Sunday, August 28, 2011

Why the U.S. Isn't Ready for Single Payer Yet

Dr. Samuel Metz, an anesthesiologist in Oregon, has a letter in the August 27 New York Times arguing for a single payer system in the U.S. Several responses follow.

I wanted to write about the exchange especially for European friends I spoke with on a recent trip. They were universally puzzled - "how can it be that you in the States don't have health care for all?"

Dr. Metz is obviously correct. No sane society designing a system from scratch would create the cockeyed U.S. non-system. The hodge podge we have is a result of history (making health insurance an employment benefit during World War II) and theology (our faith in free markets even when experience tells us they don't work).

To help explain - to myself and others - why we in the U.S. are so resistant to doing the obvious right thing, here's one of the responses to Metz, with my comments interlaced in bold italics:
Dr. Metz’s call for single-payer national health care imposes costs on taxpayers rather than directly on those being served. Note the assumption that shared responsibility for health care is unjust. Would the writer do away with police, fire depart-ments and public education because they "impose costs on taxpayers" rather than "directly on those being served"? Patients are not charged more for services they value the most or are more costly to provide. If I want more costly clothes or a sports car, it's clear that I should be responsible for financing my own preferences. But if you get cancer, would it be right for me to say "the chemotherapy is costly, and you value it most, so you should pay for it yourself"? Extending the model of optional purchases to chemotherapy for cancer or appendectomy for appendicitis turns health care needs into consumer whims. But needs and whims are not the same! Tax bills simply rise in sync with something else like income, property or sales. Here the writer assumes the single payer is passive and helpless in relation to prices and service patterns. That's actually how our "free market" system behaves! Single payer systems, and other forms of universal coverage, are much more active in managing the cost trend than the invisible hand of the U.S. market is.

It takes no leap of faith to understand how this will affect demand for health care. Anyone who has dined at a fixed-cost food buffet knows the outcome of not directing price with food portions. Comparing medical care to "a fixed-cost food buffet" again shows the writer's underlying framework - health care is like hot dogs, a trivial matter of consumer whim. Patients who don't need chemotherapy or appendectomy don't ask for these services just because they're paid for, even if they do eat an extra hot dog at the buffet. And there's no reason that a single payer system couldn't apply value-based principles, with full coverage of needed services for which there are no alternatives, but partial or no coverage for low value services, or services that have less costly equivalents.

It is tempting to believe that government will fairly and efficiently make these choices for us, but experience suggests otherwise. The writer is flat-out wrong. Citizen satisfaction is significantly higher in countries with publicly financed universal coverage, and health outcomes are as good or better. He's revealing his theology - blind faith that governments are always bad/markets are always good. Dr. Metz appears to anticipate this problem given his suggestion that Congress’s power to tax is indisputable and so government will predictably raise taxes to pay for growing demand for health care.


San Luis Obispo, Calif., Aug. 25, 2011
The writer is a professor of economics at California Polytechnic State University, San Luis Obispo.
Professor Marlow is an accomplished scholar. The fact that such a well-informed person subscribes to the political and economic theology his letter evinces shows why the U.S., alas, is not yet ready to give serious consideration to publicly financed, not-for-profit health care. If Vermont's single payer program succeeds, that will chip away at our reflexive anti-government/anti-communitarian approach to the health system.

All kinds of economic interests - the "medical-industrial complex" - favor the status quo, but the faith-based beliefs Professor Marlow's letter exemplifies are the largest impediment to steering our system in the direction virtually every other developed country has taken.

In talking about U.S. health care theology with my European friends I quoted Schopenhauer: "As a serious conviction, it could be found only in a madhouse; as such it would then need not so much a refutation as a cure."


Anonymous said...


I’m a British person living and working in California. My wife works in medicine.

I agree that the US is not ready for a single pay system right now, and would like to add my reasoning. That reason being the social structure in general rather than just health care in isolation.

Take something as unrelated as traffic stops for speeding. In the UK, speed restrictions are often controlled by cameras. Issues with photo systems aside, the cameras in the UK are placed, with adequate warnings, near traffic danger spots. The position of the cameras is well known, well signposted and even available as an overlay on GPS systems.

Why make the camera systems so obvious? How can they catch speeders if their positions are well known? Because catching speeders is not the aim of the UK speed laws. Stopping speeding and thus, reducing accidents, is the primary motivation. After all, in a single payer system the same entity (government) that is collecting the traffic fines is also the same entity paying for the health care of those injured at accidents at the same spot. A single accident can cost the taxpayer more in medical care than the money earned in many fines. So from the “payer’ perspective, it makes sense to minimize accidents.

