By William W. Dornburgh
Times Union, November 26, 2017
I am neither a Democrat nor a Republican, neither a conservative nor a liberal. I am a pragmatist.
The Affordable Care Act has imposed federal mandates on both the insurance industry and on those who are uninsured either voluntarily or otherwise. The insurance companies can’t make a profit under that system, so the government subsidizes them with cash. That should be an abomination to both conservatives and liberals alike. The ACA mandates that people buy policies they can’t afford or don’t want, and the insurance companies are mandated to sell policies that don’t meet normal underwriting standards. The ACA is a law that is seriously flawed. It is not regulation, but control.
In national polls, people favor coverage of pre-existing conditions and say health care should be a “right.” That means that health care should be available to all, regardless of ability to pay or one’s health condition. That is the political wave of the future that the Democrats will eventually act upon when they will inevitably control Congress. The Republicans may as well accept that reality while they still have an opportunity to draft the legislation by compromise.
The ACA has abolished the concept of risk management, an underlying insurance principle. By mandating what must be paid, the health insurance industry is reduced to merely a payment mechanism, a “middle man.” It is an antiquated system complicated by 50 states that have a say in the insurance products that can or cannot be sold within their boundaries, all of which is complicated by Medicaid.
The majority of health care professionals, and probably most corporate employers, would prefer a single payer system, in which the federal government would be the sole “middle man.”
That is not as radical as it may sound. Single payer is not socialized medicine, but a centralized payment system as is Medicare. A universal Medicare system could retain deductibles and co-pays as Medicare does now. The insurance industry would still have a more limited participation by offering supplementary insurance policies to cover the deductibles and co-pays that Medicare does not pay. It would surely be a more economical, less costly alternative than the chaotic system we have now.
And how should we pay for such an ambitious program? First let’s note that universal Medicare will relieve individuals and businesses of the burden of dealing with a multitude of insurance products as well as paying ever-increasing premiums, a considerable financial burden. Workers and employers would no longer have Medicare payroll taxes. The role of Medicaid would be significantly reduced if not eliminated. The cumulative benefits are significant.
The primary source of funding would be a dedicated value added tax. Some object that it would fall disproportionately upon the poor, but such a tax is paid mostly by those who buy the most products and therefore would fall mainly on the wealthiest among us. The give-and-take of compromise would be necessary.
The economist in me acknowledges that our current unwieldy health care system urgently needs to be overhauled. A centralized payment system is not only a more economic solution, but more pragmatic than what we have now. My guess is that the insurance industry would breathe a sigh of relief to get the ACA off of its back and settle for offering supplemental policies.
Let us compromise and get it over with and move on to much other pressing problems, such as abolishing pennies and nickels.
William W. Dornburgh, of Cooperstown, is an economist and former banker who has served on insurance company and hospital boards.
By Don McCanne, M.D.
Many supporters of the Affordable Care Act say that they do not believe that single payer is politically feasible and thus the pragmatic approach to reform is to continue to support ACA. But is supporting an outrageously expensive and administratively inefficient system that leaves so many without affordable access to health care truly pragmatic? Of course not.
This is why today’s message is so important. William W. Dornburgh, an economist and former banker who has served on insurance company and hospital boards, has observed our dysfunctional system, not from a political perspective but from the perspective of economics, banking, insurance, and hospital care, and he has concluded that the current system is not pragmatic, but single payer is.
His general arguments are very persuasive. Some of the details, not so much. Deductibles and copayments are a problem because they create financial barriers to care, so they should be eliminated. Single payer contains costs in a more patient-friendly way. Increasing single payer Medicare for all benefits to include those that would be covered by private supplementary Medigap plans would allow us to eliminate them, thus reducing the waste and administrative inefficiency caused by these superfluous plans. He suggests that the primary source of funding should be a value added tax, but considering the massive shift of income and wealth to the top, more progressive tax policies would be in order.
But his fundamental thesis is right on. Single payer is far more pragmatic than ACA, and it is time that we said so. We need to call out those who profess to be pragmatists in supporting the highly flawed ACA model. Pragmatism it is not.
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