Is America ready for single payer healthcare?

July 17, 2009

diana-furchtgottroth–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

President Barack Obama has repeatedly said “First of all, if you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”

But America’s Affordable Health Choices Act of 2009, the bill under discussion in the House of Representatives, would result in the demise of private health insurance in America.

The 1,018-page bill would result in unprecedented regulation of America’s health sector. Among other provisions, it includes an 8 percent tax on employers who do not offer health insurance to employees, a mandate for everyone to have insurance, and requirements on whom insurers must cover, what benefits must be provided, the extent of variation in premiums, and how much profit is permitted—with excess profits returned to enrollees.

This would solidify government control of all health care in America, force most private insurance companies out of business, and lead to a single payer health system, like Britain or France.

The bill’s focus is to drive people to the new public health-care plan or to Medicaid, the federal-state plan for low-income people. It would motivate many employers to drop insurance and pay the 8 percent tax, effectively steering employees to the new public plan.

The bill would create a new Health Insurance Exchange, where “qualified health benefit plans” are allowed to advertise their health insurance plans to individuals and firms. Only qualified health benefit plans are permitted to participate. In order to achieve the status of a qualified plan, an insurance company has to offer a certain package of benefits, meet guidelines on who can sign up, and agree to limits on profitability. It is unlikely that insurance companies can meet these requirements and stay in business.

The basic benefit plan for insurance companies who want to participate in the Exchange comprises inpatient and outpatient hospital services, as well as physician services and equipment and supplies used for treatment. In addition, it includes services that can by no means be considered basic, such as dental, vision, and hearing care for children, and mental health and substance abuse services.

Men would have to pay for maternity services and baby and child visits even if they are single and childless. People who do not abuse drugs would have to pay for substance abuse. This basic plan is like making everyone pay for a Cadillac when they would be glad to drive a used Ford.

Insurers would be required to accept all applicants, no matter how sick, and would be always required to renew coverage. With the exception of age, everyone, no matter how sick or healthy, would be charged the same premiums. When pricing by age, the highest premiums could not be more than twice as high as the lowest.

This means that in order to stay in business the prices charged by insurers would necessarily have to be very high. Companies would be required to cover a broad range of services, to accept anyone who applies without regard to sickness or health, and to keep premiums within a narrow range.

In addition, if companies were to make more than a certain level profit in a particular year, they need to return funds as rebates to enrollees. This prevents insurance companies from building up a reserve in some years to guard against losses in other years.

This pricing mechanism would quickly force private plans in the Health Exchange out of business—and leave consumers with the public plan.

In order to prevent insurance companies from offering plans outside the Health Exchange, Americans who receive financial help in paying for insurance would be required to buy plans in the Exchange. They could not select “bare bones” or catastrophic insurance plans sold on the open market.

Some Americans would be given “affordability credits,” credits to lower the price of their insurance, to be spent only within the Health Exchange. Individuals would be eligible if they earn too much to qualify for Medicaid—over 133% of the poverty line, now $29,000 for a family of four—but less than 400% of the poverty line, now $88,000.

Hence, health insurance assistance would be extended well above the median income for American households, now $55,000. These individuals would be forced to join plans in the Exchange in order to take advantage of government assistance.

Employers are also driven towards the Exchange. Beginning five years after passage of the bill, they would either have to offer health insurance comparable to plans in the exchange, or pay an 8 percent tax specifically designated towards subsidizing coverage in the Exchange.

Although President Obama repeatedly says that Americans who are happy with their medical insurance plans will be able to keep them, the House bill will make these plans disappear. Then, it’s a short step to a single payer system. Is America ready?

35 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

There were no questions asked when 800 billion dollars were given away to banks to do what they wished. The reckless – and oh so quick – way in which that was made possible stunned the whole planet.

But! there are all sorts of questions raised about a national health care plan, all kinds of unachievable goals and unsurmountable obstacles to take care of public health. Surely a global problem like the financial crisis dwarfs the regional health care needs?
Surely the needs of 350 million people can easily be taken care of?

