Bioethics Forum Essay
A Single-Payer Bubble?
In an earlier piece, “Trumping Drug Costs,” I looked at out-of-pocket costs as the pivotal issue with drugs. They can be a particularly heavy burden on the elderly, taking money from their savings and a large bite of their Social Security income. Along the way, I also looked at out-of-pocket medical costs in Europe–called “cost sharing” there. While exploring the European scene, I noticed something I had not been clear about. There are two American misconceptions about the universal health care systems in Europe: that they are wholly government-run and that they cover all medical costs. They are not, taken literally, “single-payer” systems. All of them have a private sector, some large, some small, and all have some degree of patient cost-sharing.
Something else caught my eye, not much noticed in the U.S. A recent cluster of publications in and about Europe had similar headlines. As one article put it, “the social welfare model is crumbling as the European Union fragments.” And its title is even more pointed: “Health Care: A Universal Problem Without a Universal Solution.” The headline of another article was “Tackling the Tough Problem of European Health Care Sustainability.” A third was “Column: Across the World, Universal Care Is in Poor Health.” A 2017 report by the British House of Lords said that “our NHS, our ‘national religion,’ is in crisis and the adult social care system is on the brink of collapse.”
These articles have in common one important theme: the core cost pressures in Europe come from an aging population, an increased incidence of chronic. medical conditions, low birthrates, expensive new technologies and an ever more sedentary lifestyle. While there is some grousing, Europeans don’t fault the management of their universal coverage policies or suggest giving up on universal care. But they are worried about the future. The U.S. has the same problems, of course, but also the advantage (so far) of large numbers of immigrants and thus favorable birthrates.
Many of us with a liberal bent have, over the years, looked longingly at European government-managed health care. Why can’t we have that here? It is profoundly ironic that many of those governments, in embracing “shared costs,” have made a classic market move. It is traceable to the Netherlands in the 1970s, a country that has lived off of trade and enthusiastically embraced the market long ago, as I learned when writing Medicine and the Market: Equity v. Choice. From 2008 to 2016 Dutch out-of-pocket charges more than doubled.
Many Europeans are unhappy about this development—just as Americans are. President Trump was smart to pick on drug costs, a popular issue, likely to get more traction than a fresh assault on the Affordable Care Act, which has continuing strong public support. Public opinion polls also show significant support for a single-payer health care system. Within the past year, two prominent Democrats —Elizabeth Warren and Bernie Sanders–no doubt noting that support, have introduced their own health insurance reform bills.
Warren does not call her proposal a single-payer plan, conceding that such a plan would be difficult to pass and that private insurance will have to continue. Private insurance coverage, however, would have to “be at least as good and priced as reasonably as the coverage provided by our public health care programs.” Her plan has four goals: increase insurance affordability, provide consumers with new protections, safeguard the ACA, and ensure that private insurers participate in the ACA marketplace. Her plan could reasonably be considered an effort to save and improve the ACA.
Sanders’ “Medicare For All” bill offers few details on its implementation. While he puts up front the necessity for higher taxes to pay for his plan, it is mainly a list of benefits, all of which would, in some ideal world, be attractive. His plan would cover all forms of health care and eliminate copayments, as well as employer-provided health care. It would also do away with squabbles between doctors and patients and insurers. Private insurance would not be eliminated, but it would be available only for a few medical procedures such as cosmetic surgery. As far as I can determine, no other country has such a generous or simple plan. The Congressional Budget Office has not offered any estimates of the costs of either Warren’s or Sanders’ plan. The tax implication of Sanders’ bill is another question.
In trying to make sense of the future of health care, domestic and European, I think it possible to discern what I will call axioms.
Axiom 1: The Weight of Aging. For the foreseeable future and then some, the number and proportion of elderly will increase in the U.S. and Europe and thus so will health care costs. More quickly for Europe than the U.S., the ratio of young to old will shift to the old, increasing pressure on the young to support the old. Along with aging, technological progress (notably with drugs), the increase of chronic disease, and poor health habits are the main causes of economic strain.
