health care-is single payer best?

[luckyleftyme2]

I start my approach to health care from two very basic premises. First, health care must be recognized as a right, not a privilege. Every man, woman and child in our country should be able to access the health care they need regardless of their income. Second, we must create a national health care system that provides quality health care for all in the most cost-effective way possible. Tragically, the United States is failing in both areas.

It is unconscionable that in one of the most advanced nations in the world, there are nearly 50 million people who lack health insurance and millions more who have burdensome copayments and deductibles. In fact, some 45,000 Americans die each year because they do not get to a doctor when they should. In terms of life expectancy, infant mortality and other health outcomes, the United States lags behind almost every other advanced country.

Despite this unimpressive record, the U.S. spends almost twice as much per person on health care as any other nation. As a result of an incredibly wasteful, bureaucratic, profit-making and complicated system, the U.S. spends 17 percent of its gross domestic product --approximately $2.7 trillion annually -- on health care. While insurance companies, drug companies, private hospitals and medical equipment suppliers make huge profits, Americans spend more and get less for their health care dollars than people from any other nation.

What should the United States be doing to improve this abysmal situation? President Obama's Affordable Care Act is a start. It prevents insurance companies from denying patients coverage for pre-existing conditions, allows people up to age 26 to stay on their parents' insurance, sets minimum standards for what insurance must cover and helps lower-income Americans afford health insurance. When the marketplace exchanges open for enrollment on Tuesday, many Americans will find the premiums will be lower than the ones they're paying now. Others will find the coverage is much more comprehensive than their current plans. Most importantly, another 20 million Americans will receive health insurance. This is a modest step forward. But, if we are serious about providing quality care for all, much more needs to be done.

The only long-term solution to America's health care crisis is a single-payer national health care program. The good news is that, in fact, a large scale single-payer system already exists in the United States and its enrollees love it. It is called Medicare. Open to all Americans over 65 years of age, the program has been a resounding success since its introduction 48 years ago. Medicare should be expanded to cover all Americans.

Such a single-payer system would address one of the major deficiencies in the current system: the huge amount of money wasted on billing and administration. Hospitals and independent medical practices routinely employ more billing specialists than doctors, and that's not the end of it. Patients and their families spend an enormous amount of time and effort arguing with insurance companies and bill collectors over what is covered and what they owe. Drug companies and hospitals spend billions advertising their products and services. Creating a simple system with one payer covering all Americans would result in an enormous reduction in administrative expenses. We will be spending our money on health care and disease prevention, not on paper pushing and debt collection.

[lottopol]

1. The USA is the last holdout with market-priced medical

"...The USA is the last holdout with market-priced medical care not only because of any inherent conservative or free market ideology. Rather, as the wealthiest nation that ever existed we are the last ones who can afford it. Switzerland was one of the last advanced economies to abandon market-priced medical care. It is arguably a greater bastion of conservatism than the USA. Switzerland's women were not granted the right to vote until 1971.

During the debate as to whether Switzerland would abandon market-priced medical care there was considerable concern about how it would affect the major Swiss pharmaceutical giants such as Hoffmann-La Roche (RHHBY) and Novartis (NVS) which was Sandoz prior to the merger with Ciba in 1996. However, it was then realized that the Swiss pharmaceutical giants made much of their profits in the American market.

The reason that no nation, including the wealthiest can allow markets to set the prices of medical care indefinitely is that demand for medical care is inelastic. Demand for a good or service is inelastic if a percentage increase in price results in a smaller percentage decrease in the quantity demanded. Basic economics tells us that sellers facing inelastic demand will continuously raise prices until prices reach the elastic portion of the demand curve. Consequently in every developed country in the world, all goods or services with inelastic demand have their prices regulated by government. Medical care in the USA being the only exception.

Health care is one of the very few things for which the sellers face inelastic demand. The prices of all other goods and services facing inelastic demand in the USA are regulated by government. Retail electricity service providers face inelastic demand. Consequently, their prices are strictly controlled by all governments worldwide, including the USA.

The inelasticity of retail electricity is obvious. If Consolidated Edison (ED) or any other electric utility were to triple retail service prices, people might be a little more careful about turning off the lights. Turning off their refrigerators? Watching less television? Not likely. Thus, tripling the price would result in only a small reduction in kilowatt-hours sold. Almost all other goods and services are price elastic. That includes non-medically necessary elective cosmetic and lasik surgery whose prices have actually relatively decreased over time. Medical care in the USA is the only instance in any developed country where any product facing inelastic demand is not substantially price regulated.

