The Left's Public Option Problem

(Published at Blast Magazine and on Znet's front page.)

Given the failure of similar programs in states, single-payer should not be thrown aside for this battle.

For advocates of guaranteed truly universal healthcare the debate over Obama's reform efforts have been rather disappointing.

Despite the fact that a clear majority of Americans prefer joining the rest of the developed world and having a comprehensive government plan that will cover everybody, President Obama and most of Congress, all of whom have received large sums of campaign donations from the drug and insurance industries, have made a government run plan that would not sell healthcare as a commodity to make profit, a non-starter. As a result, single-payer healthcare advocates, despite having overwhelming grassroots support, have been dismissed in Washington.

Now, with few other options, liberal members of congress and advocacy groups have largely focused their advocacy and money behind what appears to be the most heated battle over possible healthcare reform this summer: the fight to include a "public option" to compete with private plans in the healthcare package.

Predictably, ideologues opposed to any kind of government involvement in healthcare are fighting tooth-and-nail to oppose this option, ridiculously, calling it a step towards socialism. But as much of the left rallies to counter these shameful distortions, they may want to consider a very important question. What exactly are they fighting for?

By taking single-payer off the table at the start, Obama and his supporters may have put all of their fuel into a sputtering vehicle. To date, two state governments Massachusetts and Vermont have attempted to implement "hybrid" pseudo-public solutions to major healthcare problem. Both of these plans have been floated as possible templates for national reform; the Mass plan is often cited as a possible angle, and Rep. Peter Welch, D-Vermont, has introduced legislation for a public option that is somewhat similar to Vermont's state-wide plan. Sadly, in both cases the results of these efforts have not been promising.

Those of us living with the new and once-highly touted Massachusetts plan, which aims to cover everyone by requiring that everyone buy insurance (and providing subsidies for those who cannot afford it), have become all-too familiar with the problems of this arrangement, which was worked out in 2006 between Mitt Romney and the Legislature.

The Boston Globe's recent front-page article highlighting how Boston Medical Center, which provides more healthcare to the poor than any other hospital in Massachusetts, is facing major deficits largely because the 2006 healthcare legislation has bled money from the "free care pool," is only one example of how this legislation, well-intended it may be, is not sustainable.

By June 2011 enrollment in the plan is projected to be 342,000 people at an annual expense of $1.35 billion up considerably from the original projections of covering 215,000 people at a cost of $725 million.

Moreover, because so much of the funding for the plan has come from the state's free care pool, many low-income residents who were once able to get care, now face unaffordable co-pays, premiums and deductibles (which have already risen 9.4 percent since passage of the reform.) According to a study done by the Physicians for a National Health Program, if a middle-income person on the cheapest available state plan got sick, he or she could end up paying $9,872 in premiums, deductibles and co-insurance for the year.

"The Massachusetts reform law is not providing universal access to care even in a state with highyl favorable circumstances including previously high levels of spending on health care for the poor, high personal incomes, and low rates of uninsurance," the report said. "It is not a model for the nation."

A recent New York Times article, aptly titled "Massachusetts Takes a Step Back from Health Care for All," reported problems as well. The July 14 article states (emphasis is mine), "The new state budget in Massachusetts eliminates health care coverage for some 30,000 legal immigrants to help close a growing deficit, reversing progress toward universal coverage just as Congress looks to the state as a model for overhauling the nation’s health care system."

Vermont's Catamount Health, public-private hybrid effort to cover the state's uninsured population now at 11 percent is also failing. Passed in 2006 as a compromise after Gov. Jim Douglas vetoed single-payer legislation, the bill, unlike the Massachusetts plan, does not mandate residents buy insurance. Instead it offers residents a chance to purchase healthcare from Blue Cross Blue Shield of Vermont with help of government subsidies based on income. But the plan, even according to its own advocates, does little to solve the problem.

One reason: the plan is unaffordable for many working Vermonters. Even those with no income must pay a monthly premium, and someone earning $30,000 a year still must pay $160 a month for coverage, plus monthly deductibles and co-pays for prescription drugs and doctor visits. Accordingly, less than a quarter of those eligible have signed up for the plan. Catamount can also deny coverage for pre-existing condition and the recently unemployed must wait a year before they are eligible for the program.

Since Vermont, like Massachusetts and so many other states, is facing dreadful revenue forecasts, the co-pays and premiums may well be raised in the near future, or services cut. A Democratically-controled Legisalture was able to avoid cuts in the most recent state budget, but more cuts may well be needed during the year, according to Tom Kavet, Vermont's Legislative economist.

As Peter Sterling, Catamount Health's outreach director told Seven Days, Vermont's largest weekly paper, "It doesn't solve the big problem, and we know that."

Sterling's words, and the failure of both of these reform efforts, could serve as a warning for healthcare activists as the national debate over a public plan reaches critical mass. Putting all of our muscle and money into a potentially doomed public option something that "doesn't solve the big problem" may yield little benefit in the fight for universal healthcare. Worse, if Congress pushes through a failed public option, neutered by congressional Republicans, it could give the concept of public healthcare an undeserved black eye in the eyes of many Americans.

