The Single Payer Option – Feasible or Not?

No country in the world spends more money per capita on healthcare than the United States.  Despite this, the quality of care delivered to the US population does not measure up to that of the OECD countries.  Higher quality, lower cost care delivered in these countries is, to a large extent, delivered by nationalized healthcare systems. The success of government run healthcare systems stems from their significantly lower overhead, the absence of a profit motive, and the ability to control prices for healthcare services, pharmaceuticals, and medical devices.

Government run, single payer systems are not without flaws. Long wait times for routine care is a frequent complaint in countries with national health systems.  Reliance on government agencies to make the best decisions for healthcare allocation requires a leap of faith.

Many in this country view the single payer option as the best solution for what ails us.  Vermont Governor Peter Shumlin spent four years investigating a single payer for his state but abandoned the project in Dec 2014 because the “risk of economic shock” was too great.  Colorado will have a referendum on the ballot this November to establish a single payer. Senator Bernie Sanders has made a single payer system one of the central policies of his campaign.

Despite the success of single payer systems in many countries, and the acceptance of this approach by many in this country, there are substantial obstacles to such a change:

  1. As long as Congress is beholden to special interests, it is not likely that a single-payer system can ever be adopted by the federal government. Consolidation of health insurance companies, hospital systems, and pharmaceutical companies is augmenting their control in Washington.
  1. Distrust of government would make the tax increase to cover healthcare less palatable to many than the costs associated with private health insurance.
  1. Our healthcare infrastructure is built on the current price structure where private insurers pay much higher fees than Medicare or Medicaid. These fees support the healthcare sector which is the fastest growing area of the economy and accounts for 12% of all jobs in the US. A drop in reimbursement to Medicare levels would have a huge impact on the stability of the healthcare job market and on the industries that contribute to it.  All told, this accounts for 18% of the GDP.
  1. The electronic medical record has brought about many positive changes for our healthcare system but at a substantial cost. Declining fees would likely delay or eliminate some of the progress that has been made.
  1. Basic coverage offered by a nationalized healthcare system will not include many costly procedures and medications, and may delay access for many services. The millions of Americans that have enjoyed easy access to the physician of their choice may find the national system much less satisfying. Of course, those with poor access or none at all would be greatly helped by a nationalized system.
  1. State efforts to convert to a single payer will have all of these obstacles. In addition, they will have to independently purchase pharmaceuticals and medical devices at fees that differ from the rest of the country, as well as attract workers at lower salaries than in neighboring states. These are unlikely scenarios.
  1. Healthcare pricing in the US supports healthcare industries that provide their products worldwide at lower costs. The pharmaceutical industry is the best example. Reducing prices in the US will likely cause increases around the world.

All told, it seems very unlikely that a nationalized healthcare system will take over in the US  any time soon.  Does this mean we are locked into our current high cost, low quality, low value healthcare system?  Are there other ways to decrease costs and improve quality?  There are 2 very different strategies on the table right now.  This will be the subject of my next post.