Universal Coverage: Many Roads to Rome?

A hybrid mixing public and private heathcare plans may be just the way to embody key principles of a single-payer system, while maintaining political appeal.

Article created by the The Century Foundation.

A healthy debate about universal coverage is
out all over the web. But this debate risks confusing goals and means. The goal should be universal coverage. It’s necessary, as most liberals and leftists agree, because it will reduce needless fragmentation and waste, promote care of better value, and repair the patchwork coverage that employer-based care inevitably yields. It increasingly looks like a good business case. And, not incidentally, because it’s the right thing to do to boot.

Many think that straying from the single-payer camp means compromising the goal of seeking universal coverage. I disagree. The means of getting to universal coverage might be single-payer. But there are other possible ways to do so—which are radical, clear in their demands for universal coverage, and attentive to the actual medical power structure. Since the United States is highly unlikely to adopt a pure single-payer system—where all health funds pass through a government payer and the benefit package is largely uniform—it makes sense to take these hybrid approaches seriously. Compromise on design and implementation are acceptable, but not on the principles.

Let’s be clear about where some of the true fault lines lie. They are between those (like me) who think we have to trade in the crumbling employer-based coverage system and those who think we can tune it up. The latter offer incremental plans that purport to get to universal coverage. In reality, they won’t. It’s important to remember, though, that this difference is still tactical. The hearts of incrementalists are in the right place, but their strategic vision is flawed.

Exhibit A: the explicitly political and cautious approach of the
plan that was released last fall. It includes mostly sensible proposals as far as they go, but it is a distraction from the goal of universal coverage. It masquerades as a universal coverage plan—the subhead is “A Progressive Plan to Cover Everyone and Restrain Costs”—but in reality it is a cautious form of incrementalism. Here is the key quote:

“The system clearly needs sweeping reform. The political challenge, however, is to make comprehensive reforms without threatening existing health care for most people. The following six proposals for reform would give everyone an equal opportunity to be healthy without forcing anyone [to] give up what they already have.”

The problem here is that health insurance is not static. There is no way to get to universal coverage through this approach, because you are pouring water into leaking buckets. Medicaid and job-based coverage are eroding faster than they can be shored up, mainly because of the effect of rising health costs and the upward pressure this puts on premiums. And if you don’t put pressure on people to give up at least some of what they have (through paying a bit more out-of-pocket in premiums or cost-sharing)
increased demand
for high-cost, low-benefit procedures will make universal coverage impossible. It’s a circle that can’t be squared.

Universal coverage of any kind, by contrast, demands a fundamental restructuring of the health care system. But “single-payer” isn’t synonymous with “universal coverage.” There’s a substantive and political case for multi-payer universal coverage. Admittedly, I’m self-interested, as the author of one such proposal
(A New Deal For Health: How to Cover Everyone and Get Medical Costs Under Control, 2005).
I think it’s respectable. Perhaps it’s not. Please
and judge for yourself.

In this vein, Matt Yglesias
, thoughtfully, “Is there an actual problem with single-payer health care such that regulate/ mandate/ subsidize is a superior alternative? Or is the view that it makes more political sense to try and co-opt the insurance industry even if that entails some substantive drawbacks?” The answer is that single-payer may be the best option but flawed enough to make “no compromise” a poor choice, while other options may be preferable, or well over the threshold of acceptability, without being irreparably tainted by insurance and pharmaceutical influence.

Single payer shouldn’t be dismissed as a viable strategy, perhaps the viable strategy, for achieving universal coverage, but it’s hardly airtight. John Rodat
a lot of the concerns about single-payer quite well. I broached some others in an
earlier exchange
with Yglesias. Here are some of the more serious:

  • The private sector does more than just assess risk of individuals and cream skim. It acts, most importantly, as a sector where new technologies are introduced more rapidly and diffused, such as CAT scans in the United States a couple of decades back. Without a private safety valve, single-payer systems are prone to react too slowly to the public demand for new medical procedures.
  • A possible brake on medical innovation. This is rightly a contested point, but a system paid for mostly with tax dollars is more likely to be parsimonious, to say the least, in paying for new kinds of services.
  • Administrative chaos. If single-payer is adopted, will private insurers stick around to process claims, as they do for Medicare and for self-insured companies? I doubt it. This isn’t just a sop to insurers but a practical assessment of what it would mean to set up a wholly new relationship between doctors, insurers, and patients in the United States.
  • Lack of socially acceptable ways to control costs. When doctors get fee schedules, they ramp up utilization, which then leads to further budget caps and overt restraints on care. Such hard caps aren’t likely to be tolerated either by doctors or insured patients in this country.

