SINGLE-PAYER System is not the Answer

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A single-payer system—government-run healthcare for all—sounds like a noble ideal, but things quickly fall apart in the execution, according to its critics.

Michel Accad, MD, a cardiologist in San Francisco, says that because a single-payer system makes healthcare virtually free, "demand is almost unlimited," and the government has to set limits on what will be provided. Dr Accad writes a blog called "Alert & Oriented," which provides alternative views on healthcare systems.

Because the offer is so open-ended, Dr Accad says that single-payer systems in Canada, the United Kingdom, and other developed countries have to impose strict central planning. Rather than leave healthcare choices up to individual physicians, their patients, and free-market forces that could balance supply with demand, the government sets the rules.

These rules, Dr Accad says, are usually based on large quantities of data—comparing costs against probable outcomes—or on political considerations, such as the need to balance budgets without raising taxes. This approach, he says, will inevitably misallocate services. When central planning allocates care, there will be shortages of some services and gluts of other services. In particular, central planners will have a difficult time keeping up with cutting-edge technology and improvements in practice patterns.

Centralized systems also underpay physicians. "In a single-payer system," Dr Accad says, "planners decide arbitrarily what the payments should be, and payments fall because there are no competitors and no choice for providers to bid up payments."

Indeed, a 2011 study[1] found that reimbursements to US primary care physicians from public payers, such as Medicare and Medicaid, were 27% higher than in countries with universal coverage, and their reimbursements from private payers were 70% higher. Meanwhile, reimbursements to US specialists were 70% higher from public payers and 120% higher from private payers.

Lack of Competition Harms Doctors

Another disturbing aspect of a single-payer system is the lack of competition among payers, which would reduce physicians' control over standards of care and reimbursement.

In a pure single-payer system, doctors can only contract with the one payer available. Currently, in the United States, physicians have some choice of insurers to work with, and even in Medicare or Medicaid, doctors can opt out. But they couldn't do so in a pure single-payer system.

"Providers remain ostensibly independent, but the single payer exercises significant controls," such as determining what services are "necessary," wrote John McClaughry, founder of the Ethan Allen Institute, a free market think-tank in Montpelier, Vermont. The single payer is a "monopoly HMO," he added.

Critics say the single-payer program might start with acceptable reimbursement rates as a way to get physician buy-in, and then ratchet them down because there is no alternative. As Dr Accad has already pointed out, the single payer can reduce reimbursements with impunity, because it has a monopoly.

Rather than restrict choices further, opponents of a single-payer system want to open up choices in the current system. "We should strike down state barriers to insurers and allow their products to be sold nationally," says Jim Geddes, MD, a trauma surgeon near Denver.

Noah N. Chelliah, MD, a cardiologist in Grand Forks, North Dakota, agrees. "Auto insurance premiums are low because insurers had to compete with each other nationwide," he says. "The same could be done for health insurance."

"When physicians become essentially employees of the government, which is what happens in a single-payer system, then everything pretty much breaks down," Dr Geddes says. "Only physicians are the best position to determine the quality of care. We're the number-one patient advocates."

However, Dr Geddes does not believe that the United States would allow complete termination of commercial insurance. He thinks there would probably be private plans that people could purchase on their own, as is the case in the United Kingdom. However, "this would lead to a two-tiered system," he says. "I've seen it in the United Kingdom, and it's not what we should have here."

Waiting Lists in Canada

Canadian Medicare, administered by each province and funded through taxes, provides healthcare to all residents, with minimal out-of-pocket payments. Private healthcare is not allowed in Canada, so Canadians on long waiting lists have to go to the United States and other counties to get expeditious care.

Waiting lists are a familiar feature of single-payer systems, especially for higher-cost or cutting-edge healthcare. According to a report[2] by the Fraser Institute, an independent think-tank in British Columbia, Canada, the median waiting time to get treatment from a specialist has doubled in the past 20 years, to 18.2 weeks. Canadian patients wait the longest for orthopedic surgery (42.2 weeks), neurosurgery (31.2 weeks), and plastic surgery (27.1 weeks).

Dr Chelliah—whose North Dakota practice is 80 miles from the Canadian border—says that many Canadian patients on waiting lists come to him and other providers in the area for care. He thinks the waiting lists are intentional. "The way I see it, the Canadian system saves money by delaying care by rationing," he says. "The net result is that people die before they finally can get their care. I know that sounds provocative, but I think it's true."

A few years ago, he noticed that a Canadian friend of his was huffing and puffing and told him he needed to get a stress test. His Canadian family physician was initially reluctant to order one but finally agreed, and then it took 3 months to get the stress test done. Even though the results were strongly positive, the man wasn't scheduled for an angiogram until the following year. The angiogram found a 99% blockage, called a "widow-maker," and he finally got a stent. "This patient could easily have died," Dr Chelliah says.

