Proposal of the Physicians' Working Group for Single-Payer National Health Insurance
“Health care is an essential safeguard of human life and dignity, and there is an obligation for society to ensure that every person be able to realize this right.”—Cardinal Joseph Bernardin
Introduction
U.S. health care is rich in resources. Hospitals and sophisticated equipment abound; even many rural areas boast well-equipped facilities. Most physicians and nurses are superbly trained; dedication to patients the norm. Our research output is prodigious. And we fund health care far more generously than any other nation.
Yet despite medical abundance, care is too often meager because of the irrationality of the present health care system. Over 39 million Americans have no health insurance whatsoever, including 33% of Hispanics, 21% of African-Americans and Asians, and 11% of non-Hispanic Whites. Many more - perhaps most of us - are underinsured. The world’s richest health care system is unable to assure such basics as prenatal care and immunizations, and we trail most of the developed world on such indicators as infant mortality and life expectancy. Even the well-insured may find care compromised when HMOs deny them expensive medications and therapies. For patients, fear of financial ruin often amplifies the misfortune of illness.
For physicians, the gratifications of healing give way to anger and alienation in a system that treats sick people as commodities and doctors as investors’ tools. In private practice we waste countless hours on billing and bureaucracy. For the uninsured, we avoid procedures, consultations, and costly medications. In HMOs we walk a tightrope between thrift and penuriousness, under the surveillance of bureaucrats who prod us to abdicate allegiance to patients, and to avoid the sickest, who may be unprofitable. In academia, we watch as the scholarly traditions of openness and collaboration give way to secrecy and assertions of private ownership of vital ideas; the search for knowledge displaced by a search for intellectual property.
For seven decades, opponents have blocked proposals for national health insurance, touting private sector solutions. Their reforms over the past quarter century have emphasized market mechanisms, endorsed the central role of private insurers, and nourished investor-ownership of care. But vows of greater efficiency, cost control, and consumer responsiveness are unfulfilled; meanwhile the ranks of the uninsured have swelled. HMOs, launched as health care’s bright hope, have raised Medicare costs by billions, and fallen to the basement of public esteem. Investor-owned hospital chains, born of the promise of efficiency, have been wracked by scandal; their costs high, their quality low. And drug firms, which have secured the highest profits and lowest taxes of any industry, price drugs out of reach of those who need them most.
Many in today’s political climate propose pushing on with the marketization of health care. They would shift more public money to private insurers; funnel Medicare through private managed care; and further fray the threadbare safety net of Medicaid, public hospitals and community clinics. These steps would fortify investors’ control of care, squander additional billions on useless paperwork, and raise barriers to care still higher.
It is time to change fundamentally the trajectory of America’s health care - to develop a comprehensive National Health Insurance (NHI) program for the United States.
Four principles shape our vision of reform.
- Access to comprehensive health care is a human right. It is the responsibility of society, through its government, to assure this right. Coverage should not be tied to employment. Private insurance firms’ past record disqualifies them from a central role in managing health care.
- The right to choose and change one’s physician is fundamental to patient autonomy. Patients should be free to seek care from any licensed health care professional.
- Pursuit of corporate profit and personal fortune have no place in caregiving and they create enormous waste. The U.S. already spends enough to provide comprehensive health care to all Americans with no increase in total costs. However, the vast health care resources now squandered on bureaucracy (mostly due to efforts to divert costs to other payers or onto patients themselves), profits, marketing, and useless or even harmful medical interventions must be shifted to needed care.
- In a democracy, the public should set overall health policies. Personal medical decisions must be made by patients with their caregivers, not by corporate or government bureaucrats.
We envision a national health insurance program (NHI) that builds upon the strengths of the current Medicare system. Coverage would be extended to all age groups, and expanded to include prescription medications and long term care. Payment mechanisms would be structured to improve efficiency and assure prompt reimbursement, while reducing bureaucracy and cost shifting. Health planning would be enhanced to improve the availability of resources and minimize wasteful duplication. Finally, investor-owned facilities would be phased out. In each section we present a key feature of the proposal followed by the rationale for our approach.
Coverage
A single public plan would cover every American for all medically-necessary services including: acute, rehabilitative, long term and home care, mental health, dental services, occupational health care, prescription drugs and supplies, and preventive and public health measures. Boards of expert and community representatives would assess which services are unnecessary or ineffective, and exclude them from coverage. As in the Medicare program, private insurance duplicating the public coverage would be proscribed. Patient co-payments and deductibles would also be eliminated.
Abolishing financial barriers to care is the sine qua non of reform. Only a single comprehensive program, covering rich and poor alike, can end disparities based on race, ethnicity, social class and region that compromise the health care of the American people. A single payer program is also key to minimizing the complexity and expense of billing and administration.
Private insurance that duplicates the NHI coverage would undermine the public system in several ways. (1) The market for private coverage would disappear if the public coverage were fully adequate. Hence, private insurers would continually lobby for underfunding of the public system. (2) If the wealthy could turn to private coverage, their support for adequate funding of NHI would also wane. Why pay taxes for coverage they don’t use? (3) Private coverage would encourage doctors and hospitals to provide two classes of care. (4) A fractured payment system, preserving the chaos of multiple claims data bases, would subvert quality improvement efforts, e.g. the monitoring of surgical death rates and other patterns of care. (5) Eliminating multiple payers is essential to cost containment. Public administration of insurance funds would save tens of billions of dollars each year. Our private health insurers and HMOs now consume 13.6 percent of premiums foroverhead1, while both the Medicare program and Canadian NHI have overhead costs below 3 percent. Our multiplicity of insurers forces U.S. hospitals to spend more than twice as much as Canadian hospitals on billing and administration, and U.S. physicians to spend about 10 percent of their gross incomes on excess billing costs2. Only a true single payer system would realize large administrative savings. Perpetuating multiple payers - even two - would force hospitals to maintain expensive cost accounting systems to attribute costs and charges to individual patients and payers. In the U.K., market-based reforms that fractured hospital payment have swollen administrative
costs3 4.
Co-payments and deductibles endanger the health of the sick poor, decrease use of vital inpatient medical services as much as unnecessary ones, discourage preventive care, and are unwieldy and expensive to
administer5. Canada has few such charges, yet health costs are lower than in the U.S. and have risen more slowly.
Instead of the confused and often unjust dictates of insurance companies, a greatly expanded program of clinical effectiveness research would guide decisions on covered services and drugs, as well as on capital allocation.
Payment for Hospital Services
The NHI would pay each hospital a monthly lump sum to cover all operating expenses - that is, a global budget. The hospital and the NHI would negotiate the amount of this payment annually, based on past expenditures, previous financial and clinical performance, projected changes in levels of services, wages and input costs, and proposed new and innovative programs. Hospitals would not bill for services covered by the NHI. Hospitals could not use any of their operating budget for expansion, profit, excessive executives’ incomes, marketing, or major capital purchases or leases. Major capital expenditures would come from the NHI fund, but would be appropriated separately based upon community needs. Investor-owned hospitals would be converted to not-for-profit status, and their owners compensated for past investment.
Global budgeting would simplify hospital administration and virtually eliminate billing, freeing up substantial resources for enhanced clinical care. Prohibiting the use of operating funds for major capital purchases or profit would eliminate the main financial incentive for both excessive interventions (under fee-for-service payment) and skimping on care (under capitated or DRG systems), since neither inflating revenues nor limiting care could result in institutional gain. Separate and explicit appropriation of capital funds would facilitate rational health care planning. These methods of hospital payment would shift the focus of hospital administration away from lucrative services that enhance the “bottom line” and toward providing optimal clinical services in accord with patients’ needs.