Single-Payer Proposal Called ‘Politically Impractical’

Published October 1, 2003

A controversial socialized medicine proposal published in the August 12 issue of the Journal of the American Medical Association (JAMA) suggests the federal government should pay all health care bills for everyone living in the United States, effectively putting private insurers out of business and health care providers on the government payroll. The proposal makes no distinction between U.S. citizens and millions of undocumented immigrants.

The proposal’s sponsors, Physicians for a National Health Program (PNHP), claim the plan has attracted the signatures of 7,782 supporters, including hundreds of academics, medical school deans, thousands of practicing doctors, and medical students. The plan also is endorsed by former surgeons general Dr. David Satcher, who served under President Bill Clinton, and Dr. Julius Richmond, who served under President Jimmy Carter.

The American Medical Association (AMA), which publishes the journal, was quick to say it does not support the proposal. The insurance industry, which is often at odds with the AMA, also opposes the plan.

Dr. Donald J. Palmisano, president of the AMA, said the association “advocates a solution to the uninsured crisis that builds on the strengths of our current system. By implementing a single-payer system, the United States would be trading one problem for another.”

Organizations representing insurers also gave the plan a cold shoulder. Dr. Donald A. Young, president of the Health Insurance Association of America, said, “private insurance offers patients better quality care and greater control over health care decisions than the ‘one-size-fits-all proposal’ the doctors group put forward.”

The proposal comes as many of the 2004 Democratic Presidential candidates have made universal health care coverage a major focus of their campaigns. None of the leading Democratic candidates, however, has stepped forward to fully support the PNHP plan. Only Dennis Kucinich (D-Ohio), former Senator Carol Mosley Braun (D-Illinois), and civil rights activist Al Sharpton have endorsed anything like the PNHP proposal.

In a recent political debate in Philadelphia, Rep. Richard Gephardt (D-Missouri) responded to the plan saying, “The single-payer plan is politically impractical. Oregon voters last fall rejected a single-payer plan by a 4-1 ratio.”

Medicare for All

Dr. Quentin Young, a Chicago internist and cofounder of PNHP, and Dr. Steffie Woolhandler, an associate professor at the Harvard Medical School and primary care physician, co-authored the plan. Both were prominent during the failed attempt to pass former President Bill Clinton’s universal health care plan. Many of the supporters of the PNHP plan served on Hillary Clinton’s Health Care Task Force.

Woolhandler, an outspoken advocate of socialized medicine, wrote last year in the September issue of the Socialist View Point, “We pay the world’s highest health care taxes. But much of the money is squandered [on administration.] The wealthy get tax breaks. Every other developed nation has national health insurance.” Woolhandler also says, “Simply cutting administrative costs could yield $200 billion a year in savings, enough to cover the uninsured and upgrade coverage for Medicare beneficiaries.” (See “PNHP ‘Factless’ on Canadian Health Care,” page 6.)

Susan Pisano, a spokeswoman for the American Association of Health Plans, said it is unreasonable to think administrative costs could be reduced as much as the doctors’ group says, because many of those costs are imposed by the government.

Linda Gorman, senior fellow with the Independence Institute and director of the Rocky Mountain Center for Health Care Policy, questions Woolhandler’s statement as well.

“Market systems reward those who reduce costs by increasing their profits. Government systems offer no such incentive, with the result that single-payer health care is extraordinarily costly to run,” wrote Gorman in a January 13 essay.

“Wharton professor Patricia Danzon calculated that with all costs included, the overhead of the Canadian system is about 45 percent of claims,” Gorman noted. “Danzon’s estimate of overhead for U.S. private insurers, net of government cost shifting, was about 7.6 percent of claims.”

According to health actuary Mark Litow, Gorman continued, “Medicare and Medicaid spend about 27 cents on overhead for every dollar of benefits. Private insurers spend about 16 cents. In Oregon, a decade-long attempt to rationalize Medicaid spending by running it like a single-payer system succeeded only in reducing access and doubling spending.”

A Threat to Quality Care

The PNHP plan differs from Clinton’s 1993 initiative in that Clinton tried to avoid massive tax hikes by shifting the financial burden to employers in a mandate requiring all employers to provide health insurance.

The government’s role under the PNHP proposal, as in Canada’s health care system, would be to collect whatever additional taxes are needed to pay for universal health care. The arrangement is popularly known as “single-payer” because the government essentially becomes the insurance company, paying all health care bills. That responsibility is currently shared under the U.S. health care system by citizens, the government, and private businesses.

The PNHP proposal would attempt to control costs by setting a national or global budget, rationing money to hospitals for day-to-day operations and major expansions, rationing payments for nursing homes, rationing in-home services for the elderly, and implementing a national prescription drug formulary identifying the only “approved” drugs for which the government would pay.

Gorman warns the single-payer approach seriously threatens the quality of health care and positive medical outcomes that currently set U.S. health care apart from the rest of the world.

“The poor performance of single-payer systems can be seen in cancer mortality ratios, the death rate divided by the incidence of disease,” she writes. “For breast cancer, the U.S. mortality ratio is 25 percent. In Canada and Australia it is 28 percent, in Germany it is 31 percent, in France it is 35 percent, and in New Zealand and the United Kingdom it is 46 percent. For prostate cancer, the U.S. mortality ratio is 19 percent. In Canada it is 25 percent, in New Zealand it is 30 percent, in Australia it is 35 percent, in Germany it is 44 percent, in France it is 49 percent, and in the United Kingdom it is 57 percent.”

While most hospitals and clinics would remain privately owned and operated under the PNHP plan, the federal health care bureaucracy would control the purse-strings, setting a monthly budget for the facilities’ operating costs and paying them no more than that budget. Investor-owned facilities would be converted to non-profit status. Private insurance companies would essentially be eliminated.

One Size Fits No One

Merrill Matthews, director of the Council for Affordable Health Insurance (CAHI), expressed dismay at the PNHP’s inability to distinguish between dreams and reality.

“I can understand their desire to provide health care for everyone–that’s why they keep proposing this idea,” Matthews said. “What I can’t understand is why these doctors think a single-payer system achieves that goal. Every country that has enacted a single-payer health care system is in far worse shape than the United States. No government can provide all the care that everyone can effectively use.”

Matthews also noted, “When you politicize health care dollars, health care has to compete with other valid claims for government funds, such as education, welfare and defense. There is never enough money to go around.”

Greg Scandlen, director of the Center for Consumer Driven Health Care at the Galen Institute, agreed with Matthews’ assessment, noting “countries that adopted the approach are racing to change it.” And while Americans are registering discontent with the health care status quo, Scandlen points to surveys by Dr. Robert Blendon of Harvard University that show a similar level of discontent among the people of Canada, the UK, Australia, and New Zealand.

“Popular support [for single-payer health care] in Canada has plunged in the past 10 years. These countries now see that a single-payer approach leads to rationed care, high rates of taxation, and the virtual banishment of new technology and innovation. It is time for single-payer advocates to join the twenty-first century and support empowering consumers instead of relying on command-and-control bureaucrats to make decisions for Americans.”

Dr. Donald Palmisano, AMA’s president, sums up the PNHP plan as one that “… would lead to long lines, an even thicker health-care bureaucracy, and a slowness to adopt new technologies and maintain facilities.”

Pisano warned against turning health care over to the government, emphasizing the essential role the private sector plays in health care. “Private industry, not the government, has led the way in adopting disease management programs and prescription drug coverage. Innovation almost always begins in the private sector. It is very difficult for the government to innovate and change with changing times.”

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].