Dr Accad pointed to a recent news report[3] from Canada, in which a leukemia patient had a bone marrow donor, but she couldn't get the transplant because there wasn't a hospital bed available for her. Though the problem sounds crazy, "patients in these systems tend to accept waiting lists," he said.

Quality Problems in the British System

In Great Britain, the National Health Service (NHS), operating separately in England, Scotland, and Wales, not only finances healthcare but also owns hospitals, physician practices, and the practices of other providers of care. However, about 10% of Britons have access to private facilities paid through private insurance.

Those who want to have expedited care buy private insurance. Dr Geddes recalls that his nephew had an anterior myocardial infarction while working in London. He was first transported to a nearby NHS hospital, but they didn't have a catheter lab to treat him, so he was sent to a catheter lab at a private hospital covered by his private insurance. "He probably would have died at an NHS hospital," Dr Geddes says.

Dr Geddes believes strict government controls and impossibly long waiting lists have created a fatalistic attitude among many British doctors, and this makes the waiting lists even longer. Many years ago, he traveled to the United Kingdom to watch a British surgeon operate. The surgery team showed up at 8:00 AM and had two cases for the day. "The first case took a little too long, and afterward we had a leisurely lunch," he says. "The second patient was an open-heart case and had already been prepped, but they decided they wouldn't have enough time." The operation was postponed. "In the United States, we would have gone ahead with the second case and just stayed late," Dr Geddes said.

Scandal at the VA: the US Version of British Healthcare

The unhurried attitude of his British colleagues reminded Dr Geddes of the time he spent as a resident at two hospitals in the Veterans Health Administration, which is part of the Department of Veterans Affairs (VA). "The VA medical staff has some good doctors, especially in VAs affiliated with universities," he says. "But as a general rule, the staff has shorter work hours. They are just punching a clock."

The VA system is as close as US healthcare comes to the British system. It operates 150 hospitals and almost 1400 outpatient clinics and provides care to 8.3 million veterans a year. Like the NHS, it also has waiting lists, which involved a scandal that rocked the VA in the spring of 2014 and caused the departures of the VA secretary and the system's top health official.

For years, the VA has set limits on how long its waiting lists can be, but the number of patients has been growing well beyond the system's capacity to deal with them. It turned out that many VA staffers were fudging waiting-list numbers so that they wouldn't exceed the limit. Dr Geddes wasn't surprised. "This is a subpar healthcare system," he says. "If we introduced a single-payer system in the United States, pretty soon it would look like the VA."

"A single-payer system is about control," Dr Geddes says. "It isn't about improving healthcare. There are many ways of doing that without involving the government. It's about the need to exercise control."

Vermont Abandons Its Single-Payer Dream

In the past few years, Vermont had been the darling of single-payer advocates. The state had been planning a system called Green Mountain Care since 2011. But suddenly, in December 2014, Governor Peter Shumlin announced that the effort would be abandoned owing to the cost.

Before the governor's announcement, Green Mountain Care was expected to make money. A 2011 report by an outside consultant predicted $590 million in savings in the first year. But to get those savings, state government would have had to take over all the operations of commercial insurers, without having any experience.

In the end, Green Mountain Care was slated to cost the state $4.3 billion in 2017—almost doubling Vermont's total budget of $4.9 billion for fiscal year 2015. This would have required a payroll tax of 11.5% and a 9% tax on income.

Vermont has not entirely given up on its single-payer dream. The state is now reportedly[4] planning all-payer rate setting, in which it would set payments for Medicare, Medicaid, and private payers. This would be done through a unique federal waiver from the Centers for Medicare & Medicaid Services (CMS), but the state has not yet formally applied for it. If CMS granted the waiver, Vermont would be able to exercise the price-setting controls of a single-payer system without the costs of actually running the whole system.

But for now, the dream is over. A single-payer system was never a realistic goal, says David J. Weissgold, MD, a retinal surgeon in South Burlington, Vermont. "The plan was naive and foolhardy," he says. "It's the kind of sweeping change that plays well politically. It has inspired a lot of people, but it's a fantasy, a kind of a dream state. I never thought it would work."

The advocates of a single-payer system refused to face the grim reality of actually running such a system, even though it was there for all to see just across the border in Canada, says John McClaughry.

Faced with rationing in Canada, Vermont single-payer advocates said it was simply caused by "stingy taxpayers," he says. When a Vermont single-payer physician debated a Canadian physician who listed the system's failures, her reply was, "We're Vermonters; we can make it work," McClaughry recalls.

McClaughry, a former advisor to President Reagan and Vermont legislator, says that single-payer is a fundamentally flawed concept, focusing on the need for healthcare rather than on true demand. "Demand, initiated by patients who may not understand what they really need, will be replaced by government-controlled allocation of services on the basis of what patients are determined to reasonably need," he wrote in a policy brief.

