The United States is the only developed country (I will be using this term and the OECD interchangably) that relies on private for-profit insurance companies for a major part of its health care system. We are the only one that has:
- A large percentage of our people completely uninsured
- A larger percentage of our people UNDERinsured, so that if they do actually get sick, despite thinking they have insurance, their out of pocket cost are so high as to cause them serious financial distress and even bankruptcy.
- Our total costs are rising faster than in other developed countries.
- Our adminstrative costs, or to be more accurate (what do you mean "we", says Medicare), the adminstrative costs of the for-profit private health insurance companies, are higher then anywhere else.
- Without a much greater degree of central planning and purchasing (monospony) just as other OECD countries have, we cannot get to real universal health care coverage.
- Despite recent attempts at denial, the above facts both are both true and related.
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As health care reform is once again on the national poitical agenda, the latest meme in the campaign to keep Single Payer from even being part of the discussion is that the issue of excess administrative costs due to the private for-profit insurance companies, and the single payer savings potential, are somehow not real and important. That is false. And you don't have to take a single payer advocates word on it. The most prominent health economist in America, Professor Uwe Reinhardt of Princeton, agrees: our adminstrative costs are indefensible and are part of why our health care costs are the hightest and rising.
First some international comparisons, showing how the U.S. is truly the outlier nation. Here is standard comparison of health care expenditures to GDP-per-Capita Among Developed (OECD) countries:
Here is how Uwe shows graphs the data showing even more clearly how the U.S. is literally an outlier.:
As Professor Reinhardt says:
The United States spends nearly 40 percent more on health care per capita than its G.D.P. per capita would predict. Given the sheer magnitude of the estimated excess spending, it is fair to ask American health care providers what extra benefits the American people receive in return for this enormous extra spending. After all, translated into total dollar spending per year, this excess spending amounted to $570 billion in 2006 and about $650 billion in 2008. The latter figure is over five times the estimated $125 billion or so in additional health spending that would be needed to attain truly universal health insurance coverage in this country.
Only in the U.S. does private insurance dominate:
So, while our public system covers relatively few...
...Our health care outcomes are if anything worse overall!
Here is where out health care dollars are:
And yes, those private for-profit companies really do have higher overhead costs, including administration and profit, then the public sector such as Medicare:
Okay, so what about Single Payer? Well there have been many independent analyses since the 1990s to the present repeatedly showing that single payer is the best way to both cover everybody and control costs. The GAO and CBO did the analyses in the 1990s and more recently Lewin Group and others have done the same for state-base single payer proposals such as for California.
Here are some of the details:
Here is where the 30% in excess billing costs are going:
This table shows at the top where the increased expenditures occur in covering everybody, and where they are offset by savings. The analysis was done in 2005 by Lewin for California single payer proposal.
So to reiterate:
- We single payer advocates are not pie-in-sky wishful thinkers.
- Actually we are only ones being fully honest with regard to costs. We are the ones who insist that the growth in costs must be addressed if any plan is to succeed... and that you can't really do this while leaving the private for-profits in place.
Or as as Uwe summarizes:
One thing Americans do buy with this extra spending is an administrative overhead load that is huge by international standards. The McKinsey Global Institute estimated that excess spending on "health administration and insurance" accounted for as much as 21 percent of the estimated total excess spending ($477 billion in 2003). Brought forward, that 21 percent of excess spending on administration would amount to about $120 billion in 2006 and about $150 billion in 2008. It would have been more than enough to finance universal health insurance this year.
The McKinsey team estimated that about 85 percent of this excess administrative overhead can be attributed to the highly complex private health insurance system in the United States. Product design, underwriting and marketing account for about two-thirds of that total. The remaining 15 percent was attributed to public payers that are not saddled with the high cost of product design, medical underwriting and marketing, and that therefore spend a far smaller fraction of their total spending on administration.
Two studies using more detailed bilateral comparisons of two countries illustrate even more sharply the magnitude of our administrative burden relative to that in other developed countries.
One of these is an earlier McKinsey study explaining the difference in 1990 health spending in West Germany and in the United States. The researchers found that in 1990 Americans received $390 per capita less in actual health care but spent $360 more per capita on administration.
A second, more recent study of administrative costs in the American and Canadian health systems was published in 2003 by Steffie Woolhandler and David Himmelstein in The New England Journal of Medicine in 2003. The study used a measure of administrative costs that includes not only the insurer’s costs, but also the costs borne by employers, health-care providers and governments – but not the value of the time patients spent claiming reimbursement. These authors estimated that in 1999, Americans spent $1,059 per capita on administration compared with only $307 in purchasing power parity dollars (PPP $) spent in Canada.
More and more Americans are being priced out of health care as we know it. The question is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.
I'll have more on all the other arguments for single payer in future diaries.
