As an enthusiastic advocate for single payer health care, I am too often guilty of underestimating the opposition, fear, and raw emotion that it generates. I see the overwhelming evidence that a well conceived single payer plan can bring huge benefits to everyone, and assume that it's just a matter of time before everyone else will see it as well. Especially if we just keep emphasizing the advantages and virtues, it's just a matter of time before it happens, right?
Underestimating the strength of opposition to implementing a single payer plan will only lead to further delays, disappointment, and avoidable illness and death for many of us. So, my purpose in writing this diary is to explore and expose some of the incentives and methods for opposing a single payer system, and invite discussion of ways to avoid being sidetracked by those who employ such methods.
Proposals for universal single payer health care in the US are not new. Tom Daschle writes in Critical: What We Can Do About the Health-Care Crisis that 75% of Americans were in favor of a universal health care system as early as 1945. Yet time and again, enactment of a universal single payer system has failed to come to fruition. Why has there been such effective opposition to health care reform, and why have opponents of reform been so determined to prevent change?
The context of our present situation.
A brief look at the economics and science of health care delivery during the past century provides some framework for understanding our present situation. During the early part of the 20th century, the training of physicians and the practice of medicine was very much a cottage industry. Physicians were educated and certified relatively informally, there was little standardization of care, and economically the practice of medicine was a small piece of the pie. Medical treatment of illness was largely ineffective and non-scientific in its application. The practice of medicine was placed on a firm scientific and technological basis by the early 1920's, and it was at this point that the modern explosion in the potential for treatment began, and the expenditures on those treatments began to rise. By 1935, health care expenditures had risen to the point of consuming 3.8% of the total GDP of the USA. The public experienced rising expectations for what medical care could accomplish. As costs and expectations rose and disparity between those who could afford care and those who could not grew, pressure grew to reform the health care system. The popularity of health care insurance grew as it became clear that treatment could potentially be very expensive. Faced with the choice of allocating health care resources by a central decision making process vs. a laissez faire approach, the Federal government adopted the laissez faire, or free market approach. But in the early 1950's the government also adopted legislation that created tax incentives for employers to purchase health care insurance for their employees. Suddenly, there was a huge influx of money into the health care system, and following this money was a group of innovative entrepeneurs determined to get a piece of the action. This trend was accelerated with the enactment of Medicare in the 1960's, which infused even more money into health care. Between 1945 and 1965, health care rose from 4.2% of GDP to 5.9% of GDP, or in absolute terms from 9 billion dollars per year to 41.6 billion dollars per year. As the insurance companies grew to meet the demand, they also altered the traditional feedback mechanisms by which growth of demand had been kept in check. Once people had insurance coverage for medical services, demand mushroomed. Increasingly complex medical care and expectations along with an increasing pot of money to pay for malpractice claims did its share to increase the demand for medical services. By 1995, health care consumed 14.1% of GDP, or 1 trillion dollars per year. Estimates for 2008 are somewhere North of 2 trillion dollars, or 17.5% of GDP.
This is the stream of money that flows through insurance companies, pharmaceutical companies, makers of medical technology and makers of durable medical supplies. It is the stream of money that shapes the incentives for providing medical care. Understanding the power and influence that this flow of money brings is key to understanding why there is such opposition to changing the way this stream is controlled.
What are the incentives to maintain the status quo?
Let's examine the positioning of key special interest players within the economic food chain with respect to this vast stream of money, and what effect this might have on the attitudes and behaviors this might trigger with respect to change. I would like to focus on health insurance companies, congressional representatives, pharmaceutical companies, and medical technology manufacturers.
I. Health insurance companies.
We saw from the brief historical analysis above that government incentives for health insurance fueled the rapid growth of medical expenditure over the past 60 years. Health insurance companies owe their current dominance in the marketplace directly to this rising flow of money. Insurance companies now sit at the top of the medical economic food chain. Financial resources flow into insurance companies based on their number of subscribers and the amount of premiums they charge. The insurance companies base their rates on their expectations of how much their subscribers will cost them in health care expenditures plus their overhead. The insurers take their expenses out of the stream of available resources before any other expenses are paid. What an enviable position to be in! Moreover, they collect premiums well in advance of expenses that are paid out. In fact, if they can delay payment for services, even by just a small amount, they may have a substantial cash pool that they can invest in short term investments. This is called "the float" in the insurance business, and it is a very nice source of revenue.
