How do other countries afford universal health care? They regulate costs.

[Recursion]

That's it. That's the secret.

Single payer is not the secret, as witnessed by the fact that most industrialized countries don't actually use it (Canada has it; UK in a sense has it; Austria sort of has it; that's really about it).

Our allies have not found some secret financing bullet that makes health care affordable enough for everyone. Instead, they've done what in retrospect seems very very obvious: they've directly limited how much providers can charge.

That's the secret. That's really it. Every one of the countries we compare ourselves to has a board somewhere that sits down once a year and says "Lisinopril 10mg can cost 3 cents per dose. A leg MRI can cost $500. Perinatal care can cost $1200."

Having done that, they have nearly infinite freedom in deciding how to then finance it, e.g.:

Canada has each province run a single payer Medicare system

France covers 70% of costs and has the patient pay the remaining 30%

Germany, Switzerland, and the Netherlands mandate the purchase of private insurance

Scandinavian countries have the patient pay up to a deductible and then the town or district picks up the rest

Australia covers 75% of costs and has the patient pay the remaining 25%

Taiwan charges a copay for every treatment and mandates purchase of prescription drug insurance (it's not quite a mandate but I don't want to get too far into the weeds here)

etc.

There are as many ways to finance health care as there are countries. But financing it isn't the problem: the problem is the absurdly high costs we're paying in the first place.

"But what about those evil insurance company profits?"



That "overhead" wedge includes public insurance overhead and private insurance overhead and profit. Irritating, but clearly not the problem. That huge Pac Man devouring our health care spending is "services", mostly physicians and hospitals. That's the dragon we need to slay.

Now, before you say "but single payer will bring costs down!" It won't. We know this because for 20 years now everyone agrees that doctors have been overcharging Medicare and Medicaid by about 15%. And every year Congress fumes about it but refuses to stand up to the AMA. This is called the "doctor fix". For 20 years now we have let doctors overcharge Medicare and Medicaid by 15% and we haven't been able to use the indirect power of Medicare's spending to fix it. (And Orwellianly, we call the fact that we re-break it every two years a "fix".)

The only thing that will actually lower provider costs will be having a board that sits down and says "A leg MRI can only cost $500, for anyone, no matter how it's financed". We know this because it's what other countries have done. We know this because it's working right now in Maryland, which is the only state to see hospital costs going down right now, and the national leader in reducing health care costs in general. And, unsurprisingly, O'Malley is using his success in Maryland as the template for his national plan, which I urge you all to look at.

Get provider costs down and I don't care how we finance it. Hell, I'll even concede that once costs are down, single payer will probably be the most efficient way (at least if it's run at a state level). But how we finance health care won't matter as long as we're paying twice as much for everything as the rest of the industrialized world.

[kath]

1. Goddammit, if virtually every other developed nation on the planet can afford it, so can the U.S.

Period.
No two ways about it.

[Live and Learn]

2. K&R nt

[Turn CO Blue]

3. I recall a really nice win from the ACA would be a database of costs and safety records

for the top most common 300 procedures/services from every hospital and clinic in the major metro areas.

So that CONSUMERS could comparison shop which hospital to use for upcoming procedures, etc. based on success, safety record, available amenities and cost/fee breakdowns.

You can imagine why this has just disappeared...poof.

And yes, I understand that cost is not the ultimate factor (one surgeon may be brilliant and how can you put a cost on that, etc?) but the way they try to keep their prices so secret is ridiculous.

When we could finally compare car insurance rates - the consumer won, and customer service for claims has apparently improved.

[eridani]

4. Canada negotiates cost with hospitals, providers and drug companies

That kind of negotiation is an essential part of every single payer proposal.

[Recursion]

5. And *that*, not their financing model, is why it's so much cheaper

If I thought we could get that as part of Medicare for all I'd be for it in a second, but the history of the doctor fix suggests the opposite to me: the whole thing would become a huge cost sink.

[eridani]

6. Negotiating prices is a part of every single payer proposal here

The only reason to prefer Canadian financing is that Canada, like the US, has provinces which operate pretty independently of the federal government.

[Recursion]

7. Like I said, I don't really care about the financing; single payer is fine by me

What I want is the price controls, and something more firm than "oh it's in there". That needs to be the central part of the plan, like it is in O'Malley's. The financing will basically take care of itself at that point.

[pansypoo53219]

8. THEY control the medical industrial complex, Not the BLACKMAIL artists in PRIVATE insurance.

gimme you money for grandma's/mom's's/brother's life. CEO 'S MUST BE PAID!

[Recursion]

11. The insurance industry doesn't control our medical system. Hospitals do

If the insurance industry controlled it those pie charts would be reversed.

But, yeah, in the other industrialized countries the governments limit how much doctors and hospitals can make. A doctor in Germany starts at €50K and legally maxes out at €85K.

[JDPriestly]

9. So you have a link for this?

"We know this because for 20 years now everyone agrees that doctors have been overcharging Medicare and Medicaid by about 15%."

Doctors charge what they charge. Overcharging suggests they are charging more than the allowed or set price. What is meant by "overcharging"? And do you have a link stating that doctors are overcharging?

Or is that the familiar "fraud" claim? There have no doubt been cases of fraud, but that fact does not support a generalized claim that doctors and hospitals "overcharge"?

The claim that someone is overcharging suggests that there is a certain charge that is the correct charge. Who has decided how much hospitals and doctors should be charging in our system at this time?

I don't understand what you mean.

The point with single payer is that it does bring provider charges down because the system is much easier to work in, pay is more reliable, and doctors and hospitals don't get stuck trying to collect bills from people who cannot pay them.

