If you think health care is expensive now, wait till it’s free.”
Explore This IssueACEP Now: Vol 38 – No 10 – October 2019
By the common definition, America currently has “universal health care.” Health care services are largely available to almost all Americans via a combination of publicly and privately funded systems based on individual demographics. However, not all Americans choose to avail themselves of the options for health insurance to pay for these services and protect their assets.
Prior to the Affordable Care Act (ACA), or Obamacare, about 83 percent of Americans had some form of health insurance. Of the remaining 17 percent, half could have had coverage if they had chosen to pay a modest monthly premium (eg, to add family coverage at work) or simply applied for Medicaid. After ACA, the uninsured rate dropped to about 10 percent, largely due to expansion of Medicaid.1 As before ACA, perhaps another 5 percent could be covered if they choose.
With these facts in mind, the current discussion on health care is really about how to fund it and not about universal coverage. This brings us to the crux of the issue. How you fund health care directly determines what health care you get (or is even available). Nationalization of the health care system in America (eg, via “single-payer”) will be much different than our current private health insurance market. And much of this simply comes down to choice.
In a single-payer system (government funded, regulated, managed, and defined), politicians largely determine health care services and their costs. This is a “regulated monopsony.” In a market-based approach (even one that is highly regulated), individuals (or groups of individuals, eg, employers) largely determine services, and to some extent, the laws of supply and demand determine prices. Individuals have choices regarding insurance benefits or whether it is even worth the cost to purchase insurance.
Common Sense Analysis of Single-Payer Health Care
It is impossible to read, let alone analyze, everything that has been written about single-payer health care. Further, while various other countries are used as examples, the largest such country by GDP with single-payer is Japan, whose health care system (by total spend) is only about 9 percent of that of the United States. England is about 3 percent. We cannot be so naive as to believe a country the size of the United States can simply wholesale adopt a system that works for countries a fraction of our size. Even by population, the United States ranks third, and neither the first (China) nor second (India) most populous country has universal health care. There is simply no way to assume we can know the impact of adopting single-payer health care in the United States, and not just on health care but the entire economy and U.S. way of life.
The fact is, America has already largely achieved universal health care as defined as “available access to health care services.” Some simply choose not to avail themselves of readily available health insurance to protect against financial ruin due to an unexpected health care crisis. Failing to buy health insurance is like owning a car and failing to buy auto insurance. Then when you get into an accident, you complain about not having a car and suffering financial ruin after being sued by the other driver you hit.
Rather, the challenge with health care today is finding affordable insurance and/or care, a problem which largely stems from the ACA’s comprehensive coverage mandates and a lack of an efficient health care services market. Pharmaceuticals remain artificially expensive due to various federal policies.2,3 Direct hospital services are artificially expensive due to government price controls (cost shifting) and predatory pricing from some health plans.4 In fact, all of health care is artificially expensive due to a lack of a true market. Imagine how expensive anything might be if you could not comparison-shop because you did not know the price until after the goods and services were delivered. Amazon and eBay have revolutionized commerce, but health care has failed to keep pace. Nevertheless, a market-based approach will eventually prevail in virtually all aspects (including cost) if left alone to follow market forces. As noted, ACA mandates severely influence the upward trend in the cost of health insurance.4
Now, Back to Single-Payer
Rather than argue with unverifiable “facts,” I will simply appeal to common sense.
First, “single-payer” is not the same conversation as “universal health care.” I have been a proponent of universal health care (aka, equal access to health care) my entire career. Where I differ is in how to achieve universal health care, ie, how to fund it.
Single-payer may seem to make sense until you explain how it might work. In fact, much of the health care, insurance, and funding debate is steeped in ignorance. Most cannot even differentiate between health care and health insurance.
“Single-payer” is largely government-controlled and -funded health care (via taxes). The reason I am not in favor of this mechanism is the current state of government-run health care. As it stands now, publicly funded health care represents about 50 percent of current health care spending.5 Let’s break down how well these current government-run systems are doing:
Medicare: The trust fund is projected to be insolvent in 2026, three years earlier than predicted last year.6 While seniors tend to like Medicare, if you include the time value of money for the amount paid in Medicare taxes over a lifetime, plus the rising out-of-pocket cost, Medicare is more costly than private insurance (based on $150/month paid in Medicare taxes for 45 years, invested at 5 percent APR = ~$300,000 at age 65 divided by 25 years = ~$1,000 per month).
Medicaid: While most Medicaid enrollees are satisfied with their health care services, most Americans would not choose to be on Medicaid.7 And for this audience, how would you like for Medicaid to be your sole payer for the services you provide?
Indian Health Service (IHS): “Indian Health Service clinics don’t have enough doctors or nurses to provide quality and timely health care to American Indian and Alaska Native people. IHS data show an average vacancy rate for physicians, nurses, and other care providers of 25 percent.”8
VA: “[The Government Accountability Office (GAO)] designated VA health care as a high-risk area in 2015 due to five areas of concern regarding VA’s ability to provide timely access to safe, high-quality health care for veterans: (1) ambiguous policies and inconsistent processes; (2) inadequate oversight and accountability; (3) [information technology] challenges; (4) inadequate staff training; and (5) unclear resource needs and allocation priorities. In 2017, GAO reported that while VA had taken some actions to address these issues, little progress had actually been made.”9
Military Health System: “The Department of Defense faces significant challenges ensuring that all members of the military, as well as their families, receive appropriate health care for everything from general health and well-being to specialized clinical care for deployment related injuries such as amputations, chemically induced illnesses, and post-traumatic stress disorder…only 50-60% rate their health plan at 8/10 or better.”10
If the above were your résumé, you would be fired. But like many government-run services, health care is apparently good enough for government work. But the question we now face is, do we really want to turn over the remaining 50 percent of health care in America to the government, based on current evidence of mismanagement of the other 50 percent?
