A single-payer health care system would provide medical care for more people and reduce administrative costs — but it also would shift expenses from the private sector to the government and could, depending on the system’s design, increase wait times and reduce access to care, according to a new report by the Congressional Budget Office.
“Establishing a single-payer system would be a major undertaking that would involve substantial changes in the sources and extent of coverage, provider payment rates, and financing methods of health care in the United States,” the CBO wrote in a report requested by U.S. Rep. John Yarmuth, D-KY, chair of the U.S. House Budget Committee.
“I don’t think there were any surprises,” Yarmuth told Insider.
Yarmuth said that a lot of the details of any legislation would still have to be determined, including whether a single-payer system would immediately cover every American or whether it would allow people to buy into Medicare at age 55 or 50.
The CBO acknowledged that without specific proposals, it is difficult to determine a single-payer system’s impact.
Meanwhile, Humana CEO Bruce Broussard, who has previously said Medicare-for-All presents a huge opportunity for private insurers, clarified his stance last week, saying that he would oppose a single-payer system that eliminates Medicare Advantage or private insurers. Humana has about 12,000 employees in Louisville.
The CBO said, “In most other countries with single-payer systems, such as England and Taiwan, the benefit package provides comprehensive major medical coverage, including hospital and physician care, as well as mental health services, diagnostic tests, and prescription drugs.”
A single-payer system also could include cost-sharing components such as a deductible, a co-payment and an out-of-pocket maximum.
About 29 million people under age 65 were uninsured in an average month last year, the CBO said, and a single-payer system “could substantially reduce (that) number.”
The agency said that a single-payer system likely would lower administrative costs because the federal government spends just 6 percent of costs on overhead, while private insurers spend about 12 percent. But if everyone were covered, the government also would “need to establish an infrastructure to verify eligibility and enroll participants,” the CBO said.
In addition, the agency said, providing coverage for everyone would put pressure on hospitals, doctors, nurses, radiologists and other aspects of the American health care infrastructure.
“Whether the supply of providers would be adequate to meet the greater demand would depend on various components of the system, such as provider payment rates,” the CBO said. “If the number of providers was not sufficient to meet demand, patients might face increased wait times and reduced access to care. In the longer run, the government could implement policies to increase the supply of providers.”
Yarmuth acknowledged health care bottlenecks could worsen under a single-payer system, especially if doctors leave the profession because they can’t make their businesses work on the reimbursement rates paid by government-backed health insurance. Reimbursement rates from private insurers generally are higher.
If a single-payer system provides health insurance to more people, but those people can’t access a doctor, “are you really accomplishing anything?” Yarmuth asked.
But, he said, with baby boomers retiring in increasing numbers, “we’re facing a physician shortage anyway,” meaning the government will have to address the challenge one way or another.
The CBO also warned that “increasing financial pressure for providers to lower their costs could adversely affect access to and quality of care by causing providers to supply less care to patients covered by the public plan. Less spending on medical services could also alter manufacturers’ incentive to develop new technologies or providers’ incentive to invest in capital, which could affect patients’ choices over the longer term.”
One of the big questions for any Medicare-for-All proposal is how the government would pay for such a system.
“In 2017, just under half of the $3.5 trillion in national health care spending came from private sources,” the CBO said. “Shifting a large amount of expenditures from private to public sources would significantly increase government spending and require additional government resources, but it would also reduce or eliminate the costs incurred by private sources, such as employers’ and employees’ contributions for employment-based insurance.”
Yarmuth said those details, too, still would have to be worked out, though certainly a significant share of the $2 trillion that private insurance companies currently pay would be transferred to the federal budget.
The CBO said that a single-payer system also could affect the ownership structures of the nation’s hospitals.
“Currently, about 70 percent of U.S. hospitals are privately owned: About half are private, nonprofit entities, and 20 percent are for-profit,” the agency said. “Almost all physicians are self-employed or privately employed. A single-payer system could retain current ownership structures, or the government could play a larger role in owning hospitals and employing providers. In one scenario, the government could own the hospitals and employ the physicians, as it currently does in most of the (Veterans Health Administration) system. A greater government role could also include converting for-profit hospitals to nonprofit hospitals or quasi-public providers. In quasi-public organizations, the government or its appointees would oversee or manage daily operations.”
Humana CEO clarifies Medicare-for-All stance
The CBO report also indicates that a single-payer system likely would “limit the role of private insurance” to cover services not included in the single-payer plan, such as dental, vision or hearing benefits.
Private insurers, the CBO said, also could provide substitutive insurance for people who aren’t eligible for the single-payer system, such as noncitizens or temporary visitors; or enhanced benefits, such as faster access to care or private hospital rooms.
While older Americans currently can choose traditional Medicare coverage, where their health benefits are paid for and administered by the government, they also can opt for Medicare Advantage, where the benefits are paid by the government but administered by a private insurance company, such as Humana.
Broussard, the insurer’s CEO, said in an earnings call last week: “Humana does not support any bill that would eliminate Medicare Advantage or make private insurance illegal and here’s why: Insurance and Medicare Advantage create an incentive to have a holistic view of a member, which is critical to the long-term success of the program and the ability to offer greater benefits and more security for individuals.
“MA is a program where the payment model motivates plans to engage with individuals with complex, chronic conditions … resulting in lower cost and higher customer satisfaction,” the CEO said. “The success of this program is evidenced by the continued increase in MA penetration. The (share) of Medicare eligibles enrolled in Medicare Advantage has grown from 22% to 34% in the last decade, nearly doubling membership.”
Broussard said that a rising number of Medicare beneficiaries and technological advancements will make a comprehensive approach to providing health care — primary care, home care, behavioral health, prescription drugs — ever more important.
“The end goal of our strategy,” he said, “is to slow the rising cost of health care and enable expansion of coverage, while positioning the organization for growth and sustainability to deliver long-term value for our shareholders. Over the past 30 years, our company’s commitment to improving the health of those we serve has meant working in private and public partnerships that transcend party lines, and we look forward to continuing that work.”
Yarmuth said he has spoken with Broussard and understand his position, but he emphasized that even in a single-payer system, private insurers could provide some valuable services.
“I think there would be a role for insurance companies to administer the program,” he said, “and Humana does that better than anybody else.”
Yarmuth also said that the CBO report is but a first step and part of the Democratic Party’s preparation to eventually introduce legislation that would expand health care coverage to all Americans.
To some extent, he said, Democrats are trying to learn from the mistakes they made during the introduction of the Affordable Care Act, commonly known as Obamacare.
Yarmuth said that while Democrats adequately explained how the ACA would expand coverage, they failed to properly explain to people who already had coverage how they would be affected.
In any case, Yarmuth said, any single-payer bill won’t be introduced until after the 2020 presidential election.
With Republicans controlling the Senate and the executive branch, he said introducing a single-payer bill now makes little sense.
“A lot of us would like to,” Yarmuth said, “(but) it would be a waste of time.”