By PHILIP KOTLER – We have had “Obamacare” and now the Republicans have fallen short in replacing it with “Ryancare” (a.k.a. “Trumpcare”). Both plans have their unforgiving and deep critics and enemies.
I think that it is time to adopt the healthcare system that Canada and most other nations have: a single-payer healthcare system.
A single-payer healthcare system will be simpler, more efficient, involve less cost, and satisfy more consumers. Let’s recognize that today’s U.S. healthcare system is a compromise between the Democrats wish to expand healthcare coverage to more citizens and the Republicans wish to work with private insurance companies that compete by offering different plans.
Let’s first examine the criticisms of Obamacare and then the criticisms of the Republican proposal – “Ryancare” – and finally see what a single-payer healthcare system offers.
What about Obamacare?
“Obamacare” is the political name given by Republicans to the healthcare plan passed by Congress and signed by President Barack Obama in March 23, 2010. The technical name is the Patient Protection and Affordable Care Act but for short, it is called the Affordable Care Act (ACA).
The ACA sought to correct many problems of the previous “free enterprise” health care system. Here are the problems:
1. About 45 million Americans lacked health insurance coverage. Such persons would have pay their own full medical bill out of their income or rely largely on the emergency room services of local hospitals.
2. Health insurance companies did not have to accept applicants, especially if they had a health problem.
3. Health insurance companies could terminate AIDS patients and many insured persons complained about poor service from the insurance companies.
4. Health care coverage and service varied greatly from area to area. Many rural areas had only one or two health insurance providers.
5. Many patients experienced high and rising costs of health insurance and resented the limits placed on their choice of physicians and procedures.
6. Patients complained about the high prices for medications that were cheaper in many countries.
7. Physicians were unhappy because of falling remuneration, restrictions on their freedom to choose procedures and the high cost of malpractice insurance in an overly litigious society.
8. Employers were unhappy because their medical premiums kept rising.
9. Hospitals faced rising costs of new technology that rapidly needed to be replaced by still newer technology.
Clearly most people and many stakeholders were dissatisfied with the quality, access, and cost of our “free enterprise” healthcare system. Many people argued that health care was a right, not a privilege and that new legislation was needed.
The Obama plan (ACA) set three aims: (1) to increase health insurance quality and affordability, (2) lower the number of uninsured people, and (3) reduce the costs of healthcare. To accomplish this, the ACA set up mandates, subsidies and insurance exchanges. The mandate was the requirement that all persons and families needed to buy insurance coverage. It their income was too low to afford the insurance, they would receive subsidies. Those who could afford to buy insurance coverage but didn’t buy it would pay a fine.
The ACA required all insurers to accept all applicants, cover a specific list of conditions and charge the same rates regardless of pre-existing conditions or sex.
To the great credit of ACA, another 20 to 24 million additional persons had coverage by 2016.
Conservatives criticized the requirement that all eligible people had to buy health insurance. Freedom lovers thought this was unconstitutional, ignoring that all citizens who want to drive a car must buy auto insurance. The requirement was essential if the government was to collect enough money to cover the cost of everyone having healthcare insurance.
Republicans used all their power to drumbeat that Obamacare was a failure. They focused on healthy, financially secure 25-year-olds who were forced to buy health insurance when they had so many other needs they wanted to satisfy. Republicans refused to recognize that this was necessary to make it possible to insure older and lower income people, something these people would appreciate later in life if they fell into the same lack of funds. Ryan proclaimed: “The idea of Obamacare is … that the people who are healthy pay for the people who are sick,” He added. “It’s not working, and that’s why it’s in a death spiral.”
Another criticism was that President Obama promised that no one would have to change his or her present insurance or doctor relationship. Yet about 5 percent of the population found that they had to change their health plan. But 80 percent who got health care through their companies did not have to change their health plan.
There were other critics. Rich people had to pay higher taxes to fund the subsidies. Many hospitals and doctors faced lower earnings as the law tightened up on unnecessary care.
How About ”Ryancare”? (also called “Trumpcare”)
When the Republicans came to power with Donald Trump’s election in 2016, GOP House Representative Paul D. Ryan had his opportunity to kill Obamacare with an entirely different plan for healthcare delivery. Ryan wanted a healthcare system that would provide full choice and individual responsibility for one’s healthcare. Citizens would establish healthcare savings plans and build up enough savings to meet their ordinary medical needs. Those who lacked income would get a cash subsidy depending on their age. Older persons would receive a higher cash subsidy than younger people, regardless of income.
