Single Payer Pivot
Liberal Wonks Take Up Single-Payer Advocacy
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  • polifrog

    There is an economic term for “single payer”.

    Monopsony.

    If the term monopsony sounds to you like the term monopoly, it should. Whereas a monopoly describes a single supplier supplying many buyers, a monpsony describes a single buyer paying many suppliers.

    Each is as bad for a free economy as the other.

    • Andrew Allison

      With respect, your major premise is false. The consumer, not the insurance provider, is the buyer.
      The issue is who pay and at what cost. The options appear to be private insurance with roughly 50% administrative overhead or single-payer with, based on Medicare, about 3%. Hello?

      • Corlyss

        Don’t you think the real buyer is the one who pays? I certainly do. Believe me, the insured serve only as the means to the money pot, whether that pot is an individual, a group, an employer, or Uncle Sugar.

        • Andrew Allison

          Sorry, but no, the buyer is the consumer of the service. Who pays is more complicated. In the case of private insurance it’s paid by the insurance company, which receives its revenue from, guess who?

          • azt24

            It’s worth mentioning that Governor Shumlin has absolutely no idea how he will pay for single payer. He has promised several times to show his plan, but whiffed on it each time.

          • Corlyss

            Don’t agree. If you think the patient is the consumer, just wait till the payer refuses to pay. He who pays the piper calls the tune. In most employer provided health care, the employee is the 3rd party beneficiary of a contract between the employer and the insurance co. We may have a semantic disagreement in the way we refer to the different parties in the dance.

          • rheddles

            Wrong. In both health care and the internet, if you’re not paying, you’re not the customer. Keep that in mind the next time you use google.

      • polifrog

        Health providers receive their money from insurance companies, not those they treat.

        When those who receive treatment do not pay, they do not shop treatment. It is no surprise that the market in health is broken.

        • Andrew Allison

          And where, pray tell, do you think the insurance companies get their money from?

          • polifrog

            It is not a question of where the insurance companies get their money from, it is a question of where healthcare providers get their money.

            It is the fact that healthcare providers receive their money from ins. companies rather than those they treat that is at issue.

            The reality is that when insurance pays out on a claim those dollars should go directly to the individual who purchased the policy. It does not. Thus, individuals do not shop for heath, insurance companies do. But the healthcare insurance companies shop for is quite different from the healthcare individuals desire. In the end it should be no surprise that the desires of healthcare recipients are not being met as they do not pay for that which they receive.

      • Jim__L

        Actually, administrative overhead for Medicare is about 25% more per patient, in absolute terms, than private insurance companies.

        They just pay out a whole lot more per patient.

        • Andrew Allison

          You are mistaken. Medicare’s administrative overhead, including the costs of collecting the taxes which fund it, is 1.4%. The administrative overhead of the administrative expenditures incurred by the insurance companies that participate in Parts C and D are more than three times greater. ACA sets about the same maximum overhead threshold. (http://pnhp.org/blog/2013/02/19/important-what-are-medicares-true-administrative-costs/)

          • Jim__L

            Error 404… and those numbers are a little suspicious in any case, 3% to 1.4% — amazing shrinking statistics. I don’t buy it.

            Besides, that doesn’t contradict the data point that on absolute terms, per patient rather than per dollar spent, Medicare spends 25% more.

          • Andrew Allison

            None so blind. Just Google it.

          • Sodden Taproot

            Its on the internet, it must be true. Truth is, the true overhead is unknown. These statistics are based on corrupted data. I had a discussion about the UK, where the cost of training physicians, nurses, etc is paid out of separate funds. There are other funding sources for the Trusts, and basically no legal costs or defensive medicine compared to the US. The US these are recouped as higher salaries paying off loans and liabilities. Even this simple portion it is hard to ascertain which is more cost-effective because the loans are themselves subsidised.

            I suspect the way it is done in the US is more expensive, but has at least some feedback loop due to the loans, allowing rational individual decisions. In centralised systems these decisions are made by boards, which have their own issues.

            The bigger issue is the value of insurance (as interpreted as all-inclusive coverage), which is certainly questionable after the Oregon Medicaid study. I think medical care should be much more limited based on that study, which showed marked increase in consumption without apparent benefits.

