Fiscal crises may force Obama to save costs via a single-payer plan.

By Roger Bybee for Dollars and Sense

President Obama seems ready to proceed full-throttle toward a health care reform plan, but one that will keep private insurers at the center of the system. The plan, termed “guaranteed affordable choice,” would allow workers to “keep the insurance they like,” find a rival private insurer, or opt into a Medicare-style public plan.

To date, Obama has sensibly insisted that quick action on health care is imperative. “It’s not something that we can put off because of the [financial] emergency,” Obama declared in December. “This is part of the emergency.” Questioned about the wisdom of launching a $100 billion health care program at a time of mounting government deficits, “I ask a different question,” Obama countered. “How can we afford not to?”

He’s right: economic meltdown is making health care reform more urgent by the day. Hospitals are hurting; while “the number of paying patients and profitable elective procedures is down . . . ,” the LA Times reported recently, “the number of uninsured patients whom hospitals treat is rising.” At the same time, escalating health care costs are squeezing private employers and governments alike. “The new Congressional Budget Office report shows that rising health care costs are the largest driver of the nation’s long-term budget problems,” budget watchdog Robert Greenstein of the Center on Budget and Policy Priorities told Congress last fall.

But Obama’s hybrid, public-private plan is likely to hit a fiscal wall as federal spending balloons, and along with it the deficit. In the end, both popular sentiment and fiscal barriers may force him to follow a different course.

The administration’s plan subsidizes lower-income Americans to enable them to buy private health insurance. Contrary to Obama’s statements during the campaign, his plan will “need to require” all individuals to have health insurance, concludes the respected Commonwealth Fund. Such a mandate would be crucial to securing industry concessions necessary to move toward universal coverage, particularly a ban on excluding people with pre-existing conditions from coverage.

If so, the plan would eventually deliver tens of millions of new enrollees —the number of uninsured is about 47 million—to the insurance companies. Some 31% of their premiums, in many cases government-subsidized, will go into overhead and insurance company profits—an estimated $400 billion annual burden weighing down the health care system.

But this plan is on a collision course with the fiscal realities. On top of the budget wreckage left by the Bush years, the federal government’s fiscal demands are exploding. Health care reform faces daunting competition from a $787 billion stimulus package; the president’s $72 billion decision to delay repealing the Bush tax cuts for high earners; a Wall Street, bank, and insurance company bailout at $700 billion to date and likely to grow; and the ongoing Iraq and Afghanistan wars, together costing $170 billion in “extra” defense spending in FY2009.

Still, a leading advocate of the Obama plan, political scientist Jacob Hacker, argues that it can be billed as an important economic stimulus and thus escape the fierce budgetary competition. In December, Hacker cheerfully declared in The New Republic that the Obama plan offers nothing less than a “magic bullet” that will yield “short-term spending and long-term saving”—a perfect combination as the economy moves deeper into recession.

However, it is likely that Hacker seriously overstates the long-term savings while underestimating the clash of government priorities that lies just ahead. First, Obama-style individual mandate plans have run aground in at least six states that have tried them. With no mechanism to control the premiums charged by private insurers, the ever-higher cost of subsidizing low-income residents’ premiums soon exhausts available funds. Nor will sufficient savings be derived from Obama’s plan for electronic recordkeeping and more treatment of chronic illness, recent studies by the Congressional Budget Office and others suggest.

To many, a single-payer plan is the obvious way to ensure universal health coverage while containing costs. In addition to the dramatic reduction in administrative costs, single-payer plans offer other opportunities for controlling costs. For instance, they allow government—the “single payer” —to negotiate for lower costs with providers like doctors, hospitals, and pharmaceutical companies.

Unfortunately, Obama’s statements and key appointments suggest he has already disqualified single-payer as a serious option.

Tom Daschle, tapped for Health and Human Services secretary and “point man” on the health care reform effort until tax problems forced him to withdraw his name in February, appeared unwilling to let the private insurance industry go. His basic policy direction emerged in an interview last May. In a remark that seems staggering in hindsight, Daschle said, “And I would ask the question, if you think our banking system today is reasonably regulated, why not try the same model for our health-care system?”