Paul Ryan’s aim was to convert Medicare into a “voucher” program for citizens currently under age 55. People who are now age 55 and older would continue to buy traditional Medicare insurance. Those who didn’t meet the age threshold would be given “premium support” from the government when they attain the retirement eligibility age. They would then be free to buy their own insurance coverage from for-profit insurance companies. They would pay any difference between the voucher amount and premiums charged by insurance companies out of their own pocket.
A lot of federal money would be given as block grants to states to use for healthcare as they saw the need. If block grant money was insufficient, the state would have to come up with the difference. However, most states are in a poor financial condition and are not able to add more money beyond the block grant. So healthcare quality is likely to be very uneven from state to state.
Ryan’s original proposal called for capping annual increases in the premium support. If medical premium costs continued to rise much faster than the overall economy, seniors would need to kick in more of their own money to pay for medical insurance. This would hurt lower- and middle-income seniors, Ryan modified his proposal to allow for increases in the premium support amount that would track increases in total premium costs.
Supporters of Ryancare can cut their own costs in a number of ways:
1. Restrict eligibility by raising the retirement age
2. Make participants pay more by increasing premiums, copayments or deductibles.
3. Reduce demand for medical care by encouraging preventive care (with no deductible or copayment on these services)
4. Pay less to hospitals, physicians and other medical providers by reducing reimbursement rates
5. Provide incentives to medical providers to improve efficiency
6. Reduce or eliminate unnecessary costs by restricting malpractice awards, reducing fraud and encouraging the use of electronic records
Ryan’s plan is to turn free enterprise loose to pull all the other levers, while limiting government involvement in Medicare. The plan assumes that people would make informed, economically smart choices among a variety of distinct medical plans. The invisible hand of capitalism would then reward innovative medical insurance providers and punish inefficient providers that don’t meet Americans’ needs.
Ryan assumes that there will be real competition among insurance companies and that consumers will make informed choices about their medical plan. In most geographic areas, there are only handful of insurance companies that offer medical insurance plans. There isn’t the kind of intense market competition that relentlessly drives down costs and rewards innovation.
And how can we assume that consumers can make really informed decisions about something as complicated as health insurance? Consumers make awful tradeoffs between spending and saving with a bias toward spending. They invest in fly-by-night stock market tips. They acquire poor health by deciding to smoke, abuse alcohol, take hard drugs, eat sugar, fat and salt-loaded foods. They buy more expensive cars than they can pay for if a recession occurs. How can we be sure that they will make smart decisions on their medical plan coverage.
Ryancare claims that it will make $5.1 trillion in cuts to help bring the government’s cost into the black by 2024. The budget legislation promises to serve more as an election-year political and policy statement by House Republicans than a realistic attempt to engage Obama and Democrats in any serious effort to further cut the deficit.
Free enterprise works well to efficiently deliver most goods and services. It is not the best system for delivering adequate healthcare. To place Medicare, Medicaid and Social Security in the hands of private enterprise where the aim is to reduce costs and increase investor return, our people are at their mercy. Remember that the first priority of for-profit executives is to their shareholders, not to their customers.
Negative Reactions to the Ryan Plan
The Ryan Plan, called the American Healthcare Plan (AHP), calls for $880 million in cuts to Medicaid alone, and it raids $117 billion from Medicare—cutting nearly $1 trillion from both programs that will be used for a massive tax break for the wealthy! This is a case where the poor will be subsidizing the rich.
The Ryan Plan attracted an outpouring of criticism and disparagement. People accused the Republicans as turning their back on the middle and the poorer class. The plan was disparaged by the American Medical Association (AMA), American Hospital Association (AHA), and the American Association of Retired People (AARP), each pointing out the weaknesses that they saw.
The AARP estimates “that the bill’s changes to current law’s tax credits could increase premium costs for a 55-year old earning $25,000 by more than $2,300 a year. For a 64-year old earning $25,000 that increase rises to more than $4,400 a year, and more than $5,800 for a 64-year old earning $15,000.” “[I]t appears that the effort to restructure the Medicaid program will have the effect of making significant reductions in a program that provides services to our most vulnerable populations, and already pays providers significantly less than the cost of providing care.” The Republican plan would weaken Medicare and largely benefit the young and rich at the expense of the old and poor.
