Friday, August 11, 2006

Single Payer

Many people think that a single payer system would improve the cost and quality of medical care in America. I disagree. This topic was recently covered very well in a new book by Michael Porter and Elizabeth Teisberg, called Redefining Health Care, published by the Harvard University Press. (By the way, here is a review I recently wrote about the book. You have to register to read the review, but there is no fee to register.)

I think they make a persuasive argument that a government-controlled single payer system would inevitably face budgetary pressures and would shift costs to providers, suppliers, and patients, and would ultimately lead to rationing of services and a slowing down of innovation.I'm not saying the current US system is ideal, but at least it offers the possibility of competition among insurance companies and gives my hospital a chance to negotiate better reimbursement rates in return for offering higher quality and better value to consumers than my competitors provide.

What do you think?


Anonymous said...

I really don't know what to think. On one hand I agree with you, and don't think it would be better. On the other hand there has got to be something that will take care of everyone. Even with insurance the differences are amazing. I have a friend who had lung cancer, he had three anti-nausea meds. he was never really sick. However, two of them cost over $3,000 each!!!! His insurance covered everything, mine wouldn't, nor would many others. In a country that is allegedly all about equality, we are way off the mark in health care and I don't envy you or anyone dealing with it.

Anonymous said...

Really good points. From the hospital perspective, reimbursement payments set by legislative action can be very arbitrary and unpredictable. For example, we expect to get only about a 2% increase in Medicare rates this year, which is well below what it will cost us to deliver service to elderly people. This probably happened because the US government is facing lots of budget problems. Medicare accounts for about 1/3 of our business, so we have to make up the difference by what we charge private insurers and what we can obtain in donations from generous people. If the federal government paid for 100% of our business, we could not survive with such small rate increases, and there would be no private insurers to make up the difference.

Anonymous said...

John McDonough, on the Health Care for All blog,, wrote the following:

"Lots of single payer fans advance the idea that opposition to single payer only comes from the big bad health insurance industry and that’s why we don’t have it. Paul’s post bursts this balloon and makes clear something important – it’s not just insurers, it’s hospitals, physicians and other providers. Why? Because health care providers do better under our messed up, deregulated, market-based multi-payer and fractured system when they can play payers off each other, and make up losses from one by jacking up prices from others. Their worst nightmare – a single payer with real power to create financial accountability and budget discipline. Even more than the power of the insurance industry, that’s a key reason single payer is not on the horizon.

"A one payer or regulated multi-payer system – regardless of administrative savings – is anathema to providers. It’s refreshing to see Paul put it into words – more than a few hospital CEOs pay convenient and disingenuous lip service to single payer and they would run quickly in the other direction if faced with a real single payer plan and it’s budget constraints.

"Here’s the real reservation. Paul’s field of vision seems to end at Longwood and Brookline Aves. Yes it’s undoubtedly great for Beth Israel Deaconess and other hospitals that their revenues can grow at 2/3/4 times the rate of inflation. How sustainable is this? Is this good for society? Are we getting real value for these massive infusions of money?"

Here is what I answered:

"Well, I asked for criticism and am pleased to have it, but I think the commenter has it wrong. The current system is not great for BIDMC, by any means. We are lucky to make any operating margin at all in the current system, and we are intensely involved in looking for ways to make our hospital more efficient and deliver higher quality care. If you think that we don’t need budget discipline and financial accountability in the current environment, you are way off base. Further, part of our approach is to encourage low acuity patients, those who do not need high-level tertiary care, to be seen in community hospitals.

"Yes, when Medicare rates go up only 2%, well short of the inflationary pressures we face in supplies, pharamaceuticals, and salaries of nurses and rad techs, we try capture the shortfall from other insurers. And, it is a good thing they are there, or else we could never deliver the quality of care to Medicare recipients that they deserve and expect.

"That being said, the increase in healthcare costs is not, for the most part, a result of growth in hospital costs. It comes from the large increase in drug-related costs and from the greater utilization of out-patient procedures that didn’t exist years ago.

"As far as value delivered, please recall that the major advances in diagnosis and treatment of disease originate at academic medical centers like Beth Israel Deaconess. Payments for clinical care generally do not support that important research. It is supported by federal grants from the NIH and by philanthropy from generous people."

Feel free to join in, either here or there.

Anonymous said...

Does single payer work well anywhere???

Anonymous said...


I wonder if you could provide rough answers to the following two questions regarding the cost of running a large academic medical center like BIDMC:

1. What are the fixed costs per bed per day to just open the doors -- staff salaries and benefits, utilities, insurance, etc. before you do a single test or procedure or prescribe a single drug?

2. Roughly how much of the cost of services, tests and procedures done in a hospital setting as well as the drugs prescribed are attributable to defensive medicine and would likely not have been ordered if the litigation environment were more sensible (ie. specialized health courts to resolve medical disputes)?

Anonymous said...

I believe a single payer system has to be more equitable, more efficient and more affordable. Medicare is well run, has considerable cost sharing and the recipients are discerning consumers as well as largely satisfied customers. The automakers are visiting the president because the cost of health care impedes their ability to compete. It does not belong with employers. It is as fundamental as water, sanitation, and education. With multiple payers - there is too much redundancy, waste, - and too many big salaries.

Anonymous said...

Aren't we already rationing services?

Y tú qué amas said...

I'm a physician in Spain, and I can assure you that a State-ruled Health System has many advantages, but also disadvantages.
It is more equitative, so that everyone have access to health, but it is outstandingly burocratized and it is really slow-moving. It does inevitably face budgetary pressures and does shift costs to providers, suppliers, (but not patients, they are paid by the Government).
I do think a better system would be a mix. Equitative access to every patient, freedom of choosing hospital and doctor (in Spain we hardly have this), but may me a co-finance between public budgets and private paying.

Anonymous said...

Although the system in the U.S. is not perfect, competition is still the best motivator for providers. Equality was never the foundation of this country, freedom is. We do need a system that can assure necessary, emergent care to everyone; and we aren't that far from that. It would be a shame to see the government take over and ruin just one more area of the economy.