Dr. Robert Levine has an editorial in today's online version of the New England Journal of Medicine endorsing a single payer health care system for the U.S. Yes, the AMA has endorsed Obama's health care reform efforts but it is still surprising to read an editorial in a leading medical journal advocating for an option that is considered by the Village as too leftist to be serious.
The full article can be found here.
First, he makes the (obvious) point that we must find real sources of health care savings if reform is to be fiscally responsible.
It has been clear for some time that the primary hurdle to enacting health care reform is figuring out how to pay for it. Virtually all Republicans and some Democrats have been unwilling to sign on to increasing taxes on high-income Americans as a partial answer. The idea of taxing the most generous health insurance benefits has met with resistance as well. The use of electronic health records and an emphasis on prevention and early treatment of illnesses have been ballyhooed as ways to generate savings to help pay for reform, but there is no solid evidence that these measures will reduce spending anytime soon, although they might improve care. Unfortunately, legislators are ignoring the option of funding reform by harvesting available savings from within the health care system itself. I believe Congress must go back to the drawing board. Given the state of the economy and the continuing rapid growth in health care expenditures, lawmakers need the political will to devise a plan that will control accelerating costs and be budget-neutral — and to disregard the expected backlash from stakeholders (organized medicine, the insurance companies, the pharmaceutical industry, and the trial lawyers) and an uninformed public.
Second, he asks, 'Where do we find the largest potential savings?'
Some drivers of health care costs (such as demographic changes) cannot be controlled; others (such as unhealthy lifestyles) are difficult to attack. However, great savings could be achievable in two areas: administrative costs and unnecessary care. In the current health care system, administrative costs are generally estimated to account for 15 to 25% of total expenditures1; if we settled on an estimate of 20%, that would amount to $500 billion annually.
This is the 2nd largest source of savings Dr. Levine identifies. The others are fraud (3% of total health care costs) and excessive volume (30% of total health care costs).
So, Dr. Levine, how could we best reduce administrative costs?
The complexity of the present system, with multiple sources of coverage, is the main cause of such high administrative costs. Every insurance plan has different benefits with different copayments and deductibles, and many require preapprovals for various tests. The multiple interactions this complexity necessitates between physicians’ offices and insurance companies — to get authorization and to haggle over payment — translate into personnel requirements (and associated costs) on both sides. Insurance companies also conduct extensive vetting of applicants for individual policies to determine whether any preexisting conditions disqualify them from coverage and what their premiums should be — an activity that, along with spending on marketing, further raises companies’ overhead.
We can see where this is going. Later in the article he concludes,
To reduce administrative costs and simplify the system, I believe that a single-payer system that provides universal coverage is mandatory. Of course, this concept is anathema to free-marketeers and does not currently have much public resonance — largely because Americans have been misled by negative advertising and denigration of the single-payer approach by politicians and others who label it "socialized medicine" and government interference in medical care.