Public Option vs. Single Payer

Is a public option real reform?

By Mitch Gurney

October 25, 2009

Shouldn’t all the people’s interests be represented in a representative style government such as ours? As most of us realize the current debate over health care has more to do with protecting insurance companies profits and very little to do with any real reform that might actually benefit the vast majority of the people.

A sad reality that is a consequence of our two party system as it impacts an issue like health care reform is that if either party actually proposed real reform the opposition party will fight it every step of the way in fear of becoming irrelevant. In other words the Republicans will not give this sort of win to the Democrats. Even sadder however is neither party really wants reform because both are serving the needs of the insurance industry. This is dysfunctional representative style government except for those who benefit.

Paul Craig Roberts gets right to the heart of the matter in The Health Care Deceit:

The current health care “debate” shows how far gone representative government is in the United States. Members of Congress represent the powerful interest groups that fill their campaign coffers, not the people who vote for them.

The health care bill is not about health care. It is about protecting and increasing the profits of the insurance companies. The main feature of the health care bill is the “individual mandate,” which requires everyone in America to buy health insurance. Senate Finance Committee chairman Max Baucus (D-Mont), a recipient of millions in contributions over his career from the insurance industry, proposes to impose up to a $3,800 fine on Americans who fail to purchase health insurance.

Debate focuses on subsidiary issues, because Congress no longer writes the bills it passes. Executive branch agencies and departments write bills that they want and hand them off to sponsors in the House and Senate. Powerful interest groups took up the same practice. The interest groups that finance political campaigns expect their bills to be sponsored and passed.

Thus: [what we get is] a health care reform bill based on forcing people to purchase private health insurance and fining them if they do not.

What Roberts is referring to is the public option proposed in each of the key bills, House bill, HR3200, and the Senate’s key bills, S.1679 or S.1796. If enacted as currently proposed everyone will be mandated to get insurance or face a penalty. The differences between these three bills are relatively minor with each bill proposing levying a surtax on the rich. The biggest issue between them is whether the public option will be tied to Medicare reimbursement rates or whether it will require the HHS Secretary to negotiate rates.

But missing is these proposals is a Single Payer option. Polls show that a vast majority of people want universal health and a single payer option is one way to finance such a system. Advocates for single payer have frequently been denied inclusion in congressional hearings. On October 5^th Obama met with over 150 doctors at the White House but doctors representing the universal health care movement were excluded and Obama made no mention of the single payer option in his speech. Single payer legislation, HR 676 has been proposed but is being ignored by most policymakers. Why?

We hear these terms, public option, single payer, and universal health care tossed about a great deal but what exactly do they mean and is there a difference between them? For those not clear on their meaning, let’s take a look:

Universal health care in general terms refers to providing every citizen with health insurance. Although for some people the term connotes a national insurance program there are actually a variety of ways to achieve universal health care, some of which are predominantly public while others may be a mixture of public and private elements. As most of us know our current system is not universal care but is based on what one can afford and not on what one needs. It seems to me that if real reform is what we want than universal health care should be our goal otherwise why go through all the expense and emotional upheavals this debate is costing us for anything less?

What is the Public Option? (OpenCongress.org):

The public option as proposed in the core bills is a government-run health insurance plan, like Medicare, that would compete along side private insurers in a new Health Insurance Exchange that the bill would set up. The exchange is basically a place where people who aren’t on Medicare or Medicaid and don’t have insurance through their employers would go to comparison shop for a health plan. One of the plans available on the exchange would be the public option. Like all plans on the exchange, the public plan would have to meet certain minimum standards for care – minimum services that must be covered, mental health benefits parity, a fair grievance and appeals mechanism, etc. The public option and the private insurers on the exchange could still offer different levels of care – from catastrophic-only to comprehensive – but plans would be relatively standardized by type so that comparison shopping is easier for consumers. The exchange would be available to the public as a website and a toll-free hotline, and would be focused on making information about the plans more transparent.

The Congressional Budget Office (CBO) ran an analysis in July 2009 on the public option as currently proposed, see Report 

If you wish to read the official legislative text on the structure of the public option, see Title II, Subtitle B.

