Playing chicken: Health care costs vs. Single payer

Turn to page A6 in today’s Wall Street Journal “Overhauling Health Care” and I bet you’ll come to the same conclusion as me: there’s no place to hide from health care costs.

Democrats Turn Up the Heat on Insurance Industry announces a proposal to levy $100 billion in new fees on health insurers. Who will ultimately pay for that, if not the companies and individuals that purchase health care?

Businesses Worry About New Burdens describes concerns companies have about health reform bills moving through Congress. Even those that support reform and employer mandates are worried that there isn’t sufficient attention being paid to cost reduction. They should be worried.

Squeeze for Some in Middle Class describes “this funny dilemma where [middle class people] can’t afford health care, but they have to pay a fine.” Subsidies may be available for individuals earning up to $43,000 per year and families making as much as $88,000, but since health insurance premiums (never mind out of pocket expenses) for a family of four in my area are about $15,000 per year and rising fast, that’s a big burden even for people with incomes that are substantially higher. Of course everyone who pays taxes or works is already paying into Medicare through FICA and through general taxation and deficit spending.

I don’t agree with ‘Exchanges’ Factor Deserves Attention, which says the issue isn’t so much whether or not there’s a public plan, but how health insurance exchanges work. Actually I’m more and more convinced that the big issue is whether there’s a public plan or not. The reason is that if we move to near-universal coverage –which seems to be happening– but fail to address costs –which also seems to be the case– the existence of a public plan will make it easier to switch to a single payer system.

Although it seems we’re very far from single payer right now, I predict it will be part of mainstream discussion by the next general election cycle if we stay on the current trajectory.

July 16, 2009

One thought on “Playing chicken: Health care costs vs. Single payer”

  1. Re: Healthcare cost debate or “heist of the millennium”

    Dear Sir or Madam,
    It troubles me when I hear endless discussions about little things that don’t really matter that much while avoiding the most fundamental problem.
    Here is what I think it is:
    It is a well known fact that At 16+% of GDP or 2.2 trillion dollars per year American healthcare costs twice as much as healthcare in any other developed country, while the outcomes (morbidity and mortality) are worse and 15% of the population (45 million) is not covered. Unfortunately the debate at this point focuses only on the 45 million people that are not covered and how to find even more money to cover them. In addition an argument is frequently made that American healthcare is the best in the world, without any evidence to prove it, and thus needs to be preserved. At the end of the discussion a passing reference is usually made to the need to do something about the rising costs.
    What about the costs that are already there?
    Unfortunately, not a single person said this – by doing simple arithmetic, based on the above facts, one can easily arrive at the following – If this extra 8% of GDP isn’t producing any improvement in the health of this nation, then it is a WASTE?
    In other terms, more than 1 trillion dollars per year goes to the “Medical industrial complex” without producing any benefit for the country. Clearly this amounts to massive and systematic wealth transfer, comparable to the Wall Street deeds over the last few years. This astronomical amount of waste exceeds the GDP of the most countries in the world. And there is nothing to show for it.
    So this trillion dollars is either stolen or wasted every year and it is rising at the rate of 12-15%per year.
    Who pays for it? We, the taxpayers, through lower wages, higher taxes and insurance premiums.
    Some of this extra $1trillion/yr cost is illegal (like overbilling, etc), some is borderline, although should be illegal (like price fixing by the providers in the particular part of the country), some has to do with plain mismanagement, but most of it is probably legal and done “by commission or by omission”. In other words, it had to be intentionally designed into the system.
    This system is designed to “be best at being the most expensive”. One can only imagine the amount of influence the stakeholders on a receiving side can afford to buy with just 5 percent of this extra trillion dollars per year.
    One can also imagine that if this waste were to be eliminated, assuming that the government had the courage to do it (and no one else can even try to handle this task), the savings to the economy would be sufficient not only to cover the 45 million people (this would cost less than 100 billion dollars per year), but also, enough to rebuild the whole American industrial and transport infrastructure within just a few years.
    If so, then the whole different set of issues has to be discussed:
    1. Why is this 1 trillion dollars continues to be wasted? Why is this allowed to go on? How do we as a nation get our 1 trillion dollars/year back?
    2. Who are the main beneficiaries of this 1 trillion/yr of national wealth transfer and who allowed them to do this to us? Where specifically is all this money going, to whom?
    3. Why do the lawmakers, the law enforcement, federal and state governments allows this to go on? Who and why allowed this to happen?
    4. how do we get the healthcare cost down to 8% of GDP? How and when will this nation get its 1 trillion dollars/year back
    5. Who will be responsible to stop this “heist of the millennium”?

    Even Pres. Obama hinted in one of his earlier speeches that this problem is so bad that it might bring this country to bankruptcy (and as such is a matter of national security).

    Unless we address these issues, rather than talk around them, we don’t stand a chance as a nation.

    The Honest Doctor

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