As a Nation, citizens can’t be fair weather friends to each other and expect to survive united. The key to longevity of nations – of internal peace – is how well their members take care of each other. The most advanced nations are those who are consistent in their approach to social needs.
Who doesn’t want to work unburdened by the thought of losing everything they have to a medical emergency?
How about employers? What employer wouldn’t want to drop the current system that punishes their enterprise?

The current President’s administration is sending out the message that the needs of a very small minority outweigh the needs of the crushing majority. The meaning is clear, it’s a nation deeply divided.
It explains why no clear objective will ever be achieved.

Posted by Dan | Report as abusive

Why are people so concerned that 15% of GDP or 20% of household income goes toward healthcare? Most people agree with the phrase “you get what you pay for”, but not here? Never before in history has anyone rich or poor been able to survive catastrophic illness and yet we complain that we have to pay for it?

Now, the system as it stands today in the U.S. is hardly private. Medicare and medicaid contribute a large proportion of healthcare revenues already, hospitals are forced to provide charity care and regulations touch virtually every corner of the healthcare industry. So this is not an argument against this new government plan proposal, rather it is a reality check on the cost of the healthcare system. We can cut costs, for example in Pharma, but the result will be less development (and more unemployment), hardly a “free” lunch.

Posted by Jeremy | Report as abusive

Dan asks, “Why so few Q’s about TARP (and the stimulus package), and so many about health care?” I’d guess there are three factors (at least): [1] TARP was essentially bi-partisan in nature; [2] Obama’s grace period is bleeding away as folks understand the TARP and stimulus packages — and so are quicker to question the health care proposals; and [3] Health Care hits home for most folks, whereas loans to banks are more impersonal. As to working unburdened over paying for major medical, what about having a job, period? The current House plan taxes small businesses 8 percent if they fail to offer health care. That 8 percent tax will likely translate into small businesses (which apparently employ about 70 percent of all American workers) having to let go AT LEAST 8 percent of their employees — that could well mean an added 30-40 million lost jobs, on top of the 9.5 percent unemployed already.

Posted by mike smith | Report as abusive

I am a working American, I do not have health insurance.
So am I just supose to make everyone else around me pay for my health care just because of it? Nope… I could go out and get healthcare if i wanted to. there are plenty of options out there. I tell you what I will refuse to do, accept money stolen from other hard working people to cover my expenses. Obama you are out of touch with America. I dont care how popular you are with gays, black, illegal imigrants and any other country in the world you protect at my expense!

Posted by Dibledable | Report as abusive

Dear writers,
As a well wisher, i have completely analysed,listened Mr.Obama!s new health care for Americans is to be appreciated by all.
Please read,watch all Socialist ,European countries Health care benefits to many deserving citizens.
Just,rich corporates,rich people to contribute to State for health care from their pockets are not sins.
Their contributions goes to uninsured Americans.
You can not have the cake and eat it too.
Generally, his new move on major health care is for good to many poor Americans.

With private insurance, one supposedly gets what one pays for. Under the OBAMA plan some get what others pay for. For myself and family, I choose to keep my current group coverage.

Obama Plan supporters need to get real comfortable with the dollar limit on heroic measures and drugs used keep chronically ill/terminal patients alive. I understand that certain ultra expensive treatments/therapies WILL NOT be provided. Maybe, pain management and hospice care will be.

Posted by waltonr | Report as abusive

@Dibledable:

So when the banker’s were in crisis it was alright to bail them out with billions in what I’m guessing you would call “stolen money”. But fellow american’s who can’t afford health care all you can muster is that he’s a thief and has stolen your money.

I guess he’s not BIG enough to matter if he/she fails..
Get a grip.

Posted by dabledible | Report as abusive

I guess the article says it all, right upfront, “The views expressed are her own”.
Certainly aren’t mine or millions of other Americans happy to pay LESS for EVERYONE to be healthy!

Posted by Amy | Report as abusive

We have had “socialized medicine” in this country for generations. It’s called the Emergency Room. Who do you think pays for the legions of poor people who turn to the Emergency Room when they get sick? Usually they put off treatment until they are extremely sick, and then we pick up the tab.

