There’s only one catch. Most Americans just don’t believe it can be done. The health care crisis may turn out to be more of a problem of ideology than economics.

The economic case for a single-payer system is surprisingly strong. ... Countries with single-payer systems have long records of spending less on health care than the United States does. The United States spent an average of $6,102 a person on it in 2004, ... while Canada spent $3,165 a person, France $3,159, Australia $3,120 and Britain just $2,508.

At the same time, life expectancy in the United States ... was slightly lower than it was in those other countries in 2004, the latest year for which complete figures are available. And the United States had a higher rate of infant mortality.

To be sure, a single-payer system has plenty of critics. Unattractive features of some such systems, including waiting lists for particular types of care, are often highlighted by skeptics. But supporters note that the overall health of people fares well in those countries.

“The story never changes,” said Gerard F. Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health. “The United States is twice as expensive with about the same outcome. ...

What may be less well known is the level of administrative waste in the United States health care system... Although Americans tend to equate efficiency with private enterprise, that’s not the case with the current system.

The American system, based on multiple insurers, builds in more unnecessary costs. Duplicate processing of claims, large numbers of insurance products, complicated bill-paying systems and high marketing costs add up to huge administrative expenses. Then there’s an enormous amount of paperwork required of American doctors and hospitals that simply doesn’t exist in countries like Canada or Britain.

“There’s little disagreement among economists today that a single-payer system would lead to lower administrative costs,” said Len Nichols, a health economist with the New America Foundation... But he said that estimates varied widely over how big the savings could be.

One of the first major studies to quantify administrative costs in the United States was published in August 2003 in The New England Journal of Medicine... It concluded that such costs accounted for 31 percent of all health care expenditures in the United States. More recently, in 2005, a study by the Lewin Group, a health care consulting firm ... estimated that administrative costs consumed 20 percent of total health care expenditures nationwide. ...

Health care costs tend to rise over time as new technology and procedures are introduced. Yet here, too, government-funded systems appear to help contain long-term costs. ... Professor Anderson points out that in the 1960s, Canada and the United States spent roughly the same per person on health care. Some three decades later, though, Canada spent half as much as America. ...

Economic studies also show that a government-funded system could reduce costs while providing coverage for everyone. ... Despite ... the economic benefits of a single-payer system, there’s one big stumbling block: many Americans don’t believe in it. They have heard horror stories from abroad, often spread by partisan advocates, focusing on worst-case examples. Such tales play upon the aversion of many Americans to government involvement in the economy. ...

Judging from other countries, many features that Americans really like — being able to choose their own doctor, for example — would remain available in a well-designed single-payer system. And a single-payer system need not mean government-provided care: it often means government-provided insurance that encourages competition among providers.

Much of the resistance to a single-payer system appears to stem from a lack of confidence in the nation’s ability to make positive change. With all of its prowess in research and technology, can’t the United States match the efficiency of other developed nations, or do even better? ...[P]ersuading people to do something that’s in their own economic interest ought to succeed.

    Posted by on Sunday, December 31, 2006 at 12:18 AM in Economics, Health Care, Market Failure, Policy | Permalink  TrackBack (0)  Comments (29)


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