          • Andrew Allison

            Truth is, the data are impeccable. It’s the analysis which is debatable. However, conflating the administrative overhead of an insurance program with the cost of providing healthcare doesn’t contribute to the debate.
            http://pnhp.org/blog/2011/08/10/response-to-goodman-and-savingss-health-affairs-blog/
            http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
            http://www.pnhp.org/news/2013/february/setting-the-record-straight-on-medicare%E2%80%99s-overhead-costs

    • Corlyss

      In monopsony the important element is the single buyer, regardless of the number of suppliers.

    • Jim__L

      Some states only have one insurance provider. Are they more efficient? No.

    • free_agent

      As far as I can tell, in every developed country but the US, there is an effective monopsony in the purchase of health care. (Many countries have multiple payers, but they all participate in a global price-setting regime one of whose explicit goals is limiting the percentage of GDP that is paid for medical care.) And as I read somewhere, “There are people who go into medical care, but they do it because they love it, or because it’s a family tradition (like being a military officer is in some families). But nobody goes into medical care because it’s well-paid.” There’s a *reason* that other countries pay so much less for medical care, and monopsony is the reason.

      • polifrog

        Monopsony based healthcare in those nations is also why many citizens in those counties have historically come to the US when they are truly in need of effective and timely healthcare.

        Additionally, monopsony based healthcare nations do not pay less for their healthcare.

  • Leo Linbeck III

    “One possible reading of the Obamacare sturm und drang is that federal-level health reform is just too difficult and controversial to get anywhere. More state-level experimentation like this Vermont plan is a good idea.”

    Exactly. That’s why you should check out the Health Care Compact. Eight states have already joined, with more on the way. Details are available at healthcarecompact.org.

    96% of health care is intrastate commerce. We should let states that want to do their own system have the opportunity to do so.

    L3

    • Andrew Allison

      Given the ferocious resistance to the national single-payer insurance (and the resulting economies of scale) provided by every other member of the OECD (LOL), I fear that you are right.

      • Jim__L

        How well do economies of scale work in Defense?…

        All we would see is regulatory capture, as we see in DoD. The incentive for capture is immense, and would be irresistible.

        • Andrew Allison

          I rest my case. But in case it’s not obvious, military-industrial complex procurement has absolutely nothing to do with either economies of scale or health insurance. The, well- documented, pervasive corruption in DoD procurement makes that within Medicare look like chump change.

          • Jim__L

            I’m not sure how you figure your case is improved by the fact that hospitals would overthrow the best of intentions and simply lobby their way to sucking down trillions of dollars from the public treasury.

            Having worked in DoD (at least in aerospace), I have to say that most of the cost overruns I saw are due to Government changing requirements (and onerous paperwork) rather than any kind of “corruption”.

          • Andrew Allison

            Give me a break. I’ve seen enough of the writing of RFPs so as to permit only the chosen contractor to comply, low-ball bidding that assumed the final price would be much higher and the establishment and retention of weapons programs that the military didn’t want or didn’t need. F-35 and A-10 being glaring current examples.
            Not only is there no comparison between delivery of healthcare and the military-industrial-congressional complex, but hospitals have, in fact, been conspicuously unsuccessful in raising the prices paid Medicare.

          • Corlyss

            Now you really in intrigue me. Sounds like we were on opposite sides of the table. [g] If you would care to tell me more about your background, who you wrote proposals for to what progams, I’d’ be very interested to trade war stories with you. Most of my practical experience was at PC and S level, but my extensive regulatory policy experience is with the DAR Council. If you wish

          • Jim__L

            My grandfather was a defense contractor in the 60s… my father tells stories of how he would come home swearing at the DoD. They would offer a pittance for the high-tech products they bought, and would threaten him with prison if he tried to sell them to anyone else. (A bit like HillaryCare, if you remember that.)

            So what happened in two generations? (Arguably, one?) Regulatory capture, plain and simple. Lobbyists made sure that the rules of the game favored them.

            If single-payer became the law of the land, within 10 years — probably more like five — the mechanisms for medical procurement would be captured. The “Single Payer” messiah would not be on the side of the voters, taxpayers, or patents, it would be on the side of the service providers, bought and paid for.

