Health Letter, September 2016
By Michael Carome, M.D.
On May 5, 2016, Physicians for a National Health Program (PNHP) released a detailed proposal for single-payer health care reform in the U.S. The plan, written by a group of 39 prominent physicians and other experts and endorsed by more than 2,400 others, would replace the Affordable Care Act (ACA) and the profit-driven private health insurance industry in the U.S. with a publicly financed national health program. Under this program, all Americans would receive full coverage for all needed medical care at a lower total cost.
The ACA’s failings
Many had hoped that the ACA would lead to a more just health care system. And, to be sure, since 2010 an additional 20 million people have gained some form of health insurance coverage under the ACA. But according to the Congressional Budget Office, the ACA will leave an estimated 26 to 27 million people in the U.S. without health insurance annually over the next decade.
Moreover, many individuals and families who have been able to obtain health insurance coverage under the ACA face unaffordable out-of-pocket expenses in the form of escalating premiums, deductibles, copays and costs for necessary but uncovered medical services.
For example, “bronze” plans — the least expensive plans available through federal and state exchanges — cover, on average, only 60 percent of medical expenses. Under these plans, families are expected to pay up to $13,200 per year for covered services, in addition to premiums. Health care provided outside the narrow provider networks offered by many exchange plans is neither covered nor applied to the caps on out-of-pocket expenditures.
Finally, the ACA will funnel nearly a trillion dollars over the next decade to private insurers and managed-care companies with bloated bureaucracies and excessive administrative overhead costs. A publicly financed national health program would not have this problem.
The physicians’ proposal for single-payer health care reform offers an alternative to the ACA that would provide comprehensive medical care to all Americans and would be affordable over the long term.
Highlights of the physicians’ proposal
Under the physicians’ proposed single-payer national health program, all Americans would receive full coverage for all medically necessary services, including mental health, rehabilitation and dental care. A board of experts and patient advocates would determine, in an open and transparent manner, which services are medically necessary. Medical services deemed ineffective would not be covered.
Importantly, there would be no more copayments and deductibles. This method of imposing costs on patients has been shown to limit access to vital medical care, reduce compliance with medications and selectively burden the sick and the poor. Moreover, financially burdening patients with medical costs has been ineffective in containing health care expenditures, partly because collecting and tracking copayments and deductibles involves substantial administrative costs.
Global budgets for hospitals
The proposed national health program would radically change the way hospitals are funded. Each hospital would receive a “global budget,” a lump sum that would cover all operating expenses.
Global hospital budgets would be determined annually based on operating expenses from prior years, expected changes in demand and costs, and proposed enhancements in services. Operating funds could not be used for advertising, profit or bonuses. Global operating budgets also would exclude the costs of expanding or modernizing facilities, which would be funded separately through public capital budget allocations.
For-profit hospitals would be converted to nonprofit organizations, and their owners would be compensated for past investments.
Under global budgets, hospital billing of patients would be eliminated. As a result, hospitals and health care practitioners no longer would need to generate voluminous billing-related documentation, thus freeing up resources to enhance medical care services. The administrative cost savings from eliminating patient billing may be as much as $150 billion annually.
Payments for physicians and outpatient care
Physicians and other outpatient health care practitioners would be paid through one of two mechanisms: a simple, binding fee-for-service payment schedule similar to today’s Medicare fee schedule, or as salaried employees working for nonprofit hospitals, clinics, group practices, health maintenance organizations or health care systems.
Physicians’ overhead expenses would be substantially lower, because billing-related tasks for outpatient care would be made much simpler under the new fee-for-service approach or completely eliminated under a salaried-practice approach.
Medications, medical devices and supplies
All medically necessary prescription drugs, devices and supplies would be covered, without copays and deductibles for patients. The government would negotiate prices with manufacturers, resulting in substantial savings for the national health care system.
A national prescription drug formulary — an official list of drugs that may be prescribed under the national health plan — would be developed by a panel of experts. The formulary would specify the use of the least costly medications from each group of clinically equivalent drugs. Exceptions would be allowed when medically required.
Coverage would be provided for the full range of long-term-care services for disabled individuals of all ages.
Funding for the program
All public funding that currently goes to health care, including Medicare, Medicaid, and state and local health care programs, would be used to support the new national health program. Additional funds would be raised through progressive taxes, but these would be fully offset by the elimination of premiums, copays, deductibles and out-of-pocket costs for currently uncovered services.
A stark choice
According to the authors of the physicians’ proposal for a single-payer national health program, the health care system in the U.S. is at a historic crossroads. One road, laid out by the ACA, will leave millions of Americans uninsured and many more underinsured. Along this path, out-of-pocket health care costs will become increasingly unaffordable while the profits of the private health insurance industry will balloon.
The alternative road, laid out in the proposal for a national health program, provides the best and most practical way to provide comprehensive, affordable medical care to all Americans. Following this path would substantially improve the fairness and efficiency of our health care system.
In concluding comments reflecting on the long history of failed attempts to provide universal health care in the U.S., the physicians who created the proposal noted the following:
Over the past century, myriad health care reforms — most well-intentioned — have been proposed and attempted. Yet continued reliance on private insurers and profit-driven providers has doomed them to fail. It is time to chart a new course, to change the system itself. By doing so, we can realize, at last, the right to health care in America.
Indeed, the right to health care in the U.S. has been denied to too many Americans for too long. Change is desperately needed.