Health Care: The History
Health care costs have skyrocketed over the last few decades. While there are numerous reasons for this, the bulk of these medical cost increases have come with advancements in medical practices and technology. Advanced procedures such as kidney dialysis, neurosurgery, MRIs, chemotherapy etc, cost money to provide. Rather than absorb these costs and go out of business, health care providers pass these costs onto insurance companies, who (also to avoid absorbing these costs and going out of business) then pass these costs off to their plan members through increased deductibles and premiums. An unfortunate consequence is this also means that those who need these treatments the most (often times the more elderly) become more expensive to cover. Health insurance companies adjust to this by either raising premiums or deductibles, or denying coverage altogether if the potential members appears to be too costly to cover. In fact, underwriting (researching potential members and deciding how much to charge in premiums and deductibles or whether or not to even cover them if it appears to be a loss) costs resources and money in itself, which again, is passed onto consumers through their deductibles and premiums. What this means is that providing health insurance only works as a viable business model if those who are in the greatest need it are denied their needed coverage (or charged premiums or deductibles they may not be able to afford). Insurance companies profit provide potential treatment to those who are likely to need it the least. Like any other business model, revenue must be maximized while costs are reduced.
Why Medicare Costs Have Increased
This increased cost in health care doesn’t stop with the private sector. Public health insurance programs such as Medicaid and Medicare are affected to an even greater extent. Whereas private health insurance companies adjust to rising costs by passing them onto consumers or denying them coverage altogether, these public programs don’t turn people away, or charge them higher premiums for preconditions. Add to this the fact that Medicare insures senior citizens; the most costly to demographic to insure (imagine private health insurance premiums for a 68 year old who is far more likely to need a kidney dialysis or cancer treatments than someone far younger). It’s the same increased health care costs that are driving up private health insurance costs as well as Medicare/Medicaid costs. The burden this places on Medicare doesn’t quite end here however. Beyond good publicity, private health insurance companies have little reason to proactivly offer real preventative treatments knowing that later-in-life illnesses will be covered by another insurer (most likely Medicare). So while private health insurers skip this cos, it’s Medicare that picks up the bill for this lack of preventative later-in-life illness treatment. Furthermore, it’s far more costly to provide these treatments than it is to prevent them.
Single Payer Health Care
A Single Payer system would effectively fix the bulk of these problems. As a non-profit organization, such a plan would have the benefit of reduced costs all around. Private health insurance companies spend a lot of money, time and resources underwriting (screening prospective members), and deciding whether or not to even cover them as well as going back and forth with providers (who shift their end of the costs back on the insurance who then shifts that cost to its members). Other costs include, advertising, paying dividends, well-paid CEOs and executives and lobbying politicians to discourage them from passing any health care bill which might reduce their market share or profit margins. They also pay for tactically misleading advertisements scare the public into believing horrific (though incorrect) things about proposed legislature. These costs are all passed onto customers by way of higher deductible and premiums. A public plan would forego these costs.
In addition to all of this, there would exist the advantage of having economy of scale. A Single Payer plan covering the entire country would be able to truly spread out costs per unit, to a far greater extent than any single private health insurance can (because of the number of customers it would have). And since the same plan would cover its members throughout their life, there would be real incentive to provide proactive treatments to later-in-life illnesses to avoid the cost of emergency treatments down the road. Other advanced countries have universal health coverage of this nature (or something closer to it, and less privatized than the United States) and are able to ensure their entire populations for less money per person, and health care consumes a far smaller share of their GDP. While many detractors will object, claiming that such a plan would be too costly, the US pays more in taxes for Medicare/Medicaid and government employee insurance as a percentage of GDP than other nations pay for their Single Payer Plan. People in these countries also have lower infant mortality rates and longer lifespans. Taiwan provides the perfect test case. Several years ago, Taiwan moved away from a privatized system to Single Payer (modeled after our Medicare system). The result was virtually universal health care coverage for a small percentage of their GDP. The United States already has the ideal plan in place: Medicare. It simply needs to be expanded to cover everyone.