‘Single Payer Saves Money by Saying No to the Insurance Industry’

CounterSpin interview with Steffie Woolhandler on media attacks on single payer

By Janine Jackson

http://fair.org/home/single-payer-saves-money-by-saying-no-to-the-insurance-industry/

Janine Jackson: A Washington Post columnist writes that we need to admit that healthcare reform’s twin goals, comprehensive universal insurance and cost control, are at odds. The New York Times reports that a single-payer system requires unpopular taxes, making it, even in the eyes of sympathetic Democrats, politically impossible. And USA Today says the US hasn’t seriously considered single payer because it would cause great disruption to the economy, result in higher taxes, and give the federal government vast new powers.

Well, those claims have some things in common: They’re all untrue, and they’ll all from 1993. It seems the story corporate media tell us about single payer—we want it, it makes a lot of sense, and it can never ever happen—hasn’t changed a great deal. For as long as that media narrative has been abroad, we’ve been checking in with our next guest about how to address it. A primary care physician for many years, Steffie Woolhandler is co-founder of Physicians for a National Health Program and professor at the CUNY School of Public Health.

Welcome back to CounterSpin, Steffie Woolhandler.

Steffie Woolhandler: My pleasure.

JJ: Single payer is in headlines now because of the election, and the alternative visions for healthcare presented by Democratic candidates Bernie Sanders and Hillary Clinton. Sanders’ proposal of a single-payer type of system makes him “exciting,” the Washington Post said, but Clinton’s attempt to “bat down hopes” about it make her “the voice of reason.” The Arizona Republic says:

The problem with Bernie Sanders’ healthcare vision isn’t the vision. His raw outline for a greatly simplified and less expensive healthcare system is excellent in theory. The problem is the politics, the reality of which battle-scarred Hillary Clinton clearly has the better grasp.

This whole head versus heart storyline isn’t really new, either, is it? What’s your initial response to it; what’s wrong with that?

SW: Well, there’s a tremendous amount of misinformation. We have real-world experience with a single-payer program in Canada. We also have some related experience with our own Medicare program; that’s kind of a partial single payer. It’s obviously not a true single payer, because there’s lots of other insurers, but it has some of the structures of single payer. And so we can look at the experience in Canada and in the United States, and find that most of these things are not true.

In fact, neither Canada’s single-payer system nor the Medicare system disrupted things. Neither of them broke the bank financially. In fact, there’s been almost no increase in Medicare costs over the last ten years, while private health insurance costs have continued to go up. In Canada, they’re spending about 40 percent less than we are. The doctors make plenty of money, the hospitals are doing just fine, and they have universal coverage. Their taxes are not much higher than what we pay in this country, and the higher taxes are more than offset by the fact that Canadian taxpayers don’t have to pay any premiums or out-of-pocket costs for most services.

So the facts on the ground, experience in both Canada and the United States, say that a single-payer system is imminently doable from an economic point of view, and that it is not overly expensive. In fact, it’s significantly cheaper than what we have in this country.

JJ: While we’re talking about misconceptions, I think it still is a prevalent one that single payer must mean cutbacks to care. The sort of liberal critique of single payer, you might say, is represented by the Vox piece by Ezra Klein, in which he wrote that to achieve savings,

the government needs to be willing to say no when doctors, hospitals, drug companies and device companies refuse to meet their prices. And that means the government needs to be willing to say no to people who want those treatments.

Well, Seth Ackerman in Jacobin has a piece saying that this is a conflation of saying no to drug companies on prices with saying no to patients, that that too reflects a misunderstanding of how single payer would work.

SW: Well, absolutely. A single payer saves money by saying no to the insurance industry and by forcing drug manufacturers and device manufacturers to lower their prices. Again, this is not pie in the sky, this is something that’s done in Canada, that’s done all over Europe, where the government steps in and uses its bargaining power to get lower prices. That’s a very different question from what happens with doctors and hospitals.

You know, Ezra Klein has been quoted saying hospitals are going to go into bankruptcy, that doctors are going to be impoverished, and that simply did not happen in Canada. Canadian hospitals are fine, Canadian physicians earn very good livings, and in fact there’s no net migration of Canadian doctors to the United States, even though they could come if they wanted. They don’t want to. In fact, there’s very few Canadian patients who come to the United States to get care. And, again, many of them could if they wanted to; they live within 50 miles of the US border, by and large.