It’s not a distraction to the cause of universal coverage to discuss these points. If they aren’t aired thoroughly by proponents, they will be used as ammunition by foes. And not only by opponents of universal coverage but by single-payer proponents as well. Anyone who even dips a toe into these debates knows the self-righteous hostility that greets anything that smacks of apparent compromise when single-payer is questioned—even valid criticism of Canada and Great Britain or the existing Medicare program, with its overly expensive fee-for-service structure. (Take a glance at any health care thread on Kevin Drum’s
Political Animal,
for instance.)

The equation of universal coverage with single-payer is partly just about semantics, but it goes a bit deeper. For instance, Paul Krugman and Robin Wells, in their excellent
recent article
on the health care crisis, falter in the last mile when they say that the goal should be to create a “straightforward single-payer system.” Sorry, but that option is long gone. You can have clarity and failing models, or ones that stand no chance of adoption in the United States (Canada and Great Britain) or you can have relative complexity and models that might get some traction, but you can’t have both. Mixed public-private health systems are a continuum. France, for instance, has more public spending and is closer to a single-payer system. The Netherlands (my favorite model) is really a multi-payer system with about 1/3 of the dollars spent privately and a more complicated system of subsidies. The point is that any viable reform is going to include some elements of public funding and some private funding and delivery: the question is how much.

A main test of a good universal coverage plan is how it will deal with the major challenge of the future: paying for low-benefit (and no-benefit) care that delivers modest improvement to individual health but at very high cost, thus crowding out insurance coverage of a more basic and necessary kind. On paper, a single-payer plan is well-suited fairly to ration care of low marginal value. In practice, it is likely to respond too slowly to public demand for new procedures and to diffuse new technologies too slowly (as in Canada). The concept of good universal coverage for everyone and more services for those who buy up, either as part of broader risk pools or out of pocket (and with standardized, not identical benefit packages) seems best-suited to coping with the fruits of medical success.

A couple of final points about single-payer and compromise:

Medicare was the supreme compromise. As Social Security commissioner Robert Ball has said, its implementation was based “entirely on a strategy of acceptability.” Medicare was a fallback measure for those who were discouraged that they couldn’t get to universal coverage. It co-opted doctors and hospitals and set off the cycle of health care inflation that is with us to this day. But no progressive would throw it back. Ball didn’t spend time holding out for the unattainable because he thought it would strengthen his hand politically or substantively. He just assessed the situation rationally and did what he could, while sticking fast on core principles. And he was playing a much stronger hand than liberals today. Mostly, he spent a great deal of time in the trenches talking to everyone who was involved in the actual delivery of care. I think that’s a pretty good model for today’s would-be reformers.

No major health reforms will get passed in the U.S. without at least some substantial stakeholder support. The
entire history
of health reform shows the hurdles to reform even where there is substantial public support and, conversely, the possibility of quite major changes (like the introduction of prospective payment in Medicare) when medical interests acquiesce and the public is completely uninvolved.

As Jacob Hacker pointed out in The Road to Nowhere, the Clinton plan exaggerated the consensus among policy types. And even if that battle had been won, that would have been only one step toward winning the war. Partly as a consequence of their overconfidence about policymaker buy-in, the administration didn’t even begin to lay out a plan that would have satisfied the medical interests (sure, they would have been hostile anyway, but that doesn’t excuse this strategic failure).

This isn’t about defeatism, simply about reality. The specific form of universal coverage won’t be exactly what a plurality of the public demands, but it doesn’t mean that it won’t embody key principles. Insisting on a purist single-payer approach exaggerates its substantive and political appeal, drives away potential allies (including many on the right who make a strong critique of employer-based coverage) and risks not even getting a hearing among those with power.

After the Health Savings Account mania has run its destructive course, the United States will ultimately adopt a hybrid mixed public and private plan, some version of a European system (which is where Canada is headed to as well), even if we won’t acknowledge the debt. The extent to which this happens without being precipitated by a social crisis depends on the extent to which we use persuasion and create a broad dialogue about universal coverage alternatives, not stick to one version of this goal.