Len Rodberg, NY Chapter, PNHP
Currently in press, will be published in journals soon.
The series of papers in this issue identify the central characteristics of the longest-standing national health systems. In the course of the lectures and seminars in this series, the author prepared a series of commentaries addressing the lessons that could be learned for our own country. The central focus of these notes is: What can we learn from other countries in seeking to achieve universal access to health care in this country? Valuable insights are available; they are summarized in what follows
Several notes on terminology: I use the term âuniversal health careâ to mean that no one faces financial barriers to health care at the time they need it and can seek care without concern that they will not be able to afford it. Once they do seek care, they can receive the care they need without facing further financial barriers. The term âsingle payerâ refers to a system that is overseen, regulated, and, most important, standardized by government so as to assure the right to health care. The term does not refer to any specific plan.
1. Is There Any Way to Achieve Universal Health Care Other Than Through a Single Payer National Health System?
A study recently published by the Economic and Social Research Institute, and funded by the Robert Woods Johnson Foundation, looks at a range of innovative heath care financing options for the United States (Covering America: Real Remedies for the Uninsured, edited by Jack A. Meyer and Elliot K. Wicks; a detailed summary is available at www.esresearch.org/RWJ11PDF/ summary.pdf.). The ten options examined in this study aim at expanding insurance coverage. Of the ten plans examined, only the single-payer approach provides coverage for everyone while, at the same time, relieving the medical profession and the hospital industry of the administrative and financial burdens imposed on them by the insurance industry. All but the single-payer plans settle for the more modest goal of extending health care coverage to âmost, if not all, Americansâ or, as one author puts it, to âreduce the number of uninsuredâ (p.24).
All of the plans that try to increase coverage within a multi-payer private insurance environment use a form of means-testing, in which coverage received depends on income. Several authors recognize the complexity of such subsidy programs, which must be adjusted almost month by month as family incomes shift. We know from long experience with Medicaid the problems this creates for both patients and providers. Even the middle class no longer has lifetime jobs, so any plan that retains employer-provided insurance encounters the complexities and discontinuities of switching from one plan to another as policyholders move from job to job. Likewise, all retain the two-class system of care (what one author calls a âlayeredâ system), with good coverage and access to quality services for those with high-end plans, and limited coverage and limits on access to quality care for the rest. Finally, they are exceedingly complex, as they attempt to avoid âcrowding outâ of private coverage — employersâ abandonment of private coverage when they know the government will provide it instead, probably at lower cost. And all inject more money into the system, keeping current arrangements and adding money to provide coverage for more people.
The editors of the volume propose an innovative proposal that seeks to achieve universal coverage by requiring that every citizen obtain coverage, with a public Medicare-Plus plan as the bottom-line coverage of last resort. As they point out, âTo ensure that everyone has coverage requires one of two conditions: either everyone must be required to buy coverage, or a public system must be in place that automatically covers everyone.â Under their plan, everyone would have to show proof of coverage when filing their income tax returns. Those who show up in the medical system without coverage would receive the care they need; they would then be billed for every month they had been without coverage. This would clearly discourage those without coverage from seeking medical care.
The lessons of this volume, then, are (i) that we can expand coverage, but not achieve universality, at the price of increased health care costs and retention of a complex multi-class system; (ii) we can achieve universality by imposing a regulatory regime on the insurance industry along with requirements and penalties on the population at large; or (iii) we can make access to health care a right of all those living in the U.S. while simplifying the system and greatly reducing its cost.
2. Do the German and French Health Care Systems Show That a Multi-payer System Could Provide Universal Health Care in the United States?
It has been argued that the ability of Germanyâs and Franceâs health care system to achieve near-universal access to health care through a network of hundreds of âsickness fundsâ, which serve as fund collection and reimbursement mechanisms, demonstrates that a multi-payer system can work in the United States. Is this so?
The sickness funds in Germany and mutuelles in France differ markedly from the American private insurance companies. They are are non-profit entities. They cannot accumulate capital. Their staff salaries are strictly limited. And their coverage and benefits are determined by the federal government and are uniform across the country. Risk adjustment takes place across funds, and there is little competition among them. They are, in fact, far more like the fiscal intermediaries that handle reimbursement under the Medicare program, or even the provincial government in the Canadian single-payer system, than private insurance companies.
3. What Would It Cost to Achieve Universal Health Care?
A careful, quantitative study of alternative plans for reducing the numbers of uninsured in this country has now been carried out. The California State Legislature, using funding from the Federal Government, contracted with the Lewin Group, a Washington-based consulting firm, and its chief economic analyst, Dr. John Shiels, for a careful analysis of a set of plans designed to reduce the number of uninsured in California. The final report of the Health Care Options Project (available at www.healthcareoptions.ca.gov) confirms that (i) a single-payer, publicly-financed plan can provide universal access to care while reducing the overall cost of health care, and (ii) any other approach will cover fewer people while costing more than is now spend on health care.
