Single Payer Insurance

In the comments section of my previous post, Charlie offers a link to an American GP’s article on a single-payer insurance scheme. Dr Funke seems like a nice person, but unfortunately, he is also a little naive. A comment from Johnnieboy extols the virtues of ACC and wonders why the Americans don’t copy it. In case you have forgottten this graph, here is why a single payer system is a bad idea:

You will note the gradual increase in costs from 2000 as Labour ceased to be concerned about cost containment and started to use ACC as de facto welfare – extending benefits to many non-accidental and quasi-accidental categories while failing to increase benefits for genuine severe accidents. This kind of “mission creep” is exactly why governments make lousy insurers. Their aim is not to contain costs, but to win popularity. This makes a state monopoly inevitably inefficient.

Funke, in his article, says $350 million could be saved in a single payer system, citing profit-taking, executive bonuses and advertising costs as reasons why private insurers cost more. What he overlooks is that most private insurers offer substantially better benefits than Medicare. It is also very debatable whether Medicare is actually cheaper. Much of Medicare’s funding is buried in the US tax system, in much the same way as ACC’s funding.

There is another, major reason why a single-payer system is a bad idea. Currently, US doctors are at liberty to refuse to take patients with certain forms of insurance. This leverage ensure that doctors are paid a reasonable amount and that they are paid reasonably on time. There is no reason why a single payer cannot simply reduce payments or pay at 180 days if they feel like it. How can a doctor argue with them? They are the only game in town.

Technically, doctors could insist on payment up front. Unfortunately medical bills are often large and few patients could afford the initial outlay. Worse, doctors are then in competition with each other. Some doctors will decide to provide a skimpier service and accept the insurance rate in return for a large volume throughput. The quality of medical services will deteriorate. Precisely this happened in South Africa. Medical insurance companies set the amount they were willing to pay. It was difficult to practice medicine for the amount they offered. The net result was you either had to see 60-80 patients a day (essentially a script-writing practice) or you had to become self-dispensing (a doctor who dispensed his own medicines). Neither was particularly satisfactory.

US doctors should be greatly wary of Obama’s new health bill. It is clearly the first step on the road to a single-payer monopoly system. That, in turn, will eventually reduce all doctors to state employees and all hospitals to state-owned ones. And there isn’t a single state healthcare system that does not ration services and restrict doctor’s access to drugs and investigations. If US doctors currently view HMOs with deep suspicion, they must wait until there is a state monopoly in health care. You haven’t lived until you’ve referred someone for gallstone removal only to have them offered an initial surgical consultation in 6 months time  (that’s the first consultation, not the operation). Or to wait 8 weeks to get your bladder cancer confirmed only to be told there will be a 12 week wait for your radiotherapy…

Waiting for God, indeed.

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