Is it any wonder that insurance companies have a mortal fear of any change in the way health care is run? Of course, it would never do to be seen as self-serving in their opposition to a universal single payer plan that would relegate them to a much reduced role and diminised assets. Luckily, all they have to do is use their considerable assets to spread fear and disinformation about the consequences of a single payer system, and much of their work in creating opposition to single payer will be done for them. Some of the tactics that have worked well for them include:
1. Spreading concerns that people will lose "choice" of treatment, health care providers, or benefits packages.
2. Creating fear of rationing of care.
3. Creation of fear of the government waste and corruption interfering with health care.
4. Use of the label of "socialism" or "communism" to provoke emotional opposition to single payer.
5. Fear of an "inferior" system of care, creating comparisons to care in other countries which are either untrue or taken out of context.
6. Fear of inability to control costs in a single payer system because of lack of control of demand.
7. Interference in unregulated, free market, capitalist mechanisms is "anti-American".
8. Promotion of alternative ideas such as "mandates" for health insurance or subsidized health insurance instead of real reform.
These are incredibly effective tools when applied with the skill and determination that insurers can apply. A detailed examination of each of these fears and untruths is beyond the scope of this diary. For now, you will have to trust that all of them are bunk. But until we can find a way of countering this misinformation, the insurance companies have a power. Provoking a creative and robust discussion of ways this can be approached is one my goals for writing this diary.
I would be remiss if I ended this section of the diary without some mention of at least one other effective tool that health insurance companies have in combating change. Access to huge amounts of cash also give insurers tremendous leverage with congressional representative. This occurs both through the use of paid lobbyists and through the use of campaign contributions. Both mechanisms are effective, and some means must be found to combat them as well.
II. Congressional representatives.
I briefly discussed above the confict of interest that our representatives face in trying to change the health care delivery system. If they act in a way that disempowers insurers, representatives stand to lose the benefits conveyed through receipt of large cash contributions. By itself, this perverse wrinkle in the status quo is a powerful force in opposition to change. But, it does not end there. Our representatives are also the recipients of contributions and other favors from pharmaceutical companies, medical technology companies, and investment companies that benefit when pharmaceutical companies and medical technology companies prosper through the current incentives. There is an inbred, circular, and largely occult flow of money that conspires the prevent change.
Congress also enjoys the prestige of being able to claim responsibility for the successes of popular programs such as Medicare. They portray themselves as heroes to their constituents for the support of programs that grant entitlements. If they were to create a single payer system that is administered independently of the government, they would lose one of their powerful claims to success.
III. Pharmaceutical companies and health technology companies.
In the sense that pharmaceutical companies produce a high technology health care component, they are very similar to companies that produce sythetic joints, pacemakers, and other high tech medical goods. I think it is important to recognize that all of these companies have made important contributions to improvements in health care. But the benefits that these companies have brought to health care do not compensate for the abuses in pricing, inattention to conflicts of interest, and psychopathic opposition to change that characterizes the behavior of these companies. In many ways the situation for these companies is similar to that of the insurance companies. The growth of the resources that they command, access to lobbyists and to campaign contributions, and dependence on the status quo for maintenance of their current market situation are in many ways the same. The major difference is that universal single payer healthcare does not represent the same kind of threat to these companies as it does to insurance companies. Nonetheless, these companies see any change as a potential threat. The idea that a single payer plan might impose additional requirements for value, or that there might be restriction on profit margins, or that there might be restrictions on availability of very costly or marginally beneficial treatments are seen as problematic.
Pharmaceutical companies and health care technology companies employ many of the same strategies as health care insurance companies do in their opposition to change. They have the same kinds of opportunities to influence lawmakers as well. Compared to insurance companies however, providers of pharmaceuticals and other technology are further down the food chain of reimbursement. They are dependent upon the behaviors of health care providers and patients, and this gives them added vulnerability. Single payer plans in particular, because of the alignment of incentives for cost-effective and value driven care pose a potential threat.
Technology companies invoke many of the same fears as insurance companies do in service to the opposition of a single payer system. They have some added leverage however, such as:
1. Evoking the fear of "stifling innovation" that might come with regulation.
2. Fear of lack of access to technology if the ability to make make profits is restricted.
3. Fear of inadquate quality or safety of products.
As we saw with the health insurance companies, these tools provide tremendous leverage for affecting the public perception of the desirability of change to single payer system.
What can be done to overcome the misinformation and conflicts of interest?
My purpose in trying to develop these ideas is to stimulate awareness of the incentives and the resources of those inclined to opppose single payer healthcare. The opponents have tremendous resources and tremendous incentives. I also hoped to stimulate discussion of ways to expose and counteract the misinformation campaign that is already underway. I think that the misinformation can be debunked and exposed. I believe that universal single payer health care is the only way that economic recovery will come to America without going through a potentially catastrophic cycle of prolonged depression. I hope others will add to this humble begining.