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Here is What You Can Do:
- Ask your congressperson to sign-up as a co-sponsor of HR-676! You can write a letter directly via this site. You can look-up your elected officials here
- Get any organization you belong to -- civic, religious, labor, community, etc. to pass an HR-676 endorsement resolution: Here is how to do that via Physicians for a National Health Program. Or here if you prefer via a non-physician group.
Grassroots - List of National & State Organizations for YOU to work with:
National Organizations:
Physicians (and others) for National Health Program (lots of non-physician members!). Much of the research has come from PNHP and its members. Lots of state chapters. See list below or the national PNHP webpage: http://www.pnhp.org/
Guaranteed Health Care which is California Nurses Association/National Nurses Organizing Committee: http://www.guaranteedhealthcare.org/
Health Care Now: sort of a non-physician/non-nurse spin-off organization: http://www.healthcare-now.org/
Everybody In & Nobody Out: Supports state organizations working at the grassroots for universal health care: http://www.everybodyinnobodyout.org/
Alphabetic List of State Organizations Promoting Real Universal Health Care - Find Friends Near You:
Despite the "Physician" in the name of some of these organizations, they are open to all. You may wish to hook-up with the one nearest you:
AL Health Care for Everyone: http://alabamahealthcareforeveryone.org/
CA Nurses Association: http://www.calnurses.org/
CA Physicians’ Alliance: http://capa.pnhp.org/
CA Health Care for All: http://www.healthcareforall.org/
CA One-Care-Now: http://www.onecarenow.org/...
CO Health Care for All: http://www.healthcareforallcolorado.org/
CT Coalition for Universal Health Care: http://cthealth.server101.com/
DE Informed Civic/Political Coalition: http://deinformedvoters.org/
FL PNHP: http://www.tbpnhp.org/
FL for Health Security: http://www.ffhs.org/
GA for a Common Sense Health Plan: http://www.commonsensehealthplan.org/
IL Health Care for All: http://www.healthcareil.org/
IL Singel Payer Coalition: http://www.ilsinglepayercoalition.org
IN Hoosiers for Commonsense Health Plan: http://www.hchp.info/
KS Heartland Health Care for All http://healthcareforall.kumc.edu/
KY PNHP: http://www.kyhealthcare.org/
ME People's Alliance: http://www.mainepeoplesalliance.org/
MD Health Care for All Coaltion: http://www.mdsinglepayer.org
MA Campaign for Single Payer: http://www.masscare.org/
MA Affordable Health Insurance for Everyone: http://healthcareformass.org/
MA Alliance to Defend Health Care: http://www.massdefendhealthcare.org/
MI Universal Health Care Access Network: http://www.michuhcan.com/
MN Universal Health Care Coalition: http://www.muhcc.org/
MN Citizens Organized Acting Together: http://www.coact.org/
MO for Single Payer Healthcare: http://www.mosp.us/...
MS PNHP: http://www.pnhp-mo.org/
NC: Health Care for All-North Carolina: http://www.healthcareforallnc.org
NH PNHP: http://www.granitestate-pnhp.org/
NY Metro Chapter of PNHP: http://www.pnhpnyc.org/
NY State Capital District PNHP: http://capitaldistrictpnhp.blogspot.com/
NC Committee to Defend Health Care: http://www.ncdefendhealthcare.org/
NC Healht Care for All North Carolina: http://www.HealthCareforAllNC.org/
OH Single-Payer Action Network: http://www.spanohio.org/
OH PNHP Ohio http://www.pnhpohio.org/
OH Health Care for All Ohio http://healthcareforallohio.org/
OR Health Care for All-Oregon: http://www.healthcareforalloregon.org/
PA Philly Area Committee to Defend Health Care: http://www.phillyhealth.org/
PA http://phillyhealth.blogspot.com/
PA Health for All Pennsylvania: http://www.healthcare4allpa.org/
RI Everybody In-Nobody Out: http://www.everybodyinnobodyout.org/...
TX Health Care for All: http://www.healthcareforalltexas.org/
UT Health Alliance: http://www.utahhealthalliance.org/
VT Health Care for All: http://www.vthca.org/
WA Health Care for All: http://www.healthcareforallwa.org/
WA PNHP: http://www.pnhpwesternwashington.org/
WV Mountain State PNHP: http://mountainstatepnhp.com/
WI Coalition for Health: http://www.wisconsinhealth.org/
WY Voices Foundation: http://www.wyoming-voices.org/
For Single-Payer Actions in Your State:
http://www.pnhp.org/...
&
http://www.pnhp.org/...
More State Contacts:
http://www.healthcare-now.org/...
State-by-State Legislation in Process:
http://www.ncsl.org/...
Health and Health Care Facts in Your State:
http://www.statehealthfacts.org/
Please let me know of any organizations I have not listed.