So these are myths that really are not borne out by the facts on the ground. I mean, the way a single payer works economically is by huge administrative cost savings. The Canadian single-payer system has administrative costs that are just barely half of what administrative costs in the United States are. The US spends 31 cents on every healthcare dollar on billing and administration, Canada spends about 16-and-a-half percent. That’s a very large difference in terms of administrative spending. Projected to the United States, we could say that a single payer would save over $400 billion a year in administrative costs, and that’s the money that you use to pay for expanded care, both for the uninsured and for people who now have only partial coverage.

So that’s the economics of the situation. That’s what happening on the ground in Canada, and to a lesser extent within the US Medicare system. And the reporters ought to know that. Certainly Ezra Klein, Margot Sanger-Katz, Julie Rovner, folks who have long experience studying the healthcare system, need to be looking at the facts that are known about how a single payer works, rather than these scare tactics about bankrupt doctors and doctors having to go to soup kitchens. It’s simply not the situation.

JJ: It’s interesting: We talk so much about, you know, let’s look at this in a tough political way, and yet we don’t really get too specific about it. But Hillary Clinton spelled out what she meant by single payer being politically impossible when you and PNHP co-founder David Himmelstein met with her in the early ‘90s, when she was working on managed competition. She was pretty straightforward in terms of what the obstacle really was, was she not?

SW: Well, I think she was dismissive of the idea that a president should lead the American people by putting forward a new vision, and that that was part of what leadership is. Leadership is not about just looking at the status quo and seeing how you can rearrange the deck chairs. It’s about providing a vision, leading the political movement. And that’s actually how you get real reforms, like the civil rights movement, like rights for gay people, and that’s how people in other countries have gotten single-payer systems —

JJ: Right.

SW:—through political leaders leading a movement of the people, and that’s what it’s going to take in the United States. I’m not naive. The big problem is the power of the insurance industry and the drug industry, who are completely and totally opposed to this. But numerous polls have shown that a majority of the American people support the idea of a universal health system supported from taxes. And if the majority of the American people want it, then what’s missing is the political leadership to mobilize those people to get the healthcare system we deserve.

JJ: For folks who don’t know, in that meeting, as you indicate, Hillary Clinton said that she could see how single payer made sense for the country, made sense for people, but what she said was, how could we defeat the multi-billion dollar insurance industry. In other words, she simply said that would be impossible. And it’s that that you’re responding to, saying, well, how could you go up against the insurance industry? You would do that with leadership and with the awareness that this is what the public wants. Just for folks who aren’t aware of that meeting that took place. Because it’s fascinating, to say we know that people want this, we know that it makes sense, and yet it can’t happen. I mean, I think that’s just kind of a mindbender for a lot of people who believe they’re in a participatory democracy.

SW: Right. Well, we have to make democracy work. It obviously doesn’t work all the time—

JJ: Right.

SW:—or terribly well. But if we want real change, we need to mobilize to get that change. And that’s what politics needs to be about. It’s not about telling people you can’t have a good system because this private interest, like an insurance company and drug industry that are going to stop it. It’s been pretty well-known among the Democratic Party, and often said by Democratic Party leaders, including President Obama, that a single-payer system would be preferable if we could get it, if we were starting from scratch. And Mrs. Clinton said essentially the same thing. She has in the past called for a Medicare-for-all system. So this new idea that it’s too disruptive, this is something she’s only recently started to say.

JJ: One thing I think is also of note, in terms of labeling things impossible, the Arizona Republic provides, as kind of evidence that single-payer legislation is “going nowhere”, they say that the 2013 American Health Security Act attracted not a single co-sponsor. But the thing is, back in ‘92 or so, when a bill had 95 co-sponsors, elite media still said it was impossible, treated it in exactly the same way, so that can’t be the criterion.

But I did want to ask you about the idea that the Affordable Care Act is a stepping stone to single payer. I read that, again in the Arizona Republic, they say “making Obamacare more Medicare-like through incremental steps may not feed the romantic urge to reinvent healthcare reform from scratch, but there’s no other road”. Does that even make sense—making Obamacare more Medicare-like through incremental steps? What would that mean?

