SOUTH DAKOTA PEACE AND JUSTICE CENTER POSITION ON HEALTH CARE REFORM IN THE US

August 2009

Earlier this year, President Obama laid out the broad principles of health care reform that he feels are necessary both to expand health insurance coverage to most Americans and to bring overall health care costs in the country down to economically sustainable levels. U.S. health care costs now constitute 18 percent of gross domestic product, a far higher level than in virtually any other advanced nation, yet the U.S. ranks quite low in health care outcomes relative to other such nations. The combined employer/employee cost of health care coverage, for those who have employer-based coverage, has more than doubled between 2001 and 2009. This is making employer-based coverage increasingly unaffordable for both employers and employees, and private coverage is even more expensive for many people. The result is that 46 million Americans do not have health insurance coverage.

SINGLE PAYER HEALTH CARE THE PREFERRED OPTION

Unfortunately, apparently due to political caution, the President thus far has ruled out the health care option that undoubtedly is the most cost-effective: the ‘single payer' option. Ideally, the South Dakota Peace and Justice Center would like to see the U.S. adopt a single payer health insurance system.

Single payer simply means that the government sets reimbursement rates and handles all claims and disbursements. Canada and most European countries have single payer systems, and their overall health care costs are much lower than in the U.S. By cutting out duplicative administrative costs and profits of private insurers, what economists call ‘transactions costs' are greatly reduced.

Our Medicare system is a single payer system (though the not the Supplemental and Prescription Drug Insurance options). It took 20 years of political struggle from the time President Truman called for a national health care program in this country in 1945 and the time national health care for some of our citizens, in the form of Medicare, finally was signed into law by President Johnson in 1965. How many senior citizens would now willingly give up Medicare, a single payer system? Not many, we think. We are still waiting for a national health care program for the most of our under-65 our citizens, however.

MYTHS ABOUT SINGLE PAYER SYSTEMS

If single payer systems are so effective and popular in other advanced countries, why is the political establishment reluctant to push that option in the U.S.? The objections come primarily from the private insurance industry, the pharmaceutical industry, and some (by no means all) segments of the medical community. The ways in which the objections often are framed perpetuate several myths.

1. FIRST MYTH: Myth number one is that consumers of health care would give up choice with a single payer system. However, for many under-65 people, their only real choice is an employer-based plan or nothing. Farmers and other self-employed people generally have only private health insurance options, and those options can be prohibitively expensive. Healthy young adults may sometimes be able to find affordable private insurance, but they could be only one serious illness away from economic catastrophe and medical preconditions that cause them insurance problems for the rest of their lives. Canada has a single payer health insurance system, but citizens there have as much or more choice of health providers as do we in the U.S.

2. SECOND MYTH: The second myth is that control of health care under a single payer system would shift from doctors and patients to the government. The fallacy here is in the view that doctors and patients are still in sole control now. We have been living with ‘managed care' in one form or another for 20 years. The ‘management' comes from all kinds of directions—including government (Medicare), private insurers, self-insurance pools (e.g., the South Dakota employee health plan), and health systems (e.g., whether or not you will be provided surgery if you do not have insurance). In fact, doctor and patient control of health care already is severely constrained. And if you are among the 46 million uninsured Americans, you have almost no control yourself. Management controls will continue to be necessary if costs are going to be brought under control, as they must be. However, a single payer system could bring much more consistency, coherence, and fairness to those controls. A single payer system like that in Canada would allow most patients in the U.S. as much or more control as they have now, and with greater fairness for citizens and lower overall cost to the economy.

3. THIRD MYTH: Myth number three is that single payer systems necessarily involve long waits and diminished quality of health care. If the rich were to have to live within the same constraints as everyone else in a single payer system, they might, in fact, have somewhat longer waits for some kinds of care than they do at present. But most accounts indicate that for ordinary people, quality of care will be higher because of greater access to preventive and primary care and greater affordability of most kinds of care. And if the U.S. were to spend anywhere near the amount of money that we currently spend on health care (which most countries with single payer systems do not), waits for most kinds of care almost certainly would not be any longer than at present.

A ‘PUBLIC INSURANCE OPTION' FOR ALL PEOPLE

It is not too late to put the single payer option on the table. But if that does not happen, can we get major coverage and cost control gains in health care reform without it? In our view, not without a very strong and universally accessible ‘public insurance option'.

Unfortunately, it is far from certain that whatever health care reform eventually emerges will include a public option. Or, the public option that survives the legislative process may be too weak to sufficiently lower overall health care costs in the economy. For example, one version of a plan that has been discussed would use a coop approach. Writing in Huffington Post on June 16, 2009 Robert Borosage said, "Even if a network of coops somehow arose to insure that people had an option, they wouldn't have the clout to hold costs down and force private insurance to compete." We think he's right.

If we are not able to pass ‘single payer' health care legislation at this time, the South Dakota Peace and Justice Center believes that we must at least have a strong ‘public option'. A strong public option would include the following features:

1. This must be a Federal option that is available for all individuals, including individuals whose employers offer health care insurance. If public options were to be left to the individual states, coverage in many states would be pretty weak. And we would continue to have a highly fragmented and costly system nationwide.

2. If an employee chooses the public plan, the employer match (if employers are required to provide insurance coverage) should go with the employee to the public plan. Also, employers should be free to simply provide their match to the public plan, rather to carry a private plan for their employees, if they so choose.

3. Safeguards must be created to prevent private insurers from simply ‘dumping' patients with poor health or high risk onto the public option. Designing such safeguards is extremely difficult; that's one reason a single payer system is really preferable. Reimbursement criteria and rates for health care providers should be the same for the public and private insurance options; otherwise, providers may refuse to serve those on the public option. Forms and filing procedures for public and private options must be identical if transactions costs are to be reduced significantly.