In fact, a more intriguing consolation prize in Obama's health reform bill could come from Sen. Bernie Sanders (I-Vermont) who has a plan to fund pilot programs for universal healthcare in five states -- one of which would be a single-payer plan. This could prove to be a sterling example of the cost-effectiveness of such a program. If Sanders' home state, Vermont, were to implement state-wide single-payer, it would save the tiny state a sizable $51 million a year, according to a study commissioned by the Vermont Legislature in 2006. Predictably, however, the Senate has not been very open to this idea, moderate as it may be, and voted it down in committee. One can only hope this idea will resurface as the debate rages on.

Despite such unceasing opposition from Washington, giving up on single-payer healthcare is not a wise move. As healthcare costs continue to skyrocket, the likelihood of a single-payer plan becoming reality in the US will only increase. The United States currently spends about 16 percent of its GDP (and rising fast) on healthcare more than any other country in the world and still has embarrassing rankings on infant mortality, life expectancy and overall healthcare rankings, according to the World Health Organization and BMJ, a peer-reviewed international medical journal. 46 million are left uninsured with many more underinsured, and an estimated 18,000 people die each year from lack of insurance.

Since nearly half of healthcare costs go towards corporate profits and administrative waste, two expenses that are virtually eliminated by implementing a single-payer system, in time some kind of not-for-profit government-run system is the only option that will make any fiscal sense. This reality should not be lost in the battle for a doomed-to-fail half measure that may or may not be attached to healthcare reform in the coming months.

Further Reading:

*PNHP Report on Massachusetts Reform Plan

*Vermont Workers' Center: Health Care is a Human Right Report (Features information on Catamount)

*Study commissioned by VT Legislature on economic impacts of a single-payer system

*Hasta la vista single-payer movement? (Article I wrote in 2007 on a hybrid plans vs. single-payer)

UPDATE: 6:22 p.m., July 16)

A Blast reader commented on my post. Since the internet is all about open debate, I thought I would post his comments here, and my response. I will update you if he responds again.

He wrote:

Not everyone who opposes single payer healthcare is simply an
ideologue. There are a lot of legitimate concerns about a single payer system
and what it would do to real access to a doctor as opposed to just having a card
that says you’re insured, the actual cost of care, progress in research and
development of both drugs and medical equipment, and making certain types of
care unobtainable for patients when the government doesn’t feel like paying for

The ‘rest of the developed world’ which you vaguely refer to
has had plenty of problems with their single payer systems. In one survey of
citizens 80% of Americans said that the current system needs to be reformed or
rebuilt, with only %20 saying they liked it the way it is. But when the same
question was asked of citizens of the UK, Canada, Australia, and New Zealand,
which all have single payer national healthcare, the distribution of answers was
the same. Even with national coverage, patients still want massive overhaul of
their healthcare systems.

To say that a single payer option is the only that makes
sense, or that ‘not for profit’ automatically means that waste will be
eliminated is just silly, especially when no evidence is provided. Anyone who’s
ever paid any attention to how the government spends money knows

For anyone interested in hearing real researched arguments
against single payer healthcare, a good place to start is:

My reference to the 80/20 survey comes from their podcast
about the Massachusetts healthcare model.

Please read and consider the information there and
elsewhere before simply writing off anyone who doesn’t agree with you as an

My response:

Hey Lucas,

For the record, this article was not meant to be a full fledged defense of single-payer, but rather a critique of the half-measures liberals and Obama are now advocating for hence - so, indeed, much is left unsaid.

Still you raise interesting points, avoided attacks and presented evidence. I appreciate your comments, though as you might expect disagree with most of them, and I will address some of them here. I will use footnotes, rather than hyperlinks, as comments sections are shaky sometimes.

You have three paragraphs mainly. The first is mostly introductory, so I won't respond to it, other than to say I don't think all opponents of single-payer are ideologues. In fact, the major point of the article was to attack liberals for backing away from the idea, despite the fact that the majority of the public supports it. I did note that there are hyperbolic ads, paid for by ideologues (which, is not a pejorative term, in my view) comparing the possibility of a quasi public plans to socialism. An absurd argument, I think, and can elaborate if you like.

Also, before I delve further, allow me to provide some evidence to the above statement regarding public opinion. There are many polls, framed in many different ways, but all of them indicate that the majority of the public (floating around 55-65 percent) believes the gov has the responsibility to make sure everyone has care.