Compare that to the US, where traffic tickets are used to raise revenue for police departments. Cops regularly position themselves as not to be seen by approaching traffic, thereby able to catch more speeders. Stories abound of “quota’s” of tickets speed cops are supposed to write each month. Safety plays second fiddle to the need to raise revenue. The revenues raised by tickets go to the police departments, while the cost of accidents is borne by private insurance.

With a single payer system, there is an obvious conflict of interest in the public sector. To minimize the taxpayer expense caused by traffic accidents, policies that discourage accidents rather than profit from unsafe behavior need to be applied. That will reduce revenue. Funding patterns would have to change to promote a system that keeps the taxpayer costs down.

This is just one area where the infrastructure of the US is geared towards private rather than public services. Everything is outsourced. All possible costs are externalized. In such a structure, any attempt to “socialize” just results in a greater burden of costs going to the public sector while costs are paid for by the taxpayer.

Jim Sabin said...

Hi Harry -

Thank you for the very helpful comment. Your comparison of cameras in the UK to speed traps in the US is fascinating!

There's a chicken and egg problem here. We in the US often say "we're different - we're more individualistic - that's why our systems are so distinctive." But it could be the other way around - our systems may condition us to think about ourselves and not about our communities.

In the National Health Service, it's clear that if I as a physician waste money, I'm causing harm to your patients, since there's less to go around. But we in the US don't have a health care budget in the same way, so we're not "taught" that waste causes real harm and savings create real benefits.

I agree completely with your view that what we see in US health care is part of how we handle other aspects of social structure. But I would never have seen the way the US and UK handle speeding as a source of insight until you pointed it our!



Gadfly said...

The writers (well spoken and well informed)leave out the most obvious reason for America's health "system". Greed. Look at the obscene remuneration of health care executives. This is criminal.

beowulf said...

Actually the red light cameras are worse than that. They're a form of private rent seeking intended to "borrow" govt powers to provide guaranteed revenue streams to private companies (in other words, the "individual mandate" business model). A few states have done something about it, here's a 2006 story:

"The N.C. Court of Appeals undercut the automated traffic cops on Tuesday, ruling that the state constitution requires cities to give 90 percent of every ticket to local school systems.
That’s a problem for the cities, who pay most of the money they receive to the companies who operate the cameras. In Charlotte, for example, the contractor gets $35 from every $50 ticket issued by the city’s 22 red-light cameras."

Anonymous said...

The "well-informed" person to whom you respond is just evidence that it's awfully difficult to get people to understand when their paycheck depends on them not understanding.

Jim Sabin said...

Dear Gadfly and Beowulf -

Thank you for your comments.

I agree with Gadfly that greed is a significant factor in the U.S. economy, very much including the medical industrial complex. But as I said in my response to Harry, I think there's a chicken and egg problem here. Our system allows individuals to make huge incomes, at the same time that it keeps wages for hard working folks flat and refuses to tax the top earners at a fair level. There is indeed a lot of greed-motivated resistance to change, but I continue to believe that the "theology" I commented on is a major driver of our resistance to tax supported universal care.

Beowulf - there's much more going on with cameras and speeding than I was aware of. If I understood Harry correctly, in the UK the cameras are acting in a preventive manner - the aim is to reduce speeding and thereby reduce accidents. The story from Charlotte seems consistent with his point that we in the US use speeding as an opportunity for revenue, whether solely for the locality through speed traps or for the vendor as well as the locality as happened in Charlotte.

The bottom line, as you both point out, is that culture is a major shaper of how we structure our social institutions, and then those institutions contribute to shaping and stabilizing the culture. That's a recipe for paralysis, which is what we've seen in health care for several decades.

Again, thank you for your comments!



beowulf said...

And I'm sorry I missed Harry's initial point, he was talking about British speed cameras, and my mind immediately went to America red light cams, cognitive dissonance in action. :o)
So I will make another point related to what Harry said here?
"The position of the cameras is... even available as an overlay on GPS systems."

The US Air Force may have the worst marketing team in the world. How many people are aware there's a military unit in Colorado called "Space Command" that provides access to its (single payer!) satellite navigation system worldwide "free at point of service"? If it was Intel, they wouldn't let you forget that fact.

Anonymous said...


I believe you are correct, "rent seeking" is increasing as traditional investments are providing less income. With the Federal Reserve committed to Zero Interest Rate Policy until at least 2013, that is going to increase.

Unfortunately, I see the push for smaller government to make things worse. Not from the concept of smaller government, I'm all for that. What concerns me is where the cuts will come - not from the bloated areas that could be trimmed but from areas that protect the public.

Smaller government in areas such as the FDA and the EPA lead to more illness from food or environmental.