            I’m sorry, but the government we have cannot be trusted. Giving it more power would be a ghastly blunder.

        • Corlyss

          Jim,

          Your analytical is probably out of my depth, in which case I’ll bow out, but could you explain what you are driving at with “economies of scale” and “work in DoD?” There’s a HUGE difference between buying socks-and-jocks on the one hand, and jet fighters or air craft carriers on the other.

          • Jim__L

            The “economies of scale” line was trying to point out a case that monopsony is not always effective at reducing prices. (Joint Strike Fighter, anyone?) Economies of Scale have not made defense procurements a whole lot less expensive. Economies of scale in health care — where there is only one insurance provider in a state, for example — have not reduced prices either.

            Medicare is no panacea. As has been pointed out in these pages, saying that a program that will bankrupt the country if it continues on its current course (and it will take a TEA Party takeover of both Congress and the White House to change its course, frankly) is a successful program, is lunacy.

          • Corlyss

            I understand your point now. Again, there’s a big difference between achieving economies of scale in commercial off-the-shelf items as opposed to the necessarily unique and exotic weapons of war. I grant you that the idea of competition and economies of scale where you have only one or two government-supported industries like warplanes and naval vessel producers had little meaning. I’m not sure that economies of scale selling to the US government was EVER more than a secondary or tertiary benefit. Why? Because for the initial outlay of money, there’s only one buyer and everyone knows it. However, economies of scale can be realized for the producer IF older generations can be sold to foreign allies, which is what happens. The government does get a royalty on sales of older generations to foreign allies, but that is not without controversy in itself. The primary benefit of keeping warplanes and warships procurements going forever is simply and unambiguously to keep alive American producers of critical products and their components. I’m afraid none of the rational buyers’ logic can substantially dent the logic of that, no matter how expensive they are. The principal rebuttal to the expense is the viability of the product for anticipated needs. Example: the putative switch to high-tech 21st warfare with its smaller troop footprint and its complex cyberworld emphasis has seriously inhibited the arguments for tools of old-fashioned troops-heavy, massive battlefield resource-intense tools. Notwithstanding the tiresome whining of the soft triangle about military expenditures, it’s been the changing face of warfare that’s caused the most cutbacks in high-vis weapons production.

          • Jim__L

            The aerospace cutbacks that have most affected the companies I’m familiar with were Bush’s cuts to next-generation programs, to pay for the boots-on-the-ground in Iraq, then Obama’s cuts, which confirmed Bush’s cuts and cut what Bush augmented, then added its own cuts for good measure.

            It’s no wonder the likes of Putin think that now is a fantastic time to try their luck.

          • Corlyss

            Well perhaps you are right about the Bush cuts, but remember that Cheney was the one who administered the coup de grace to the A-12 when he was SecDef. http://www.usni.org/magazines/proceedings/1999-02/12-legacy-it-wasnt-airplane-it-was-train-wreck He and Rumsfeld were very tight when it came to the shift of warfighting emphasis from hardware and troops to smaller more flexible “21st century” responses.

  • Boritz

    “When the government owns and operates one health insurance plan for all residents, it sets a single price for each medical procedure.”

    Wie über fähig.

    • Andrew Allison

      Boritz, I fear that you overestimate the linguistic skills of our fellow-commentators. Worse yet, you suggest that the government is incapable of setting a price for a medical procedure. The single-payer insurance plan which successfully serves, as I recall, 16% of the US population (Medicare) suggests otherwise [/grin]

      • Corlyss

        The great virtue of the private health insurance industry, at least from a user POV, is that they were not lashed up to rigid legislature-sponsored price list and government’s refusal to pay for cutting edge medicine.

        • Andrew Allison

          You must be joking [/grin] While the private health insurance industry’s reimbursements may be slightly less draconian that those of Medicare, they are, never-the-less, setting the price. Might I also remind you that one of the “wrongs” which ACA was purported to right was the pre-existing condition exclusion. I think we both know what the result is going to be (hint: check the ratio of the newly- versus the previously-insured with pre-existing conditions).

          • azt24

            But private insurers have been forced to pay extra to make up for too low reimbursements from Medicare. If private plans are replaced by more Medicare, then doctors will stop accepting Medicare.

