Friday, February 5, 2016

qotd: Why it is difficult to make sense of the claims and counter-claims of single payer financing

Philadelphia Inquirer
February 5, 2016
Single-payer health plan wouldn't cost U.S. more
By Steffie Woolhandler and David U. Himmelstein

In our "read my lips/over my dead body" political culture, the threat of
tax increases usually shuts down proposals for single-payer national
health insurance. Lately, conservative pundits - and even liberals like
Hillary Clinton - have been repeating the mantra that single-payer
insurance would break the bank.

Never mind that Canadians, Australians, and Western Europeans spend
about half what we do on health care, enjoy universal coverage, and are
healthier. Their health-care taxes are higher.

Or are they? According to our study in the current issue of the American
Journal of Public Health, American taxpayers picked up 65 percent of the
total health-care tab last year - a figure that will soon rise to 67

We paid $2.1 trillion in taxes to fund health care - $6,560 per person.
That's more per capita than Canadians or people in any other nation pay.
Indeed, our tax-financed health-care bill is higher than total health
spending (private as well as public) in any other nation except Switzerland.

Official accounts from agencies like the Department of Health and Human
Services peg taxpayers' share of U.S. health spending at about 45
percent, a figure that includes Medicare, Medicaid, the Centers for
Disease Control and Prevention, and Veterans Affairs. However, this kind
of tally omits two important items.

First, it leaves out government spending to buy private health coverage
for public employees like teachers, firefighters, and members of
Congress. Indeed, government employers account for 28 percent of all
employer health spending.

Second, it excludes tax subsidies for private employer-paid plans and
other privately paid care - $326 billion last year - that mainly benefit
affluent families.

Omitting these government expenditures from the official health-spending
tabulations obscures the fact that our health-care system is already
about two-thirds publicly funded. In contrast, the Office of Management
and Budget, not to mention most health-policy experts, considers tax
subsidies for private insurance to be tax expenditures.

Even many uninsured families pay thousands of dollars in taxes for the
health care of others.

More than one-third of these tax dollars meander through private
insurers on the way to the bedside. These private insurers siphon off 12
percent for their overhead and profits (vs. 2 percent in the Medicare
program) and also inflict huge paperwork costs on doctors and hospitals.
A shift to single-payer national health insurance would save at least
$400 billion annually on paperwork alone, enough to cover all of the
uninsured and eliminate co-payments and deductibles for the rest of us.

That means a national single-payer plan wouldn't cost Americans any more
than we're currently spending. Moreover, the taxes to pay for it would
be fully offset by the savings from eliminating private insurance premiums.

Moving from our current level of tax financing, 65 percent, to Canada's
70.7 percent would mean a tax increase of about $185 billion per year.
But Americans would save at least that much on premiums. The vast
majority of American households would come out ahead financially, and
everyone would be covered.

Drug and insurance firms that would lose billions under single-payer
health coverage generously fund its detractors (including Clinton, who
has gotten more health-industry dollars than any other presidential
candidate). These naysayers suggest that a single-payer plan (or
"Medicare for all," as Bernie Sanders likes to call it) would downgrade
Americans' coverage, and they also raise the specter of big tax increases.

But a national single-payer plan would give all Americans the
first-dollar coverage enjoyed by Canadians and Brits, and guarantee them
a free choice of doctors and hospitals - a choice that private insurers
currently deny to many of us.

Surprisingly, American taxpayers already pay enough to fund national
health insurance. We just don't get it.

/Steffie Woolhandler, M.D. and David U. Himmelstein, M.D. are professors
of health policy and management at the City University of New York
School of Public Health and lecturers in medicine at Harvard Medical


Comment by Don McCanne

There are two important reasons for distributing this update on how much
we spend in taxes for the health system. One is that most people do not
realize how much they are already spending for health care through
mostly opaque tax policies - approaching two-thirds of our national
health expenditures! Right now the more important reason is that people
are bashing single payer reform with reports and articles based on
selected taxes drawn from single payer financing proposals -
particularly countering the brief single payer proposal from a leading
candidate for the Democratic nomination for President. Misinformation is

A big part of the problem is that most people have no idea what they are
currently spending on health care, especially since most of it is hidden
in our taxes. So when people “analyze” the single payer proposals by
pulling out the various taxes, adding them up, along with recalculating
upward what the expenditures would be under single payer, ignoring the
savings that are already firmly established in the policy literature,
then calculating the deficits in the federal budget that would result,
and then projecting that out over ten years - the cumulative total is in
the trillions - an almost incomprehensible number. Scary.

When individuals compare those enormous numbers with what they know they
are currently spending - employee share of the premium for
employer-sponsored plans, deductibles and copayments, and Medicare
payroll taxes - they do not realize that this is only a small part of
what they are actually paying, so the single payer taxes appear to be
horrendous to them. Little do they realize that, with our current
system, we will be spending about 43 trillion dollars on health care
over the next decade, and much of the spending will be opaque to
individuals and their families (since, again, two-thirds is paid through
the tax system).

We now have claims on one side that the costs of single payer are
egregiously high, and on the other that the savings for individuals and
families will be phenomenal - conclusions that are reached by playing
with these numbers. In fact, well designed single payer models save
typical individuals and families an average of about 5 percent from
their current total spending (including the hidden costs). Only very
high income individuals would pay more.

By losing people in the fog of these incomprehensible numbers, the
opponents are able to suppress discussion of the more important reasons
why we should enact a single payer system: absolutely everyone is
covered, deductibles and other financial barriers to care are greatly
reduced or eliminated, free choice of health care professionals and
hospitals is returned to patients, central planning ensures adequate but
not excessive capacity in the system, excessive prices are reduced to
fair levels, and economic policies are put in place that slow health
care inflation to sustainable levels.

Do not get hung up on the numbers, Just remember that most people will
see better numbers, whether they recognize them or not, Â while everyone
will see a superior health care system. And that is what single payer is
all about.

/Physicians for a National Health Program (PNHP) is a nonpartisan
educational organization. It neither supports nor opposes any candidates
for public office./

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