Motley Moose – Archive

Crossposted from CNewhall.com

Single Payer health care means that there is one entity that pays for all healthcare.  Typically, it also means that the single payer is also the single entity that collects the money to pay for health care.  Since the early 20th century, the AMA and (later) the health insurance-hospital industry (collectively, the medical-industrial complex) have labeled this form of payment “socialized medicine.”  That is an untruth.

Socialism is when the government owns the means of production–as in, for instance, when the government buys stock in a big insurance company (AIG) or a bank (Citibank) or an auto maker (GM??).  Therefore, “socialized medicine” means that the government owns the hospitals, the doctor offices, and employs the doctors, etc.  As a matter of fact, we have a very large “socialized medicine” entity in theUS now–it is called the Veteran’s Administration.  We have long had other forms of “socialized medicine” such as county, city and state hospitals.  We have clinics run by various governments.  All of these are “socialized medicine.’

In contrast, single payer is similar to Medicare in its original form (before the privatization by Bush.)  In that form, the government collects the money to finance the system and pays it out to the producers (hospitals, doctors, clinics, etc.)  This is the form of health care financing that all of the world’s industrialized nations have in one or another flavor.  The US is the only exception:  we have more than 1200 payers called “health insurance companies.”

Typically, competition is thought to reduce costs.  The problem with our system is that competition among multiple payers in health care does not reduce costs; it increases costs.  The reason is that health care is a very complex product and health insurance to pay for health care adds another layer of complexity.  In other words, it is possible to compare houses, cars, laundry soap. bags of carrots–they are all relatively easy to understand and compare.  In contrast, it is almost impossible to compare health insurance plans.  There is no standardization among plans, each plan has long lists of coverage, each plan has long lists of different doctors, and there is no way to know the underlying prices.  Think about the problems with buying health insurance:  your employer may pay part of the premium and decides who to buy insurance from.  The doctor list from insurer to insurer may vary.  You have no way to know what the insurer pays each doctor.  You really cannot understand the details of what an insurer does and does not cover.  You have no way to find out the hidden restrictions (‘pre-authorization”) that the insurer places on the doctors and hospitals it contracts with.

It’s even worse if you aren’t told by your employer who the company buys insurance from.  When you are on your own, you may have a choice of two, three, ten or a hundred different insurance companies.  Each company will have a list of various plans, each with varying costs and levels of coverage.  Try comparing one to the other–it is a daunting task and unless you are prepared to spend hours and hours, it is impossible for most people.  Even when you can get the information, the  comparison is still not apples to apples.  More like apples to moon rocks.

Because 1200-plus health insurers are competing with each other to get the most and healthiest people in their plan, and are competing to pay the least possible amount to doctors and hospitals, the cost of administering these insurers is inflated far beyond the cost of the medical care they pay for.

Add to that the complexity for hospitals and doctors of dealing with multiple different insurance plans, each with different criteria for payment, many administered by poorly-trained clerks.

The result: we spend 25% of our health insurance dollar on administration.

is the government more efficient?  Yes.  When health insurance is administered by the federal government (Medicare), the administrative cost is 3%.

The potential savings is something like 400-500 billion.  Annually.  That is several times what is needed to pay for a gold-plated Blue Cross plan for every uninsured person in the US.

Dr. Newhall is principle attorney at the Law Firm of Clark Newhall MD JD in Salt Lake City, Utah.