Republicans in Congress, and their backers, see health-care reform as one more way to get a tax cut for the wealthy. Since Obamacare is largely financed by a tax on unearned income and higher payroll taxes for high earners, they believe it has to go. Health-system reform for Republicans, then, is analogous to their tax reform proposals—not “reform” at all, but a bonanza for those who need it least.
Democrats are different. Most of us do actually want to provide universal health care. But as Harold Pollack makes clear in his interesting and detailed article, “Single-Payer Is not a Principle,” we are divided on how to do it. Obamacare increased access to health insurance by about 7 percent, but Obama himself admitted at a press conference in 2009 that the only way to achieve universal care is through a single-payer system (that is, a system financed by the government), and eight years later, nearly 30 million Americans remain uninsured. Many liberals nevertheless saw Obamacare as a step in the right direction. But others (I was one of them) saw it as a step in the wrong direction, because it provided the illusion of a fix to our dysfunctional health-care system, and might thereby delay a real solution. Although that illusion appears to finally be collapsing.
Pollack is wrong, I think, in seeing this disagreement as acrimonious. It was acrimonious in the context of the 2016 primary campaign between Hillary Clinton and Bernie Sanders, because acrimony is inherent in all political campaigns. But for many years, the disagreement has been largely genuine and civil. (Since my husband and I were on different sides, I can testify that it was anything but acrimonious.)
The fatal flaw in Obamacare is that it is inherently unsustainable. (Unfortunately, the Republicans are right that it is unraveling, but wrong about the reason, and certainly wrong that the solution is more market competition.) Obama made the mistake of trying to increase access to better health insurance without fundamentally altering the features of our health system that made it so expensive, inflationary, and inadequate in the first place. Thus he continued to rely on investor-owned insurance companies and even guaranteed them millions more customers, while he also relied on revenue-seeking providers, including hospital conglomerates (even if technically nonprofit), out-patient facilities, drug companies, and medical specialists paid to provide ever more and ever pricier tests and procedures.
The result is that we still don’t have a health-care system. Rather, what we have is a non-system, consisting of thousands of businesses operating more or less independently of one another, each seeking to expand revenues and profits, often by avoiding uninsured or otherwise costly patients. Not surprisingly, the United States has the highest and fastest-growing overhead costs in the world. As Obamacare poured more federal dollars into this fragmented market-based system, with no real constraints on prices, the inevitable consequence has been rapidly rising costs (after a brief respite during the financial crisis).
The health-care market also fails to deliver health care rationally. Instead of providing care according to medical need, it provides it according to the ability to pay. But the people who most need health care are usually the least able to pay for it (or to work for employers who will pay). This mismatch inevitably introduces inefficiencies and inequities, which have to be dealt with by government programs, or simply not at all. Obamacare sought to remedy this problem by expanding Medicaid and offering subsidies on the insurance exchanges.
To survive, any health-care system must be financially sustainable. If costs were no object, everyone could have all the health care they could possibly want. But costs are an object, and if they consistently outpace the inflation rate, something has to give.
And something is indeed giving. Even though about 90 percent of Americans now have health insurance, premiums are increasing rapidly, as are deductibles and co-payments, and benefit packages are shrinking. Employers who offer health insurance often cap their contributions so the effects of inflation fall on their workers. We’re witnessing a new phenomenon: Americans with health insurance who cannot afford to use it. In other words, we’re learning that health insurance is not the same as health care.
To my reading, Pollack minimizes the differences between our system and those, such as Switzerland and Germany, that have private insurance companies or multiple payers. In fact, the differences are profound. All the other OECD countries, whether they are single payer or multiple payer, have predominately nonprofit systems that are coordinated and regulated by the government. Everyone must be covered, and benefits and costs must be uniform. Government oversight in a nonprofit system makes all the difference. The United States spends over twice as much on health care as the average for the OECD countries, which still manage to include nearly everyone and have generally better health outcomes.
