I’ve been rather vocal in my advocacy for a private insurance-based universal health care program. My thinking has been that once insurers stop employing all that expensive brain power to select risks and cancel policies, they’ll be able to actually work on ‘managing care’.
That’s the idea, anyway.
Unfortunately, my single payer advocate friends have had lots of ammunition to shoot holes in my argument, ammunition provided by the same health plans I’ve been pushing as solutions to the health care crisis.
And every time there’s another report of stock price manipulation, retroactive termination of coverage, or refusal to cover appropriate care, my argument weakens.
Today’s hit comes not in the form of another scandal or more evidence of incompetence, but rather from Health Affairs. The points made by the authors can be summarized thusly:
– non-single payer programs incur much higher costs due to the work inherent in eligibility determination and vetting.
– additional expenses incurred for advertising, marketing, PR, and overhead (that would include consultants like me) would be unnecessary
– the elimination of medical underwriting would simplify matters and prevent cost-shifting (true, but so would guaranteed issue and community rating and mandated universal coverage)
– provider administrative hassles would be greatly reduced – instead of dozens of arrangements, contracts, and provider manuals there would be one main one.
I’d add a biggie. WIth relatively minor exceptions, today’s for-profit health insurers are doing a lousy job ‘managing’ care. Strike that – they aren’t doing much at all. What they are doing is managing reimbursement. The only large national payer that is doing much in this area is Aetna, and they have quite a ways to go.
Here’s hoping the mainline health plans start providing me with compelling arguments in favor of their continued existence.
And please, no citation-free ideological rants against ‘socialized medicine‘. Single payer is NOT socialized medicine, and screaming about the ‘failure of socialized medicine’ is getting tiresome.
Sep
10
Joe – I have several concerns regarding a possible single payer health insurance system. They are as follows:
1. A monopoly insurer would not have to worry about pleasing either customers (patients) or providers because there would be nowhere else to go for basic comprehensive coverage as opposed to supplemental insurance.
2. There could be an adverse effect on healthcare innovation. Depending on the adequacy of reimbursements, this could reduce the flow of new drugs and devices as well as less invasive, safer surgical procedures.
3. I would not look for a single payer insurer to be innovative in benefit design. It took Medicare (and Congress) fully 41 years after the original legislation passed to provide a prescription drug benefit even though the need for it was obvious many years earlier.
4. As we already see with Medicare, it overpays for some procedures like cardiac and orthopedic surgery while it underpays for primary care. Thus, we have a surplus of the former and a shortage of the latter. I don’t think administered pricing by a single government controlled payer is the best way to allocate healthcare resources.
Large, self-funded plans have administrative costs in the range of 5%-6% of total costs which are competitive with Medicare if all of its costs are properly accounted for including those done for it by other government agencies. My own preference would be for a health insurance voucher system, coupled with risk adjustment payments to insurers who wind up with a sicker than average population of insureds, along the lines suggested by Emanuel and Fuchs and financed with a dedicated tax. They propose a Value Added Tax which I’m not enthusiastic about. I would prefer a payroll tax. We would also need to integrate income and payroll taxes in a way that makes sure that those who earn their income from dividends, interest, rent, capital gains and other non-wage sources pay a similar percentage of their income in combined income and payroll taxes (including the employer’s share) that wage earners do. For wage earners, the employer’s share of payroll taxes would also count as income as well as taxes paid by the employee. If maintaining a significant role for private insurers results in overall administrative costs a few percentage points of total healthcare costs higher than under a single payer system, that’s a small price to pay to mitigate the concerns that I outlined above.
You must also consider single payor inefficiency. Being the only game in town means they have no risk of being replaced. I grew up hearing Medicare loses 10% of every dollar to fraud and waste, I haven’t seen any studies to show they have improved on that. That means they lose $600 for every Medicare enrollee which is equal to or almost as much as the total administrative cost of private insured individuals and 2 almost three times as much as self funded plans.
Is one manual better then dozens if it is 35000 pages long and dictates practice to a nano scale? Dozens of people asking you to do something is usually better then one person ordering you to do it their way or else.
Eligibility determination and vetting also saves money. Under single payor are we going to allow every illegal immigrant or foreign tourist who shows up to get all the care they want? It’s easy to claim we can eliminate that cost, doing so would exponentially increase liability and paid claims though. Far greater then any savings.
Government spends millions now advertising Medicare, generally very poorly. Who do you think understands their plan better Medicare or Private Insurance beneficiaries?
Medical underwriting is a predicative exercise done so insurers know how much to charge. If single payor doesn’t do medical underwriting how do they know how much to budget? I’m more concerned about a government program with an open check book and no benchmarking then spending a couple million on underwriting. Plus have some humanity who else is ever going to hire an actuary?
I personally totally disagree with even the concept of insurers managing care. Insurance is the transfer and protection from risk. Insurance companies should be protecting individuals and companies from large and/or unexpected claims, not managing and rationing their day to day health. If you ask a fox to act like a guard of a hen house what do you expect to happen? Providers, individuals, or some other entity needs to be responsible for managing care.