Single-Payor Healthcare in the US: A Proposal

[Segnosaur]

This would be a government-run plan, along the lines of Medicare-for-all, but with a national-service component (so a VA expansion along with the Medicare expansion). Participation would be mandatory; there would be employer payroll deductions, like there are now for Medicare. There would naturally be exemptions for disability or unemployment, but for the most part it would be a pay-as-you-go system.

Ok, 2 things...

The problem with payroll deductions is that you have to deal with 1) people that are self-employed, and 2) people that are part time/work minimal hours, and thus wouldn't be able to make their minimum payments. (Not insurmountable problems but still need to be considered.) You may almost be better to take things out of general tax revenue rather than payroll deductions.

More importantly... if its a government-run health care, are you also going to allow private hospitals to function along side the public (government funded) ones?

The best health care systems in the world seem to have some sort of mix of public and private. Although there are accusations that allowing private care is somehow "unfairly jumping the queue" (i.e. people who pay more get faster access), in practice it is a great benefit, since it allows your health care system to be more responsive. Canada has a (more or less) single payer system (funded through tax revenues, but delivered privately) , and we have significant problems with wait lists.

 

[psionl0]

Level one looks a lot like Medicare in Australia.

Australia's medicare system is very dishonest. The medicare levy is simply additional general revenue for the government but it doesn't raise anywhere near enough to cover the cost of government funded health care. From the outset it instantly resulted in lengthy queues for public hospital treatment and massive out of pocket expenses for private treatment.

The "medibank stage two" system introduced by the Fraser government appeared to provide the best compromise between public and private health insurance. People had to pay a medibank levy through their taxes (as they do today) and got a basic level of doctor and hospital treatment. People could opt out of this levy if they had private health insurance. At least private health insurance companies had to be competitive then. Some even offered a "basic hospital only" package that cost less than the medibank levy.

Unfortunately, the medibank levy didn't cover the cost of government provided health care (I believe). So the government had two options: increase the levy or restrict coverage. The government chose the latter. This was the beginning of a never ending series of frustrating changes to the health system. By the time Bob Hawke introduced the current system, everybody was saying "enough" and no government since has been game to change the system.

I haven't crunched the numbers on jhunter1163's proposals but I suspect that underfunding will also be a recurrent problem with his proposals.

 

[MikeG]

......... shorten patent protection from ten years to five in order to increase competition.......

Aren't you frightened that this would stifle medical research by halving the incentives? You might make existing drugs and those in the pipeline cheaper, but turn off the supply of new drugs.

 

[jhunter1163]

Thank you all for your feedback.

The problem with payroll deductions is that you have to deal with 1) people that are self-employed, and 2) people that are part time/work minimal hours, and thus wouldn't be able to make their minimum payments. (Not insurmountable problems but still need to be considered.) You may almost be better to take things out of general tax revenue rather than payroll deductions.

More importantly... if its a government-run health care, are you also going to allow private hospitals to function along side the public (government funded) ones?

The best health care systems in the world seem to have some sort of mix of public and private. Although there are accusations that allowing private care is somehow "unfairly jumping the queue" (i.e. people who pay more get faster access), in practice it is a great benefit, since it allows your health care system to be more responsive. Canada has a (more or less) single payer system (funded through tax revenues, but delivered privately) , and we have significant problems with wait lists.

You could be right about simply taking the money from general revenues. The current Medicare deduction is 1.45% for employees and employers, and raises about $800 billion annually. We'd have to increase that to something on the order of 4% each, but the tradeoff would be that there wouldn't be any health insurance premiums, so most employees (and employers, for that matter) would see a decrease in costs.

I might not have been clear earlier; the government will not be running healthcare itself, except for the VA and any expansion of that system needed to accommodate the national-service program. Most hospitals and medical facilities would still be privately owned, but would be paid by the government. So, yes, public and private facilities would be side-by-side.

I haven't crunched the numbers on jhunter1163's proposals but I suspect that underfunding will also be a recurrent problem with his proposals.

As above. You may well be correct; this is a work in progress and we are continuing to discuss possible funding designs.

Aren't you frightened that this would stifle medical research by halving the incentives? You might make existing drugs and those in the pipeline cheaper, but turn off the supply of new drugs.