Medical prices are controlled in various ways in the rest of the developed world. In Japan, the land of $100 melons and tiny $10,000 per month apartments, all medical care prices are listed in a book, thicker than the Manhattan telephone directory. The prices set in the book are usually less than a third of those in the USA. An MRI that costs $1,200 in the USA costs $88 in Japan. Japanese insurance companies are private as are most doctors. Japan spends less than a third per capita on medical care than America. However, the Japanese are greater consumers of medical care than Americans. They visit doctors and hospitals more often, have much more diagnostic tests such as MRIs. They also have better health outcomes as measured by all metrics such as life expectancy. They also wait less for treatment than Americans do as Japanese doctors work much longer hours for their much lower incomes.

Japan’s explicit price controls are roughly emulated in other countries via the use monopsonistic systems. Monopsony, meaning “single buyer” is the flip side of monopoly. A monopolist sets prices above free market equilibrium. A monopsonist sets prices below free market equilibrium. It does not matter if there is an actual single payer or many buyers (or payers) whose prices are set by the government or by insurance companies in collusion with each other. More competition among sellers generally leads to lower prices. However, more competition among buyers leads to higher prices. In the health insurance industry the beneficial effects of more insurance companies competing for patients are far outweighed by the adverse effects of insurance companies competing for doctors and hospitals in their HMO plans. This was completely misunderstood during the recent debate on health care reform. With health care, more competition among insurance companies on balance results in higher prices.

Focusing attention on the insurance companies, which are simply intermediaries between the doctors and the patients, was a tragic error. It would like trying to solve a problem of high energy prices by focusing on gasoline stations. Only if the government sets prices can health care prices be controlled. Controlling prices does not automatically result in longer waiting times. Japan and Switzerland generally have shorter waiting times to see doctors than does the USA. Additionally, if prices were controlled there would be no such thing as “in-network” or “out-of-network” since all doctors would accept all insurance plans.

Price inelasticity in medical care stems not from the physical nature of its delivery as is the case of retail electricity. Rather, it is the dynamics of how medical care is delivered via the patient –doctor relationship. How many people have ever negotiated with a doctor over the price before undergoing necessary treatment? Have you ever met anyone who got up off an examination table and walked out because the doctor quoted too high a price? In theory, sick people could shop for the lowest price, but they don’t. An individual gasoline station faces elastic demand. People must buy gasoline, but if one station raises its price enough, customers will go elsewhere. When an individual doctor increases fees, most customers don’t go elsewhere. Thus, fees will continue to rise until prices reach the elastic portion of the demand curve.

In the USA we have attempted to deal with the combination of inelastic demand and unregulated medical care prices in various ways. One method of keeping medical care expense as a percent of GDP to “only” double that of other developed countries was to have a significant portion of the population uninsured and denied medic care in some circumstances. Obamacare will reduce the number of uninsured and untreated. However admirable this may be from a humanitarian perspective, absent price controls, it will exacerbate the cost problem. The existence of large numbers of uninsured (conscripts in the war against rising medical costs) did moderate the growth in health care costs. Now the number of uninsured and untreated will be declining and uncontrolled prices will be rising.

HMO’s were once thought to be a way of dealing with the inexorable price increases. The problem is that HMOs have to compete against each other for services of doctors and hospitals. As long as medical prices are set by market forces, the inelasticity of demand will force market prices inexorably higher. In a “mixed system” with both free-market and controlled health care prices like the USA, prices inexorably are driven upwards to the market level as long as demand is inelastic. Prices such as payments from Medicare that are “controlled” have to be increased continuously with legislation such as the “doctor-fix” to stay competitive with market prices. Medical prices can only be effectively controlled either by direct price controls as in Japan or with systems where everyone gets care for “free” from the government (Canada, UK, France). In those countries only the extremely wealthy can chose not to use the government paid health services that they have already paid for with their taxes and patronize the relatively small market-priced sector. In those countries, forgoing the government priced system is not an option for almost all doctors, as it is in the USA..."
http://seekingalpha.com/article/1647632

[gopiscrap]

2. welcome to DU

[Enthusiast]

3. It isn't the money wasted on billing and administration.

It's the money wasted on advertising and profit.

[76Stifledfits]

4. Healthcare Q

Anyone on DU interested in helping me navigate MN insurance options?