Friday, February 26, 2016

The debate over health care boils down to externalization of costs

Common Dreams published an interesting article on the debate over health care. The article was penned by Dr. Don McCanne, senior health policy fellow at Physicians for a National Healthcare Program (PNHP), a nonprofit, nonpartisan organization of 20,000 physicians who support single-payer national health insurance.

The premise of the article is that Hilary Clinton is raising the public option for health care insurance as a diversion from Bernie Sanders' "Medicare for All" plan, a single payer plan. Notice that the article is written by a doctor as a senior policy fellow of an organization of doctors with a membership of at least 20,000 strong. That's a large group of doctors who see that the current system is beyond repair and that are actively promoting a single payer system to remove many layers of bureaucracy.

But what is hidden in all the private bureaucracy is profit. It starts as nickels and dimes, coalesces into fivers and tens and eventually turns into an $80 million a year compensation package for an un-elected executive who might be willing to give a large sum to the Clinton campaign. You know, to keep things as they are.

What I see as a sort of subtext to the entire argument is the tendency to shift costs. Dr. McCanne goes into some discussion about the costs we could save with a single payer plan that we would miss with a public option. Namely, those "administrative costs" that pile up on the private side, but somehow seem to be efficiently managed under Medicare. The nugget of the article is the fact that with their lobbying prowess and deep pockets, the health insurance industry is keen to avoid any semblance of a level playing field between the private option and the public option. Guess which side gets the advantage.

Critics are pointing to the deficiencies that a single payer plan would have. They say that we'd lose many of the benefits of the private plans we have now. You mean, like, paying 17% of GDP compared to our counterparts in Asia and Europe that pay something closer to 8-10% GDP? Yeah, that's a benefit, alright. But only if you can externalize the costs.

High ranking officers of health insurance companies bear a disproportionately small share of the costs. Whatever costs they must shoulder, it's only temporary for they can always pass it on to the customer or the government. As long as they can continue this charade, they will continue to retain astronomical salaries at the expense of everyone else. They know that the tax code is complicated enough that few if any would see the loopholes they can exploit.

A single payer plan not only simplifies the health care system, it prevents anyone from escaping the costs and shifting them onto someone else. If everyone has to pay the taxes to support it, with no deductions, and no caps on income, then everyone has incentive to use it fairly and keep the costs low. By making everyone pay into it, with the same tax rate, the risks are distributed, and in the end, will even out.

With the current system, risk is not distributed evenly. Dr. McCanne demonstrates that private insurers will cherry-pick their customers and dump the rest onto higher cost plans or to the government. A single payer plan eliminates that practice.

Not only that, studies have consistently shown that bigger plans tend to be more efficient. This was borne out by a Politifact article on the debate over the efficiency of Medicare, one of the largest insurers in America. Where private insurers have overhead ranging from 7-30% depending on the number of people covered in each plan, Medicare has shown a consistently low overhead of 1.3%. A plan that covers everyone with a single payroll tax or income tax for those who make their money some other way besides working, is going to be far more efficient than the private insurance plan we have now.

A single payer plan would use a single standard for collecting and maintaining the data. Poof. There go the legions of data entry clerks at $40 an hour or more, just to translate billing codes into insurance codes. Every doctor, every hospital would have to use the same standard of billing. This ensures accuracy. The government can then more easily measure the outcomes against the treatment plan as well.

Imagine that the tax imposed to support a single payer plan has no cap, no deduction and is flat. Kinda like Social Security, but without the cap. With everyone paying into it, the plan would be fully funded and risk would be distributed and assumed by everyone paying into it.

As long as insurance executives can privatize the profits while socializing the risks, noting will change. A single payer plan socializes the risks and the dividends from the cost savings.

This is the point of the debate that few if any on the right (including Hilary) are willing to discuss. We are all in this together. We're already 64% of the way there. Let's finish the job.
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