by Nancy Reed and James Potter
We are constantly being bombarded by all the problems with our health care system and the different proposals to fix it — or at least try to tape it together. In the confusion, the term “single payer health care” pops up. What is it?
Well, let’s start with the word payer. “ Payer” means the one who pays the medical bills. So why doesn’t everyone just pay their own medical bills? Because a single injury or illness will break the bank and put us in the poor house. So we need to pool our risk by buying health insurance. If enough people pay in, we spread the risk of medical catastrophe and no one person will face disaster. We all share the pool of money that we contribute to so that, when things happen, money’s there to pay the bill. Since not everyone gets sick or injured at the same time, there is enough to cover those unlucky few who need it from time to time, and we all have the security of knowing that we will be covered when it happens to us. Our “payer” is the insurance company that manages the pool of money that we contribute.
In the U.S., there are many private health insurance payers of medical bills — many insurance companies with different pools of people. Therefore, we have a multi-payer system and multiple pools of money.
But we also have a single payer system: Medicare. Medicare is a single payer insurance system for those over 65. Our premiums are paid with payroll taxes and everyone over 65 is in the pool. Think of Medicare as a public insurance system financed with premium taxes.
Single payer systems like Medicare are not “socialized medicine.” A socialized system is when the government owns the hospitals, and doctors are salaried public employees. Medicare, on the other hand, merely pays the bills just like private health insurance. It does not own the hospitals, nor does it pay salaries to doctors as if they were government employees.
Our insurance system has multiple for-profit private insurers like Anthem, Blue Cross, and hundreds of others. In a multi-payer, for-profit system, each private insurance payer creates its own risk pool of insured people and their premiums. Because each private company creates its own risk pool, it can make more money if it selects the youngest and healthiest people to join its plan. Young people are less likely to get sick, and more from the pool of premiums can be turned into profit. The less a company has to pay for health care, the more money it can make. This drive for profit is why private health insurance companies look for ways to take in more premiums and pay out less for health care. This results in cherry picking the healthiest people to insure. It also results in denying claims whenever possible. Private health insurance companies are seeking profits. They are not looking to pay for health care.
This perverse profit incentive adds huge costs to our health care system in the form of
profit-enhancing gimmicks such as narrow networks, maze-like claim rules, deductibles, co-pays, exclusions and limitations — all designed to keep our premium dollars for their profits instead of paying for care. All of this mess requires an army of insurance clerks to review the fine print and deny payment of claims. This huge bureaucratic bloat also requires that hospitals and doctors hire their own billing army to battle with those claim denials and deal with hundreds of insurance companies and their arcane rules, coding, and claim forms. Add to insurer’s high cost of marketing, extravagant executive salaries, duplication by multiple payers and lobbying of state and federal legislatures, and it is easy to see why the cost of administration of this beast eats up at least 15-20% of premiums.
Medicare, on the other hand, is a single payer nonprofit system designed to cover the health needs of an entire population, all those over 65. So Medicare does not seek to make money from the premium taxes paid into the pool of those covered, nor seek out the healthiest people in order to avoid paying for health care. Medicare wastes no money on advertising, high executive salaries, expensive lobbyists, nor does it seek to increase dividends to shareholders by denying claims in order to make larger profits. Its mission is to create a large pool of people and raise just enough money to cover their health care needs. As a result, Medicare’s administrative costs are around 2%; its claims procedures are uniform requiring less clerical staff; paper work is reduced; the duplication of a multi-payer system is eliminated; and it’s large enough to negotiate for lower prices and coverage, and is not tied to employment or marriage. All providers and hospitals are part of this single system. This is how most other developed countries pay for health care within their free-market economies.
The Bottom Line
To lead a healthy productive life, people need medical care much as they need clean water and safe food. The universal system that covers everyone is a single payer nonprofit system that costs less, provides more, and eliminates the duplication and bloat of our current mess. We’ll all be physically, mentally and financially healthier with it.
Why it’s worse for rural Coloradans:
As health insurance companies become bigger and more consolidated, competition shrinks. There are areas in the U.S., especially in rural areas in Colorado, where there is only one company offering insurance – only one place where a person can pay premiums into a pot of money and have medical bills paid. This is also a single payer system because there is only one payer available to join. In this case, however, it is not the government but a private insurance company that is the single payer. And with its monopoly power and goal of making a profit, it is a single payer without any real interest in paying for health care.