For further reading, click on the public option link provided above.

Will the public option as proposed provide universal health care? No. The public option as proposed is a compromise and may have a less radical  impact on the nearly 1500 insurance companies offering medical coverage in the U.S.

(Nov 8, 2009 – Please see updated commentary on this subject). 

Roberts points out:

The determination of “our” elected representatives to serve the insurance industry is so compelling that Congress is incapable of recognizing the absurdity of these proposals…Baucus masquerades as a defender of the health impaired with his proposal to require insurers to provide coverage to all comers as if the problem of health care can be reduced to preexisting conditions and cancelled policies. It was left to Rep. Dennis Kucinich to point out that the health care bill ponies up 30 million more customers for the private insurance companies.

It seems important to highlight this statement: the current “health care bills ponies up 30 million more customers for the private insurance companies.”

The CBO in testimony before the Senate in February 2009 stated:

Without changes in policy, a substantial and growing number of people under age 65 will lack health insurance. The CBO estimates that the average number of nonelderly people who are uninsured will rise from at least 45 million in 2009 to about 54 million in 2019. That projection is consistent with long-standing trends in coverage and largely reflects the expectation that health care costs and health insurance premiums will continue to rise faster than people’s income—making health insurance more difficult to afford.   

The public option will not alleviate the flaws in the current system and coverage would still be based on what one can afford and not on what one needs. Roberts further points out:

It is absurd to mandate that people purchase what they cannot afford and to fine them for failing to do so…A person who cannot pay a health insurance premium cannot pay the fine… These proposals are like solving the homeless problem by requiring the homeless to purchase a house…The reason there is a health care crisis in the US is that the cumulative loss of jobs and benefits has swollen the uninsured to approximately 50 million Americans. They cannot afford health insurance any more than employers can afford to provide it.

What is Single Payer? (Physicians for a National Health Program – PNHP)

Single-payer national health insurance is a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private.

Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or “payer.” In the case of health care, a single-payer system would be setup such that one entity, a government run organization, would collect all health care fees, and pay out all health care costs. In the current US system, there are literally tens of thousands of different health care organizations—HMOs, billing agencies, etc. By having so many different payers of health care fees, there is an enormous amount of administrative waste generated in the system. (Just imagine how complex billing must be in a doctor’s office, when each insurance company requires a different form to be completed, has a different billing system, different billing contacts and phone numbers—it’s very confusing.) In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services. This alone reduces administrative waste greatly, and saves money, which can be used to provide care and insurance to those who currently don’t have it.

The American Medical Student Association (AMSA) explains single payer similarly:

Single payer refers to a way of financing health care, which includes both the collection of money for health care and reimbursement of providers for health care costs… Single payer does not specify a health care delivery mechanism; it specifies a health care financing mechanism.

For further reading, click on the single payer links provided above.

If a single payer system were adopted it would clearly represent real reform. Obviously, as AMSA points out, “private health insurance companies do not stand to gain from a single payer system as their role would be dramatically minimized.” Additionally the pharmaceutical industry would not gain from a single payer system either as a consequence of price controls and bulk purchasing. And there is the heart of our entire debate, the challenges, and all the emotional upheaval. The problem is that single payer would effectively wipe out the health insurance industry and they are too powerful to let that happen. I am pretty confident that most people if they look at this issue objectively will recognize that the right choice for the American people is a single payer financing system. This is why single payer advocates and a single payer proposal are being ignored and why we are unlikely to see it actually happen because there are too many powerful influences that have corrupted our political system thus thwarting logical thinking and an honest appraisal of our problem by most of our elected officials. The fight for survival is a primitive but a powerful force. And it is this key issue I suspect is motivating industry leaders and defenders of big business to confuse the issue, spread rumors of secret bills, vapor bills, socialism, and a government take over.  

Regarding single payer, Roberts says:

What the US needs is a single-payer not-for-profit health system that pays doctors and nurses sufficiently that they will undertake the arduous training and accept the stress and risks of dealing with illness and diseases.

