Government-run, single-payer health care would be disastrous. —Sally Pipes
It's wedding season for health insurers. Indianapolis-based Anthem Inc. has struck a deal to acquire Connecticut-headquartered Cigna for $54 billion. Its Connecticut cousin Aetna recently agreed to buy Kentucky-based rival Humana for $37 billion. The flurry of deals will leave just three major national insurers.
The federal government may be tempted to reduce that number to one — by eliminating insurers altogether and designating itself the nation's sole buyer of health care. After all, the government is poised to spend more than $800 billion subsidizing insurance on Obamacare's exchanges over the next decade. It already accounts for 43 percent of all health spending. Why not just cut out the middleman?
Government-run, single-payer health care would be disastrous. For evidence, look no further than the single-payer systems at home and abroad that saddle patients with substandard care.
Single-payer advocates claim it would prevent insurers from charging exorbitantly high prices — and would reduce overall health costs. As Dr. Ed Weisbart of Physicians for a National Health Program puts it, "A single-payer model would eliminate the inefficiencies of fragmentation" and yield a "single administratively efficient financing system."
Some presidential hopefuls are drinking the single-payer Kool-Aid. Democratic candidate Bernie Sanders recently said it's time to "expand Medicare to cover every man, woman and child as a single-payer national health care program." Republican front-runner Donald Trump has also praised a single-payer system.
Such plaudits are hardly warranted.
Take the claim that single-payer dramatically reduces administrative costs. Proponents claim that Medicare operates with overhead costs of just 3 percent, as opposed to private insurance's 13-plus percent.
That 3 percent figure, however, counts a fraction of Medicare's administrative costs, many of which are picked up by other agencies. The IRS gathers taxes that support Medicare, the Social Security Administration collects premiums and the Department of Health and Human Services manages accounting.
Plus, that 3 percent figure overlooks the $60 billion or so that Medicare loses each year to fraud.
After considering those additional administrative costs as well as fraud, Medicare's overhead per patient is $56 higher than the private sector.
Single-payer systems also hide their true costs by delaying and rationing treatments.
The Veterans Health Administration, which owns its hospitals and clinics and pays its doctors and nurses directly, is a prime example. Last year, whistleblowers reported chronic and sometimes deadly delays, along with cover-up attempts, at the VA. A report found that the agency neglected to answer over 31,000 inquiries that had been pending for an average of 312 days. Poor, untimely care contributed to at least 40 deaths.
In the wake of the scandal, Congress injected $16 billion into the VA to hire more doctors and nurses, among other reforms. Yet a year later, patients are waiting longer for care. Fifty percent more veterans have been on a waiting list for over a month than at the worst part of last year's scandal.
In Canada's single-payer system, patients have to wait an average of more than two months to get an MRI. The average patient must wait more than 10 months between referral from a general practitioner and treatment from an orthopedic surgeon. Over 900,000 Canadians — out of a total population of about 35 million — are on waiting lists for treatment.
Long wait times for surgery and other medical treatments cost Canadian patients nearly $1 billion a year, according to the Fraser Institute, a Canadian think tank.
Patients in Britain's National Health Service — another "model" government-run health system — face long lines even at the emergency room. Every hospital system in England has failed the NHS' goal of treating 95 percent of ER patients within four hours.62 comments on this story
More than 3 million Britons are on waiting lists for treatment. Between April and June 2014, nearly 16,000 scheduled operations were canceled for nonmedical reasons.
By dictating everything from how much insurers can charge to what benefits they must cover, Obamacare has effectively turned insurance companies into regulated utilities. Mergers offer them a quick way to reduce competition — and thus preserve profits in the short term.
But soon, there will be no one but the government to merge with. If health costs continue spiraling upward, insurers may be forced into a marriage with Uncle Sam.
That's a wedding to which no patient wants an invitation.
Sally C. Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “The Cure for Obamacare.”