Obama’s initial pick for surgeon general was TV health expert Dr. Sanjay Gupta. Gupta was trounced by Michael Moore in a televised debate over Moore’s documentary “Sicko,” and was then forced to retract some of the factually inaccurate criticisms of single-payer he had offered.

Another key player is Senate Finance Chair Max Baucus, author of a plan similar to Obama’s. Baucus recently dismissed the single-payer option on this basis: “We are Americans; we’re different from Canada, we’re different from the United Kingdom.” Baucus was probably not referring to the United States’ poorer health outcomes at vastly higher costs when he spoke of the American “difference.”

Promoted by this kind of team, Obama’s health-care plan could prove to be the most vulnerable component of his domestic program. The Republicans feel confident about their ability to brand Obama’s plan as overly complex and a threat to consumer choice in medical care, as they did so successfully with the Clinton plan in the 1990s.

The Obama plan’s “pay or play” component, giving employers a choice between insuring their employees or paying a tax to help finance the government plan, will no doubt open it up to conservative criticism as a coercive, big-government program. This line may also strike a chord among moderate-income citizens who earn too much to qualify for a subsidy and consequently lose enthusiasm for reform once they start to pay mandatory health premiums.

The single-payer approach, on the other hand, would disarm many of the most explosive Republican arguments. It is far less costly to both employers and individuals—nearly 50% lower per person in Canada than the United States, for instance—and there is no billing of patients or other complexity. Every citizen enjoys the right to health care and a free choice of doctors and hospitals. Start-up costs would be minimal, especially if Medicare were simply expanded to cover the entire public.

Back in 2003, Barack Obama told the Illinois AFL-CIO: “I happen to be a proponent of a single-payer universal health care program. I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14% of its Gross National Product on health care, cannot provide basic health insurance to everybody . . . a single-payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”

Now that Obama himself occupies the White House and health care costs consume nearly 17% of GNP, the new president may rediscover that single-payer is the truly pragmatic course on health care reform. Hemmed in on all sides by the enormous costs facing the federal government, Obama may find—despite his misgivings—that pursuing a single-payer reform plan is the sole means of creating a low-cost and appealing alternative to the health-care status quo.

Roger Bybee is the former editor of the union weekly Racine Labor and is now a consultant and freelance writer whose work has appeared in Z Magazine, The Progressive, Extra!, The Progressive Populist, In These Times, commondreams.org, and other national publications and websites. Visit his webpage at www.zmag.org/zspace/rogerdbybee.

SOURCES: Jacob S. Hacker, “A Healthy Economy,” The New Republic, Dec. 31, 2008; S. Woolhandler, T. Campbell, and D. Himmelstein, “Costs of Health Care Administration in the United States and Canada,” New England Journal of Medicine, Aug. 21, 2003; Physicians for a National Health Program, “Barack Obama on single payer in 2003,” posted June 4, 2008; Maggie Mahar, “On Healthcare Reform Stimulating the Economy: the Massachusetts Example,” Health Beat blog (Century Foundation, Dec. 12, 2008); Sara Collins et al., “An Analysis of Leading Congressional Health Care Bills, 2007-2008: Part I, Insurance Coverage,” Commonwealth Fund, Jan. 9, 2009; Kevin Freking, “Health secretary pick seeks health care overhaul,” Associated Press, Jan. 10, 2009.

6 Comments

  1. care4all on March 20, 2009 at 1:18 am

    Very good points in your post. The public needs to hear it. Please also expose the reasons single payer is not on the table.

    Senate Finance Committee Chairman Max Baucus ruled single-payer off the table. However, a MAJORITY of Americans want single-payer reform.

    Why?
    Sen. Baucus has received more campaign contributions from health insurance and pharmaceutical companies over the past four years than any other Democrat in Congress.



    According to the Consumer Watchdog study, Baucus has received $413,000 since 2005 from insurance and drug companies, third behind Sens. John McCain and Mitch McConnell.

