The Virtues and Vices of Single-Payer Health Care

By Jonathan Oberlander, Ph.D.
The New England Journal of Medicine, April 14, 2016

The 2016 U.S. presidential campaign has produced many surprises. One unexpected turn is the reemergence of single-payer health insurance on the public agenda. Senator Bernie Sanders has made Medicare for All a centerpiece of his platform. His opponent for the Democratic party’s presidential nomination, former Secretary of State Hillary Clinton, has criticized Sanders’s plan as unrealistic. An old debate has thus reopened. What are the virtues and vices of single-payer reform? Is it a realistic option for the United States or a political impossibility?

First, a note on language. “Single payer” is often used loosely to refer to everything from Canadian national health insurance to the British National Health Service (NHS) and even Obamacare — though depicting the Affordable Care Act (ACA) as a “slippery slope” to single payer is bizarre, given that it relies on private insurance. U.S. observers often mistakenly lump all foreign health systems together under the single-payer label — a classification that grossly oversimplifies the range of models in place elsewhere. In some rich democracies (Germany, the Netherlands, and Switzerland among them) people enroll in multiple insurance plans, which are typically highly regulated and are operated by private companies or nonprofit associations. Alternatively, in the NHS, the government traditionally owned most hospitals and directly employed many physicians.

Most U.S. single-payer advocates instead have in mind emulating Canada, where all legal residents in each province or territory receive coverage from one government insurance plan for medically necessary hospital and physician services. Canadians can obtain private policies for supplemental services not covered by the government plan. The government does not directly employ most doctors, nor does it own most hospitals, though their payments come from the single provincial insurance program. Canadian national health insurance arrangements — and Taiwan has a similar system — resemble traditional U.S. Medicare, with public financing for privately delivered services. Sanders is not the only presidential candidate to find this model appealing. Donald Trump has praised the Canadian program, though recently he suggested it wouldn’t work here.

Proposals for U.S. single-payer reform have a long history. A 1943 bill subsequently endorsed by President Harry Truman in 1945 envisioned national health insurance funded through payroll taxes. That bill and subsequent efforts by the Truman administration to pass universal insurance went nowhere. However, Medicare, conceived in the 1950s and enacted in 1965, embodied the single-payer model. Medicare’s architects saw it as the cornerstone of a national health insurance system. They believed that Medicare would eventually expand — with children perhaps the next group to join the program — to cover the entire population. That aspiration was never realized. Meanwhile, Congress created Medicaid as a separate program for some categories of low-income Americans, including families with dependent children, further fragmenting the insurance pool.

Single payer enjoyed strong support during the early 1970s among liberal Democrats such as Senator Ted Kennedy (D-MA), yet it never came close to passing. Subsequently, its political fortunes faded. Democratic policymakers increasingly pursued incrementalism (primarily through Medicaid expansion) and more conservative models that relied on private insurance (managed competition) as the only feasible reform routes. Medicare itself underwent a transformation as the role of private insurers in the program grew substantially. The 2010 ACA represented both a landmark achievement in expanding access to insurance and the culmination of a turn away from single payer. In 2009, the House of Representatives did pass legislation creating a Medicare-like government insurance program that would be available to the uninsured in competition with private plans. But this “public option” couldn’t clear the Senate. Even with a Democratic president and large Democratic congressional majorities, a narrow remnant of single payer failed to pass.

Nevertheless, the single-payer approach enjoys a dedicated following among groups such as Physicians for a National Health Program, and Sanders’s embrace has generated renewed attention for the idea. Regardless of the outcome of the 2016 election, the single-payer debate will persist. The enduring appeal of Medicare for All is understandable, given the fragmented, inequitable, costly, profit-driven, and wasteful nonsystem that prevails in the United States. The ACA’s shortcomings are sufficiently serious, single-payer adherents argue, that Obamacare has left unsolved many of U.S. medicine’s major problems. For all the ACA’s considerable achievements, health insurance and medical care are still unaffordable for many people. In a country where nearly 30 million persons remain uninsured, where health insurance is increasingly thinned out by rising deductibles and cost sharing, where even insured patients face staggering bills and the prospect of medical bankruptcy, where myriad insurers and payment systems generate astonishing complexity, and where more money is spent on administration than on heart disease and cancer, it’s no surprise to hear calls for sweeping change.