Again, a conflict between the aims of those reducing government spending and the ideals of a social healthcare system that would be publicly funded.

Norcal Steve said...

Hi, I'm a concerned lay person who found his way here from an economics blog (not sure exactly which blog linked to yours).
I'm concerned from general public policy interest and also personally (I'm early retired and not at all sure how i can continue to pay for insurance at 10% per year inflation rate on the premiums which are already $930/mo for 2). Thanks for your very interesting blog.

I don't have hard statistics but my understanding is that an extremely high pct of US system wide expense is spent on care for the final months of life of terminal patients. It seems to be ultra-rational to start trying to rationalize cost of those for whom we are paying the most for the least benefit, at least in terms of cost of treatment vs expected result, both expected improvement in quality of life and for how long the patient will live to enjoy any benefits

There is an ethical question in the above. On a more practical level, I understand that the system is very bad at managing end of life care even from the point of view of minimizing pain and suffering, i.e. even the people who would wish to just go home and not suffer extreme intervention often do get to make that choice.

Politically it infuriates me that even the first step towards both improving end-of-life treatment and managing costs, i.e. allowing payment to the M.D.'s for family end-of-life care consultation, got demagoged into 'death panels'. That shows as you also mentioned, how very screwed up our political system is.

Leaving aside the politics, I wonder if you agree that there is huge cost savings to be had while actually improving care by making massive intervention not be the default for very sick elderly patients.

There may be 2 parts to this. The ethically easy part is simply to do a better job of not doing extreme intervention on patients who would refuse it if they had the opportunity. The ethically difficult would be my thesis that if we cannot manage the costs of the system, the first place to rationalize would seem to me be to spend the money on those who have a long life ahead of them and do not spend a huge percentage of the total funds available on people who are very near end of life.

I would appreciate your comments.

Jim Sabin said...

Dear Beowulf, Harry and Steve -

Thank you for your valuable comments!

Re the exchange between Beowulf and Harry - thank you for introducing me to the "rent seeking" term - I understand the concept but had to turn to Wikipedia for understanding the term itself. What I take from your exchange is (1) as Beowulf points out, a non-commercial program like the "Space Command" site may not be leveraged for maximum benefit for potential users (this is a warning about the potential inefficiency of tax supported universal health coverage), but (2) as Harry points out, deficit reduction measures could result in worse population health and long term cost increases if unwise choices are made (this is a warning about the stupidity of our current political process).

An article in this week's New England Journal of Medicine on "Health Care Policy in an Age of Austerity" agrees with your concerns. It ends this way: "If we are to slow the rate of growth of health care costs and make both public and private insurance more affordable, dubious reforms like raising Medicare’s eligibility age and reducing the federal share of Medicaid will not suffice. The United States needs systemwide cost control, not budget gimmicks." Budget gimmicks are the politically easy way out. Systemwide cost control takes guts, something our national politics lacks.

Re the questions that Steve raises - I wish that more of the population reflected on the ethics of health care the way you do! We'd be in less of a mess if that were the case.

Your thoughts are totally on target. Anyone who has had a serious illness and looked at their insurance bills can spot wasteful interventions and ridiculously inflated prices immediately. I see the way to go as a two step process. There are huge savings that can be squeezed out of the health sector with either (a) no decrement in health outcomes or (b) improved health, through avoidance of harms that accrue from treatments that offer no benefits. Insofar as doing this doesn't achieve the cost control we need, the next step would be a rational political discussion of rationing. I agree with the rationing perspective you argue for, but we'd need a true national dialogue to establish the values that would guide our rationing priorities. This is what the state of Oregon has done in establishing its "prioritized list" of health care interventions.

You might like to browse in the posts under the "Medicare" and "Costs" tabs in my blog - over the years I've written a lot of short posts on the topics you bring up. Two posts that address the questions you raise are here and here.

Again - thank you for your comments!



Mark Elliot said...

I recall how Michael Moore's playful comparative documentary on health care systems (and philosophies) made a point by showing a UK hospital's 'cashier' window. It wasn't where one paid; the costs are covered. It's where some patients received a refund, the narration said. That puts a fine point on the differences.

Jim Sabin said...

Hi Mark -

Thanks for your comment!

I recently took a friend from abroad to a local emergency room. The care he received was excellent, but he and I were both impressed with the intense attention to insurance status and how the bill would be paid. The "wallet biopsy" is an unhappy component of medical visits.

The UK and Canada have to be just as attentive to the finances of the health system as we do. But the way we've done that - through our enormously complex and hard to understand insurance system, creates lots more administrative cost and can create an emotional barrier as well.