Can the US emulate single-payer health care?

Where I live in BC, the provincial government is doing its best to subtlely undermine public health care, rather than make the reforms countless commissions have recommended to make the system better. A full frontal assault is not possible due to the continuing popularity of a public model, but perhaps they think that if they mismanage the system enough and propagate falsehoods about the system’s “sustainability” they will change public opinion to do what they really want. In the meantime they are using the disasterous P3 model to build and allow for-profit facilities that are going to cost more to taxpayers.

And so I find it so ironic that good economists in the US, and the public are starting to get the benefits of the Canadian single-payer model. Here’s Krugman again, then an interesting piece on how ideology is holding Americans back from joining the rest of the industrialized world (hat tips to Mark Thoma):

A Healthy New Year, by Paul Krugman, Commentary, NY Times: The U.S. health care system is a scandal and a disgrace. But maybe, just maybe, 2007 will be the year we start the move toward universal coverage.

In 2005, almost 47 million Americans — including more than 8 million children — were uninsured, and many more had inadequate insurance.

Apologists … try to minimize the significance of these numbers. Many of the uninsured, asserted the 2004 Economic Report of the President, “remain uninsured as a matter of choice.”

And then you wake up. A scathing article in yesterday’s Los Angeles Times described how insurers refuse to cover anyone with even the slightest hint of a pre-existing condition. People have been denied insurance for reasons that range from childhood asthma to a “past bout of jock itch.”

Some say that we can’t afford universal health care… But every other advanced country somehow manages… Americans spend more on health care per person than anyone else… Yet we have the highest infant mortality and close to the lowest life expectancy of any wealthy nation. How do we do it?

Part of the answer is that our fragmented system has much higher administrative costs than … the rest of the advanced world. … In addition, insurers often refuse to pay for preventive care … because [the] long-run savings won’t necessarily redound to their benefit. And … we lag far behind … in the use of electronic medical records, which both reduce costs and save lives by preventing many medical errors. …

If it were up to me, we’d have a Medicare-like system for everyone, paid for by a dedicated tax that for most people would be less than they or their employers currently pay in insurance premiums. This would, at a stroke, cover the uninsured, greatly reduce administrative costs and make it much easier to work on preventive care. Such a system would leave people with the right to choose their own doctors, and with other choices as well…


Health Care Problem? Check the American Psyche, by Anna Bernasek, Economic View, NY Times: What is the most pressing problem facing the economy? A good case can be made for the developing health care crisis. … There is a solution, proven effective for hundreds of millions of people: single-payer health insurance.

[S]ingle-payer … calls for everyone to pay into one insurer, typically the government or a public agency. The insurer then pays doctors, pharmacists and hospitals at preset rates. Patients who want unapproved procedures and doctors not willing to accept the standard payment remain free to deal with one another directly, outside the system. …

There’s only one catch. Most Americans just don’t believe it can be done. The health care crisis may turn out to be more of a problem of ideology than economics.

The economic case for a single-payer system is surprisingly strong. … Countries with single-payer systems have long records of spending less on health care than the United States does. The United States spent an average of $6,102 a person on it in 2004, … while Canada spent $3,165 a person, France $3,159, Australia $3,120 and Britain just $2,508.

At the same time, life expectancy in the United States … was slightly lower than it was in those other countries in 2004, the latest year for which complete figures are available. And the United States had a higher rate of infant mortality.

To be sure, a single-payer system has plenty of critics. Unattractive features of some such systems, including waiting lists for particular types of care, are often highlighted by skeptics. But supporters note that the overall health of people fares well in those countries.

… The American system, based on multiple insurers, builds in more unnecessary costs. Duplicate processing of claims, large numbers of insurance products, complicated bill-paying systems and high marketing costs add up to huge administrative expenses. Then there’s an enormous amount of paperwork required of American doctors and hospitals that simply doesn’t exist in countries like Canada or Britain.“There’s little disagreement among economists today that a single-payer system would lead to lower administrative costs,” said Len Nichols, a health economist with the New America Foundation… But he said that estimates varied widely over how big the savings could be.

One of the first major studies to quantify administrative costs in the United States was published in August 2003 in The New England Journal of Medicine… It concluded that such costs accounted for 31 percent of all health care expenditures in the United States. More recently, in 2005, a study by the Lewin Group, a health care consulting firm … estimated that administrative costs consumed 20 percent of total health care expenditures nationwide. …

Health care costs tend to rise over time as new technology and procedures are introduced. Yet here, too, government-funded systems appear to help contain long-term costs. … Professor Anderson points out that in the 1960s, Canada and the United States spent roughly the same per person on health care. Some three decades later, though, Canada spent half as much as America. …

Economic studies also show that a government-funded system could reduce costs while providing coverage for everyone. … Despite … the economic benefits of a single-payer system, there’s one big stumbling block: many Americans don’t believe in it. They have heard horror stories from abroad, often spread by partisan advocates, focusing on worst-case examples. Such tales play upon the aversion of many Americans to government involvement in the economy. …

Update: Dean Baker jumps in:

Health Care Reform: Is the Obstacle Politics or Ignorance?

The New York Times had a column Sunday that pointed out that other wealthy countries have better health care outcomes than the United States, at a much lower per person cost. While the column included much useful information, it concluded that the main obstacle to reform in the United States is that the public does not have confidence in a government managed health care system.

I would suggest an alternative hypothesis — the vast majority of the public has no idea how inefficient the U.S. health care system is relative to the systems elsewhere in the world. I have been reading the NYT almost every day for more than 30 years; this is one of the few times I can recall any mention of the relative inefficiency of the U.S. health care system. On the rare occasions when the NYT talks about the health care system in another wealthy country (e.g. Canada, Sweden, England), the article is usually focused on the system’s problems, and generally implies that its demise is imminent. I would be very surprised if even 10 percent of the NYT’s readers knew that per person health care expenses in the U.S. are more than 60 percent higher than in Canada and more than twice as high as in England, and that both countries enjoy longer life expectanies.

Furthermore, the NYT has a policy of either ridiculing or ignoring politicians who propose reorganizing the U.S. system along the lines that have proven successful in other countries. Remember the extensive coverage given to 2004 Democratic presidential candidate Dennis Kucinich’s plan for a universal Medicare system? No one else does either. It was barely mentioned in the media. (e.g. This NYT piece includes just a sentence on the topic. This Washington Post article wrongly tells readers that Kucinich doesn’t say how he would pay for his proposal. A claim that could have been disproven with a quick trip to the candidate’s website.)

Of course most of the public is far less informed than regular readers of the NYT. That is why it is safe to assume that they have no idea how inefficient the U.S. health care system is by international standards. Before we follow this column and assert that the obstacle to health care reform is the “American psyche,” it would be nice to see the media make some serious efforts to inform the American public on the relative quality and cost of its health care system. It has failed badly in this task so far.

One comment

  • Look what’s happening to health care in Italy:

    Patients die as Sicilian mafia buys into the hospital service:

    Sicily has about 1,800 private health centres compared with 150 in the rich northern region of Lombardy, said Mr Forgione. Such clinics offer government-subsidised services in order to reduce the workload for public hospitals. “But that has diverted funds from public hospitals, which are falling into a state of disrepair,” he said. “Sicily is the first region in Italy for the financing of private health centres and the first for patient deaths.”

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