The lessons of Canadian national health insurance are as straightforward as they are neglected. Having a single government-operated insurance plan greatly reduces administrative costs and complexity. It concentrates purchasing power to reduce prices, enables budgetary control over health spending, and guarantees all legal residents, regardless of age, health status, income, or occupation, coverage for core medical services. Canadian Medicare charges patients no copayments or deductibles for hospital or physician services. Controlling medical spending does not, the Canadian experience demonstrates, require cost sharing that deters utilization. The Canadian system is hardly perfect. All countries struggle with tensions among cost, access, and quality; at times, Canada has grappled with fiscal pressures, wait lists for some services, and public dissatisfaction. Yet its problems pale in comparison to those in the United States.

The substantive virtues of single-payer programs are compelling. But so are their political liabilities. Medicare for All, which aims to constrain health care spending, faces intense opposition from insurers, the medical care industry, and much of organized medicine. It would trigger fierce resistance from conservatives and the business community and anxiety in many insured Americans fearful about changing coverage and the specter of rationing. The ACA’s comparatively conservative reform approach inspired false charges of “socialized medicine,” “pulling the plug on grandma,” and “death panels.” It takes only a little imagination — or a look back at the history books — to predict the reactions that an actual single-payer plan would evoke.

Single payer would also require the adoption of large-scale tax increases. Although Americans would save money by not paying premiums to private insurers, the politics of moving immense levels of health care spending visibly into the federal budget are daunting, given the prevailing antitax sentiment. Furthermore, converting our long-established patchwork of payers into a single program would require a substantial overhaul of the status quo, including the ACA. Then there are the familiar institutional barriers to major reform within U.S. government, including the necessity of securing a supermajority of 60 votes in the Senate to overcome a filibuster.

In short, single payer has no realistic path to enactment in the foreseeable future. It remains an aspiration more than a viable reform program. Single-payer supporters have not articulated a convincing strategy for overcoming the formidable obstacles that stand in its way. Nor have they, despite substantial public support for single payer, succeeded in mobilizing a social movement that could potentially break down those barriers. The pressing question is not about whether Medicare for All can be enacted during the next presidential administration — it can’t — but where health care reform goes from here.

It’s possible that some states could, through waivers that begin in 2017, consider adding a public option to their marketplaces or even adopt single-payer systems. Yet Vermont’s recent struggles to make a modified single-payer plan work underscore the challenges to state action. At the federal level, incremental steps toward Medicare for All, such as expanding program eligibility to younger enrollees, are conceivable — though challenging in this political environment. Moreover, the fight over Obamacare is not over. Preserving and strengthening the ACA, as well as Medicare, and addressing underinsurance and affordability of private coverage is a less utopian cause than single payer. I believe it’s also the best way forward now for U.S. medical care.

http://www.nejm.org/doi/full/10.1056/NEJMp1602009#t=article

NEJM Interview with Dr. Jonathan Oberlander

Closing comments:

When we look at the entire patchwork of the American medical care system and our insurance system there’re still so many holes in it, there’s so much redundancy, and it’s so inefficient. And that’s why the single payer idea is going to resonate far beyond whatever the outcome of the 2016 election is. Because when you have a health insurance that leaves tens of millions uninsured, tens of millions underinsured, that is beset by administrative complexity and is governed too often by profit, there’s going to be an appetite for sweeping change. And whatever its political fortunes are, and I don’t think they’re particularly good, single payer is going to continue to speak to those who are disaffected by what’s going on in American medical care and are looking for something different, something better.

(The full 8 minute audio can be accessed for free at the link above.)

***

Comment:

By Don McCanne, M.D.

Although single payer advocates may be disappointed with Professor Oberlander’s conclusion that the best way forward now is to strengthen ACA and Medicare and to address underinsurance and the affordability of private coverage, we need to keep in mind that he has described the clear superiority of the single payer model, and that it still has widespread popular support. His pessimism is based on current political realities, which have been confirmed by over half a century of failure to advance comprehensive, universal single payer legislation.

Since single payer seems to be an imperative, why has it not been enacted? Oberlander writes, “Single-payer supporters have not articulated a convincing strategy for overcoming the formidable obstacles that stand in its way. Nor have they, despite substantial public support for single payer, succeeded in mobilizing a social movement that could potentially break down those barriers.”