          • Corlyss

            No, not joking. How can you claim that when prices for the same procedures vary wildly across ins. cos., hospitals, doctors, and pharmacists? THAT was one of the problems greater transparency is supposed to solve. Obviously some providers are able to strike better deals than others, probably due to quantity price breaks, but inherent in that fact is that no one co. sets the price like the government will be able to.

            Not wholly OT, but yesterday on Marketplace, one of the few respectable programs on public radio, Kai interviewed Nancy Kane of the Harvard Business School on the recent trend in businesses to eliminate their HR departments.http://www.marketplace.org/popoutplayer She noted that at this point in the evolution of employee relations both in government and private sector HR jobs are overwhelmingly staffed by women, so it is an interesting “coincidence,” if one believes in such things, that now the jobs are deemed of low enough importance that they are expendable. I’ve remarked in the past on the curious social trend that when the providers of a service exceed 50% women, the jobs become less valued by recipients, pay less, and are less esteemed in the society. [“If a woman can do it, how important can it be?] I’ve also noted in the past that the full court press to attack health care costs comes at precisely the moment the health care service providers, including doctors, psychologists, and elder care personnel, i.e., the “nurturing professions,” is well over 50%. I don’t think it’s a coincidence. And if the blowhard Dems really wanted to do something constructive about women’s pay, they’d look at the social implications and consequences of this curious mindset.

          • Andrew Allison

            Always a pleasure doing discussion with you! The fact that the prices which insurance companies (including Medicare) agree to pay are all over the place is irrelevant to the fact that it is they who set the amounts, which bear no relationship to the “list price” billed by the provider, which they are willing to pay.
            The OT subject of HR is interesting. Being in complete ignorance of the topic, I can fearlessly hypothesize that it’s been discovered that HR has grown fat, dumb and happy, and is costing more than it’s worth. LOL

          • Corlyss

            I understand. I’m never so confident of my opinion as when it is uncompromised by messy facts. Considering that HR is largely a “hand-holding function,” esp. the burgeoning employee-assistance facet of the job (the element that can get between a non-performing employee and a dismissal if the employee can invoke a disability like drug addiction, alcoholism, PTSD, illness, depression, etc., i.e. those character-flaw-cum-fuzzy-DSM-diagnosis/treatment areas), I can understand why a co. would ask “where is my core competency in here?” Other more automated functions have been outsourced, like payroll, benefits administration, etc., to companies that pitch that as their sole raison d’etre. If the operations can be done seamlessly by contractors who will hire the same women to do it, I don’t see much to object to. But if cos. think that those latter functions are the only reasons to have an HR department, they are going to be in for a rude shock. Managing organizational dysfunction was the most important thing they did in IRS IMO. They existed in spite of the fact that OPM exists to handle the policy making, and those people were never under the control of agencies.

          • Andrew Allison

            If you think that OPM has any interest in ensuring that the agencies behave as they should, I want to know where you get whatever it is that you are smoking [/grin]. I can assure you from personal experience that neither it nor the IG do.

          • Corlyss

            HR functions in corporations are supposed to be an instrument of the co. I think what’s made the shift in their missions is the avalanche of federal and state regulations that make HR an state-owned and -operated mole in corporations to protect employees. The HR folks are the frontline ensuring that the cos. don’t run afoul of state and federal regulations to the extent that they, the HR folks, can avoid it, with the assistance of co. lawyers.

            Believe me, I’m not smoking anything. I suppose standardization of personnel policies across the federal government has its advantages. But early on I acquired the belief that the people with the agency mission and the money should call the shots about 1) how they do business, and 2) whom to hire and fire. Instead, those functions now belong to an OMB office and a stand-alone agency, respectively. Being a former DoD employee, I see their mission as far more exacting and far more demanding, esp. where quality and timeliness is concerned. Basically, it’s no never mind to me if IRS has no concept of mission, their attorneys have no idea what their role is, their management is hopelessly screwed up and devoid of leadership and their policy on “homegrowing” their future workforce, or that it is the most dysfunctional agency on the planet. It DOES matter to me that DoD has become Social Experiment HQ since the end of the cold war, and probably before that under every Democratic president because once, on racial integration, the agency had such tremendous optical and practical success. One day when it’s relevant I’ll relate tell you about breast cancer research, environmental rectitude, and minority contracting as part of DoD’s mandate. It’ll curl your hair that such misguided and obsessive policy makers could seize and exercise authority over our warfighters and so prostitute their mission and their focus.

