Multipayer Universal Healthcare: Why It Works

[SpartanDem]

I ran across this Kos post from 2007 that lays out a good case why the current proposal is good one, some have contended that what is being proposed is a compromise in itself since it is not single payer. But if a multipayer system can provide universal coverage and it does in many places is that really a compromise? I think too many progressives have tunnel vison when it comes to this issue. Maybe due in part to the unfamilerity of mutilpayer systems and more knowledge about the systems in Canada and the UK, it has become dogma for many on the left that single payer is the only option and that anything else is second class. I'd to see the left broaden its view in terms of what a sucessful universal health care system can look like.

What do prostitution, pot and private insurance have in common? They all coexist peacefully in the Netherlands. In legalizing prostitution, the Dutch also controlled it in a way that dramatically reduces the disease and violence associated with it in most nations, while allowing consenting adults the freedom to pay for sex and to get paid for it.

In regulating private health insurance and aligning its incentives with those of the people, the Dutch have managed to keep costs low, quality high, and give everyone coverage. And it isn't just the Dutch who do it. So do the Germans, the Swiss and other nations to one degree or another. Their costs are slightly above those of single-payer nations, on average, but they have fewer access problems (like wait lists for elective surgery).

So how do they do it, and why are so many on the left convinced it can't be done? And why do all the top tier Democratic candidates propose systems that are like those of Germany and Holland (multipayer) rather than England or Canada (single payer)? Despite the earnest arguments of good diarists like bonddad, I have come to tell you that you have nothing to fear from multipayer universal healthcare.

I'd argue that with what's been proposed these goal have been met.

The first wave universal healthcare system in the U.S. will expand, not shrink, private health insurance. You have nothing to fear from this, so long as a Democratic regime creates the system and a few simple rules are followed.

In a nutshell here are the rules, and why they matter:

1.All individual insurance is guaranteed issue: no insurer can turn you down for coverage based on pre-existing conditions, nor can it drop you once you get sick. When the insurer can't get drop you, it immediately has a much stronger incentive to take care of you. A stitch in time saves nine, and all that.

2.All individual insurance is community rated: insurers can't charge you 10x as much as your neighbor because you are 50 and have diabetes, whereas she is 25 and has no illness. Large risk pools are created so that the healthy subsidize the sick.

3.The cost of insurance is determined by ability to pay: the poorest get it for free, and lower income individuals have a sliding scale of subsidization.

4.Individual and/or employer mandates: if a substantial number opt out of the system, they are disproportionately likely to be healthy and/or poor. each group causes its own escalating problems if allowed to opt out, so this must be strongly discouraged by making it never to one's financial advantage to do so. Penalties must be higher than the cost of coverage for your income bracket (or firm size).

5.Universal, standard basic insurance package: this has the benefit of ensuring everyone has real health coverage and not crap insurance, and it also lets every provider know a large range of things that are going to be covered no matter what. It dramatically reduces bureaucratic complexity from what we have now, even if it isn't as simple as single-payer.

6.Some means of comparing and purchasing insurance options in a straightforward and transparent way: self-explanatory, I think. This was the national insurance exchange in Clinton's 94 plan, and is the Health Connector in Massachusetts' current system. Universal access to FEHBP fills that role in Clinton's new plan.

7.Some additional set of mechanisms for rewarding insurers for helping people to be healthy, but not for enrolling a disproportionate number of people who are already healthy: the idea is to discourage cherry picking, which is hard to do in a guaranteed issue system but possible, and encourage wellness and disease management activities on the part of insurers. There are several options here that I won't go into.

http://www.dailykos.com/story/2007/9/18/213620/164

[Sebastian Doyle]

1. Thom Hartmann addressed this subject the other day on his radio show

Yes there are countries where a mix of private and public systems works. But those countries also have laws that prevent health care from being a "for profit" industry.

That mix will not work in this country where corporations consider themselves "citizens" and can buy any deregulation they want.