He’s right, based purely on results to date. We have a lot of work to do.

News About Obamacare Has Been Bad Lately. How Bad?

By Reed Abelson and Margot Sanger-Katz
The New York Times, April 13, 2016

Ever since passage of the Affordable Care Act, a fierce debate has been waged over whether the law would work as advertised. While advocates promised that the design of new insurance markets would transform the way consumers buy health insurance, critics warned that the new market would never succeed. Reed Abelson and Margot Sanger-Katz have had front-row seats to the debate, and the two reporters took a few minutes to discuss when — and if — the market would stabilize.

Margot Sanger-Katz: Every time I write a story about the health law, I get comments and emails from people just above the income cutoff for subsidies. These are the people who have been most hurt by the health law. Plans on the exchanges are just really expensive for them, and often come with big deductibles, too. And if premiums keep rising, they’ll keep getting squeezed. Analysts from the Urban Institute have done the math and found that some of them are paying more than 25 percent of their income on health care now. Still, it is awfully hard to imagine Congress approving massive new spending to make Obamacare more generous. Hillary Clinton has some proposals about affordability, but they don’t include expanding subsidies.

Reed Abelson: One of the strengths of the law, and its main weakness, is its emphasis on keeping the status quo. While President Obama may have overpromised when he said you can keep your plan if you like it, the insurance isn’t radically different. The only way companies can seem to bring down prices is by narrowing networks of hospitals and doctors or hiking deductibles. While Bernie Sanders seems to be offering the most dramatic change by proposing that everyone switch to a government plan like Medicare, I’m still looking for a market response — some real change in how care is delivered that is much less expensive or at least more effective.

Margot Sanger-Katz: This is the thing I say whenever anyone asks me what I think about the health law. It basically baked in all of the complexity and dysfunction of the pre-existing American health care system.

Reed Abelson: We’re heading into the season when insurers and state regulators start talking about next year. Any thoughts on what we might expect?

Margot Sanger-Katz: I’m expecting them to ask for rate increases! The insurance companies are doing everything they can to broadcast their intentions to charge more. There are reasons we should expect the plans to do so even if the markets were already stable. Some of the early training-wheel programs set up by the law expire, which means the plans have to pay out more claims for really expensive patients.

http://www.nytimes.com/2016/04/14/upshot/news-about-obamacare-has-been-bad-lately-how-bad.html

***

Comment:

By Don McCanne, M.D.

Six years after the Affordable Care Act was signed into law we hear opinions ranging from what a phenomenal success it has been to what a miserable disaster it is. This brief excerpt from a discussion between two respected journalists who have followed the process closely, and who are well versed on the policy issues, provides us with a perspective on where we actually are on reform.

It is somewhat sobering. There have been some tradeoffs such as expanding nominally the numbers insured but with insurance products that further limit provider choice and shift more costs to the patients. Margot Sanger-Katz says that the health law “basically baked in all of the complexity and dysfunction of the pre-existing American health care system.”

Most of the system has remained about the same while the deficiencies introduced offset much of the gains. We are still left with tens of millions uninsured, tens of millions more who are underinsured, and costs that continue to increase in spite of the expansion of blunt financial barriers to beneficial health care services. Even employer-sponsored plans are beginning to deteriorate, especially because of higher deductibles and narrower networks.

Reed Abelson says that she is looking for “a market response — some real change in how care is delivered that is much less expensive or at least more effective.” Yet it has been confirmed over the last half century that markets do not work in controlling health care spending. Nothing in the Affordable Care Act will change that in spite of wishes that feeble policy measures such as ACA exchange competition, ACOs, shared shavings, bundling, wellness programs, meaningless rhetoric of quality over quantity, and other ACA concepts would revolutionize health care. The revolution is not happening.

So claims of phenomenal success or miserable disaster can be ignored since we really have not fundamentally changed the infrastructure of our system. But with that background, we actually have failed: We failed to enact an Improved Medicare for All which would have met our goals for reform. We can still do it, you know.

