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The Myths of Single-Payer and Health Insurance

Rayburn House Office Building

A prominent Chicago physician, Dr. Donald McCanne blogged a “Quote of the Day”, on the PNHP website (Physicians for a National Health Program, located on Madison Avenue) in May 2016, commenting on Hillary’s Medicare Buy-In proposal, as follows: “No, a Medicare Buy-In or Public Option is not a step towards single payer.” Medicare is not a “single-payer” system. Our federal government contracts with a public/private partnership for all federally sponsored entitlement insurance programs, except for Medicaid. The federal government partners with each of the 50 states and the states run their own Medicaid administrations with a shared purse-string relationship with the federal governement. All the other federally sponsored health insurance programs are principally supervised by federal government but administered by the public/private partnership.

As noted by Patricia Cohen and Reed Abelson of their New York Times - Single Payer - article on May 26, 2018, “Single-payer has no single definition. Democrats overwhelmingly favor single-payer plans in polls, but the phrase means different things to different people. To some, “single-payer” is just a way of saying coverage for everyone. To others, it means eliminating the profit motive from health care. Or it represents simplicity – an end to paperwork, deductibles, co-payments and preapprovals.”

In actuality, since 1966, the federal governement runs the Medicare Program using a public/private partnership that of about 30 – 50 health insurance companies across the U. S. under contract for administration. (8.) We commonly refer to Medicare as a “single- payer” system, however this is a false narrative. Medicare, in reality, is a “multiple-payer” system. It seems to us seniors like a “single-payer” system because there is a single manager, CMS. Medicare is managed by the Centers for Medicare and Medicaid (CMS), under the Department of Health and Human Services, currently under the leadership of Trump Administration appointee, Secretary Alexander (Alex) M. Azar II. President Trump also recently appointed Seema Verma, an ally of Vice President Michael Pence’s, to ably head up the Centers for Medicare and Medicaid Services. Ms, Verma and Alex Azar are doing a terrific job of with these programs challenging circumstances.

Originally passed in 1956, Medicare was created to cover the civilian families of individuals serving in the military. In 1965, under President Lyndon Johnson, Congress re-enacted Medicare under Title XVIII of the Social Security Act to provide for the payment of health services for every citizen age 65 and older, regardless of income or medical history. (9.)

CMS calls almost all the shots on Medicare. CMS determines exactly what health care services are to be covered, exactly how they are to be paid, and most importantly, they determine (through various means) exactly how much is to be paid for each covered health service, in every county in the U. S. They generally do not get involved in a person’s health or life-style. This is one of the major reasons Medicare is so expensive. Although Medicare is often criticized for costing too much money, the government has been successful in reducing the rate of the programs medical inflation to less than the private health insurance market. The Medicare single-payers in this public/private partnership include companies like Anthem, Electronic Data Systems (EDS), BlueCross BlueShield (BCBS), Humana and United Health Care (UHC). They are useful to CMS because they generally have favorable medical and hospital provider contracts which reduce the cost of health care and inflation. These favorable provider contracts may save more money than it costs to administer of the benefit program. A PBS Documentary on Medicare Part C Plans uncovered the fact that some carriers could save more money through favorable provider contracts than the cost of their administration of the programs.

These health insurance carriers are paying Medicare claims by programing CMS instructions into their computer systems. Therefore, Medicare “single-payer” is just the working of the “computer systems” of the public/private partnership. There is not a lot of fragmentation in this infrastructure that would cause un-necessary expense. Even if there were only “one” computer system, software is software, and the complications would be great, and the savings would be negligible with further consolidation. The most beautiful thing about this decentralized system is that it should be more flexible and responsive to changing conditions. It should have the centralization necessary to launch a national health and fitness program and maintain the adaptability to the implement the would be different aspects of the one size does NOT fit all program in different parts of the country.

The second most beautiful aspect of this system is the effectiveness with which CMS can be, for us, a “single-payer”, and use the health insurance carriers to pay the claims and do its bidding using the public/private partnership that exists. These carriers will do exactly what CMS tells them to do and they have been doing so for the last 50 years. The federal government and CMS have, in fact, acted as a “single payer” for us. CMS is our Single-Payer health care system, but some Congressional reform efforts and the ACA are attempting to change all of that.