The U.S. is the main outlier in health care costs, with 17.1% of its gross domestic product going to health care, almost 50% more than the next highest, France at 11.6%. While all European countries have out-of-pocket costs, the U.S. figure for such costs in 2013 was $1,074 per person, with only Switzerland higher, at $1,630. By far the smallest was the U.K., at $321. At $4,197 per capita, the U.S. was the leader in public financing of medical care. Despite all that high-end spending, public and private, the U.S. had a lower life expectancy than any European country.
Axiom 2: Limited Options. There are only three ways to pay for health care: government, personal income, or some mixture of both. No health care system uses a wholly single-payer plan or provides unlimited medical coverage. Each health care system uses a different mixture of options, but the European health care systems are uniformly tilted in favor of government over private funds. All of them are feeling economic strain, intensified by slowness of recovery in Europe from the global recession.
Axiom 3: System Loyalty. While Europeans resist tax increases, dislike out-of-pocket payments, and complain of other restrictions (e.g., waiting times), they want to keep their government-managed universal care systems. Government, they believe, has the ultimate responsibility for health care. Are they worried? Yes, but the proposals to deal with the problems seem mild and conventional: moderate tax increases, more out–of-pocket expenses for some, and, everyone’s favorite, “greater efficiency” to lower costs.
Axiom 4: Cost: Too Good to Be True. As the Congressional debate on the Republican effort to rescind the ACA program made clear, Americans like it. A subsequent Pew public opinion survey showed something even more surprising: over 50% support the view that the government is ultimately responsible for ensuring health coverage for all. Some 33% want a single-payer plan while 25% would accept a government and private mix.
That combination suggests, however, something less than strong support for a single-payer system, even among Democrats. While they want to keep Medicare and Medicaid, Republicans are far less willing to embrace government responsibility, and only 5% support a single-payer system. A clearer picture of the costs of a single-payer plan is likely to cool some ardor.
Even so, Sanders and Warren are on to something. But Warren, building on the ACA popularity and aware of public support, has the better plan. If legislated as Sander proposes, his plan would probably be the most comprehensive in the world—and the most expensive.
Notable among a handful of states, California is warm to the idea of a single-payer plan. Its Senate has voted in favor of it. But the cost estimates are chilling, costing an estimated $400 billion a year. Some of that could be offset by money from the Medicare and Medicaid programs and other moves, but total spending would still come in at the $50-to-$100 billion annual range, requiring a new tax of 15% tax on earned income. Even rich California, with a surplus budget, would have trouble swallowing that; even there, increased taxes are not popular.
Public Citizen, a consumer advocacy organization in Washington, has undertaken a high-powered drive to petition Congress to pass Bernie Sanders’ Medicare-for-All system, touting the support of 16 Senators and 121 members of the House of Representatives. While offering no details on the bill, it confidently says that the health insurance industry will be “eliminated,” a simple “health care card” will get you all need–home care, nursing care, rehab, eye care, and dental care—and “drugs will be cheaper.” The seductive economics behind all this is that there will be savings to offset the expenses, but not much is spelled out.
What’s not to love about such a plan? The old caution, “too good to be true,” fits perfectly here. With a future of certain rising costs from aging societies here and abroad and the troubles of European health care, it would make no sense to embrace what would be the world’s most expense heath care system. The immediate problem is that a strong push for it might reduce the chances of Elizabeth Warren’s more prudent and likely affordable plan being introduced in the Senate. Her plan could have a chance of passing, but Sanders’ won’t.
All her plan would take is a continuing strong economy and an increased number of Democrats in Congress. Although she does not mention it, one of the most necessary changes to control costs would be to rescind the 2003 Congressional prohibition of government negotiated drug prices and to permit citizens the right to buy drugs from other countries—just what’s missing from President Trump’s drug plan. European countries consider it self-evident that government should be free to negotiate drug costs. Meeting those plausible goals would get the Warren plan off to a grand start.
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