If we learn anything from the current silliness in American politics, it’s that we do not want politicians in charge of health care.
A Few Other Considerations
Single-Payer=Tax-Funded Health Care: The progressive tax system in America means the largest burden of the “health care tax” will fall on higher-income individuals. It is de facto income redistribution, which may seem great until you run out of everybody else’s money. As providers, you may get paid for more people (albeit much less for each), and on the other side, you are also paying their bill (via taxes).
Single-Payer=Universal Health Care Monopsony: A monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services. This single entity has market power over sellers as the only purchaser, much in the same manner that a monopolist can influence the price for its buyers in a monopoly, in which only one seller faces many buyers. As noted, 50 percent of U.S. health care is already publicly funded (taxes). These programs are regulated limited monopsonies in defined populations. Due to little, if any, coordination among these various government programs, they currently do not have the same effect that a true universal monopsony would. In other words, health care providers still have considerable freedom for whom they wish to provide services and at what price. A true single-payer environment would dramatically change these economics. By definition, a monopsony eliminates choice and competition. The government sets the rates. You take it or leave it. If there are not enough “takers,” people wait in line for care (or go to the emergency department).11
Single-Payer=Aspirational (versus Politically Viable=Reality): Some have called for a physician-friendly single-payer plan. I believe that is a false hope; one might say bait and switch. The fact is, we have no idea what the implications and outcomes might be of implementing single-payer health care in the United States. In the end, it’s all conjecture (or, perhaps more accurately, rhetoric). A lot of promises and projections have been made with every major government program, and to my knowledge, they have nearly always been wrong, and not for the better. The most recent health care example: What would the ACA vote have been if we knew then what we know now? “You can keep your doctor, your hospital, your health plan.” “Premiums will be lower.” “It will increase choice.” All (grossly) false promises.
Net-Net for Emergency Physicians: Under single-payer, we may have lower (perhaps much lower) compensation, deal with patients experiencing a delay in receiving services, and pay (much) higher individual taxes. If we are going to propose a single-payer system, we need to own up to these realities and not act like they will not happen “if done right.” These things will necessarily happen because that is doing it right under single payer.
Single-Payer=Economic Disaster: Health care is now the largest private-sector industry in the United States, and in some cities it represents more than 25 percent of all jobs.12,13 In 2017, $3.3 trillion ($10,348/person and 17.9 percent GDP) was spent on health care.14 Private health insurance represented 34 percent ($1.122 trillion) of that spend.15 You do not have to be a genius to know what would happen if you “nationalize” a >$1 trillion segment of the health care industry (about 6 percent of GDP). How would United Healthcare ($245 billion market cap), WellPoint ($232 billion), Aetna ($177 billion), CIGNA ($178 billion), Humana ($293 billion), and all the other insurance companies and shareholders respond to nationalization from a government program (eg, Medicare-for-all)? A government takeover like this would clearly be unprecedented in American history.
Single-payer will never happen, and if it does, it would precipitate an economic depression. But the good news is you would have free mental health services for your emotional depression.
Dr. Taylor is an independent consultant based on Phoenix, Arizona, specializing in EMTALA, health care information technology, and emergency medicine administration. He authored the landmark paper “Universal Access as a Solution for America’s Uninsured” in 2001.
- Skopec L, Holahan J, Elmendorf C. Changes in health insurance coverage 2013–2016: Medicaid expansion states lead the way. Urban Institute website. Accessed Oct. 1, 2019.
- Haislmaier E, Badger D. How Obamacare raised premiums. The Heritage Foundation website. Accessed Oct. 1, 2019.
- Kesselheim AS, Avorn J, Sarpatwari A. The high cost of prescription drugs in the United States : origins and prospects for reform. JAMA. 2016;316(8):858-871.
- Selden TM, Karaca Z, Keenan P, et al. The growing difference between public and private payment rates for inpatient hospital care. Health Aff (Millwood). 2015;34(12):2147-2150.
- Conover C. The federal share of American health spending is now approaching 50%. Forbes website. Accessed Oct. 1, 2019.
- Medicare: insolvency projections. Congressional Research Service website. Accessed Oct. 1, 2019.
- Rudowitz R, Garfield RR, Hinton E. 10 things to know about Medicaid: setting the facts straight. Kaiser Family Foundation website. Accessed Oct. 1, 2019.
- Indian Health Service: Agency faces ongoing challenges filling provider vacancies. US Government Accountability Office website. Accessed Oct. 1, 2019.
- Managing risks and improving VA health care. US Government Accountability Office website. Accessed Oct. 1, 2019.
- Military health and health care. RAND Corporation website. Accessed Oct. 1, 2019.
- Barua B, Jacques D, Collyer A. Waiting your turn: wait times for health care in Canada, 2018 report. Fraser Institute website. Accessed Oct. 1, 2019.
- Thompson D. Health care just became the U.S.‘s largest employer. The Atlantic website. Accessed Oct. 1, 2019.
- Fanelli G. How big can the health care industry in Rochester get? Rochester Business Journal website. Accessed Oct. 1, 2019.
- National health expenditure accounts 2017. Centers for Medicare and Medicaid Services website. Accessed Oct. 1, 2019.
- National health expenditures 2017 highlights. Centers for Medicare and Medicaid Services website. Accessed Oct. 1, 2019.