We remember the fake appointment fulfillment reports and gross negligence and mismanagement uncovered at every level of the Veterans Administration (VA). Some veterans died while waiting to get an appointment to see a doctor. I have known veterans, who suffered serious debilitating injuries from VA treatment completely unrelated to the treatment of their illness condition. President Obama established a Commission to study the problems with the VA and even though the Blue Ribbon Commissioners unanimously affirmed the need to allow veteran to seek private system health care alternatives under certain conditions, the Democrats continue to block these reforms on the guise that the private sector does not have the ability to serve veterans without governement regulatory restrictions and VA oversite, which supposedly is more important to them than preventing unnecessary deaths at the hand of the VA. Executive Orders and repeated firing of top management at the VA have been required to begin to fix the system. This is the kind of thing that can be expected with a government run health care system. The VA is the closest the U.S. has come to a Government run health system, yet no one is out there publicly advocating the “The VA for everybody”. But, you often hear public avocation for Single-payer. Some part of their Single-payer system will look like the VA. We all greatly value the service of our veterans. And, when the backlog veterans waiting for appointments were too unmanageable, we temporarily authorized them go to any private health care provider of their choice at the VA’s expense. We can NOT let the governement be in charge of our health care. Even though the Democratically appointed VA Commission was clear, they had to beg the Democrats and the Republicans to work together to implement the solutions they developed to adequately care for our veterans. And, even then, the Democrats found ways to thwart their recommendations and delay their implementation. We cannot let this travesty happen to “We the Peoples” health care or we will all be dying from the experience.

Under Obamacare and some of the Reform bills (Graham-Cassidy), the proposed responsibility for our national insurance programs is being transferred to the States. There is no question that CMS must improve its performance and do more, if we are ever going to arrest the cost of our health care at a more reasonable level. However, the best and clearest path to that success is through the private health insurance carriers, HMO’s and the medical and hospital provider communities, not through the federal and state governments. And, Medicare Part C – Medicare Advantage can help facilitate this process. Now you tell me; is this any way to run a health insurance program that you (and me) have to pay for with our tax dollars? I don't think so?!

Even though it is practical impossibility for a state governement to effectively implement a universal single-payer health care system for a myriad of structural issues, not the least of which is the inability to pay for it and the political suicide of proposing the abandonment of the employer based system and Medicare program, under which most Americans are completely satisfied; that does not preclude some outlying politicians from advocating it. This includes Jerry Brown’s Lieutenant Governor, Gavin Newsom, who is the Democratic front runner for CA Governor’s in 2018. His candidacy ignores what happened in CO in 2016, when surveys showed wide support for a single-payer plan, but when the initiative was put to the ballot, it got just 21 percent (21%) of the vote.

A nationwide Kaiser Permanente survey last September found a majority favored the idea of a single-payer national health plan. But, when those surveyed were told that the role of employers in health care would be ended, that governmental control would grow, or that people would trade in their existing coverage, support fell to 40 percent (40%). The truth of the matter is no one understands what single-payer means and when they realize that it is going to raise taxes, the idea falls completely from grace. And, there is no way for a state to support such a program without the help of the federal governement. So, while there is an outside chance that a Berny Sander’s Medicare for All bill could pass, there is no way it will ever be universal, because we simply can’t afford to tax the country enough to pay for it.

In 2015, CMS under Medicare arranged for the payment of health services for Fifty-Five (55) million beneficiaries, 46 million of which were retirees over the age of 65 and 9 million citizens on disability. On average, Medicare pays for about half of the health care expenses for those enrolled. (9.) In addition to the Myth that Medicare is a “single payer”, is the Myth that Medicare is health insurance. Medicare, and most of the other programs primarily supervised by the federal government, are “NOT” Health Insurance. ACA - Obamacare is “NOT” health insurance. Medicare Part C - Medicare Advantage and FEHB, “ARE” the only federal programs that are actuarially underwritten (“Real”) health insurance, where risks are quantified, and rates are developed to cover those risks. All the rest of the federal entitlement health programs are pay-as-you-go contracts for health care services. BCS is advocating “real” health insurance for the replacement of ACA – Obamacare.

Under a real health insurance contract, the insurance company takes the risk. They implement programs that are actuarially underwritten to cover certain risks. If they miscalculate the risk, and the cost is more than they projected, they will lose money. If they manage the program efficiently and deliver all the benefits for less, they make more money. Their goal should be to at least break even. Under most government entitlement programs, the government generally takes the risk and the health insurance carriers are relegated to the position of administrator. The government is going to pay, no matter what. Is this any way for us to run a health insurance plan? I don’t think so?!