If a single payer system were adopted it would be necessary to transition the thousands of people who work for private insurance companies to other sectors of the economy. Some of these people could be trained to work in the new public system they would still experience a significant change in their lives. So as we can see we are in rock and hard place. What would be good for the nation as a whole isn’t necessarily good for a smaller portion of the society, at least in the short term.   

Polls show more people support the idea of universal coverage that single payer could provide:

PNHP.Org

Most Physicians support National health insurance March 2008 study shows

Given our nation’s obsession and fear of “socialism” and because it would be a government program one myth that opponent’s claim is that a nationalized health care system such as single payer is “socialized medicine”. But this is not necessarily true. It depends on how it is structured that defines what is and is not socialized medicine, as explained by PNHP:

Socialized medicine is a system in which doctors and hospitals work for and draw salaries from the government. Doctors in the Veterans Administration and the Armed Services are paid this way. The health systems in Great Britain and Spain are other examples. But in most European countries, Canada, Australia and Japan they have socialized health insurance, not socialized medicine. The government pays for care that is delivered in the private (mostly not-for-profit) sector. This is similar to how Medicare works in this country. Doctors are in private practice and are paid on a fee-for-service basis from government funds. The government does not own or manage medical practices or hospitals.

And AMSA points out:

Importantly, the term “single payer” is different from “socialized medicine” and “universal health care.” Socialized medicine refers to a system like the National Health Service of the U.K., in which the mechanisms of delivery of health care are owned by the government. That is, the government owns the health care facilities and physicians work for the government. In contrast, the mechanisms of delivery of health care in a single payer system are not necessarily owned by the government. Physicians can be either in private practice or public practice, and hospitals can be both publicly or privately owned.

The distinction we need to make in this country is that health care is unlike other consumable products or services where free enterprise has its proper place. We can choose not to buy the top of the line HD TV settling instead for a cheaper model or buying a car we can afford. But medical care, especially in time of crisis, is not a personal choice. At some point in each of our lives we will need care and perhaps a great deal of it and there is no escaping this. The free market in health care may provide good health care for those who can afford it, but what about those who can’t?

AMSA points out:

[The free market system is]…not designed to distribute health insurance equally or universally. Private health insurance companies seeking to maximize profit have no incentive to insure everyone, as this would require them to insure patients with high health care costs.

Over a year ago my brother passed away from cancer. Self employed his insurance was what he could afford. The insurance company denied payment of a large portion of the care he had received while in the hospital saddling his widow with over $200,000 in bills forcing her into bankruptcy. This is a story being experienced by hundreds of people every day. One million people experience medical bankruptcy every year. Such a tragedy could be avoided if a single payer system were enacted. Those who claim it is unjust for the whole of society to share equally in the cost of medical services through a nationalized medical system may be failing to recognize that with each bankruptcy this cost is transferred to the public sector through increased insurance premiums and raising medical cost. Does it seem humane and civilized for an advanced and educated nation such as ours that medical care is based on what you can afford versus what you need or that one is saddled with massive debt and often forced into bankruptcy when the inevitable medical crisis happens? Does it make sense to keep things as they are when we know without doubt that the current system is failing a large portion of our society?

So while our options seem clear our political and business challenges are not. While we are totally justified, we find ourselves in a hell of a predicament of not trusting our government and not trusting corporations either, so what do we do now?

Other resources:

League of Women voters prepared a chart comparing public option vs. single payer:

Public Option vs. Single payer Health Care

Physicians for a National Health Program is an organization of over 17,000 members, many of whom are employed in medical industry, that have been advocating for health care reform since 1987.

Their summary and recap of the single payer program they advocate can be reviewed here:

What is Single Payer?

Advantages and Disadvantages and key features of single payer:

Single Payer 101 – power point presentation

Single Payer 101 – pdf document

Republicans for Single-payer Universal Healthcare with informed Choice

A summary of HR 676 is available here:

The United States National Health Care Act, H.R. 676

See what you would save if single-payer healthcare legislation were passed

Small Business Guide to single-payer healthcare

Download additional power point slides here:

Conversation Coalition for Health Care Reform

Universal Health Care PowerPoint Presentations

Mitch Gurney