[abluelady]

3. That is the Issue

Profit! As long as profit stays in health care, I believe you are right--corporations with their dollars will override the morality of the issue.

[SpartanDem]

5. That's not true

the Dutch has both for profit and non profit insurers and the same is true for hospitals. The Swiss system is similar

Health Care Around the World: Switzerland

Percent Insured. 99.5%. Does this mean a mandated system system would lead to universal coverage in the U.S? This is unlikely. In Switzerland, a mandate for auto insurance has nearly 100% compliance, but in the U.S. the auto insurance mandate’s compliance rate is only around 83%.

Funding. Insurance is purchased by individuals. Individuals generally must pay the full cost of premiums, but the government helps to finance insurance purchases for the poor. “These subsidies are designed to prevent any individual from having to pay more than 10 percent of income on insurance,” and one third of Swiss citizens receive this type of subsidy. Thus, the Swiss government only pays for 24.9% of health care costs (compared with 44.7% in the U.S.).

Private Insurance. All insurance is private insurance. However, insurance companies are mandated to offer the same “basic benefits package.” Some physicians operate outside the negotiated schedules and individuals are beginning to purchase supplemental insurance to cover the cost of these higher cost physicians. Some estimates claim that 40% of Swiss citizens have purchased supplemental insurance.


http://healthcare-economist.com/2008/04/23/health-care-around-the-world-switzerland/

[wildflower]

7. I didn't realize there was such a thing as nonprofit insurance

Thank you for your OP. It's good food for thought.

And I found this interesting: "When the insurer can't drop you, it immediately has a much stronger incentive to take care of you"

K&R.

[andym]

10. FYI, There are already non-profit insurers in the USA

For example, Blue Shield of California is a non-profit organization. However, their coverage and costs are only comparable to the for-profit insurers.

[MarjorieG]

11. At Obama's recent town hall, NC or VA, he used non-profit public option, the first time I'd heard it

Says everything you want to know about an option. Medicare seems an option we can't go, it seems, but this other staisfies the PR and content of it. However, success is in the details, and all insurance has to be tightly regulated.

[avaistheone1]

21. I prefer the single payer system.

It works well in more countries than the multipay system.

The U.S. health insurance industry has proven over and over again it can't be trusted.

[avaistheone1]

22. I heard the same thing on Thom's show.

Furthermore, in Switzerland primary care is handled by nonprofit insurers. People can elect if they want to purchase additional insurance over and above that from profit-making insurers. However, the primary care is in the hands of the non-profit insurance companies.

[pinto]

2. Interesting take. I've heard mention that Australia has a similar system,

but I'm admittedly unclear on the specs. Maybe an Australian DUer could chime in with some first hand info.

[inna]

4. for-profit insurance companies need to go, that's the most critical point.

multipayer or single-payer, we need universal health *care* (not health "insurance"), like every single industrilialized country in the world except us.

it's for-profit insurance "industry" that needs to be taken out of the equation, just like it was in many other countries.

[nightrain]

6. The Swiss also pay about 750 US$ per month --from Sick Around the World--Frontline show 2008

That's for family coverage.

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

watch the segment on Taiwan for single payer

[Cleita]

8. Here's the problem...the cost to the taxpayer and private citizen.

A single payer system can provide quality universal and comprehensive care for half of what multi-payer costs. Compare Canada's single payer system or our Medicare system to Massachusetts multi-payer system that also has mandates in place. Canada can deliver generous benefits for about $3,000 per person cost to the taxpayer with no extra costs to the patient like additional premiums, deductibles and copays or at least very few depending on the province. Medicare can do the same but still allows premiums for private insurance Medigap that plugs the deductibles and co-pays. Massachusetts system costs in round figures over $6,000 per person to the taxpayer and in addition there are premiums, deductibles and copays.

