Professor Bradley Herring on single payer
Covering the Uninsured: Options for Reform
Kaiser Commission on Medicaid and the Uninsured
Alliance for Health Reform
March 2, 2009
Bradley Herring, Ph.D., Assistant Professor, The Johns Hopkins University, speaking on Potential Complications with the Different Approaches to Health Reform
First off, single payer, HR 676. The underlying appeal of this is essentially that it is very elegant, and simple. You pay taxes into the system and in return you get the medical care that you need. And then also it’s universal. This is probably the only approach that’s actually going to get us to having no uninsured. That kind of notion of being universal - getting everyone covered. This is probably the only one that’s going to do it. But then moreover if you think about universal as having the system in which everybody essentially has got the same kind of coverage, and we’re all in the same boat together - single payer is really probably the only way we might get there. Another thing underlying the appeal about single payer is that there would be large reductions in the administrative costs. So Medicare has administrative costs between about 2 to 3 percent whereas private insurance varies considerably across different markets but averages about 14 to 15 percent.
Potential complications. Well, if you look at the description of single payer, and particularly on John Conyers’s website, it kind of seems like a health care utopia. You get the health care you need, cost sharing is reduced - right now there is pretty significant cost sharing in the Medicare program - and that is going to go away. But I think many of us might agree that somebody’s got to say no, right, that you can’t consume all of the health care that we’d like. Someone’s got to be in place to say no. There are certain treatments that we shouldn’t be receiving or certain patients that shouldn’t receive certain treatments.
Taxes is a big issue, right, so I don’t want to be hysterical. I actually think that taxes should kind of go up a little bit to address the fiscal situation we’re in in the U.S. But many people probably balk at the extent to which taxes have to go up to pay for a single payer. HR 676 includes payroll taxes, increasing from about 1.5 percent to 4.75 percent, on the employee side and the employer side. Repeal the Bush tax cuts. Get in line. Everyone’s targeting these Bush tax cuts - the single most popular pay-for in history. And then on top of that, the proposal would increase the marginal tax rates for the top 5 percent and the top 1 percent of income, an additional 5 percent or 10 percent respectively. And also include a tax on stock transactions.
The final thing I’ll say about single payer is that it most likely is going to result in lower payments to providers. If you look at the MedPAC data comparing private reimbursements and public reimbursements, they’re about 15 to 20 percent lower on the public side.
(Prof. Herring then discusses the three other models of reform: the Republican/McCain proposal, Obama/Baucus proposal, and the Wyden/Bennett proposal)
Q & A:
Audience member (from Center for Budget and Policy Priorities): Dr. Herring and the other panelists, I was wondering if you could discuss the ability of all of the various options to control costs of the health system. If health costs grow at their current rate, no insurance system, no matter how well designed, will be able to cover everyone because we won’t be able to afford it. Thank you.
Prof. Herring: So, off the top of my head, I would think that the single payer approach yields the most promise towards reducing health care costs because it can essentially happen by fiat, right. The government can say what we’re going to spend, and, if Congress is so willing to actually follow through on that, I mean, kind of decide what we’d want to spend. I think the Republican vision of tax reform and getting people into individual plans has a lot of promise for lowering the growth in spending in the sense that people would face strong incentives to purchase cheaper plans with higher deductibles, less access to costly technology, which will certainly, I think, reduce spending, but, taking a step away, we have to ask is that really appropriate? Is that where we want to go? I think the Wyden bill then, in turn, might probably rank third in terms of its ability to reduce the growth in spending. I think for some of these reasons alluded to in the more Republican approach in which there’s a system by which individuals are choosing, on cost, plans - in making decisions to purchase basic versus more comprehensive plans. And then finally I think with the Obama plan, and Baucus’s, the result is that, yes, we might get everybody covered but in a wildly fragmented system that it might be really hard to control costs moving forward with these different things, you know, to kind of plug (moves arms as if plugging multiple leaks in the system).
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=3120
Comment:
By Don McCanne, MD
Should we care what Johns Hopkins Professor Bradley Herring has to say about single payer? Emphatically, yes. Prof. Herring is theoretically an academic purist, and has no relationship with the single payer community. Many of his policy studies on private health insurance have been done with Mark Pauly, of “moral hazard” fame. That would certainly place him outside of the single payer camp.
A recent Quote of the Day (2/6/09) covered the OECD working paper, “Health Care Reform in the United States.” My comment was quite critical because the paper ignored single payer while discussing the merits of private insurance reform, especially the work of Jonathan Gruber on the Massachusetts plan. The working paper was coauthored by two staff economists from OECD and, yes, Prof. Bradley Herring. In no way could he be considered to be a single payer ideologue.
Although I transcribed only his comments on single payer, you should listen to him on all four models (at the link above - a transcript will be available soon). He describes single payer as a system that actually gets everyone covered, that you get the medical care that you need, that there would be large reductions in administrative costs, and that “the single payer approach yields the most promise towards reducing health care costs.”
The other three models fall short on these goals, but look at what he says about how they control costs. Each model spends more money on administration in order to control costs by reducing benefits and by erecting financial barriers to care. As Prof. Herring asks, “Is that where we want to go?”
Tomorrow President Obama holds the White House summit on health care reform. A broad spectrum of special interests have been invited, but the single payer community has been explicitly excluded, except for Congressman John Conyers. Does that mean that they will search guests at the door to be certain that none of them bring in a copy of Prof. Herring’s comments? The turfs of the special interests would certainly be threatened by exposing the attendees to sound policy science.