    Baucus is now pressuring the Congressional Budget Office (CBO) to favorably judge his health plan as financially sound–even though it is not. The CBO issued a series of recent studies which have found that most savings claimed, in the effort to keep private-for-profit insurance companies in the mix, do not exist.


    Alternatively, a single-payer system would save more than $350 billion per year.
    SINGLE-PAYER SHOULD BE GIVEN A FULL AND FAIR HEARING BY THE SENATE FINANCE COMMITTEE


    Write to Senator Baucus and tell him to put Single-Payer Reform on the table:
    http://baucus.senate.gov/contact/emailForm.cfm?subj=issue

    For more information: http://www.change.org/ideas/294/view_action/sen_baucus_we_need_accurate_numbers_not_creative_figuring



  2. Aaron Roland on March 20, 2009 at 8:12 am

    An Op-Ed from November with a Similar Message—

    A Chance to Begin From Scratch:

    How Obama Can Fix The Economy and The Health Care System At The Same Time

    Aaron M. Roland, M.D.

    In the face of an economic crisis unprecedented in more than half a century, pundits are asking how President-elect Obama will alter his ambitious proposals. The implication is that economic hardship must lead to scaling back or even abandonment of the change upon which he had based his campaign.

    Certainly, in the face of changing conditions, the new President will have to reconsider his plans. But in the case of health care, the crisis may have an unexpected effect. It may allow Obama move beyond his modest proposals to something far more comprehensive.

    Obama’s existing health care proposals argue for tightly regulating insurance companies, expanding employer-based health insurance, and opening the Federal employee health program to all. But by even the most optimistic estimates this complex plan will lead to coverage of only about 50% of the uninsured and will entail a cost of up to $1 trillion over the next ten years. In a world of $700 billion dollar bailouts, this may not sound like much, but in an economic environment where need is widespread, alternatives should be considered.

    As recently as August the President-elect voiced his support for an alternative. “If I were designing a system from scratch,” he offered, “I would probably go ahead with a single-payer system.” The rationale for this idea is simple. The private insurance based health care system has become a bureaucratic nightmare of buck-passing and profiteering. It is rife with waste that has nothing to do with providing quality health care. By eliminating that waste we’ve solved the problem.

    Now, only 65% of private health insurance premiums are spent on health care. Instead, insurance company executives earn hundreds of millions of dollars while corporate marketing departments spend fortunes selling insurance to the healthy just as their utilization departments resist paying for the care of those who become ill.

    On the other hand, Medicare, with centralized funding and near universal enrollment of the population it serves, provides better quality care and higher satisfaction at a substantially lower cost. Medicare’s bureaucracy takes up only 3% of its funding. No surprise, as there is nothing spent on avoiding care for the sick, marketing, or corporate profits.

    The economic crisis offers the new President the opportunity most other reformers have not had–the chance to begin, as he has said, “from scratch.” The American people have voiced an overwhelming desire for change. We have come to understand that business as usual isn’t always good business and that the business models that private systems create don’t always work in the public interest. And we’ve learned we need to pay attention to our money.

    As a doctor in the trenches of primary care, I can see no other way forward. For my well-insured patients, a switch to Medicare for all will hardly alter the face of the health care system they currently experience. But it will reduce everyone’s level of economic and health insecurity. None will need to worry about what is covered. None will need to cling to unsatisfactory jobs simply to keep insured. The process of paying for care will be simplified.

    This is not socialized medicine, but a plan for public finance of our diversified private health care system. An improved Medicare for all offers relief from the waste in the bureaucratic private health care system. It can eliminate a multitude of public and private programs which currently pay for segmented components of health care, eliminate the distinction between health care for the poor and for the rich, and reduce the confusion, waste, and annoyance which providers and patients face in dealing with the 1300 insurance companies which litter the existing health care landscape

    Politics, and political change, has been described as the art of the possible. Remarkably, the crises we face have made the seemingly impossible happen. We have a new President, a man who has inspired our hope. Let him begin from scratch. Let crisis and hope lead to real change.

    Copyright November 5, 2008

    Aaron Roland is a family physician practicing in Burlingame, California and clinical associate professor at U.C.S.F.