The Virtues and Vices of Single-Payer Health Care

By Jonathan Oberlander, Ph.D.
The New England Journal of Medicine, April 14, 2016

The 2016 U.S. presidential campaign has produced many surprises. One unexpected turn is the reemergence of single-payer health insurance on the public agenda. Senator Bernie Sanders has made Medicare for All a centerpiece of his platform. His opponent for the Democratic party’s presidential nomination, former Secretary of State Hillary Clinton, has criticized Sanders’s plan as unrealistic. An old debate has thus reopened. What are the virtues and vices of single-payer reform? Is it a realistic option for the United States or a political impossibility?

First, a note on language. “Single payer” is often used loosely to refer to everything from Canadian national health insurance to the British National Health Service (NHS) and even Obamacare — though depicting the Affordable Care Act (ACA) as a “slippery slope” to single payer is bizarre, given that it relies on private insurance. U.S. observers often mistakenly lump all foreign health systems together under the single-payer label — a classification that grossly oversimplifies the range of models in place elsewhere. In some rich democracies (Germany, the Netherlands, and Switzerland among them) people enroll in multiple insurance plans, which are typically highly regulated and are operated by private companies or nonprofit associations. Alternatively, in the NHS, the government traditionally owned most hospitals and directly employed many physicians.

Most U.S. single-payer advocates instead have in mind emulating Canada, where all legal residents in each province or territory receive coverage from one government insurance plan for medically necessary hospital and physician services. Canadians can obtain private policies for supplemental services not covered by the government plan. The government does not directly employ most doctors, nor does it own most hospitals, though their payments come from the single provincial insurance program. Canadian national health insurance arrangements — and Taiwan has a similar system — resemble traditional U.S. Medicare, with public financing for privately delivered services. Sanders is not the only presidential candidate to find this model appealing. Donald Trump has praised the Canadian program, though recently he suggested it wouldn’t work here.

Proposals for U.S. single-payer reform have a long history. A 1943 bill subsequently endorsed by President Harry Truman in 1945 envisioned national health insurance funded through payroll taxes. That bill and subsequent efforts by the Truman administration to pass universal insurance went nowhere. However, Medicare, conceived in the 1950s and enacted in 1965, embodied the single-payer model. Medicare’s architects saw it as the cornerstone of a national health insurance system. They believed that Medicare would eventually expand — with children perhaps the next group to join the program — to cover the entire population. That aspiration was never realized. Meanwhile, Congress created Medicaid as a separate program for some categories of low-income Americans, including families with dependent children, further fragmenting the insurance pool.

Single payer enjoyed strong support during the early 1970s among liberal Democrats such as Senator Ted Kennedy (D-MA), yet it never came close to passing. Subsequently, its political fortunes faded. Democratic policymakers increasingly pursued incrementalism (primarily through Medicaid expansion) and more conservative models that relied on private insurance (managed competition) as the only feasible reform routes. Medicare itself underwent a transformation as the role of private insurers in the program grew substantially. The 2010 ACA represented both a landmark achievement in expanding access to insurance and the culmination of a turn away from single payer. In 2009, the House of Representatives did pass legislation creating a Medicare-like government insurance program that would be available to the uninsured in competition with private plans. But this “public option” couldn’t clear the Senate. Even with a Democratic president and large Democratic congressional majorities, a narrow remnant of single payer failed to pass.

Nevertheless, the single-payer approach enjoys a dedicated following among groups such as Physicians for a National Health Program, and Sanders’s embrace has generated renewed attention for the idea. Regardless of the outcome of the 2016 election, the single-payer debate will persist. The enduring appeal of Medicare for All is understandable, given the fragmented, inequitable, costly, profit-driven, and wasteful nonsystem that prevails in the United States. The ACA’s shortcomings are sufficiently serious, single-payer adherents argue, that Obamacare has left unsolved many of U.S. medicine’s major problems. For all the ACA’s considerable achievements, health insurance and medical care are still unaffordable for many people. In a country where nearly 30 million persons remain uninsured, where health insurance is increasingly thinned out by rising deductibles and cost sharing, where even insured patients face staggering bills and the prospect of medical bankruptcy, where myriad insurers and payment systems generate astonishing complexity, and where more money is spent on administration than on heart disease and cancer, it’s no surprise to hear calls for sweeping change.