This is a good point, and one that we have considered. Granted, it might stifle some R&D, or, conversely, it might make drugs more expensive in the short run as manufacturers try to recoup more costs in the shorter patent period, but we believe that opening the drug markets to generics sooner will be a net positive.

 

[Aber]

) but shorten patent protection from ten years to five in order to increase competition (generics would be available sooner).

You might want to check that:

Orange Book Frequently Asked Questions*
1. What is the difference between patents and exclusivity?
Patents and exclusivity work in a similar fashion but are distinct from one another and governed by different statutes. Patents are a property right granted by the United States Patent and Trademark Office anytime during the development of a drug and can encompass a wide range of claims. *Exclusivity refers to certain delays and prohibitions on approval of competitor drugs available under the statute that attach upon approval of a drug or of certain supplements.* A new drug application (NDA) or abbreviated new drug application (ANDA) holder is eligible for exclusivity if statutory requirements are met.* See 21 C.F.R. 314.108, 316.31, 316.34 and sections 505A, 505E, and 505(j)(5)(B)(iv) of the FD&C Act.* Periods of exclusivity and patent terms may or may not run concurrently.*Exclusivity was designed to promote a balance between new drug innovation and greater public access to drugs that result from generic drug competition.
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2. How long is a patent term?
Patent terms are set by statute.* Currently, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States.* Many other factors can affect the duration of a patent.
Back to Top
3. How long does an exclusivity period last
It depends on what type of exclusivity is at issue.
Orphan Drug Exclusivity (ODE) – 7 years
New Chemical Entity Exclusivity (NCE) – 5 years
Generating Antibiotic Incentives Now (GAIN) Exclusivity– 5 years added to certain exclusivities
New Clinical Investigation Exclusivity – 3 years
Pediatric Exclusivity (PED) – 6 months added to existing Patents/Exclusivity
Patent Challenge (PC) – 180 days (this exclusivity is for ANDAs only)
See 21 C.F.R. 314.108, 316.31, 316.34 and sections 505A, 505E, and 505(j)(5)(B)(iv) of the FD&C Act.

https://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079031.htm#howlongpatentterm

 

[jhunter1163]

You might want to check that.. <snip>

Thanks for the info. To clarify, I meant five years after FDA approval; the issues that MikeG identified would still apply.

 

[Bob001]

Thanks for the feedback. We're trying to be fully inclusive, cover everything under the sun; that's why we included Level Three as a buy-up. If you want to have a tummy tuck or a nose job, fine, but you'll have to pay extra premium for it.

Why do you want to cover everything under the sun? That boosts costs for everyone, and insurance coverage of elective care reduces price competition. Why should completely optional services like Lasik or tummy tucks be covered by insurance?

Instead of starting from scratch, why not build on existing models? Medicare generally works pretty well and is well understood. Medicaid can work well if states fund it properly. Even good corporate health insurance generally works pretty well; the key issue is how to pay for the same coverage for everyone. Federal government workers can choose from a wide array of health plans, with varying options, premiums and deductibles.

And what, by the way, is wrong with the basic Obamacare model, with more generous subsidies to users and guarantees to insurance companies?

And health care systems abroad range from the British NHS (like our VA) where all hospitals and doctors are part of the government system, to Canada (like our Medicare), where a national or provincial government pays private providers, to Germany, Switzerland, Japan etc., where private insurers pay private providers, but all are closely regulated like public utilities.

But all of this could come after you decide how to pay for it: increased FICA taxes, private premiums with government subsidies, etc., etc. Start with the money question before you debate coverage details.

 

[jhunter1163]

Why do you want to cover everything under the sun? That boosts costs for everyone, and insurance coverage of elective care reduces price competition. Why should completely optional services like Lasik or tummy tucks be covered by insurance?

Instead of starting from scratch, why not build on existing models? Medicare generally works pretty well and is well understood. Medicaid can work well if states fund it properly. Even good corporate health insurance generally works pretty well; the key issue is how to pay for the same coverage for everyone. Federal government workers can choose from a wide array of health plans, with varying options, premiums and deductibles.

And what, by the way, is wrong with the basic Obamacare model, with more generous subsidies to users and guarantees to insurance companies?