Any of the OECD systems would be an improvement over ours. I favor a true single-payer system (as in Scotland), because it would essentially mean an expansion of Medicare, for which we already have the basic administrative structure. Other systems would be virtually impossible to import to the United States, as well as less efficient. Setting up a German-style system, for example, would mean creating from scratch universal employment-based “sickness funds.”
Pollack acknowledges the limits of the Affordable Care Act, yet still favors incremental reforms to Obamacare and believes we liberals are just disagreeing about means to the same end. I wish that were so, but I don’t believe affordable universal care is achievable unless the means are explicitly designed to get there, and, as mentioned, incremental expansion of coverage within the same market-based system won’t do it. One much-discussed reform, for example, is to allow a buy-in to Medicare for people in their 50s. A buy-in, unfortunately, won’t work, because commercial insurance companies would market to the healthiest people, leaving the sickest to the public system, just as they have done with Medicare Advantage plans. So, in effect, the public would be subsidizing insurance companies.
Bernie Sanders has introduced a bill (Medicare for All) that would extend Medicare to everyone over a period of four years by progressively lowering the eligibility age and covering all children immediately. It would not be a buy-in. The government would assume the entire cost, and there would be no premiums, deductibles, or co-payments. Medicare is a single-payer system embedded within our larger commercial system, and it’s the most popular and efficient part of it. Unlike the private system, it doesn’t pick and choose which patients it will cover or for what medical conditions; everyone gets the same package of benefits.
But Medicare would have to be improved. Its out-of-pocket costs are significant and increasing. The major problem is that it uses the same profit-oriented providers as the larger system, so it’s vulnerable to the same perverse incentives to perform unnecessary tests and procedures. To fully realize the advantages of universal Medicare, we would have to convert to a non-profit provider system, as outlined by Adam Gaffney and colleagues last year in the American Journal of Public Health.
But what about the costs of Medicare for All? Wouldn’t they be prohibitive? As a matter of fact, they wouldn’t. Government already pays for about 65 percent of health-care costs, if we include Medicare, Medicaid, government employee plans, and employer-tax deductions. According to one detailed analysis, that would increase to about 80 percent with the Sanders plan. Although an earmarked increase in income taxes would be necessary to cover it, the increase would probably be entirely offset by the elimination of the soaring out-of-pocket costs—premiums, deductibles, and co-payments. Moreover, an income tax has the advantage of being progressive, unlike out-of-pocket costs. If both government and private expenditures are taken into account (the Congressional Budget Office considers only government expenditures), it’s likely that universal Medicare would initially cost no more than our current system, and over time, it would be increasingly cost-effective because of its greater efficiency and reduced inflationary incentives. We would come into line with other OECD countries.
In addition to costs, what are the other objections? The most common one is that single-payer reform is politically impossible. But given our current political environment, nothing progressive is politically possible—whether the incremental reform advocated by Pollack or Bernie’s Medicare for All. Nothing at all. So we might as well lay down a marker for what would actually work for a future time when the outlook is brighter. It is also said that Americans don’t like “big government.” But what they really object to is government that doesn’t serve their interests. When it does, as Social Security and Medicare do, they like government just fine. Pollack believes that the notion of single payer “frightens millions of Americans who are happy with their current coverage.” I’m skeptical about “happy,” although I grant that many insured Americans might fear that any reform (particularly at the moment) could be worse than what they already have. (Trumpcare springs to mind.) Still, I believe most Americans need to wonder whether their plan will adequately cover whatever illnesses befall them, and many are locked into a job because it is their only source of insurance.
Unlike Pollack, I believe the only solution is a single-payer non-profit system. Incremental changes should be explicitly directed toward that end (as Sanders does, with the four-year lead-in time). It is true that there would be some disruptions in our economy. In particular, there would be unemployment in our bloated health-care industry. But there would be economic gains, as well. Employers would no longer be saddled with health-care costs, since there would be no employment-based insurance. Businesses would then be more competitive globally, and they would be more likely to hire more workers, some of whom might be retrained health industry workers.
Pollack says “Single Payer is Not a Principle.” I disagree. Any decent society owes its citizens health care, just as it owes them police and fire protection. That is a principle. I believe only a single-payer, non-profit system will get us there and keep us there.