Several smaller or specialty trade associations have also expressed deep concerns with Ryancare, including the American Academy of Pediatrics, the American Psychiatric Association, and the Federation of American Hospitals. Surprisingly, Powerful conservative groups such as Heritage Action, Freedom Works and Club for Growth have all denounced the Republican legislation.
The Democrats charged that the Ryancare would cause at least 11 million person to lose health coverage, cause premium co-pay and deductible increases, deplete the Medicare trust fund, and transfer wealth to the richest. It would decrease the number of health insured people and do nothing to get the millions of uninsured to get health insurance.
Even former vice presidential nominee Sarah Palin wrote on her Facebook page that Ryan’s budget “is a joke.” She said that the block grant program managed by the states, could drive millions of people from the program, including those in nursing homes and children from low-income households.
Ryancare made two classic mistakes. They cut out the support needed by lower-income older people, the very people who voted for Trump, who now wants to hand rich people a big tax cut. It would repeal the $158 billion levy on investment income by people in top brackets, Second, they dramatically overreached by going after not just Obamacare but Medicaid, setting up a huge clash with the hospital industry, the medical industry, the AARP and various governors.
All said, Ryan’s plan would:
– Force Americans to pay more for less coverage – Cut 24 MILLION Americans off of their healthcare plan by 2026 – And defund Planned Parenthood.
What about Single-Payer Healthcare?
We believe that ALL people should have the right to healthcare, that it is not just a privilege, and that good-quality healthcare is not just for the rich.
Single-payer healthcare involves the state, rather than private insurers, paying for healthcare costs. The state can contract for healthcare services from private organizations or can own and employ healthcare resources and personnel. In some single-payer systems, consumers may have the option of contracting for private health insurance. Canada and Taiwan have pure single-payer systems while countries such as Australia, France, Spain, and the United Kingdom have hybrid single-payer/private insurance systems.
In a single-payer system, the government provides all health insurance and collects all medical and insurance fees. The insurance is extended to all citizens and legal residents. The aim is universal healthcare. The system typically bears a name such as the United Kingdom’s National Health Service, Australia’s Medicare, Canada’s Medicare, and Taiwan’s National Health Insurance.
The fund can be managed by the government directly or by a publicly owned and regulated agency. The government may employ doctors and own and run hospitals (United Kingdom). Or the government may purchase healthcare services from outside organizations (Canada).
We will describe the single payer system in Canada, because Canada is physically close and close in values to those of U.S. citizens. Canada provides free medical services through private entities. The government sets federal standards to assure quality of care. The individual’s health remains confidential between a person and his or her physician. In each Canadian province, each doctor submits the insurance claim against the provincial insurer. The person who gets healthcare does not get involved in billing and reclaim.
The Canadian government keeps advertising at a minimum. Costs are paid through funding from income taxes. There are no deductibles on basic health care and co-pays are kept extremely low. Provinces issue a health card to each individual who enrolls and everyone receives the same level of care. There is no variety of plans because all essential basic care is covered, including maternity and infertility problems. Dental and vision care may or may not be covered depending on the Province. Some provinces provide private supplemental plans for patients who desire private rooms if hospitalized. Cosmetic surgery and some elective surgery are generally not covered. These can be paid out-of-pocket or through private insurers. One’s health coverage is not affected by loss or change of jobs, as long as premiums are up to date. There are no lifetime limits or exclusions for pre-existing conditions.
Canadians chose their family physician (called a general practitioner or GP). If the person wants to see a specialist, the GP will make a referral. The median wait time to see a specialist physician is a month. The median wait time for diagnostic services such as MRI and CAT scans is two weeks. The median wait time for surgery is four weeks.
Pharmaceutical medications are covered by public funds for the elderly or indigent, or through employment-based private insurance. The Candadian government negotiates drug prices with suppliers to control costs.
Physician incomes in Canada rose initially after the single payer system was implemented. A reduction in physician salaries followed, many fearing this would be a long-term result of government-run healthcare. However, by the beginning of the 21st century, medical professionals were again among Canada’s top earners.
The main thing to notice is that Canada’s healthcare cost to its GDP is 11 percentwhereas the U.S. cost is 17 percent of the GDP.
Past Efforts to Bring a Single-payer Healthcare System into the U.S.
