Health Insurance HQ distills the current political activity around health care into a brief, monthly educational update to help you become a more active consumer and citizen. Our experts in the field and others in our community are here to provide you with plenty of handy resources to help you use your voice and your vote to make a difference.
July was quite an eventful month! Republican Senators made three separate attempts to repeal and/or replace Obamacare, and all of them failed. That failure can be attributed to several factors, including division within their own party, ominous reviews by the Congressional Budget Office about the millions of people who would lose coverage and a unified coalition of stakeholders, from the AMA, to AARP to insurers, who lobbied against it. But, let’s not underestimate the power of the most important stakeholders—you, the consumers—in stopping these bills from progressing! Consumers protested by the thousands, and it made a difference. The most egregious attempts to disenfranchise the public from medical care were halted. Kudos to all who participated.
The president doesn’t seem to have gotten the memo; he continues to threaten to withhold promised payments to insurers on behalf of consumers, which would destabilize the Exchanges. A couple key dates to watch out for: August 21, when these payments are due, and September 4, when the Senate begins holding hearings to look at actions Congress should take to stabilize and strengthen the individual health insurance market.
With all the proposed changes to our health insurance infrastructure, more elected officials and consumer organizations have begun discussing a “single payer” system. Indeed, both California and New York have introduced bills (SB 562 and A4738/S4371, respectively) in their state legislatures this year that seek to adopt a single payer system.
But what does “single payer” mean? A single payer system is one in which the government organizes and pays for the financing of all health care expenses. However, the actual delivery of care is still done by private providers. It is not the government owning private practices; it is the government managing the cost and reimbursement of health care services.
This type of health insurance is mostly financed by the savings the government gets from replacing today’s inefficient, for-profit system with a streamlined single payer system. Another source of funding could be from taxes on those making above a certain (high) income threshold.
Many people think that most other countries have single payer systems. In fact, there are few truly single-payer systems in the world. Canada is one. However, most developed countries rely on many insurers. (Germany, for example, has more than 150 insurers.) Yet other countries pay much less for health care than we do. Why? “In the United States, insurers negotiate with hospitals and drug companies on their own—and they pay more as a result. In fact, because of their weak negotiating position they frequently use whatever price Medicare is paying as a baseline and then, because they lack the power to strike a similar deal, add a percentage on top. That leaves the United States with the worst of both approaches: Prices aren’t set by the market, but they also aren’t set by the government. We simultaneously miss out on the efficiency of a purely private system and on the savings of a purely public one."
For example, the pharmaceutical industry is both the No. 1 and No. 4 most profitable industry in the US in part because we do not use the power of the federal government to negotiate lower drug costs. This drives everyone's premiums up. (Much to the surprise of many, the health insurance industry doesn't even crack the top ten).
Here are some potential pros and cons of such a system:
- The single payer system treats people equally regardless of their income or health status. Everyone is eligible for comprehensive services.
- It does not require complex billing, as is currently the case. This frees up money, resources and time for doctors and other providers.
- Since such a system is not-for-profit, and the government has sole purchasing power, the cost of care goes down significantly.
- Because of the lower cost of care, premiums, co-pays and deductibles are drastically reduced.
- It requires an increase in government bureaucracy to administer it.
- It may increase wait times for some services.
- It may reduce innovation, as there is less of a financial incentive for it.
One example of a single payer system is Medicare, in which the government negotiates rates and pays for services. Currently, two percent of Medicare’s total budget goes to administering services, less than one-sixth of the rate for the private insurance industry. Many individuals and organizations advocating for a single payer system envision "Medicare for All," in which everyone, including children, would be covered by Medicare. It would certainly be easier than devising a whole new system from scratch, since the administrative system is already in place. Senator Bernie Sanders is currently making the media rounds with his proposal but other single payer proposals exist as well, including Representative John Conyers.
Ideally, a health care system that used international best practices would allow the government to set rates, but it wouldn’t necessarily eliminate private insurers. A variety of insurers allows for some competition in the system, and gives them an incentive to innovate and keep customers happy and healthy. And that’s in everyone’s best interest.
Yours in good health,
National Director, Health Services
Do you work in performing arts and entertainment and have questions about health insurance? The Actors Fund provides assistance nationally. Contact our regional office closest to you to speak to a counselor.
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Don’t forget to use the resources section of our website. It contains tools to help you make decisions about your health insurance, including new online tutorials on how to choose providers and how to read an Explanation of Benefits. In addition, you’ll find an updated Stage Managers National Health Directory, our national online directory of health care providers recommended by industry professionals that can be used by theatres and touring companies. For these resources and more, visit actorsfund.org/HealthServices. You can also find out more about enrollment assistance and upcoming health insurance seminars near you!