And health care systems abroad range from the British NHS (like our VA) where all hospitals and doctors are part of the government system, to Canada (like our Medicare), where a national or provincial government pays private providers, to Germany, Switzerland, Japan etc., where private insurers pay private providers, but all are closely regulated like public utilities.

But all of this could come after you decide how to pay for it: increased FICA taxes, private premiums with government subsidies, etc., etc. Start with the money question before you debate coverage details.

Fair questions. We want to cover everything in the interest of completeness; we intend this to be a true single-payor system, where people don't have to pay at all for medical services (beyond their premiums, that is.) Also, the plan does charge extra for those completely elective services; it's basically a voluntary tax to cover those things.

Medicare is, as you said, well understood, by far the largest health insurance plan in the country, and quite efficient. Medicaid also is a fairly efficiently run program. We have based our model on the concept of Medicare-for-all, with some expansions to cover things that are currently excluded. We're not trying to re-invent the wheel here, but we are trying to think in a different direction as far as coverage and provider reimbursement.

The problem with private commercial insurance (as well as the Obamacare exchanges) is spiraling cost. Health insurance premiums have more than doubled since 2001, while average deductibles have quadrupled in the same period. We're paying a lot more for a lot less coverage, and this model is not sustainable over the long run. We need to address the money question, yes, but also the coverage question and the access question.

 

[theprestige]

I might not have been clear earlier; the government will not be running healthcare itself, except for the VA and any expansion of that system needed to accommodate the national-service program. Most hospitals and medical facilities would still be privately owned, but would be paid by the government. So, yes, public and private facilities would be side-by-side.

A similar arrangement appears to have resulted in massive inflation of higher education costs in the US.

 

[theprestige]

And why is completeness a good goal?

 

[Bob001]

......
The problem with private commercial insurance (as well as the Obamacare exchanges) is spiraling cost. Health insurance premiums have more than doubled since 2001, while average deductibles have quadrupled in the same period. We're paying a lot more for a lot less coverage, and this model is not sustainable over the long run. We need to address the money question, yes, but also the coverage question and the access question.

Insurance companies are basically the middlemen. They are certainly profit-motivated, but rising health care costs are largely the result of opaque pricing by providers, particularly hospitals. Journalist Steven Brill got quite a lot of attention a couple years ago with a Time magazine report, later a book, about the complexity and irrationality of hospital charges. And pharmaceutical companies charge whatever they can get away with.
https://www.nytimes.com/2015/01/11/books/review/americas-bitter-pill-by-steven-brill.html
https://www.amazon.com/Americas-Bit...5241&sr=1-1&keywords=‘America’s+Bitter+Pill,’

No single-payer system in the world covers everything everybody could possibly want, nor should it. But they all do have tough controls on how much providers can charge for covered services. That's the place to start.

 

[Spock Jenkins]

It's a health insurance proposal; the government would not be in the business of providing health care, with the exception of the VA.

So you're suggesting a government approved monopoly on health insurance, essentially expanding the risk pool to include all U.S. citizens.

Meanwhile, hospitals and other medical offices continue to be private, but are told what they have to charge for services? I assume they also have to accept this coverage? Or are they able to opt out and be private pay only?

 

[Spock Jenkins]

I foresee a lot of, "Here's what we (the single payer entity) will reimburse for an x-ray."

With a medical office saying, "We would have to take a loss on providing x-ray services, so we will no longer be providing those."

I don't know if this is necessarily a bad thing.

Canada has 8.8 MRI machines per 1,000,000 people.
The US has 34.5 MRI machines per 1,000,000 people. No doubt part of our cost issues reflect under-utilized capacity. Idle machines don't pay for themselves. But it is nice to have a machine available when you need it.

 

[jhunter1163]

Insurance companies are basically the middlemen. They are certainly profit-motivated, but rising health care costs are largely the result of opaque pricing by providers, particularly hospitals. Journalist Steven Brill got quite a lot of attention a couple years ago with a Time magazine report, later a book, about the complexity and irrationality of hospital charges. And pharmaceutical companies charge whatever they can get away with.
https://www.nytimes.com/2015/01/11/books/review/americas-bitter-pill-by-steven-brill.html
https://www.amazon.com/Americas-Bit...5241&sr=1-1&keywords=‘America’s+Bitter+Pill,’

No single-payer system in the world covers everything everybody could possibly want, nor should it. But they all do have tough controls on how much providers can charge for covered services. That's the place to start.