The lessons of Canadian national health insurance are as straightforward as they are neglected. Having a single government-operated insurance plan greatly reduces administrative costs and complexity. It concentrates purchasing power to reduce prices, enables budgetary control over health spending, and guarantees all legal residents, regardless of age, health status, income, or occupation, coverage for core medical services. Canadian Medicare charges patients no copayments or deductibles for hospital or physician services. Controlling medical spending does not, the Canadian experience demonstrates, require cost sharing that deters utilization. The Canadian system is hardly perfect. All countries struggle with tensions among cost, access, and quality; at times, Canada has grappled with fiscal pressures, wait lists for some services, and public dissatisfaction. Yet its problems pale in comparison to those in the United States.

The substantive virtues of single-payer programs are compelling. But so are their political liabilities. Medicare for All, which aims to constrain health care spending, faces intense opposition from insurers, the medical care industry, and much of organized medicine. It would trigger fierce resistance from conservatives and the business community and anxiety in many insured Americans fearful about changing coverage and the specter of rationing. The ACA’s comparatively conservative reform approach inspired false charges of “socialized medicine,” “pulling the plug on grandma,” and “death panels.” It takes only a little imagination — or a look back at the history books — to predict the reactions that an actual single-payer plan would evoke.

Single payer would also require the adoption of large-scale tax increases. Although Americans would save money by not paying premiums to private insurers, the politics of moving immense levels of health care spending visibly into the federal budget are daunting, given the prevailing antitax sentiment. Furthermore, converting our long-established patchwork of payers into a single program would require a substantial overhaul of the status quo, including the ACA. Then there are the familiar institutional barriers to major reform within U.S. government, including the necessity of securing a supermajority of 60 votes in the Senate to overcome a filibuster.

In short, single payer has no realistic path to enactment in the foreseeable future. It remains an aspiration more than a viable reform program. Single-payer supporters have not articulated a convincing strategy for overcoming the formidable obstacles that stand in its way. Nor have they, despite substantial public support for single payer, succeeded in mobilizing a social movement that could potentially break down those barriers. The pressing question is not about whether Medicare for All can be enacted during the next presidential administration — it can’t — but where health care reform goes from here.

It’s possible that some states could, through waivers that begin in 2017, consider adding a public option to their marketplaces or even adopt single-payer systems. Yet Vermont’s recent struggles to make a modified single-payer plan work underscore the challenges to state action. At the federal level, incremental steps toward Medicare for All, such as expanding program eligibility to younger enrollees, are conceivable — though challenging in this political environment. Moreover, the fight over Obamacare is not over. Preserving and strengthening the ACA, as well as Medicare, and addressing underinsurance and affordability of private coverage is a less utopian cause than single payer. I believe it’s also the best way forward now for U.S. medical care.

http://www.nejm.org/doi/full/10.1056/NEJMp1602009#t=article

NEJM Interview with Dr. Jonathan Oberlander

Closing comments:

When we look at the entire patchwork of the American medical care system and our insurance system there’re still so many holes in it, there’s so much redundancy, and it’s so inefficient. And that’s why the single payer idea is going to resonate far beyond whatever the outcome of the 2016 election is. Because when you have a health insurance that leaves tens of millions uninsured, tens of millions underinsured, that is beset by administrative complexity and is governed too often by profit, there’s going to be an appetite for sweeping change. And whatever its political fortunes are, and I don’t think they’re particularly good, single payer is going to continue to speak to those who are disaffected by what’s going on in American medical care and are looking for something different, something better.

(The full 8 minute audio can be accessed for free at the link above.)

Although single payer advocates may be disappointed with Professor Oberlander’s conclusion that the best way forward now is to strengthen ACA and Medicare and to address underinsurance and the affordability of private coverage, we need to keep in mind that he has described the clear superiority of the single payer model, and that it still has widespread popular support. His pessimism is based on current political realities, which have been confirmed by over half a century of failure to advance comprehensive, universal single payer legislation.

Since single payer seems to be an imperative, why has it not been enacted? Oberlander writes, “Single-payer supporters have not articulated a convincing strategy for overcoming the formidable obstacles that stand in its way. Nor have they, despite substantial public support for single payer, succeeded in mobilizing a social movement that could potentially break down those barriers.”

He’s right, based purely on results to date. We have a lot of work to do.