By Tom DeLoe, Ph.D.
Gettysburg (Pa.) Times, March 10, 2016
If I were in business, I would favor a single-payer health plan. Instead of paying private insurance companies monthly premiums for health care coverage, each individual and business would pay the government through modest taxes. The government would negotiate health care services and costs for all of its citizens and pay providers directly for their services. Your business would no longer be responsible for the health care of your employees. Your business would pay a 10 percent payroll tax on your payroll directly to the government, and the health care of your employees would be provided by participating doctors and hospitals. So let’s look at what a single-payer system could do for you, your business, and your bottom line.
As a business leader, you want to control your business environment as much as possible. This means controlling costs, building a good product or service, and beating the competition. There are at least four principles that you must strive to achieve in order to survive in a competitive business environment. They are efficiency, transparency, predictability, and the building of core functions. Let’s look at each of these principles, and how they relate to your business and our present health care system.
Efficiency means getting the best value or result with the least cost in terms of time and money. If you are not efficient, you risk reducing your profits or worse facing bankruptcy. So how efficient are you now in controlling your health care costs? Let me give you a scenario and see if this rings a bell. You keep spending more on health care yearly and getting less coverage. The prices go up but the value of the coverage erodes year after year. So what do you do? You can shift some of the costs to your employees. You can try to negotiate harder with the insurance companies, but that is difficult given the resources of the insurance industry. You can also reduce the health benefits for your employees. You may have tried all or some of these strategies, but the bottom line is you are continuing to lose value while paying more. This is not the business definition of efficiency.
Transparency means clarity and openness. As a business, you want to know exactly what you are buying and at what cost. Also, if you are bidding for products or services, you want to know is the playing field equal for everyone? If your environment is transparent, you can effectively plan and implement your business model in a strategic manner. So how transparent are health care costs? The short answer is there is no transparency. No one knows how health care costs are determined. Hospital and pharmaceutical costs are all opaque. So how do you negotiate your health care premiums under these conditions? If you are like most businesses, you pay and hope you get appropriate services. This is not the transparency you are looking for.
Predictability means that you have some indications of what your business environment looks like. Ideally, you want a stable environment where prices do not fluctuate wildly. Without stability and predictability, you may risk losing business to competitors. Also, stability and predictability help you plan and implement your business model efficiently and effectively. So how predictable and stable are health care costs? They are in fact chaotic and swing upward every year. Providers move in and out of plans yearly. Also, services and drug coverages change constantly. As a business person, you try to keep up with the changes, but it is difficult because health care is so complex. How can your business plan effectively when there it is so much unpredictability? This is a constant challenge.
Core functions are the critical functions of your business. They are the products or services that you provide. Whether your core function is construction, software design, sales, or marketing, they are the bedrock of your business. They are where you want to concentrate your efforts to build your skills and expertise. The better you perform your core functions, the better you are able to compete. So is providing health care coverage a core function? No, it is not. However, because health care is so expensive and so complex, you must expend time and energy on it. Some examples of time spent may be: reviewing multiple health plans yearly; assessing how the Affordable Care Act affects you and your employees; and determining whether the business should self-insure or drop health care all together? These activities are not core functions. Spending excessive time on issues like these may not bring more value to your business. They certainly impede the concentration on your core functions, and that does not help the bottom line.
So you are paying a lot of money and spending excessive time on health care. Coverage and services are reduced each year, but you continue to pay more. Health care is eating into profits inexorably. You are trying your best, but you simply cannot control the beast. Your employees are complaining about dwindling coverage and no one is happy. How can you compete effectively in this kind of environment? Let’s look at the single-payer health care system and how it might contribute to the four business principles and thus your bottom line.
Single payer is an efficient system because everyone pays into it, and the government in turn negotiates health care services for everyone. Everyone – patient or provider – is part of the system. Because it is one system, overhead costs are low (just like with Medicare, a time-tested, government-run health care program that seems to work pretty well for today’s seniors). While single-payer systems have different iterations, you as a business may not be involved in the complex process of providing health care at all. Your business would pay the 10 percent tax on your payroll directly to the government. The government handles the rest.
A major issue for you as a business leader is: will a single-payer health system cost more than what you are presently paying? A lot of experts, such as Steffie Woolander and David Himmelstein, say no. Writing in February 5, 2016, in the Philadelphia Inquirer, they noted that when you add up all of the premiums and taxes paid to fund our health care system, the single-payer system will not cost more. In fact, the taxes to pay for it will be fully offset by the savings incurred from eliminating private insurance premiums. Remember also, the costs of workman’s compensation and retirees’ health care costs would also be eliminated under the single-payer system. That’s because all individuals are provided for health care through their own modest (3 percent of income) tax. The result is most businesses would pay less than what they are paying now.
We know that health care costs are not fully transparent, but the single-payer system offers the best opportunity to achieve greater openness. Because everyone is in one system, the government would be in a strong position to negotiate with the large health care industries like the pharmaceutical industry. As an example, the Veterans Administration negotiates drugs prices for veterans. As a result, our veterans pay some of the cheapest drug prices. Also, under the single-payer system, administrative overhead would be low (probably ranging from 1 to 6 percent). Insurance companies average 20-35 percent. The power to negotiate prices and lower administrative overhead similarly have kept Medicare premiums for seniors relatively steady for several years.
Because the government would take the lead in acting as the single payer for health care services, you could then concentrate on your business core functions. You would not need to expend time learning the intricacies of the health care insurance industry. Health care services would be negotiated and paid for through the government. This would give you time to concentrate on your business model and your bottom line.
Richard Master, CEO of MSC Industries, a leading supplier of wall and poster frames located in Easton, Pennsylvania, became a recent convert to the single-payer system. Speaking in 2015 at a Chicago conference of Physicians for a National Health Program, he stated, “My company pays $1.5 million a year to provide access to health care for our workers and their dependents.” When he found out that approximately 33 percent of every health care premium dollar was being spent on administrative costs, he was “shocked.” He then reached out to a couple of award winning film makers to produce “Fix It, Healthcare at a Tipping Point.” This film makes the corporate case for scrapping the current multi-payer system and converting to single payer.
Representative Pamela DeLissio (D-Montgomery/Philadelphia) has recently introduced House Bill (HB) 1688, labeled the Pennsylvania Health Care Plan. The proposed legislation sets out a blueprint to lower health care costs through a single payer-system. It does this while retaining the freedom and flexibility to choose your health care providers. For more information on single payer health plans in Pennsylvania, go to: www.Healthcare4allPa.org.
Single payer is certainly not nirvana. There will still be problems within our health care system. However, single payer represents an efficient, transparent, and cost-effective way to achieve health care. It would also provide a level playing field for business to compete in a global economy. That would be good for business and for us as citizens, and that is the bottom line.
Tom DeLoe, Ph.D., is a member of the Democracy for America Healthcare Task Force.