          • Andrew Allison

            We’re on the same page Corlyss (my wife quit DoD at the beginning of the year for precisely the reasons you outline).
            And I think you’ve identified the HR departments’ problem: since they’re all dealing with the same avalanche, it could be outsourced to consolidated service providers.

      • qet

        I can’t tell if in this post and the one below you are being facetious. I don’t think that a program that is continually said to be in fiscal crisis and that is helping to bankrupt the entire country could be said to be a success.

    • Corlyss

      The Feds have had two operative models for many years: Veterans and Medicare/Medicaid.

      • John Stephens

        I have first hand knowledge of the former. The VA works because it prioritizes it’s patients, and when the money gets tight it refuses care to the lower priority patients. Death Panels, anyone?

    • Breif2

      Or for the linguistically challenged: One government, one health plan, one price..

  • Corlyss

    Sometimes I can’t resist the impression that on the left the way this is all playing out is orchestrated.

    • Jim__L

      Maybe that’s because Obama himself talked about his plans as a stepping stone to single-payer.

      • Corlyss

        That must be it.

        • Anthony

          As I said an acolyte, perhaps you can fully orient.

  • gabrielsyme

    Essentially, the lesson here for conservatives is never, ever trust liberals when they say “this is all we want”. The appetite of the state and its dependents will never be satiated.

    And I say this as someone who, in the abstract, supports a single-payer system.

    • Breif2

      “progressives are already testing out the next stage of their preferred health reforms”

      Citius, Altius, Fortius!

      This is an example of why I increasingly refuse to countenance any “Progressive” proposal; there is no final proposal, one always finds oneself tumbling down a slippery slope.

      • Jim__L

        This is an example of why I will never vote for a Democrat, at any level of government, for any reason.

        The idea of a “moderate” Democrat is a distinction without a difference. Elect a single one, and you just hand power to the Eurosocialists.

    • Andrew Allison

      In fairness, I think your first sentence would have been more accurate absent “for conservatives”. As the abuses in the financial industry, etc., venality is not restricted to the left.

  • lukelea

    Medicaid for all may end up the default system, the thought has occurred to me.

    • Corlyss

      That’s been in the air for some time – since March 2010.

  • lhfry

    I would prefer to return to the old system under which we paid for our own routine care and carried “hospitalization” or catastrophic care insurance. As a Medicare recipient, I would not like to see “Medicare for all” – it’s hard enough now to find a GP who is willing to accept Medicare patients, and if you are a healthy old person and rarely need a doctor, they aren’t interested in you at all because those doctors who do take Medicare patients make money by doing tests and procedures.

    • qet

      Yes, this is the only way to have true insurance. There must be an expectation–one that is socially accepted and not resisted–that we will all pay for our own routine care up to a certain amount. Medicine is in most respects a consumer good no different from all the others. Why we expect people to pay for their own cars and televisions but not be required to bear even a few dollars of their own health care is beyond me.

    • Andrew Allison

      I couldn’t agree more with your major thesis that catastrophic insurance should be an option for those who want it. However, as a Medicare beneficiary myself, I take issue with “those doctors who do take Medicare patients make money by doing tests and procedures.” The fact is that primary care physicians don’t get paid for the tests and procedures the order. Unnecessary tests and procedures are a major contributor to healthcare cost inflation across-the-board, largely due to CYA in a malpractice-happy environment.

  • rheddles

    I would be enthusiastic about this idea if there were the opportunity to shift healthcare toward a more free market – patient as customer model. But the only changes that states can make will be toward more government control than the federally mandated baseline, not less.

