Physician makes case for single-payer health care
By Larry Mitchell
The Enterprise Record
10/14/2007
Chico, California
To Dr. Don McCanne, the remedy for California’s health-care crisis is obvious.
“Let’s give up this concept that belongs in the last century of individual private plans,” he told about 100 people who came to hear him speak in the Chico City Council chambers Thursday evening.
McCanne said the solution is a single-payer system: private health insurance would disappear and the government — California or the whole nation — would act as an insurer, collecting premiums and paying for medicine, doctors, hospitals and other health-care services.
Trying to fix the present system the way the leading Democratic presidential candidates and Gov. Schwarzenegger propose doing, makes no sense, said McCanne, a senior health policy fellow for Physicians for a National Health Program, an organization advocating the single-payer system.
McCanne, who worked as a family-practice doctor in Orange County for three decades, said the $2.2 trillion America spends every year on health care “will provide high-quality care for everyone if we spend it right.”
He claimed insurance companies use 20 percent of the money they collect for “administration,” which includes such things as profit, paying their employees, lobbying and advertising. When you add the 12 percent of their income that doctors and hospitals spend dealing with insurance plans, you have 32 percent of the health-care dollar going for “administration.”
“Most of it is waste,” McCanne said.
“We are being soaked, and we don’t even recognize it.”
However, Nicole Evans, spokeswoman for the California Association of Health Plans, which represents 40 health plans that represent 21 million Californians, said McCanne’s figures were outdated. She said more recent data show administration, at most, accounts for 20 percent of the health-care dollar (see Dr. Don McCanne’s response to Nicole Evans below).
Not only is the present system way too expensive for what it provides but it’s extremely inefficient, McCanne said. “This fragmented system of thousands of plans physicians and hospitals have to deal with puts a tremendous burden on them.”
He said it makes much better sense “to put all funds in one pool, fund it equitably and pay for health care out of that.”
His appearance in Chico was sponsored by several groups: the League of Women Voters of Butte County; the California Nurses Association; and the Butte Healthcare Coalition, a local organization that has been pushing a single-payer system for years.
Many leading Democratic politicians want to try to fix the current system, and Republicans tend to “blame the victims,” saying things like if people wouldn’t get so fat, health care wouldn’t cost so much, McCanne said.
He noted the Legislature passed Sen. Sheila Kuehl’s single-payer bill, but the governor vetoed it. She’s holding the bill in abeyance, trying to keep it alive, he said.
McCanne said states like Massachusetts and Hawaii, which have tried to make private insurance cover everyone, have only run into more problems.
The people indicate they want action on the health-care crisis, and it’s clear that single payer is the answer, he said.
But Evans insisted single payer is not the solution. The biggest problem today is that medical costs are rising between two and three times faster than other types of inflation, she said. “Single-payer health care doesn’t do anything to address that.”
She said the rising costs are due to many factors, such as the shortage of doctors and nurses, hospitals’ growing expenses, drug costs, and a large population that is getting older and less healthy.
McCanne noted that the number of uninsured people in America rose by 2.2 million last year to a total of 47 million, according to the U.S. Census. A fact sheet from the California Nurses Association says the uninsured receive less preventive care, are diagnosed at more advanced disease stages and get less medicine and fewer surgical interventions for their medical problems than people with health insurance.
One of the best things about a single-payer system is that it would cover everyone, McCanne said. “Health care is a right. I think most of us health-care providers feel that way.”
Staff writer Larry Mitchell can be reached at 896-7759 or lmitchell@chicoer.com.
BACKGROUND: In a single-payer system of health care, private insurance would be abolished and the state or federal government would pay private hospitals and doctors to care for everyone.
WHAT‘S NEW: Dr. Don McCanne, representing Physicians for a National Health Program, spoke in Chico this week on the benefits he believes would come from a single-payer system.
WHAT’S NEXT: For area health-care providers, a local chapter of the California Physicians Alliance has been formed. Its aim is to promote a single-payer system for the state.
Don McCanne responds to Nicole Evans’ statement that his figures on administrative costs are outdated:
The total administrative cost of our entire health care system is about 31 percent of our health care spending, which some claim is an outdated estimate. However, I was referring to the portion of premiums paid to private insurers that is consumed in administrative services, which also happens to be about 32 percent. In either instance, the numbers are still valid.
A January 2004 update of prior studies on the total administrative costs of our entire health care system demonstrated that they are about 31 percent of the entire costs. Nothing has changed in the past three years to alter that estimate. Insurers have actually increased the often intrusive administrative services that they provide. Changing to a single payer national health insurance program would recover a significant portion of those costs.
Press release on that study:
http://www.pnhp.org/news/2004/january/national_health_insu.php
My comments on the percentage of health insurance premiums being consumed by administrative services were based, in part, on a study of billing and insurance related (BIR) costs. Excluding other administrative costs, the portion of the premium consumed by BIR functions alone was 8 percent for private insurers, 14 percent for physician offices, and 7 to 11 percent for hospitals, for a total of 20 to 22 percent. Insurers also spend an additional 9.9 percent for other administrative functions. Thus the percent of premiums used for administration is about 30 to 32 percent, and that does not include insurers’ profits.
Brief excerpts from this study (with my comment on the BIR portion):
http://www.pnhp.org/news/2005/november/landmark_study_much.php
Although the insurance industry tends to dismiss their administrative costs as an insignificant portion of our health cost burden, they do have to report their medical loss ratios to the SEC. These reports do show that they retain an average of about 20 percent for administration and profit, but, of course, that does not include the administrative burden placed on the health care providers (another 12 percent).
Medical loss ratios of largest insurers for 2005:
http://www.pnhp.org/news/2006/march/medicalloss_ratios_.php
Note the first paragraph of my comment.
Also, Nicole Evans’ comment that single payer does not address rising medical costs is untrue. Besides the administrative savings, a single payer system would realign incentives to improve our rapidly deteriorating primary care infrastructure while reducing wasteful spending on non-beneficial high-tech excesses. Systems with a strong primary care base provide higher quality care at a lower cost. Health care prices are much higher in the United States, and a single payer system would use negotiation to achieve greater value. Negotiation would include fair profits but would reduce wasteful spending (such as pharmaceutical marketing and patent abuses).