Chuck cautions that this article is not peer-reviewed, but it passes the sniff test. One reason the claims of enormous savings from a single-payer system deserve serious examination is visible on almost any Medicare statement.
When I review my own Medicare explanations of benefits, the amount originally billed is frequently more than twice what Medicare allows. Medicare essentially says, “This is what the service is worth, and this is what we will pay.”
Private insurers negotiate prices too, of course. The evidence suggests that they often pay substantially more than Medicare.
And then there is the patient’s role in our supposedly competitive healthcare marketplace. We are told that competition and consumer choice help control prices. That theory works reasonably well when buying a refrigerator. It becomes a little less convincing when you are flat on your back on a gurney being rolled from the emergency room toward surgery. Your bargaining position is not especially strong.
“Before you remove my appendix, could we discuss your fee schedule?” Perhaps not.
The deeper problem is that we have created an extraordinarily complicated system in which the same medical service can have a hospital “charge,” a Medicare price, several privately negotiated insurance prices, and a cash price. Then we employ armies of people on both sides of the transaction to determine which price applies, obtain authorization, submit the claim, deny it, correct it, appeal it, and finally collect whatever remains.
The United States now spends roughly $5.3 trillion a year on healthcare. So a claimed savings of $1 trillion annually is about 19% of the entire system. That is an enormous number—large enough that it should invite skepticism and careful examination—but it is not inconceivable in a system this large and administratively complex.
Put another way, the claim is not that we can save a trillion dollars by eliminating insurance-company profits. It is that nearly one healthcare dollar in five may be consumed by higher prices, administrative complexity, duplicated systems, billing machinery, and other costs that a simpler financing system could reduce.
That doesn’t prove the estimate is right. But it does put the number in perspective. The real question is whether we are getting $5.3 trillion worth of healthcare—or paying an extraordinary premium for the way we choose to finance it.
Richmond Shreve
NaCCRA Board Member & VP
Forum Moderator