Waning Enthusiasm for Single-Payer

The VA scandal and the demise of the Vermont plan were not the only defeats for a single-payer system in 2014. Activists in Colorado failed to get enough signatures to get a single-payer measure on the November ballot. And in Massachusetts, Donald Berwick, MD, the former CMS administrator who ran for governor on a single-payer platform, won only 21% of the vote in the Democratic primary.

Even in Europe, the heart of the single-payer movement, the concept has encountered embarrassing defeats. In Sweden, owing to access problems in the country's single-payer system, about 10% of residents have opted for private health insurance, according to the trade group for Swedish private insurers. And in Switzerland, almost two thirds of voters rejected a single-payer proposal.

In the United States, public opinion has been shifting away from support of "healthcare for all" ever since the build-up to President Obama's Affordable Care Act (ACA). Gallup reports[5] that in 2000, 59% of Americans said the nation has a duty to provide healthcare for the poor. The number peaked in 2006 at 69%, but in polls since 2009, a slight majority of Americans oppose that responsibility.

Single-payer advocates are actually a subset of those calling for universal care, which includes advocates of multipayer approaches, such as the ACA. An April 2014 Rasmussen poll[6] found that 37% of eligible voters support a single-payer system.

Why Single Payer Is Still a Threat

Even though the single-payer movement has taken a beating recently, Dr Geddes doesn't think it's going to go away. He already sees many aspects of it in Medicare and Medicaid, which depend on central planning.

Dr Geddes says that just like a single-payer system, Medicare imposes arbitrary rules created through central planning. For example, Medicare dictates that certain patients have to be in the hospital for a certain number of days before they can be referred to a rehab hospital. Often, he says, patients can be transferred earlier, but they are forced to stay in a high-cost hospital bed. "The rules actually force doctors to waste resources," he says. "That's how a single-payer system operates."

Furthermore, Dr Geddes thinks the ACA will be just a temporary stop on the way to a single-payer system. Despite cost controls in the ACA, insurance premiums are rising significantly. He believes that health insurance will eventually become unaffordable, and the US public will rise up and call for abolishing private insurance and establishing a single-payer system.

That would be the wrong way to go, Dr Geddes says. "Our private healthcare system is working," he says "We have the finest healthcare system in the world, and it continues to get better."

Even as much of the rest of the world has embraced single-payer and other forms of government-controlled healthcare, such as price controls, they are completely dependent on medical advances created by the US system, he says. Advances in pharmaceuticals, medical equipment, and many surgical techniques come from the United States, where a free market encourages entrepreneurs, Dr Geddes says.

"The incentive is potential windfall profits," he says. "But if you take it away, the whole process of innovation will cease. No other country could take up the slack." Dr Geddes is a regent of the University of Colorado, whose state-of-the-art Anschutz Medical Campus hosts biotech firms financed by venture capital firms and others.

Even within the United States, he says, Medicare and Medicaid depend on the cost shift from private payers. "The only way physicians can afford to participate in Medicare is that they get higher payment from commercial insurers," Dr Geddes says. "Single-payer advocates talk about 'Medicare for all,' but if Medicare were standing alone, it would fall flat."

References

  1. Laugesen MJ, Glied SA. Higher fees paid to US physicians drive higher spending for physician services compared to other countries. Health Aff (Millwood). 2011;30:1647-1656. http://content.healthaffairs.org/content/30/9/1647 Accessed August 20, 2015.
  2. Barua B, Fathers F. Waiting your turn: wait times for health care in Canada, 2014 report. Fraser Institute. November 26, 2014. https://www.fraserinstitute.org/sites/default/files/waiting-your-turn-2014.pdf Accessed August 20, 2015.
  3. CTV News. Ont. teen facing unnecessary chemo due to bed shortage may soon get transplant. August 7, 2015. http://www.ctvnews.ca/health/ont-teen-facing-unnecessary-chemo-due-to-bed-shortage-may-soon-get-transplant-1.2507061 Accessed August 20, 2015.
  4. Goswami NP. State gets set to embark on health system overhaul. Rutland Herald. May 22, 2015. http://rutlandherald.com/article/20150522/NEWS03/705229878 Accessed August 20, 2015.
  5. Newport F. Majority say not gov't duty to provide healthcare for all. Gallup. November 20, 2014. http://www.gallup.com/poll/179501/majority-say-not-gov-duty-provide-healthcare.aspx Accessed August 20, 2015.
  6. Rasmussen Reports. 37% favor single-payer health care system. April 28, 2014. http://www.rasmussenreports.com/public_content/archive/health_care_update_archive/april_2014/37_favor_single_payer_health_care_system Accessed August 20, 2015.
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