Years ago we discussed on DU the merits of offering Medicare to all out in the open market. Back then the thinking was that the insurers who advocate free market wouldn't be able to compete and would get out of the business paving the way for a true single payer, privately delivered universal health care system. Since it appears now that the privateer middle men insurers and big PhRMA are lying about their free market beliefs and aren't playing fair.

Okay screw meaningful reform, except pass legislation that the private insurance must cover everyone, 100% with no exceptions like deductibles and co-pays, no denials, no pre-existing conditions and everyone pays the same premium regardless of age or medical condition. Oh yes, demand that they become non-profit. Maybe that will get Wall Street out of the health care business once and for all, so that we can move on with real universal health care legislation that is best for the health care provider, the patient and the taxpayer's wallet.

[andym]

9. What would get wall street out is not demanding that they become non-profit

Just being non-profit doesn't guarantee that premiums will be reasonable and that overall costs be contained. For example, right now I have insurance through Blue Shield of California, which IS a non-profit insurer. But it seems to offer about the same insurance for the same cost as many of the for-profit insurers.

What needs to be done is to force by regulation that insurers charge create insurance plans that average together the real medical costs for an area per person (using the data gathered by the government for Medicare for procedures and visits to doctors) and then impose a certain reasonable percentage cap for overhead (say 5%) that is allowed to be passed on to the insured. No kickbacks would be allowed. An extensive list of required procedures for minimal coverage would be necessary.

That would chase out insurers who are in it for the large profits and leave those organization that are non-profit or are satisfied with a fairly small profit (if such a small cap even allows for that).

Then competition and capitalism could come into play-- the insurer with the smallest most efficient staff would make the most money, causing companies to reduce their own bloated overhead, etc. If they get their actual overhead cost to 3%, then they keep 2% as their profit.

[Cleita]

13. I don't think Blue Cross is really non-profit.

They have figured out how to profit from a non-profit like many so-called charities have.

[andym]

18. Non-profits can "profit" by turning large amounts of $$$ to their executives

Also, many Blue Shields/Crosses are really for-profit. At the federal level, they are all considered for-profit and must pay federal tax. it's only at the state levels that some Blue Cross/Shield are considered non-profits.

From wikipedia:

"Many plans are administered by not-for-profit organizations, while others are for-profit companies. (Though all Blue Cross Blue Shield plans must pay Federal income tax under the Tax Reform Act of 1986, some plans are still considered not-for-profit at the state level"

http://en.wikipedia.org/wiki/Blue_Cross_and_Blue_Shield_Association

[andym]

19. duplicate. deleted. nt.

[SpartanDem]

12. The Dutch actually spent less as percentage of GDP than Canada

9.4% in 2006 compared to 10% for the Canadians.


http://www.who.int/whosis/whostat/EN_WHS09_Table7.pdf

[Cleita]

14. It doesn't seem like a system that would work here.

Although it is apparently the system we will have shoved down our throats. For one I believe the Dutch still have jobs so they can pay for this mandatory insurance.

http://www.healthbeatblog.org/2008/06/whats-happening.html

<snip>

But make no mistake, the Dutch system is still, as van de Ven and Schut point out, very much “a work in progress.” One big question mark: how do you enforce the mandate that everyone buy insurance? The authors note that “although all Dutch citizens are legally obliged to buy basic health insurance coverage, in 2006 about 1.5 percent failed to do so.” The penalty for not having insurance is “130 percent of the premium over the period of not being insured, with a maximum of five years.” To enforce this penalty, the Dutch government compares insurance files with civil registration files to see who is missing. Then, “after identification, the uninsured will receive a warning notice. If they persist in being uninsured, a last-resort option is that some public authority will enroll them as insured with some insurer.”

Emanuel’s plan avoids this problem by simply giving every U.S. citizen a voucher that entitles them to insurance. No one has to buy insurance. (The voucher is funded by a VAT tax on all purchases.)

