Second in a series.
Imagine a health insurance system with runaway costs, millions left without coverage, administrative headaches galore and unhealthier people than in many other countries spending less.
Actually, you don't have to bother imagining such a system. You're already living with it. And it's bankrupting our country.
Curing the ills of our health care delivery system is a topic that has been and will be addressed extensively by the editorial board. More specifically, health care "entitlements" are at the very heart of our nation's fiscal troubles, so they are a crucial factor in our financial recovery.
Medicare and Medicaid account for 23 percent of federal spending and cover more than 100 million Americans. But the problem is even larger, because government at all levels pays 45 percent of the nation's $2.6-trillion annual medical bill. Private spending is outlandish too, which also matters; money spent by individuals and companies on exorbitantly priced health care is money unavailable for investing in business, rebuilding bridges or paying off loans.
In general, compared with other rich countries, we spend perhaps $1 trillion a year too much on health care, a sum that would all but solve our fiscal troubles if it could be put to better uses. So applying the brakes to increases in public and private medical spending is critical -- especially because it doesn't buy us much. Thirty years ago, our health-care spending was in line with that of other advanced nations, but now we spend about twice as much proportionately -- nearly 18 percent of national output. Yet in countries that spend far less, people live longer. The cost burden on the unlucky in this country is particularly crushing; one study found that medical bills caused 62 percent of bankruptcies in 2007. The researchers said their findings show that "the U.S. health care financing system is broken."
It's a form of single-payer already
President Barack Obama spent enormous political capital to push a health-care plan through Congress, and it is designed expand coverage. Yet even if it survives legal challenges and unrelenting Republican opposition, it will still leave millions of people uncovered -- and do far too little to rein in costs.
The salient fact about health care in America is that we already have a single-payer system. That payer is you. You pay for your neighbors, they pay for you, and everyone pays for the uninsured, unless of course they simply die untreated. By its nature, after all, insurance collectivizes costs. Our system is also riddled with tax deductions, employer coverage and other cost-shifting features that effectively hide who's paying what and how much it really amounts to.
Overall, it's a recipe for out-of-control spending, which is just what it's given us. Indeed, in Australia, Britain, Japan and some other affluent countries, the sum spent here by government alone (on a per-person basis) would be enough to cover everybody without a dime of additional spending.
Once we acknowledge that we already have a single-payer system, we might as well go ahead and make it a sensible one. What would such a system look like?
First, it will have to change how health-care providers are compensated, so that they're paid for producing health rather than performing costly procedures. Second, it would have to turn back the tsunami of paperwork that threatens to inundate American health care in costs, errors and frustration. And third, it would have to cover everybody. Hospitals already have to treat any emergency patient -- they just pass the costs along to everyone else -- and universal coverage, according to a Harvard study, might prevent the deaths of nearly 45,000 Americans annually, which is more than die each year on U.S. roads.
It would also have to find ways to change behavior, since so much of what ails us -- obesity, for instance -- is self-inflicted. Since the health insurer would be the same outfit that makes the laws, the government would have strong incentives to abandon policies that make us less healthy and support ones that make us more so.
While we're at it, let's acknowledge that any sane single-payer system must ration care -- just as our current system does -- only based on science rather than affluence or insurance-company fiat. Today, a third of health-care resources are spent on patients in the last year of life, when it often does more harm than good. Ending some of this tragic waste will require a change in attitudes. But spending that money on hospices, prevention and coverage for the uninsured would be vastly more beneficial, both for the elderly and for everyone else. Hospice care, for example, can actually prolong life even while saving money.
Leverage to hold down costs
Most of all, a sensible single-payer system would be basic, providing decent care for all while allowing anyone with the money and inclination to buy a private add-on plan to upgrade coverage. Since people would pay for these plans from their own pockets, market forces should work to keep costs down. Such add-on coverage could pay for a private hospital room or procedures not covered by the basic government plan. But the cost of such extra coverage can't be tax-deductible, because that would encourage people to overspend and pass the bill to their fellow taxpayers.
A basic single-payer plan could mean Medicare for all, or it could just as well mean 50 single-payer programs in 50 state capitals. Vermont has already started building a single-payer plan that would pay health care providers a set fee to care for patients. Either way, the entity that increasingly pays our medical bills -- government -- would finally get the hammer it needs to tamp down costs. And the United States would finally have a prescription for solvency.
Coming up in the Balancing Act series:
TUESDAY, Nov. 15
Securing Social Security: Of the long-term problems threatening to explode spending, this is in many ways the easiest to fix.
WEDNESDAY, Nov. 16
Taxing and spending:
Imagining a fair and simple tax system for the nation.
THURSDAY, Nov. 17
Plugging the loopholes: Tax breaks are costing $1.1 trillion a year -- money that could help solve the nation's fiscal problems. But realistic tax reform could fix this.
FRIDAY, Nov. 18
Super solutions: Why the congressional supercommittee needs to cut entitlements and eliminate tax breaks.
SUNDAY, NOV. 20
What it means for you: There are no easy answers, but if all are willing to give up something, a lot can be gained, including a nation returned to solvency.