President's Page

President's Page
November 2007

Universal Healthcare Coverage
with a Single Payer: Time to act

by James T. Norwood, MD
2007 DCMS President

Last month I discussed some of the details for consumer- driven health care. Its reliance on market forces is considered the key for less expensive, more efficient, and higher quality health care. This month I want to cover universal coverage through a single-payer system. This single payer would no doubt be the federal government or some agency empowered and controlled by our government. Proponents for this system often cite how efficient Medicare is, since it uses only 3% of its revenue for administration. Another advantage to a single-payer system is that it would cover everyone regardless of their location, employment, age, or income. One system obviates the problems that arise when a person tries to migrate from one insurance company to another, changes jobs, or tries to qualify for some type of government assistance. A horrible example of this problem was highlighted in a tragic story in the September Wall Street Journal about a woman with breast cancer who struggled with delays in diagnosis and treatment. These delays were not of her own doing but caused by insurance administrative problems and government bureaucracy. Being in a single-payer system would have at least given her only a single bureaucracy and a single set of rules to deal with. Like the patient, physicians in a single-payer system would also have only one set of rules and bureaucracy to deal with.

But the single-payer, government-financed proposal has plenty of downsides. Any practicing physician who has dealt with Medicare understands its administrative costs are low because much of the administrative chores are performed in the physician’s office. Reimbursement is at the mercy of the prevailing political winds. Physicians would find themselves competing with hospitals, drug companies, and insurance companies for the health-care dollar. Those three competing entities have a lot more lobbying power in Washington than we do as physicians. Spending on health care would be more dependent on the deficit, war, and politics rather than on actual healthcare needs. What physician in his or her right mind would support such a proposal? Well, there are many who do, and one of them recently wrote a book about it.

This person is Arnold S. Relman, MD. He recently published a book called A Second Opinion, Rescuing America’s Health Care. Dr Relman is the former editor in chief for the New England Journal of Medicine. He spends the first third of his book discussing what is wrong with our current system, then has a short section on the faults of the consumer- driven healthcare system. The rest of his writing is dedicated to his proposal for healthcare reform through a government-sponsored single-payer system. When I began reading, I expected him to recommend a large government-sponsored plan similar to Medicare, in which reimbursement is tightly controlled and at the mercy of the politicians. Dr Relman believes that access to health care is limited because of its high cost. He blames the high cost on the “commercialization” of health care, where business interests shape the behavior of doctors and facilities. He believes that a large portion of what is spent on health care is tied up in CEO salaries, insurance administrative costs, marketing, advertising, and activities that benefit shareholders and providers over the patients. If these “commercial” functions were eliminated, the money that is freed up could be diverted to patient care, he says. He implicated greed and the market for driving up costs and reducing the number of patients covered. He accused physicians of looking at their offices as businesses and not as a practice. He blames the current fee-for-service structure for stimulating over-utilization and unnecessary care. He claims we have too many specialists stimulating the demand for services, which in turn drives up the costs. He frowns upon advertising by physicians. He states the demand for most medical services is determined by physicians and not the patient. I must selfishly admit that, while reading his take on what is wrong with our current system, I was looking for a trash can to toss the book into. I felt he had been in the ivory towers of academic medicine too long and was out of touch with the practicing physician. But then I came across this quote of his that stimulated more reading. “Unless we physicians help devise a better healthcare system, we are likely to become little more than highly trained, specialized workers in a system dominated by corporations or government.” Citing these problems and their causes he proposes changes in how we insure and pay for health care in addition to changes in how we organize and deliver health care. Briefly, his plan calls for:

1. A universal insurance system funded through a graduated earmarked healthcare tax and administered by a public-private health agency structured like the Federal Reserve.

2. A delivery system of not-for-profit multispecialty medical groups paid in advance on a per-capita basis.

3. These prepaid group practices (PGPs) would be privately managed, and physicians would be paid salaries determined by the management, but limited in total to a specified percentage of the gross income of the group.

4. Hospitals and other facilities would be paid standardized fees from these PGPs.

5. PGPs would be held harmless by the health agency for losses from caring for very sick patients.

6. The healthcare agency would develop a national system for technology evaluation and outcome reporting.

While this is a capitated system for health care, a couple of items caught my interest. First, the health tax would be collected separately from and maintained independently of other governmental agencies. The tax rate would be dependent on the nation’s health needs and nothing else. This is money employers and individuals would pay in lieu of their current insurance premiums (which now average about $7000 per person per year). The second item that caught my interest was the structure of the PGPs. Just like the Consumer Driven Health plan, provider groups would form to collect a pre-determined amount of money for the treatment of patients. The PGP plan would consist of a group of physicians with professional management hired by those physicians to administer the group. The hospitals and other facilities would contract with the PGPs. Dr Relman did allow that hospitals could be reimbursed directly by the governmental agency, but he preferred that the physician group control the flow of funds to hospitals and other facilities.

While I believe some of his conclusions for what is wrong with our current system are off base, I do give Dr Relman a lot of credit for coming up with an idea that gives physicians a little better control over their fate and the care of their patients. I would recommend you read his book, which is only 175 pages. As I have said before, we physicians must be a part of this debate. It seems that everywhere I look there is discussion about health care – 20/20, The Dallas Morning News, Consumer Reports, the Wall Street Journal, and even on Oprah. I leave you this month with a quote whose author I do not know:

“The best way to predict the future is to help shape it.”

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