Posted by Bart Stewart | Report as abusive

This article is full of misinformation and lack any sort of logic, it is alarming. To highlight few:

>Men would have to pay for maternity services…
this is the definition of insurance – always have, always will be – and it is already this way. Your premium pays someone else care until you need some and they pay for yours.

>Insurers would be required to accept all applicants, no matter how sick…
Is Diana Furchtgott-Roth suggest we let people die ?!!

>… lead to a single payer health system, like Britain or France.
You know that France health care is the best rated in the world, don’t you ?

The hypocrisy of this article is staggering. Arguing that public plan will be terrible and at same time that private insurance could not do better ?? arguing public health care plan would kill you while people are dying NOW of lack of care.

This is not one shred of new idea in this editorial which is more fitted for a right-wing blog than a news website.

Posted by Chris | Report as abusive

For Europeans ,American attitudes to setting up a universal health care system with strong state participation and management seem bizarre. The peace of mind that comes from knowing that in an emergency you will be taken care of and you won’t be financially ruined has no price. Why resist it?

Posted by mk | Report as abusive

Chris,

>Men would have to pay for maternity services…
this is the definition of insurance – always have, always will be – and it is already this way. Your premium pays someone else care until you need some and they pay for yours.

Chris, do you pay for motorcycle insurance and car insurance? I don’t, never have….never will.

Posted by MikeC | Report as abusive

MikeC: The insurance company used your car insurance premium to pay for someone else motorcycle accident. In an insurance you never choose what your premium are used for, ever, in any insurance.

That’s why the way the author wrote the article is fallacious. She tries to confuse what insurance coverage you get with what premium will be used to pay for. Trying to create a fake outrage over what is the essence of insurance currently !!

Posted by Chris | Report as abusive

As someone who has experienced single payer systems (England, Finland and Canada) its a no brainer, they are the best way to go. Our current system is at best expensive, and grossly exploited by corporate profiteering. Single payer is the only way. Unfortunately fear mongering (paid for by the drug company lobbies and insurance pirates) is trying to block an intelligent debate. MOST Americans by far support it and politicians who block it will ultimately pay for the pay they took from the corporate outfits.

Posted by Philip Daughtry | Report as abusive

Yeh Seth Dudley! A true American! Hey Seth, I live in Northern California and you wouldn’t believe how Socialist it already is here. why, in the mornings i watch my neighbors drive off to work and every one of them just gets on the Interstate! A PUBLIC road! Now how Socialist is that? I’m sure in your part of the country everyone has their own private roads that they built themselves and, like any right-thinking american would never think of getting onto the pavement of some socialist road that our commie-loving government had their hand in building.
And not only that, but a while ago my neighbor’s house caught fire. Guess what that commie-loving socialistic America-hater did? Yes, exactly! He called the fire department!! Can you believe it? To allow a group of government run bureaucrats to put out the fire! Well, you can imagine the mess they made of that! When they were done half the house had Fire damage!!! I’m sure you’ll stand with me in this when I say that if my house catches fire there’s no way I’m asking some Socialist organization like the fire department for help! No Sir. I’m a true American and if I can’t afford my own private fire department { Something every real God-fearing American should own), I’ll just stand there and watch’er burn.
And this healthcare thing! How stupid can these liberal socialistic America-haters be? You know how the government can’t run anything! Just look at the fire departments! And all those Police departments! and the U.S. military for that matter!
No Sirrie Seth! I don’t want to live in that kind of world! Why, truth to tell, Seth, I’m originally from Canada and do you know how socialist they are there? Well, let me tell you! It was so bad that I had to leave. Why, when canadians get sick or hurt or whatever they go and see a doctor and they don’t even have to pay . Now how wrong is that!! No sir. I like your thinking, Seth! when I get hurt and can’t pay, or am denied care because it would too deeply on some businessman’s right to make money off my misfortune, why, I’ll just throw my family into the gutter and jump right after them! You won’t hear me complain, Seth, cause I’ve got my head screwed on right and I live my talk!

Posted by annieopsquatch | Report as abusive