This table summarizes the Lewin results:
| Type of Plan | Reduction in Uninsured (%) | Change in Total Cost (%) | |
| Incremental (multi-payer public and private insurance) | |||
| California PacAdvantage Premium Program (Harbage et al) | 1.7 | 0.1 | |
| Cal-Health (Schauffler) | 5.6 | 0.1 | |
| Insure the Uninsured Project (Wulsin et al) | 18.5 | 1.4 | |
| Managed Care Expansion Plan (Brownstein et al) | 28.1 | 2.4 | |
| Employer Mandate | |||
| CHOICE (Schauffler) | 69.7 | 1.8 | |
| Health California (Brown & Kronick) | 86.4 | 2.0 | |
| Single-Payer | |||
| Cal Care (Spelman) | 100.0 | -2.4 | |
| California Single-Payer Plan (Kahn et al) | 100.0 | -5.0 | |
| California Health Service Plan (Shaffer) | 100.0 | -4.9 | |
All of the multi-payer plans add to current costs while covering, in the case of the voluntary subsidized plans, a relatively small portion of the uninsured. The employer-mandate plans cover a larger portion of the uninsured, up to an estimated 86%, but at correspondingly greater cost. The single-payer, publicly-financed plans, on the other hand, reduce overall costs while covering everyone.
The Lewin study is valuable as well for its guidance in designing proposals. For instance, it shows that families at nearly all income levels would save money with the proposed single-payer plans. Employers who now provide insurance for their employees would save money, but employers (particularly small employers) who do not now provide insurance would spend significantly more than they now do, between $1,600 and $2,200 per worker. These plans might be modified so as to delay the savings to families and large employers and use the savings to phase in gradually additional spending by small employers.
One unexpected finding in the California study is that the employer mandate plans, under which employers either provide private insurance to their employees or pay a tax to cover them under a public insurance plan, cover between 70% and 86% of the uninsured but add only 2% to the cost. How can the total number of people covered increase by between 13% and 16% and yet the cost go up so little?
Upon examining the Final Report from the Lewin Group, the answer becomes clear: Most of those insured under the employer mandate would choose the public plan, with its much lower cost. In fact, many of those now covered by private insurance would choose the public, single payer plan, so that fewer people would be covered by private insurance after the plan is implemented than are now covered by that more-costly insurance. The result is a very small net increase in cost. (One recent response by advocates of private insurance is a requirement, in a plan proposed in the State of Maryland, that would prevent individuals from switching to the public plan unless they are without insurance for six months, in other words, a form of âinsurance lockâ.)
If it is true that a public plan is so much more cost-effective than the private plans (we already know this from experience with Medicare), why retain the multi-payer private insurance portion of the employer mandate at all? With the continuing high administrative cost of these private plans, their second-guessing of physician recommendations, the two-class access to care they create, the continuing complexity facing physicians and hospitals in seeking approvals and reimbursements, the absence of preventive care, the failure to foster coordination of care, and the many other deficiencies of a multi-payer private system, there seems no reason to retain these unnecessary middlemen. Keeping them in the system, as these âplay or payâ plans do, offers continuing opportunities for them to undermine the system. They might attempt to retain their share of this new system by offering cut-rate plans to âcherry-pickâ healthy workers, or they might offer plans initially at a loss to retain access to employers, only later increasing the price.
In short, if the success of the employer mandate depends on the existence of a large, effective single payer component, good public policy should seek all of the many known advantages of a single payer plan and support its growth and strength.
4. Conclusion: Final Lessons
This series of papers on the achievement of universal health care in other industrialized countries has illuminated many issues that we should consider in seeking a reformed health care system in the United States. Here are some that seem especially important:
The centrality of government: In every country examined, a strong national government presence defines universal health benefits, sets standards, and assures fairness and equity. Regardless of the specific manner in which revenues are raised or are disbursed, the national government oversees the entire process, providing a powerful public mechanism for sharing risks and working toward assurance that all residents have access to essential health care.
Health care must be a right, not a privilege to be purchased. Access to health care is assumed to be a basic right of all residents. It is not dependent on an individual choosing to participate, working for a particular employer, or paying at the time care is received. Instead, it is assumed that all contribute, and all benefit.
There is no need for a market system. Every universal system uses some combination of governmental and non-profit management. In none of them is there a market system, either in reimbursement or in the provision of care. And, contrary to some of the claims of market ideologues, these public non-profit systems are far more cost-efficient than our current market-oriented system.