While I don't disagree that hospital billing practices are ridiculously and unnecessarily complex (believe me, I know; dealing with this sort of thing is my day job), I feel I must point out that reimbursements to hospitals are dictated by the insurance companies. If you charge $100,000 to an insurance company for a cardiac procedure, and the insurer says "We'll give you $25,000 instead," the hospital gets $25,000 and is contractually barred from pursuing the patient for the balance. The horror stories regarding hospital billing arise from patients who are uninsured, who get the same bills that insured patients do. And you're correct about Big Pharma; the question is, how do we give patients relief from these skyrocketing prices without a) implementing price controls or b) cutting off the pipeline of new drugs?

 

[jhunter1163]

I foresee a lot of, "Here's what we (the single payer entity) will reimburse for an x-ray."

With a medical office saying, "We would have to take a loss on providing x-ray services, so we will no longer be providing those."

I don't know if this is necessarily a bad thing.

Canada has 8.8 MRI machines per 1,000,000 people.
The US has 34.5 MRI machines per 1,000,000 people. No doubt part of our cost issues reflect under-utilized capacity. Idle machines don't pay for themselves. But it is nice to have a machine available when you need it.

Probably not so much on x-rays, as that's a mature tech, but I could see, say, MRI and CAT scan providers grouping up to save money on overhead and equipment if reimbursements are reduced. And as you say, that might not be an entirely bad thing; a lot of these services come under the heading of defensive medicine (that is, services performed to protect the provider against allegations of malpractice by misdiagnosis or nondiagnosis).

 

[Bob001]

While I don't disagree that hospital billing practices are ridiculously and unnecessarily complex (believe me, I know; dealing with this sort of thing is my day job), I feel I must point out that reimbursements to hospitals are dictated by the insurance companies. If you charge $100,000 to an insurance company for a cardiac procedure, and the insurer says "We'll give you $25,000 instead," the hospital gets $25,000 and is contractually barred from pursuing the patient for the balance. The horror stories regarding hospital billing arise from patients who are uninsured, who get the same bills that insured patients do. And you're correct about Big Pharma; the question is, how do we give patients relief from these skyrocketing prices without a) implementing price controls or b) cutting off the pipeline of new drugs?

I don't think that's true. Uninsured patients -- and often insured patients who go outside their company's network -- can be billed the full retail cost of the services. In your example, the uninsured patients would be billed -- and ultimately sued -- for the full 100 grand. It would be a big step forward if providers were prohibited from charging uninsured people more than the standard Medicare reimbursement rate.

Of course, theoretically Obamacare -- properly executed and supported --would have eliminated the whole idea that anybody could be uninsured. But now we're going backward.

 

[Bob001]

Probably not so much on x-rays, as that's a mature tech, but I could see, say, MRI and CAT scan providers grouping up to save money on overhead and equipment if reimbursements are reduced. And as you say, that might not be an entirely bad thing; a lot of these services come under the heading of defensive medicine (that is, services performed to protect the provider against allegations of malpractice by misdiagnosis or nondiagnosis).

Free-standing MRI/CAT centers, dialysis centers etc. are big profit centers for their owners, who are often physician groups who refer their patients to their own businesses. They don't want to save money; they want to make money.

 

[Aber]

I don't think that's true. Uninsured patients -- and often insured patients who go outside their company's network -- can be billed the full retail cost of the services. In your example, the uninsured patients would be billed -- and ultimately sued -- for the full 100 grand. It would be a big step forward if providers were prohibited from charging uninsured people more than the standard Medicare reimbursement rate.

In medical services, full retail cost is what the market will bear, and seems unconnected with the actual costs in providing the services.

 

[Spock Jenkins]

Free-standing MRI/CAT centers, dialysis centers etc. are big profit centers for their owners, who are often physician groups who refer their patients to their own businesses. They don't want to save money; they want to make money.

While that's true today, I'm not sure how that would work under a single payer, assuming the single payer has the power to establish the reimbursement rate, and the provider is required to accept said coverage, and prohibited from pursuing the patient for the difference.

 

[Dumb All Over]

Would I have the option to opt out and not participate?