The Problem with Single-Payer Plans

Abstract

Many liberals in America dream about single-payer plans. Even if they acknowledge that a single-payer plan cannot be enacted, they still think it the best reform. Another proposal may be politically necessary to achieve universal coverage, but it would be a compromise, a fall-back. Single is the ideal. This is wrong. Even in theory, is not the best reform option. Here's the problem: while it proposes the most radical reform of the health care financing system, it is conservative, even nostalgic, when it comes to the broken delivery system. It retains and solidifies the nineteenth century, fragmented, fee-for-service delivery system that provides profligate and bad quality care. Reform of the American health care system needs to address problems with both the financing and the delivery systems. As proponents of single-payer systems note, the financing system is inequitable, inefficient, and unsustainable. There are now forty-seven million uninsured Americans, about 70 percent of whom are in families with full-time workers. Wealthy individuals receive much higher tax breaks than the poor, and insurance premiums are a larger percent of wages for those working at low wages and in small businesses. Many working poor and lower middle class Americans pay taxes to support Medicaid and SCHIP, yet are excluded from these programs. The employer-based and individual market parts of the financing system are inefficient because they have huge administrative costs, especially related to insurance underwriting, sales, and marketing. The government part of the finance system is inefficient because it fails to address key policy issues, fraud, and--for Medicaid--complex determinations of eligibility. Over the last three decades, health care costs have risen 2-4 percent over growth in the overall economy. Medicaid is now the largest part of state budgets, forcing states to cut other programs. But the delivery system is also fraught with problems. First, it is badly fragmented. Currently, 75 percent of physicians practice in groups of eight or less. Of the one billion office visits each year, one-third are to solo practitioners, and one-third are to groups of four or fewer physicians. On average, each year Medicare beneficiaries see seven different physicians, who are financially, clinically, and administratively uncoordinated. A second problem is that the delivery system is structured for acute care, but the contemporary need is for chronic care. Over 133 million Americans have chronic conditions, and among Americans sixty-five and older, 75 percent have two or more chronic conditions, and 20 percent have five chronic conditions. Consequently, 70 percent of health care costs are devoted to patients with chronic conditions. Also, the care that the system delivers is of much poorer quality than Americans realize. Use of unproven, nonbeneficial, marginal, or harmful services is common. The list of offending interventions that are paid for and widely used but either unproven or of marginal benefit to patients is vast--IMRT and proton beam for early prostate cancer, CT and MRI angiograms, Epogen for chemotherapy induced anemia, Erbitux and Avastin for colorectal cancer, and drug-eluting stents for coronary artery disease. Stanford researchers recently showed that between 15 and 20 percent of prescriptions are written for indications for which there is absolutely no published data supporting their use. (1) The Dartmouth studies on variation in practices demonstrate that for many interventions, more services are not better. For instance, heart attack patients in Miami receive vastly more care than similar patients in Minnesota at 2.45 times the cost, yet have slightly worse outcomes. (2) In the context of reforming the American health care system, single payer has come to be associated with three key reforms: a national plan for all Americans, reduced administrative costs, and negotiated prices for hospitals and physicians and perhaps for health care goods and services, such as drugs. …