Several proposals have been made for introducing a single- payer healthcare system in the U.S. or in several individual States. The most recent is the United States National Health Care Act, (popularly known as”Medicare for All”). Representative John Conyers (D-MI) every year since 2002 has introduced an act for a single-payer system. All medical care would be paid for by the Government of the United States, ending the need for private health insurance and premiums, and probably recasting private insurance companies as providing purely supplemental coverage, to be used when non-essential care is sought. But neither his bill or any others succeeded in getting more than 20 percent congressional co-sponsorship.
Several arguments are presented to favor a single-payer healthcare system. More people will see a physician more frequently who might spot lingering or unrecognized medical problems. For example, catching cancer in Stage 1 is much better than catching it in Stage 3 when it involves so much more hospitalization and pain. Preventative healthcare will save expensive dollars later. Consumers and employers would both face lower administrative costs. Good healthcare will be more uniformly available throughout the land.
Experts see much saving realized through preventive care and the elimination of insurance company overhead and marketing costs and hospital billing costs. A 2008 analysis of a single-payer plan estimated immediate savings at $350 billion per year. Another study estimated savings of $570 billion a year.
The Congressional Budget Office (CBO) has scored on a few occasions the cost of a single-payer health care system. Each time the estimate concluded that a single-payer system would cost less than any other system through its savings in administrative costs.
There have been several single-payer state referendums and bills from state legislatures. Bills have been proposed in Vermont, California, Colorado, Hawaii, Illinois, Massachusetts, Minnesota, Montana, New York, and Oregon. All have failed, with the exception of Vermont which canceled its plan in December 2014 for single-payer health care, citing costs and tax increases as too high to implement.
The Veterans Administration healthcare system is a pure form of single-payer system because it is “owned, operated and financed by government.” Researchers of the RAND Corporation reported that the quality of care received by Veterans Administration patients scored significantly higher overall than did comparable metrics for patients currently using United States Medicare.
American citizens have been polled on whether they would favor a single-payer healthcare system like the one in Canada. The polls varied in their findings, much depending on the time of the poll and the wording of the question. The response is different when citizens are asked whether they favor a stronger Medicare system vs. a government-run medical system. There is general support for a “national healthcare plan” but there are also many people who are satisfied with their present healthcare plan.
Among advocates of a single-payer healthcare system are
Physicians for a National Health Program, the American Medical Student Association, Healthcare-NOW! and the California Nurses Association. The Annals of Internal Medicinein 2007 found that 59% of physicians “supported legislation to establish national health insurance” while 9% were neutral on the topic, and 32% opposed it.
What are the major criticisms leveled against a single-payer healthcare system?
- Many Americans don’t want to expand the size of government and they distrust government.
- Many fear that universal coverage will cost too much and raise taxes too much.
- Many fear that waiting times for diagnosis, treatment and surgery will increase too much and they prefer the present system.
- Many Americans, especially younger citizens, don’t want to pay higher taxes for something that won’t currently benefit them.
- Many Americans fear that others will use the system more than necessary and cause longer wait times and additional cost and end up ordering more medications than necessary.
- Many Americans worry about dealing with a government monopoly that sets all the standards and that can arbitrarily cut certain medical services to save money.
- Physicians fear that single-payer healthcare will limit their discretion when treating patients, decrease physician salaries, and leave less money to cover more services, thereby reducing, the quality of treatment.
Singapore’s Single-Payer System that Costs Less
We must recognize that there are many versions of single payer healthcare systems. We examined the Canada version but it pays to examine how Singapore has designed it single-payer e system. It manages to keep cost down and yet protect Singapore citizens from losing their savings in case they are hit by a major medical problem.
The Singapore Plan guarantees coverage only for expensive medical events, those events that can eat up the family’s savings and lead them into bankruptcy. It is less necessary to provide coverage for more everyday medical expenses. Let market forces cover the latter. Singaporeans pay for much of their own health care out of their own pockets. The major insurance program covers only long-term illnesses and prolonged hospitalizations. Singaporeans experience excellent healthcare costing just 5 percent of their GNP whereas European countries spend around 10 percent and the U.S. spends 17 percent.
The Singapore Plan does not call upon Singapore citizens to set up a health savings account. Their Medisave program requires a mandatory health-savings account called MediShield to which employers contribute as well. The government maintains a safety net called Medifund for patients who can’t cover their bills, specifically older and poorer citizens. Singapore manages to minimize public spending and third-party payments and maximizes public awareness of what different treatments cost. Everyone is insured for catastrophic events. And the government funds health savings accounts for the working class and poor.
Note: This article has been prepared from a variety of public sources.
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