Selling the Obama plan: mistakes, misunderstandings, and other misdemeanors.

First I congratulate all people in the United States who are working hard to reform our health care system. Although I support these efforts, I want to clarify what single-payer health care is and is not, and how it differs from the “public option” proposed by the Obama administration and various advocacy organizations.1–3 A single-payer health care program basically would extend Medicare to the entire US population. Although Medicare is not without problems, people aged 65 years or older widely support the system and express satisfaction with it. Under Medicare, the government occupies a very small role. The government collects payments from workers and employers and then distributes funds to health care providers for the services that Medicare patients receive. Because it is such a simple system, the administrative costs under Medicare average between 3 and 5%, according to most studies. This small percentage means that the vast majority of Medicare expenditures pay for clinical services as opposed to administrative expenses. On the other hand, private insurance generally shows administrative expenses between 20 and 30%. This much larger percentage means that about one quarter of every dollar spent on health care goes toward administrative costs. Many of these expenditures pay for activities such as billing, denial of claims, supervision of copayments and deductibles, scrutiny of preexisting conditions that disqualify people from care, and exorbitant salaries for executives (in some cases totaling between $10 million and 20 million per year). A single-payer national health program would achieve universal access to care by drastically reducing administrative waste.3,4 Because private insurance companies no longer could spend money keeping people out of the system, all of us would receive the care that we need without copayments, deductibles, or other expenses at the point of service. Under a single-payer system, the average family and the average business would spend the same or less than they currently spend on medical expenses. Unfortunately, the Obama Administration and many of our Congressional representatives do not support the single-payer proposal, even though national polls consistently show that a majority or plurality (depending on the poll) of people in the United States favor this approach.4,5 The Obama administration has proposed a “mixed approach,” which includes a “public option,” organized along the lines of a single-payer system.2 However, the overall national health program would include the current private insurance industry and would therefore maintain a much higher level of administrative costs than would a single-payer approach. Because the mixed approach will not significantly reduce administrative waste, the projected costs of the proposal predictably become prohibitive, despite some assurances to the contrary. Concern about these high costs has become a key focus of the debate in Congress and around the country. President Obama consistently has argued that it is important to preserve the for-profit private insurance industry as part of his proposal—with even more tax subsidies for the industry. The Obama proposal essentially will compel families and individuals to buy insurance, from either the private industry or the government, with the poor assisted through a means-testing approach requiring huge administrative costs. The mixed private and public approach has failed to achieve universal coverage in multiple states (most recently Massachusetts, frequently cited as a model for the Obama proposal).6 Other countries that have implemented mixed private–public systems have encountered challenging problems. Although some European systems have received critical attention,7 several middle-income countries in Latin America also have tried to implement mixed systems. These initiatives have resulted largely because of the requirements of international financial institutions like the World Bank and International Monetary Fund, which have demanded a reduction of public sector services and an expansion of private sector services as a requirement of new or renegotiated loans.8 In these countries, neither the conversion of public sector to private sector insurance, nor the expansion of private insurance through enhanced public financing and participation by corporate entrepreneurs, has succeeded in assuring access to needed health services. Expansion of private insurance often has generated additional copayments. Privatization of social security and other public sector trust funds for health services in Latin America generally has enhanced private corporations by providing publicly subsidized insurance and by increasing the capital held by these corporations. In addition, privatization led to higher administrative costs. The impact of mixed private–public systems has varied across countries. In Argentina, these policies led to increasing economic crisis and major cutbacks of services, especially for older and disabled people. In Chile, where privatization occurred largely during the military dictatorship, private managed care organizations (subsidized by public tax funds) prospered as they covered relatively healthy groups in the population, while a constricted public sector continued to provide services to the uninsured. Mexico faced pressures from the World Bank to privatize its social security system, including public sector health services; as avenues opened to the participation of private corporations, public sector institutions encountered budget reductions that led to eroded services. If we are serious about working to improve the devastating problems of access to services in the United States and other countries, we need to move beyond conventional wisdom about the value of market-based policies like mixed private–public systems. Strategies that channel public funds into private insurance corporations have failed to achieve the goal of universal access. Unfortunately, such policies may worsen even further the conditions faced by vulnerable groups. Based on empirical realities, our work must find ways to enhance the delivery of public sector services, rather than continuing to implement the mostly failed policies of privatization. Two important bills in Congress would achieve a single-payer system. In the House of Representatives, the bill is HR676, introduced by Rep John Conyers (Dem-MI) and, as of late 2009, cosponsored by 88 other representatives.9 Sen Bernard Sanders (Ind-VT) has introduced a similar bill, S703, in the Senate.10 These bills deserve our support because they actually would achieve a single-payer national health program that would guarantee universal access. Let's focus our attention and organization on the real single-payer approach, which is the only way to avoid the failure to achieve universal health care which has plagued us for so many years. In the long run, we might take hope from Winston Churchill's much quoted observation, “The United States invariably does the right thing, after having exhausted every other alternative.”11