This past spring California’s Senate proposed a single-payer health care financing system. Gov. Jerry Brown was immediately skeptical.
“This is called ‘ignotum per ignotius.’ In other words, you take a problem and say, ‘I’m going to solve it by something that’s even a bigger problem,’ which makes no sense,” he said.
When the California Assembly speaker tabled the bill in July, single-payer advocates/protesters were not happy.
Their anger is understandable. A study by the Political Economy Research Institute at the University of Massachusetts Amherst projected that the bill could have reduced health care spending by $37.5 billion per year.
The savings supposedly will be realized through reduced administrative costs, reducing pharmaceutical reimbursement charges, and “a more rational fee structure for providers.” “More rational” usually means “reduced,” and that usually means primary care and mental health are the first in line to take it in the neck, given their limited negotiating leverage.
In addition, there would be no premiums, copays or deductibles. According to the study, people could get treated whenever and wherever they want. And money will be saved. This is like heaven.
Missing from the bill: A funding mechanism, among other things.
The theory of single-payer universal coverage has had its ups and downs. The last state that went down this path – Vermont – got a very rude financial awakening when the real numbers were toted up. According the Boston Globe, it would have “cost $4.3 billion in 2017, with Vermont taxpayers picking up $2.6 billion and the federal government covering the rest.” Vermont’s entire fiscal 2015 budget was about $4.9 billion, said the Globe, including federal pass-through dollars.
The governor who ran on this issue pulled the plug.
Gov. Brown may well do the same in California if a final bill reaches his desk next year, although some on the right think he should use the state as a proving ground that makes progressives to live with the consequences.
Given the paucity of other more-workable initiatives and the inability of Republicans in Congress to agree on much of anything, it may well be time to call the question once and for all.
It is true that a universal coverage single-payer system would save money right off the bat in some areas. Systemwide administrative costs indeed would be reduced. Commercial insurers as we know them would be eliminated, along with their varied operating expenses, procedures and the ever-present bureaucratic red tape.
Employers would be relieved entirely of providing health insurance as a benefit.
Providers would have but one set of procedures and rules to comply with and no copays to collect. While the savings from reduced admin expenses do represent real money of the one-time variety, it does nothing for the other 85 percent or so of the cost of coverage, namely, the claims expense.
As difficult as it is to digest, the only way to truly reduce health care costs substantially and in increasing amounts over time is to reduce claims expense. And to do that, either fees must be reduced or reductions must be had in the per-person rates of usage of services.
To reduce rates of service, the focus must be on the chronically ill and improving overall health. Over time, that approach will take increasingly large bites out of the cost of health care.
The California bill went in the opposite direction with its proclamation of no copays or deductibles, and the ability to get care wherever Californians want without restriction.
Still, it must be admitted that single-payer universal coverage is much simpler than the current system. Like education up to certain levels, it would become a right, funded wholly by tax dollars. But does that make it more palatable? We did that with Medicare and Medicaid for years, and the costs are now so huge, they cannot be buried.
So only partly tongue in cheek, I too invite California, home of so many other societal innovations, to take the plunge, adopt single-payer universal coverage and show the rest of the country how to do it. One way or the other, we will learn something … I hope.
James E. Purcell is the former CEO of Blue Cross & Blue Shield of Rhode Island. He is also an attorney and operates a national consulting practice on workplace wellness.