An ABC News/Kaiser Family Foundation/USA Today survey found that 56 percent of Americans preferred a government-run universal health system "like Medicare" to our current employment-based system run by private insurers. (1) This one is apt, because it bluntly compares our system to Medicare -- a single-payer system for the elderly.(2) Interestingly, the elderly are the most satisfied healthcare consumers in the US. (3) Further a majority of Americans said they are willing to pay higher taxes and give up future tax cuts to accomplish this. (4)

Perhaps I should have highlighted all of these arguments, but i was already over a 1,200 word limit and , again, was critiquing two complicated state plans, not making the case for single-payer in details (which, I have done, and will do again, if you care to continue the debate. Glad to have you as a guest blogger on my blog, or maybe Blast can work something out.)

The second graph raised great points, and I would like to address them.

You write:

The ‘rest of the developed world’ which you vaguely refer to has had plenty of problems with their single payer systems. In one survey of citizens 80% of Americans said that the current system needs to be reformed or rebuilt, with only %20 saying they liked it the way it is. But when the same question was asked of citizens of the UK, Canada, Australia, and New Zealand, which all have single payer national healthcare, the distribution of answers was the same. Even with national coverage, patients still want massive overhaul of their healthcare systems."

This is true. Even countries that cover everyone, via singlepayer (like Canada, UK) or otherways (France, Australia) etc ... have room for improvement, for sure. Healthcare systems -- good or not -- are complicated and there are always problems.

For example, the UK only spend 8 percent of GDP on healthcare - way less than other single-payer countries. It is bled dry to an extent, even though everyone is covered, no small point.

But even with their faults, public opinion polls consistently show that other countries are more satisfied with their systems than our's.

According to MArket Watch, hardly a marxist rag, "A third of Americans said they believe the U.S. system 'has so much wrong with it that we need to completely rebuild it,"' while only 9% in the Netherlands hold such a sentiment about their health-care system. Twelve percent of Spaniards favored a complete overhaul, compared with 15% in France, 17% in New Zealand, 18% in Australia and 20% in Italy." (5)

The article continues, "What's more, Americans' personal share of medical expenses is the highest in the industrialized world, Davis said. In 2007, 30% of Americans reported having out-of-pocket medical expenses of more than $1,000 in the last year compared with 19% of Australians, 12% of Canadians, 10% of Germans and New Zealanders, 5% of Dutch and 4% of Britons. "

These stats are backed up elsewhere. The US pays the most in the world for health care, yet is ranked 37th by the WHO, has 46 million uninsured, and low satisfaction rates. We pay double what most countries pay.

You are right that they want improvement. Market Watch reports, "Majorities in France (70%) and Britain (59%) said their health systems are the envy of the world. Still, nearly as many in France as in the U.S. said fundamental changes are needed to make the system work better. Half of American adults said so compared with 47% of French adults."

But overall, costs are lower, people are healthier and more satisfied, and everyone -- everyone - is insured. And only the United States has a system where healthcare is not guaranteed to everyone. That is quite radical.

Now, why do spend so much, yet cover so few?

You make this point:

"To say that a single payer option is the only that makes sense, or that ‘not for profit’ automatically means that waste will be eliminated is just silly, especially when no evidence is provided. Anyone who’s ever paid any attention to how the government spends money knows this.

Allow me to give the evidence. There are two major reasons, as I mentioned, why single-payer is more fiscally conservative. 1) There are no corporate profits, which make up about a quarter of overall costs. This, obviously, is eliminated if you eliminate private insurers. the other reasons is administrative waste. Having so many payers, leads to expensive overhead -- another 25 percent of health care spending is this administrative waste. (6)This is about ten times as much as single-payer options. According to the New England Journal of Medicine Canada's national health insurance system spends just 1.3% on overhead, and the US's Medicare and Medicaid programs have administrative costs of between 2-5%. (7)

The International Journal of Health Services estimates the US would save 75 percent of its administrative costs by switching to single-payer. (8) (Note, because peer-reviewed journals are behind pay walls, I am linking to studies citing them.)

To conclude, you are right I did not make a full-blown case for the economics of single-payer, because my article was a critique of state plans. But I am happy to make a full-blown case for it, if you would like to have a formal exchange (say, we pose the question "Would Single-Payer Improve Health care in the United States, I in the affirmative, you in the negative.)

Still, you raised questions about the merits of single-payer -- why it is cheaper and so forth, and I tried to address them here. Anxious for a response and all the best.

1 as quoted in http://www.boston.com/news/globe/editorial_opinion/oped/articles/2006/12/31/silent_majority_for_single_payer/
2) http://www.commonwealthfund.org/Content/News/News-Releases/2009/May/Elderly-Medicare-Beneficiaries-Give-Their-Coverage-Higher-Ratings.aspx
3) http://www.nytimes.com/2007/03/01/washington/01cnd-poll.html?ex=1330405200&en=45c0a4cf48ed21a1&ei=5088&partner=rssnyt&emc=rss (see complete poll results to the left of article.
4) ibid
5.) http://www.marketwatch.com/story/americans-rate-us-health-care-system-lowest-among-10-nations
6) http://content.nejm.org/cgi/content/abstract/349/8/768
7) iBid
8) http://www.pnhp.org/news/IJHS_State_Paper.pdf