[Recursion]

12. Here's a pretty good history of it

http://healthaffairs.org/blog/2015/04/14/may-the-era-of-medicares-doc-fix-1997-2015-rest-in-peace-now-what/

[JDPriestly]

10. I think that the point is that if we are going to bargain with care providers to control costs,

we are going to have to bring something to help them to the table.

A patient base that can pay for the procedures because all of them have valid insurance is a good thing to offer. More security in their work and that kind of paying patient base will bring costs down.

As it is, hospitals and doctors do not always collect their bills very easily or very quickly. That makes the costs rise. Also, if the primary care doctors, specialists and doctors in hospitals work together as they do in the Kaiser system, I should think that also brings costs down.

The idea of single payer insurance is that you take out the costs of profits and you make sure that all patients can pay and do not default on their bills. The bills are paid by a single source or several sources, but everyone is insured. That is very important. Even if a patient dies, that patient's bills are collectable.

And we need to cut down on the paperwork required of doctors and their offices. The doctors' and other medical personnel should be able to focus on providing care and not have to think so much about billing.

My dentist, for example, has technicians but also several people working in his office. The billing is complicated. He has all kinds of payment plans which means there are collection and enforcement strategies. All that adds to the cost of healthcare.

In Europe, doctors did not earn as much as they do here, but like everyone in Europe, they have a lot of government programs for which they are eligible as are all the other people -- like pre-school in the countries I lived in starting at 3 years old, free college in many countries. Their living costs may be lower than here. That means their incomes can be lower. It's a different kind of economy from the get-go. Single payer is a great way to move in that direction.

How do the incomes of medical personnel, especially doctors and hospital managers in Maryland compare to those of people in similar positions around the country?

[Recursion]

13. No, we don't. We need the government to set prices

They do it for all kinds of things. Health care should be one of them.

[JDPriestly]

19. What kinds of things does the government set prices for?

Do you think the government can prohibit people from practicing medicine if they charge too much?

And if the government only agrees to reimburse up to a certain charge per procedure, you get a result that is the equivalent of imposing surcharges or deductibles on people, and that discourages people from getting healthcare.

The government can set the charges to a certain extent but will eventually have to work with doctors to negotiate the prices. Sorry, I hear a lot about how single payer can't work in America. One thing that will not work in America is dictating prices to hospitals and caregivers. That won't last long.

It will be a matter of negotiation. And even with single payer, a few doctors will charge their own rates and go outside the system to charge more than the agreed rates. Even the single payer systems I used did not prohibit doctors from setting their rates if they worked outside the single payer system.

Some surgeons train for many years at low pay to gain the skill and knowledge they need for their work. They work for very low pay and delay the beginning of their careers. They invest huge amounts of money and time in acquiring their degrees and their expertise. They will always be very well paid. That's the incentive for the sacrifices they make to become doctors.

Do you know any doctors well? As friends or family, I mean? Have you discussed their pay, their education, their training, their lives, their stress with them?

Medicine is an unusual profession. People who become good doctors have to be exceptional in many, many ways. We put our lives in their hands. Doctors earn less than most CEOs and hedge fund managers, and that is a sad fact about our society.

[DanTex]

14. K&R. Good post. Single payer is not a silver bullet in cost control.

You're right, administrative expenses are only a small part of what makes our system more expensive. The largest part is that we simply pay more for care. And the thing is, there are no simple answers here either. Doctors get paid more here, that's true, but that's only a small part of the equation. Prescription drugs cost more here, but even if they didn't, we'd still be spending a lot more than other countries. Same with the malpractice argument.

There's an excellent series of blog entries exploring what makes the US System more expensive here:
http://theincidentaleconomist.com/wordpress/what-makes-the-us-health-care-system-so-expensive-introduction/

A quick summary is in this chart. The green part is what we would pay if our health care spending was in line with GDP vs other countries. The colors are where we overspend and by how much. The biggest chunk by far is outpatient care, and only a sliver of it is higher doctor salaries.

[Recursion]

16. Thanks! That's a really interesting blog (nt)

[boston bean]

15. During the 2010 mid terms when the tea party was raging

and Obamacare was a hot subject before passage, I went to a town hall meeting.

The meeting was held at a hospital and all of our congress critters were there to explain and answer questions.

Needless to say the tea party crazies and Larouchie's were there screaming their little hearts out. That wasn't suprising.

What was surprising was the how the hospital admin and doctors felt about Obamacare. They screened questions we all wrote on pieces of paper and they didn't pick one that was somewhat in favor. Also, they asked questions that showed their hands.

I knew right then and there that physicians were the obstacle to solving our healthcare issues. Sort of turned my stomach. These care givers were more concerned about their pocket book (which I can understand on one level), but never once in this meeting did they show concern for their patients. It was all about them.

[restorefreedom]

18. that is sickening

and why we need to untangle the incestuous profits in medicine. i have no problem with medical personnel making a good salary, but as long as there are profits to be made, the patient will never come first.

[mythology]

17. Thanks

This was a really good post.

The Netherlands with their mandated for private non-profit insurance has great health outcomes in terms of patient satisfaction.

[MaggieD]

20. Healthcare is 18% of our GDP

We don't make much here any longer, and our economy has become service based. Healthcare is the largest of our service based industries and it represents 18% of our GDP at this point.

So while I agree with your suggestion it is much easier said than done now, since so much of our economy relies on healthcare spending. People should have listened back when Bill and Hillary first tried to pass universal care. If they had we wouldn't have let costs get so out of control. It was 9% of GDP back then.

(Disclaimer: I do health care policy analysis and consulting for a living).