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Health care is moving toward a single-payer system
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A single payer for health care is a funding mechanism where one entity not only collects health care fees and premiums, but is also the payer for all health care costs. The United States already has a large single-payer health care system in Medicare. In addition, the Veterans Administration health care system is also often used as an example of a socialized single payer that is owned, operated and financed by government.
It is possible that as a consequence of the full implementation of the Affordable Care Act (ACA) in 2014, the United States could move even closer to a single-payer health care system if it results in a few years of coverage chaos. We are already currently more than halfway there in how we finance health care with Medicare, Medicaid and other federal and state-funded health care programs. A single payer does not necessarily refer to the specific type of delivery of health care. However, the entity that reimburses for services usually makes the rules and regulations.
Funding issues and responsibilities
To date, the partial implementation of the ACA has raised many issues that require public education, the need for additional marketing by the government and, most likely, may need some reshaping of legislation. Government officials still have to work through how this health care law will be paid for and how lower costs will be achieved through accountable care organizations (ACOs). The hard data for the ACO model to date lacks good evidence that they will produce significant savings with widespread application. The ACA still has to establish insurance exchanges and get more support for them, determine the exact amounts federal, state and local governments will pay for the expansion of Medicaid and navigate changed employee/employer relationships. Ultimately, the question will be, “Will the public like the health care they receive at the end of the process?” Unless something changes in the full implementation of the ACA, it appears the United States cannot afford the potential health care costs related to all the proposed additional coverage and the mandates in place.
Douglas W. Jackson
Many people believe the total cost of the ACA has been underestimated ,and this will become apparent to the American public in time. The full financing of the ACA will impact people who pay taxes, businesses, cities, states and the federal government. Individuals can forget the campaign promises that the ACA will not add to the national debt or that patients will not have to change physicians. In reality, the average family in the United States may now have a $2,500 per year increase and could experience a doubling of their health care costs. The ACA has moved the United States to a position where health care is both an individual right and the responsibility of the government to fund.
Many politicians and the current administration are further empowered following the elections to proceed with the expansion of the insurance coverage as an imperative entitlement regardless of cost. I believe with the further implementation, there may be increasing signs of financial chaos and soaring individual costs. If this occurs, many people will call for even more government involvement to solve the problem. A bigger government might try to solve the problems with an expanded government-run single payer for the health care system. It would further mandate the extent and participation in health coverage for all, determine premiums prorated on income levels, and depend heavily on the continued use of price controls and rationing. This expanded single-payer system would be in an even stronger position to cover the procedures and treatments found to “statistically work.” As we have experienced with Medicare, a procedure is seldom performed when it is not reimbursable. The bottom line for a single-payer government system is that it has the ability to add more taxes and fees to cover the cost of shortcomings and underfunded subsidies.
Government-run systems
Whenever the government completely takes over systems with large budgets, we see increased inefficiency and a large bureaucracy with voluminous regulations and oversight by auditors and regulators. Currently, Medicare is the largest unfunded liability in the United States.
The new reform bill proposes shifting some money from Medicare to help fund a portion of the ACA’s additional coverage and subsidies. I question how realistic this approach is as legislators have been unable to cut unfunded Medicare costs. They constantly delay or reduce scheduled Medicare cuts. The Congressional Budget Office projects future costs on the basis that the proposed cuts will be made. In addition, legislators have mandated expanding the scope of coverage in response to lobbying and other financial interests regardless of policyholders and taxpayers ability to afford the premium increases.
Transfer of costs
In his new role, Chicago Mayor Rahm Emanuel and many other leaders are looking for ways to transfer their cities’ health care liabilities to national taxpayers. One of the discussions Emanuel is leading involves how to transfer Chicago’s retirees to a federally subsidized state health exchange. In doing so, Emanuel is trying to meet the health care needs and escalating costs of Chicago’s retirees. There is more maneuverability with the health benefit as they do not have the same legal protections as pension plans. The extent of these obligations will be further clarified as more cities declare bankruptcy. We will soon see the outcomes from Stockton, Calif., as they try to get out from under the unfunded liability for retiree health benefits in bankruptcy.
No one knows for sure what the eventual costs will be for individuals, businesses and subsidized insurance in the new health care exchanges. No one is sure how many employers, both private and government, will drop health care coverage for their employees. State lawmakers and private employers are worried about how they will fund and absorb any increased costs. Many employers and state and local governments are actively investigating how they can shift some of their costs to the federal government. It may take 5 years to 10 years to fully define how much each individual will pay and which entities will be responsible for subsidizing the new health care costs.
Countries that have single-payer systems have seen increased taxation — with some reaching levels of taxation well above 50% or more with a combination of income taxes and value-added taxes. So while the cost accounting for the new subsidies involved in implementing mandated governmental health care coverage is occurring, it will require further savvy analysis and monitoring. One thing remains certain — the taxpayer will pay more in both their coverage costs and taxes to subsidize the ACA.