  3. Dr. Christine Adams on March 20, 2009 at 6:33 pm

    I posted this article on DIGG – we need to get the word out to more and more people because the mainstream media ignores single payer national health care. We have to go around them with all tools at our disposable.



    • Eliza Jane Dodd on March 22, 2009 at 2:18 pm

      I made copies of HR676 and handed them out to everyone , every place I went .And I would open a conversation with do you have health care ? And what ever they said I would say “Have you heard of the HR676 Universal Health Care Bill ?By John Conyers ? Do you know who John Conyers is ? And tell everyone my Blue Cross B.C.story of how I had it and what I paid $7,500 @17 yrs and what they did to me and I only used it one time in 17 years .And then after how I was refused care @ a County Hospital and all the illeagls being treated and I was told there was nothing they could do for me / with excellent credit , they always run your SS# ..
      I hand people the papers I have made with my own money and they havent a clue ! Never heard of this , they say ! With the look on their faces (I cant believe it look ) and they ask how do we get it? I tell everyone to sign all the petitions , call the White House everyday and e-mail W.H. everyday .And tell your story to the W.H.everyday .Tell people at church and spread the word or we are not going to get it if people sit back and do nothing .And then one day these people get sick and get refused care or have to wait 19 hrs long to get seen at the local County Emergency Room (Avg.wait time ) and you die because the emergency rooms are full of illegals with simple colds and flus & this is the only way they know how to see a doctor in the USA and not get turned in.
      Right now the White House People and others are playing games with AIG and all that mess that President Obama said would never happen .Makes me wonder are these games they are playing not to End the WAR and give the American People Health Care with 500+ Americans who are dying everyday in the U.S.A. Now we have record booming Tent Cities popping up all over as shown on OPRAH with Lisa Ling doing the reporting .There are more people in the USA as in the days of the Great Depression and more DISEASES that can spread like Wild -Fire .Think the emergency rooms are full now ? Just give it another year or 2 .Ask Mel Gibson why we are at WAR and we dont have Health Care .And TODAY in Moore’s web site …tells it like it is in America and why the Obama admistration is dragging its feet …and not keeping HIS Promises to the American people who voted for HIM .
      AIG and their BONUSES could of PAID for LOTS of HEALTH CARE and maybe a COUPLE of HUNDRED innocent Americans would’nt have DIED TOADY ? I agree with the congressman who just stated on TV, AIG CEO’S need to commit suicied like the Japanese !
      I wish that President Obama would TELL the Citizens who Voted for HIM why HE lets 500 innocent Americans die in America everyday with no health care ? And another million more from lack of ? Why are we spend TRILLIONS to kill more people in other countries ?Why are we KILLING PEOPLE and even our own by Neglect ??? That is ABUSE of POWER !



  4. Terry Brauer on March 21, 2009 at 7:41 pm

    President Obama will sign the legislation he has in front of him … not necessarily the legislation he wants.

    He is not steering what Congress is calling ‘health care reform’, which will change weekly to pacify those more wedded to bi-partisanship than either cost-effectiveness or the establishment of a quality system.

    Those steering what they reference as ‘reform’ are the same people, who enabled by default the financial services industry to run amuck and create a Depression … voted consistently for Iraq War funding … created Medicare Part D in the most expensive context conceivable (and called it ‘Medicare Modernization’)… failed to bring Bush and Cheney to accountability … and are telling us that salvaging some of the most notorious fraud perpetrators in history is in our national interest.

    Senator Grassley et. al. are committed to the private sector insurance-based model. Senator Baucus is committed to a plan markedly different from single-payer.

    The challenge for single-payer and other enlightened souls is to render them more elastic in their commitments. And this will not be done by appeals to their better instincts.



  5. Chris Blair on March 26, 2009 at 4:43 pm

    It’s a good idea and it’s something that puts the lie to the notion that all these Conservadems really care about balanced budgets. If they cared about balanced budgets they’d support single payer. They all care about keeping campaign donations (legal bribes) flowing and also setting themselves up for fat corporate salaries once thier constituents figure out who they really work for and vote them out on their asses.