The Facts on Single Payer Healthcare

in Healthcare/Policy/Politics

Healthcare is expensive. According to the Kaiser Family Foundation 40% of Americans and 62% of cancer patients will go into debt to pay for their medical treatment. It’s the single largest cause of personal bankruptcies in the country. Why has the cost of healthcare risen so much faster than wages in the past 40 years? The average American spends 8 times on healthcare what they would have spent in the 1970s, while overall GDP has grown by 168% and median wages a measly 16%. (Pew Research) The idea of a single payer system has recently become more mainstream, though not without push-back. For-profit healthcare is rare in the developed world. In fact, for-profit hospitals weren’t legal even in the US prior to 1973, before the passage of the Health Maintenance Organization Act.

Would single-payer cost more? Does it cost more in other countries? While it’s challenging to predict what it would cost here, particularly as the proliferation of lobbyists, industry campaign contributions, etc. have effects that are difficult to quantify, we can compare what single-payer systems cost in other countries and the result is dramatic. Not only are they paying less, but they are paying per citizen about the same as the US government pays per citizen. The difference is that for their investment they get a full-service system whereas our investment only funds Medicare and Medicaid.

When you include what our employers and we ourselves pay in premiums, deductibles, and co-pays the US healthcare system is literally twice as expensive as in our peer countries, over $10,000 per person in 2018, 17 cents out of every dollar of GDP or roughly double the OECD average. So, we’re actually already paying the price for single payer. We simply aren’t getting our money’s worth. So why does it make sense to publicly absorb the most expensive time for healthcare consumption in the form of Medicare for retirees but not the cheapest and potentially the best time to provide preventative care?

What are we getting for our money? If we spend double the average, one would assume that we should have the finest system on Earth, right? This is certainly not the case by most measures. There are 2.4 practicing physicians per 1,000 people in 2010, well below the OECD average of 3.1.The number of hospital beds in the U.S. was 2.6 per 1,000 population in 2009, lower than the OECD average of 3.4 beds. On overall life expectancy, we come in 31st, right between Costa Rica and Cuba, well below most of our rich world counterparts. There are of course lifestyle factors to consider here. Americans are more obese than other rich world countries. Roughly 1/3 of American adults are obese, as defined by a BMI over 30, compared to most EU countries where obesity rates are between 20%-25%.  While this might explain some of the disparity, there are other factors where Americans do make healthier decisions however, such as smoking rates which have fallen to about 15%. Compare that to France, where 34% of adults use tobacco. Another factor may be wait times for care. While opponents of single payer systems love to point out wait times in single payer systems, Americans are actually more likely to wait more than 6 days to see a doctor or specialist than our European counterparts. Americans had to wait more than 6 days in 26% of cases, compared to 16% of the time in the UK or France. (Commonwealth Fund International Health Policy Survey).

Where it is much more difficult to tie outcomes to lifestyle choices is in the rate of infant mortality, particularly as pregnant women and infants are covered by Medicaid where they do not have private insurance. The infant mortality rate in the US is 6.7 babies per 1,000. The OECD average is 3.9 per 1,000, with many countries such as Iceland, Japan, and Sweden under 3 deaths per 1,000.

Another favorite topic of those opposed to publicly funded healthcare is that of innovation. Without the profit incentive, the reasoning goes, innovation will cease. There is no doubt that the cost of research and development is significant and the developers of life saving treatments deserve compensation, but where does public funding fit into this model? The first fallacy in this is that all research is done by private industry. It isn’t. Many of the largest breakthroughs are accomplished in universities, research that is largely funded through research grants. So while there is no doubt the US files more new drug patents, this may be a result of having the world’s finest University system rather than the most profitable drug companies. In fact, only 40% of new drug patents in the US come from the big pharmaceutical companies according to researcher Derek Lowe, and many of these patents are actually reworks or slight modifications of existing drugs, which is a tactic used to extend the life of patents that are set to expire allowing competition from generics. The lead American companies enjoy also disappears when one adjusts those number according to population. Japan actually produces more medical patents per capita than US, and, unsurprisingly, enjoys the longest life expectancy on Earth.  In fact of the seven pharmaceutical companies judged most innovative by Thompson Reuters; Johnson & Johnson, Novartis, Roche, Abbott, Bayer, Bristol-Myers Squibb and Boehringer Ingelheim; two are German and two come from tiny Switzerland, so the US hardly has the market cornered on innovation.

Where is the resistance coming from when the comparisons seem to favor single payer? The person on the street won’t really care whether their healthcare is funded monthly in an insurance premium or on tax day. Employers would love to be freed from one of their largest personnel costs. Certainly there are vested interests in the for-profit system, but that’s hardly a compelling argument for overpaying for any service.

While the arguments against a single-payer system seem flimsy or are unsupported by any available data, the arguments in favor are many. First, if access to primary and therefore preventative care is universal, there will be savings in terms of disease prevention. Many diseases are cheaper to prevent than to cure. One of the largest factors in cancer survival rates is early detection. An outpatient procedure performed at a clinic today may well be months of painful and costly treatments, such as chemotherapy, within a relatively short time. The confusion of in network/ out of network disappears when there is but a single network, expanding the options for almost all patients. Of course on some level insurance companies compete, but how transparent is that? Are they competing or colluding? Who is better to guide healthcare decisions, a company whose primary purpose is profit or officials that can be replaced by us every few years? While certain relative merits may be open to debate, the fact that high quality healthcare can be provided more cheaply by a single-payer system is impossible to refute, as every industrialized country in the world seems the be able to do so. Why can’t we?