  • qet

    Here we have nicely encapsulated the Blue Method: first, rely on a published “study,” because we are all about “evidence-based” policy, and a number from a study constitutes said “evidence,” even if what is truly important is the inference drawn from said number and not the bare number itself; second, in the Blue world of “evidence-based” whatever, a single study is insufficient to build a case on, except, apparently, here, when the number given is the number you want; third, never question any number presented to you by a published study when it sets you up to make the claim you deeply desire to make out of a motive of passion rather than reason; here, for instance, we might, were we truly seekers after truth, start to deconstruct that number on which our entire case is based: how were the “averages” arrived at? what meaningful information do they really signify? what would it mean if other studies could not reproduce these averages? what if it were the case that in fact the US average were lower and the Canadian higher?; fourth, do not ask, not even yourself, on what theory your faith rests that a simple average has meaningful informational content; what does “average” really signify in this context, because if we are going to draw all kinds of policy inferences from it, we ought first to understand if it even means anything, right?

    The Blue Method appears to be science but in fact is nothing but assumption, prejudice and belief wearing the mask of science. Our vaunted Blue policy wonk method cannot even do simple counting correctly–witness our inability to determine how many people have really enrolled in the ACA at any given moment in time. All of this computational technology at our disposal and we still cannot even do simple addition reliably! And yet Klein & Co. will have whatever level of government it can co-opt institute massive coercive policies on the basis of still more complex numbers that it not only cannot understand but has no desire to understand. Yeah, this will turn out well.

  • free_agent

    You misspelled “too expensive” as “to expensive” in the punchline!

  • Stephen

    “Rather we need to focus on improving the ways in which we deliver care.” True, but also on the what and the to whom. Single payer systems, like all others, perhaps more so, have to decide on what to deliver. And, unless you nationalize the medical profession and outlaw private practice, there will always be the issue of who can buy what.

    • Corlyss

      My guess from reading the Europeans and Canadians on their systems, that is exactly what the administration’s shot callers have in mind. The problem is that is what the did, or tried to do years ago. IOW the models the shot callers are trying to mimic here have long since been superseded by the addition of more flexible elements.

      • Stephen

        The combined effects of Medicare, Medicaid, and Obamacare won’t be to nationalize the health care industry. Medicare is not like coverage under the NHS in the UK: as senior citizens moving to a new parts of the country find out when shopping for a new doctor.

        This is why the issue of the what and to whom will continue to be an issue even with single payer, in the absence of a laws which outlaw concierge medicine – and that won’t happen as too many with means to avail themselves of these services won’t let it. To the great annoyance of those who admire the NHS, American proles seem unable to accept their place.

        Add your point about the economic interests of tort lawyers to the list of hurdles on the way to anything resembling the NHS or Canadian model.

        I see that Leo Linbeck III has advertised his Health Care Compact movement. Pushing healthcare management down to the regional level makes a great deal of sense. At the very least, regional associations among the states produce populations under management that more closely approximate populations where current national systems held up as models have had some success.

  • Jacksonian_Libertarian

    It’s stupid to think the Government monopoly can do a better and cheaper job. If Canadian healthcare is so much better, how come the Canadians that can afford it, come to the US and pay cash for what they would get for FREE in Canada? Could it be that FREE isn’t worth the PRICE, if it means a complete sacrifice of Quality and Service?

    The fact is that US Healthcare’s problem isn’t that there’re a thousand insurance companies being billed, it’s that there should be hundreds of millions of patients being billed. Only when patients are demanding better Quality, Service, and Price or they will take their business elsewhere, is the “Feedback of Competition” engaged. It is the “Feedback of Competition” that forces continuous improvements in Quality, Service, and Price in free markets. It’s the way health insurance has come to monopolize healthcare in the US that is causing the decay of healthcare. We can see this from a lack pricing available to the consumer.

    If doctors and health facilities had to compete for the consumer’s business, Prices would be falling, Quality would be improving, and months long waits for appointments would end as doctors tell you to “Come on in, I will see you as soon as possible, your business and health are important to me”.

    There is a simple fix for this, make all consumers responsible for paying their healthcare bills and then getting reimbursed by their health insurance, and paying for their health insurance (no more health insurance paid for by employers or any third party). In this case both the Medical industry, and Health insurance industry would face the “Feedback of Competition” and both would swiftly improve.

  • Dantes

    Single payer=No choice, for doctor or patient. I would rather deal with the insurance companies. BTW, the government health care programs…Medicare, Medicaid, etc…are as bad or worse to deal with than insurance companies.

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