Structuring National Health Care in America

I’ll be honest in admitting that a part of me, from time to time, thinks that we should just adopt a single-payer, nationalized health care system like that of the UK. There are some wonderful arguments for equality and gains to be made through standardization. Believing that we’re ready to move basic health care from the capitalist to the citizenship model, a fully government-run program seems the most effective way to do so.

But then I think about the need for flexibility and entrepreneurship that comes so much more easily in the capitalist model. Though there will necessarily be some trade-offs (as there already are), I think we need to preserve some room for innovation. With this balance in mind, here are the elements I believe a federal health insurance system should include:

Single-Payer Financing

Right now Americans are divided into thousands (millions?) of smaller health insurance pools by a variety of factors. State and local boundaries make some difference but the biggest division is by employer. If you have health insurance through your employer (as encouraged by the tax code), you won’t be able to take that coverage with you to a new job. If you lose your job you likely lose your health insurance, though you may be able to keep it for a few months at a much higher premium. There are historical reasons for that system but not compelling arguments for keeping it. Concern for personal health or family illness should not tie one to a specific employer.

As consumers, we would be in a better financial position if we were part of the same very large insurance pool. For starters, this would decrease a lot of cost-increasing inefficiencies built into the present system. For instance, a local hospital could treat all local patients in all of its facilities, instead of accepting everyone for emergency medicine and only those with the right insurance for other procedures. The same would go for local doctors, dentists, medical clinics, etc.

We would also be in a better position to negotiate prices. Right now insurance companies negotiate on behalf of their patients for the price of each procedure, then pass on some of that reduced price to their members according to deductible policies, etc. So those without insurance pay a huge premium to balance the books against the lower prices paid by members of the largest insurance pools (which bring greater negotiating power). Negotiating as a single entity would allow consumers to set prices at or near cost. Together, though more of the cost would be channeled through government, we could actually lower the cost of health care in this nation.

Finally, a single-payer system would provide for a citizen model of health care. As I argued earlier, I think this fits with the goals laid out in the Declaration of Independence. I’ll write later about how I think it fits with the Constitution. And fundamentally I think American is sufficiently prosperous to afford to extend health care to all its citizens as a basic right.

Taxpayer Funded

As I also argued earlier, a federal health care system would be on much stronger Constitutional footing if it relied on the tax power rather than the Commerce Clause. I would favor a dedicated, progressive tax to fund the federal health care system, with exemptions for those below a basic income/asset threshold.

Private Care Providers

Here’s where the capitalist model starts to come in. At present I’ve concluded that we should not entirely nationalize the health care system. That is, I don’t believe that the government should take over hospitals and other private health care providers to become both the single-payer and single-employer for health care in the nation. Instead, I’d prefer that we maintain an element of competition and accompanying innovation.

The trick — and I admit I don’t have this figured out yet — will be to provide an appropriate incentive structure. One approach might be a fee-for-patient model. If everyone chose a primary care physician, each doctor would receive a steady fee for that patient. If they did a better job of keeping their patients healthy more cheaply, they would be able to keep more money. This would diminish the incentives for unnecessary tests and increase the incentives for quality preventative care. A similar system for hospitals would provide a greater incentive for working to diminish recidivism. I would pair this with a fee-for-service system to preserve flexibility in the system. That way if you went to a new doctor for a checkup (and to consider switching primary care providers) there would be a mechanism for paying for that doctor’s time. The same would apply to specialists whom patients would only visit occasionally.

Basic, Preventative, and Catastrophic Care

To make more room for the capitalist model, I would also limit the coverage of national health care. To begin, it should cover basic medical care, preventative care, and catastrophic care. Regular doctors visits, routine exams, programs to help people lose weight or quit dangerous addictions, etc. should all be part of the standard single-payer insurance. It should also consume the current Medicare and Medicaid systems. And it should cover catastrophic medical needs: the kind of unpredictable accidents or medical conditions that will occur in a small portion of the population and cost millions of dollars. Because we’ll all be in the same pool, the individual tax burden of this latter category will be small even though it will mean huge savings for those who need the care.

Beyond this basic single-payer care, individuals could purchase additional health care through private carriers. I’ll be honest that I haven’t figured out all the nuts and bolts here. I’m not a doctor or a health-insurance executive. So I can’t tell you the boundary of what should be covered publicly and what would be included in private plans. I do expect that the public plan would include co-payments and deductibles for most treatment (except preventative care), so private plans could pick up those costs. And optional treatments, excluded from the public plan, could be available through private coverage. Health care providers would negotiate separately with insurers, as they do now. This would provide some competition for the government-run plan, which could be a positive thing.

So, those are the details of the system I’d prefer, at least for now. I recognize that it’s a complicated and imperfect plan. But I’m serious about preserving some of the benefits of the capitalist model even as we expand health care under the citizenship model. I welcome your comments, criticism, and suggestions regarding what I’ve proposed here.

This is the fifth post in a series explaining why I favor a national health care system. For the introduction to the series and a list of the posts, click here. Or, for all my health care related posts, see here.