By William Albee & Van Newstrom
Wall to wall coverage of Republican efforts to repeal Obama care and replace it with no-rules block grants to states pays zero attention to the elephant in the room (pardon the pun), which is ever rising health care costs. The proposed approach is totally free market, where health care providers can charge whatever fees they wish for services. Where there are fewer providers of a given service in the local market, the lack of competition results in higher fees. If you are uninsured and you need health care services, you go to a provider of your choice and pay the stated fees for services with little or no negotiation.
If you don’t have insurance, you generally avoid health care providers unless there is an emergency. A large percentage of emergency room visits would not be necessary if everyone were insured and they visited health care providers regularly for preventative care. But because they have to pay the total cost out of pocket, the uninsured are unlikely to get preventative care or go to a health care provider until their condition deteriorates to the point they need emergency treatment. Emergency treatment generally costs far more than doctor office visits for treatment of the symptoms before they reach emergency status. By law, emergency rooms can’t turn away patients who can’t pay; so those losses result in higher fees for emergency room services, which are passed on to patients in the form of higher insurance premiums.
If you have insurance, you are far more likely to visit a health care provider for treatment of illnesses on a non-emergency basis. You pay a co-pay for an office visit and your insurance company pays the balance in accordance with the terms of the coverage you have purchased. More importantly, your insurance company has likely negotiated a substantial discount for the office visit and the specific treatment provided. The largest health insurance companies usually get the largest discounts because they represent a larger percentage of any given provider’s patients. So who represents the most patients you might ask? It is the federal government via Medicare, Medicaid, and federal employee insurance plans.
The key point is that the federal government has the greatest bargaining power to negotiate the lowest allowable costs charged by the health care providers. If the federal government were the single payer under some variation of Medicare-For-All, program officials could negotiate the lowest possible allowable cost for any given medical service or procedure for the entire U.S. population, perhaps with regional variations based on the average cost of providing services. By pushing Medicaid, which is the largest health care insurance program in nation, down to the states, Graham-Cassidy proposes to drastically reduce the federal negotiating power. This single negotiating block would become 50 smaller blocks, one for each state, each with far less power to negotiate discounts than under the current federal program that includes Medicaid, Medicare and Federal Employee Health Insurance. Thus, passage would produce unintended health care cost increases.
The following eye opening example illustrates the magnitude of the discounts for services, medications and procedures currently negotiated by the federal government. It is an Explanation of Benefits (EOB) for services provided to my wife from my Blue Cross Federal Employee Plan (my primary and her secondary insurance). Her primary insurer is Medicare.
Fairbanks Memorial Hospital gave her two doses of the same medication, and charged $855.05 for each dose. Notice the EOB states the health care provider has agreed to accept the allowable payment (negotiated by Medicare) of $.97 for each dose of this medication. Imagine your shock if you received a bill for $1710.10 for two pills you got in the hospital emergency room, and had no insurance coverage. You would have no choice but to pay the full price charged. So even health insurance plans with large deductibles and high premiums at least provide substantial discounts that protect the insured persons from paying the full retail prices charged by providers.
The strongest argument for a single payer health care system is cost control. With a single pool comprising the entire U.S. population, no other system for U.S. healthcare has anywhere near the potential to reduce the overall cost of health care for everyone.
Health care providers and insurance companies vehemently oppose a single payer system because it would force them all to accept the same fees for the same services and it would adversely affect insurance company profits. Just remember when forming your opinion on what system you support for a better health care system – single payer health care is the reason other countries can deliver quality universal health care for a fraction of the cost of what we spend per capita on health care in the U.S.
Editor’s note: William W. Albee and Van Newstrom are a husband and wife team of writers based in Albuquerque. William has spent much of his career in federal service (including stints with the Defense Logistics Agency, the GSA, and the FAA) and then with Wyle Laboratories. Van has had a similarly varied history, working at one time or another as a teacher, a curriculum writer, and a technology consultant to the U.S. Department of State, U.S. Navy and U.S. Agency for International Development. Both have been active in environmental and developmental causes, and until recently they owned and operated the Alaska Heritage House Bed and Breakfast in Fairbanks, Alaska.