Health Care Reform: Commercial Multi-Payer vs. Public Single-Payer Health Insurance

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Health Care Reform: Commercial Multi-Payer vs. Public Single-Payer Health Insurance

"Everybody does better when everyone is covered." (Photo: ufcw770/flickr/cc)

Washington health care “reform” has become one more vehicle for the continued 40-year wealth transfer upward. Recent Republican proposals offer $600 B in tax cuts for the wealthiest, paid for by $840 B in Medicaid cuts for the low-income. To Republicans, "freedom" means freedom from health care access.

Washington health reform proposals, including the Affordable Care Act, are built around the most costly, inefficient model – that is, multiple commercial insurances that drive wasteful complexity and high administrative costs. Commercial multi-payer health insurances rely on public subsidies to preserve private insurance profits. The private health insurance and pharmaceutical industries together siphon off tens of billions of public dollars annually, to boost their profits.

Commercial health insurers further protect their bottom line by increasing premiums, copays and deductibles, while limiting benefits and shrinking provider networks - thus shifting costs and risks to the insured. Health insurance middlemen practicing “Denial Management” deny and delay claims in order to cut costs and increase their profits, while greatly adding to billing costs for providers, who often are required to submit a single claim multiple times. The uncertainty leaves too many Americans one illness or accident away from financial disaster.

Public Single-Payer Insurance: A Boost for the Entire Economy

Dozens of studies over the past 30 years have demonstrated that a single national insurance – modeled on traditional Medicare - provides the most sustainable, comprehensive, universal health coverage. By covering everyone in one large risk pool, single-payer insurance can best leverage economies of scale to cut costs by negotiation of global budgets and bulk medicine rates.

Furthermore, single-payer insurance provides first-dollar coverage, eliminating copays and deductibles while reducing administrative costs, saving up to $500 billion annually – enough to cover the uninsured and fully cover the under-insured. Analysts estimate that another $150 billion would be saved by negotiation of bulk medicine rates by Medicare, as the VA now does.

At 18 percent of GDP in 2015 and growing, U.S. health costs average almost twice as much as other countries that all report better health outcomes. U.S. health spending is crowding out most other segments of the economy – including education, housing, infrastructure and pensions - and reducing consumer purchasing power and wages.

Properly done, single-insurance health reform could boost all segments of the U.S. economy, saving as much as $1 trillion annually in overall health spending, based on the experience of other countries whose health expenditures are almost half as much as that of the U.S. Businesses, state and local governments, and families would all realize savings. U.S. businesses would be more globally competitive, eliminating the high health costs that now inflate the price of U.S. goods, including thousands of dollars added to every U.S.-made car.

A traditional Medicare model insurance would relieve businesses of the time and cost of managing employee health plans. Jobs will be retained in the U.S. when high health costs no longer induce insurance companies and self-insured firms to use medical tourism to send patients abroad for medical procedures.

We have seen the benefits of increased Medicaid coverage in states like Colorado, where reduction of uncompensated care has stabilized rural economies, contributing to job growth and permitting hospitals and clinics to remain viable. The more sustainable, cost-efficient traditional Medicare model, improved and extended to all, would benefit everyone and be a boon to the entire economy.

Everybody does better when everyone is covered.

Contrary to political right narrative, Medicare is not "socialized medicine" – insurance by nature is "socialized." Only a Medicare model assures full choice of private or public providers; whereas, commercial insurers shrink their networks in order to cut costs, thus limiting provider access. Some assert that Medicare is “free,” nevertheless all working people invest in Medicare through payroll deductions. Like the Fire Department, all contribute according to their means in order to ensure health care is available when each of us needs it.

The government already underwrites 60 percent of all health costs, much of it to subsidize the insurance and pharmaceutical industries, while also partially or completely funding congressional, VA and public employee health coverage. An innovative proposal for consolidation of the health insurance industry would permit the federal government to “buy out” commercial health insurances, with a projected payback period of two years, a much shorter time than banks took to pay back their TARP loans during the great recession. Read U.S. Healthcare Financing Reform: The Consolidation of the Health Insurance Industry.

Michele Swenson

A former nurse, Michele Swenson has researched and written about the history of women’s health care, as well as religious fundamentalist and gun-centered ideologies. Her book Democracy Under Assault: TheoPolitics, Incivility and Violence on the Right is an in-depth examination of the fractured church-state divide, assaults on the independent judiciary, as well as resurgent 19th century science, socioeconomic Darwinism, corporatism, and Christian nativism. She is a member of the working committee of Health Care for All Colorado Foundation that created the proposal.

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