SW: Well, the problem with the idea of incremental steps is you don’t get any administrative savings. If anything, the Obamacare legislation raised overall administrative costs in the United States. So the beauty of single payer is you get the $400 billion in administrative savings; it allows you to jumpstart universal coverage without increasing total healthcare costs. But when you try to do things incrementally, every time you add new coverage, you don’t have a way to pay for it, because you have not gotten those administrative savings. So that’s the problem with the incremental approach. Whatever its political possibilities, it’s economically not possible, whereas a true single-payer system is.

JJ: It’s kind of like looking for your keys under the lamp because that’s where the light’s better. You say: well, this doesn’t actually fix the problem with healthcare, but it seems like something we could achieve. You know, it’s a kind of a strange way to go about things.

A lot of the conversation is premised on the fact that what the US has now is a private system. But I know that work that you’ve just done recently indicates that the US is already spending, from public funds, a tremendous amount on healthcare.

SW: Well, yes, we just published a paper in the American Journal of Public Health showing that nearly two-thirds of current US health spending is from taxpayers. So that figure would include not just Medicare and Medicaid and the VA, things people think of as government health programs, but two other items. First, the benefit costs of public employees, like teachers and FBI agents, which of course are paid for by the taxpayers. And the second thing is the huge tax subsidy to private health insurance, which people have been talking about in relationship to a Cadillac tax. But that subsidy is about $326 billion a year that the taxpayers are picking up for private insurance.

So when you include government direct spending for programs, government spending for public employees’ benefits and that tax subsidy, lo and behold, you get to 65 percent of total health spending already being funded by the taxpayers, which is about to rise to 67 percent over the next decade. Sixty-seven percent, we’re not that far below the tax-funded share of, for instance, Canada’s single payer, where the taxpayers pick up about 71 percent of total health spending. So the increased taxes that are needed are not that huge. They would all be offset by decreases in premiums and out-of-pocket payments. But even just thinking about the taxes, we’re only talking about a share equivalent to about 4 percent of healthcare budget to get us to the level of taxpayer funding in Canada.

JJ: So, in other words, we’re almost paying enough as citizens through taxes to have a single payer system, but we don’t have it.

SW: Yes. We’re paying for national health insurance and we’re just not getting it. You know, if we start talking in dollar terms rather than percentage terms, we’re already paying more per capita than the total cost of healthcare, public and private, for any other nation on the earth.

JJ: Well, what do you make of the media coverage? Obviously, a lot of the reporters who are covering it are covering it just as an issue in the presidential campaign, or just as a political issue. So they can be forgiven, if you will, for kind of wearing those glasses as they discuss it. But we do have healthcare reporters. You know, we do have economics reporters. What do you make of the fact, or is it correct, my sort of sense that we haven’t really advanced the level of this conversation in decades, in terms of misconceptions and misunderstandings about single payer?

SW: Yeah, well, several of the reporters who’ve said fairly outrageous misstatements of fact are in fact expert in health policy. For instance, Ezra Klein has written about health policy in the past, so some of the misinformation he’s been putting out is a little surprising. Similar, Julie Rovner, who works for Kaiser Health News Service, is a long-time healthcare reporter, and she actually made a statement [that] replacing the private health insurance bureaucracy with a new payment system would probably be more expensive than what we now have, which is just a silly thing to say. That’s not true. When you look, when you compare private insurance and public insurance in the US and when you compare it in Canada, it’s very clear that the public payment systems have much lower administrative costs. And it’s simply unbelievable that anyone with any health policy experience would make a statement like the one she made.

Similarly, Ezra Klein, saying doctors and hospitals would be bankrupted and have their fees and salaries cut dramatically—he should know better as well. That isn’t what happened under the Medicare program in the United States. It’s not what’s happened in Canada. So, you know, it’s been quite disappointing, the willingness of some of these health reporters to kind of conflate two ideas. They may think that single payer’s politically unfeasible. That’s their opinion; that’s OK for them to say. But then to conflate that with the idea that it’s economically unfeasible, would cause these huge disruptions in the actual delivery of care—that really should not be done. Those are two totally separate issues. And they should know it.

JJ: We’ve been speaking with Steffie Woolhandler of Physicians for a National Health Program. You can find them online at PNHP.org. Steffie Woolhandler, thank you so much for joining us this week on CounterSpin.

SW: You’re very welcome.