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May 21, 2014

U.S. Sen. Bernie Sanders' Panel on Single-Payer Health Care

Statement of Robert Weissman, President, Public Citizen

Thank you, Senator Sanders, for your leadership in paving the way so that our country finally receives the health care it deserves, through a single-payer, Medicare-for-All system.

Today’s panel discussion is important because we know that single-payer wins the health care argument on the merits. We know that it wins with the American people, and the more they learn about single-payer, the stronger will be their support.

The problem in Washington is that we haven’t had a merits argument on single-payer. Policymakers have decreed it “off the table,” because it’s not “realistic.” By realistic, they mean, it will be too hard to defeat the health insurance industry. That can’t be the way we do policymaking, especially when the stakes are so high.

No other industrialized country follows the U.S. insurance-driven model of high-pay, bad-results. Although the details of their systems vary in important ways, every other industrialized country provides guaranteed coverage to its citizens.

As a result, those countries have far better health outcomes. The Commonwealth Fund finds that the United States performs last among industrialized countries in the rate of mortality amenable to health care — deaths that might have been prevented with timely and effective care¸ with a rate 68 percent higher than the rate in the leading countries. Infant mortality is so high in the United States that the best-performing U.S. states have rates twice as high as those in some industrialized countries.[1]

These countries get better results at far lower costs. As a proportion of GDP, we spend at least 50 percent more on health care than every other rich nation. Per person costs in the United States, by World Bank figures, are $8,608. In Germany, it’s $4,875. In neighboring Canada, $5,630.

There are many ways that our health care payment system can be improved. Indeed, the list is seemingly endless, precisely because there are so many problems. But fixing particular problems will only get us so far, because that long list of problems is a direct outgrowth of the multi-payer, private insurance system, with all of its complexities and profit-driven irrationalities.

Here are three illustrative problems that will be fixed when we move to a single-payer, Medicare-for-All system.

First, balance billing.[2] This widespread problem refers to bills for the difference between the amount that an insurance company is willing to pay for treatment and a provider’s total charges. Providers who are not members of a patient’s insurance network have charged patients as much as 9,000 percent of what Medicare would have paid for the same procedure.

Patients can be subjected to balance bills despite making their best efforts to avoid them. For instance, they might receive care at an in-network facility, only to find out later that an out-of-network doctor -- even a pathologist with whom the patient never interacted -- was involved in their treatment.

This problem is a direct result of the multi-payer system, and the complicated and multiple pricing schemes between providers and insurers. Medicare and Medicaid have both essentially banned balance billing for their beneficiaries. The problem goes away with a rational payment system.

Second, executive compensation. The New York Times reported earlier this month on executive compensation at insurance companies and hospitals, noting that “the biggest bucks are currently earned not through the delivery of care, but from overseeing the business of medicine.”

Asked about extraordinary compensation for insurance company and hospital executives, the New York Times reported, “Hospitals and insurers maintain that large pay packages are necessary to attract top executives who have the expertise needed to cope with the complex structure of American health care, where hospitals and insurers undertake hundreds of negotiations to set prices.”[3]

One might dispute whether this really justifies the need for exorbitant compensation of hospital and insurance administrators and executives, but we know this: With a single-payer system, that “complex structure” and “the need to undertake hundreds of negotiations to set prices,” is eliminated.

And, indeed, it is the case that hospital administrators are much more modestly compensated in other countries.

Third, drug prices. The company Gilead has a new hepatitis C drug (brand name: Sovaldi) that may dramatically improve care and health outcomes for hepatitis C patients. The company is charging roughly $90,000 for a course of treatment. An estimated 3 million people in the United States have hepatitis C. The math is jaw-dropping: the country cannot afford to provide Gilead’s hepatitis C treatment at this price level. Gilead’s price is so outrageous that insurers are revolting – but with what final result, we do not know. What we do know is that it won’t be a rational result; the final price will be too high, and some people – maybe very many people -- will very likely be denied treatment.

This example is exemplary of drug pricing trends. As drug prices, especially for biologics, skyrocket, insurers are aiming to reduce pharmaceutical use by imposing huge co-pays,[4] which is certainly the wrong way to stop excessive prescribing and deliver appropriate care.[5] Drug companies are circumventing these co-pays by providing coupons and direct reimbursements to patients. And so the irrational system goes.

A single-payer system would eliminate these problems by providing a fair and rational system for compensating drug makers and incentivizing new research. At minimum, it would involve a single negotiation over price where negotiating power rested with the single-payer; ideally, it would involve replacing the system of compensation via patent monopolies with something that better pays and incentivizes innovators, while avoiding the unjustified consumer rip-offs of the patent monopoly system.[6]

These problems, and many more, are endemic to our current health care system.

We have a cure: It is called a single-payer, Medicare-for-All system.

With a single-payer, Medicare-for-All system, we would eliminate all of this wasteful and deadly irrationality. We would – we will – finally recognize that health care is a human right, and that no one should be denied needed care because they can’t afford it.

###


[1]“Why Not the Best,” New York: The Commonwealth Fund, 2011, available at: .

[2]See  “Out of Control,” Washington, DC: Public Citizen, 2014, available at: .

[3]Elisabeth Rosenthal, “Medicine’s Top Earners Are Not the M.D.s,” New York Times, May 17, 2014, available at: .

[4]For the pharmaceutical industry rationalization of this practice, see Suzanne Shelley, “Copay programs' increased value to manufacturers is matched by rising criticism,” Pharmaceutical Commerce, January 15, 2014, available at: .

[5]See: Research Activities,” Rockville, MD: Agency for Healthcare Research and Quality, Rockville, MD, July 2012, No. 383, available at: .

[6]See, for example, the Medical Innovation Prize Fund Act, S.627 (introduced by Senator Bernie Sanders).

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