Another potential worry is that some people with insurance won’t pay their bills. In a system where insurers can’t refuse anyone coverage, they also can’t refuse deadbeats with a history of defaulting on their premiums. If I don’t pay my health care premium, my insurer can cancel my contract and bar me from enrollment in their plans for the next five years; but the next insurer I apply to can’t turn me away for my behavior. By law, it has to accept me—which means folks can systematically take insurance companies for a ride, if they’re so inclined.

According to van de Ven and Schut, “about 1.5 percent of the insured have not paid any premium in the past six months.” There is some concern that, as folks realize that they can get a free ride, more will do so. But right now, this is not a major problem.

More troubling is the possibility that, as the Dutch system grants private insurers more freedom to compete, (which it plans to do), insurers will have enough wiggle room to begin cherry-picking the healthiest patients—just as they do in the U.S.

You might think this is not possible in a system where insurers must offer insurance to everyone. But there are loopholes. Although Dutch insurers can’t reject risky individuals or charge them more for basic insurance, when it comes to supplementary insurance they can turn away customers, or boost premiums based on the applicant’s medical history.

That means that, while everyone may have basic insurance, the supplementary insurance market can break down along lines of healthy/unhealthy, as insurers offer discounts to less expensive (i.e. healthier) policy holders.(Dutch citizens are allowed to organize themselves into groups and negotiate for lower prices. The discounts that insurers can offer healthy groups are relatively open-ended).

The Health Insurance Act also gives private insurers more freedom to negotiate contracts with health care providers. Today the government still regulates most prices, but over time, it plans to ease up and allow a more open market where insurers have more power to negotiate with service providers.

Since this plan is still in the experimental stage, it seems premature to tout it as the solution to all health care woes.

[Cleita]

15. More about the Netherlands.

An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System

By Pauline Vaillancourt Rosenau, University of Texas, Houston, and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands
Journal of Health Politics, Policy and Law
December 6, 2008

The 2006 Enthoven-inspired Dutch health insurance reform, based on regulated competition with a mandate for individuals to purchase insurance, will interest U.S. policy makers who seek universal coverage. This ongoing experiment includes guaranteed issue, price competition for a standardized basic benefits package, community rating, sliding-scale income-based subsidies for patients, and risk equalization for insurers. Our assessment of the first two years is based on Dutch Central Bank statistics, national opinion polls, consumer surveys, and qualitative interviews with policy makers. The first lesson for the United States is that the new Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. Finally, policy makers should not underestimate the opposition from health care providers who define their profession as more than simply a job. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?

http://jhppl.dukejournals.org/cgi/content/abstract/33/6/1031



This from 2007

Mnistry of Health Welfare and Sport, The Netherlands
Newsitem, 10 May 2007

On 1 May 2006, some 241 thousand people in the Netherlands were not insured for the costs of medical care. This 1.5 percent of the Dutch population.

People with a foreign background are relatively more likely not to be insured than native Dutch people. Many families with children are also not insured for medical costs. The percentage of uninsured among benefit claimants on the other hand was relatively low, according to figures form Statistics Netherlands. The new figure of 241 thousand is higher than previously published estimate of 182 thousand on 5 July 2006. This is because a more accurate method was used.

More than 4 percent of people in the Netherlands with a foreign background did not have medial insurance, compared with less than 1 percent of native Dutch people. People from countries other than Turkey, Morocco, Suriname, the Netherlands Antilles and Aruba were more likely not to be insured. Moreover, the percentage of uninsured among first generation immigrants is four times as high as that among the second generation.

http://www.pnhp.org/news/2008/march/some_241_thousand_du.php

[Honeycombe8]

16. Would appreciate a definition of "multipayer universal healthcare system."

Just what do you mean by that? It's not a term commonly used, and I've never heard it before.

[SpartanDem]

17. As the name implies in a mutipayer system there are multiple payers

government, businesses typically your employer and you.

[Oregone]

20. Are there like 400+ private, for-profit payers?

Or just a handful of regulated non-profit providers?

In otherwords, is this all a moot point?