Opinion Editorial
January 11, 2003

By Linda Gorman

A revised edition of this article was published by The Denver Post as “Road to Medical Hell”, on January 11, 2003, p. E1

Advocates of single payer health care want Colorado state government to pass legislation making government the sole provider of health care in the state. It can be done, but the real question is why anyone would want to be so inhumane.

After decades of experience with single payer health care systems we know that it makes health care harder to get, and increases costs. Even in the unlikely event that government promises to pay for everything, there is no guarantee that it will pay enough to motivate others to provide the expertise and equipment required to treat a particular patient. As the Oregon Health Services Commission snippily told Medicaid clients complaining about their inability to find a doctor, “Having coverage does not always guarantee access.”[1]

Single payer makes access difficult because government officials focus more on budgets than they do patients. In a profit oriented health system patients can influence outcomes by changing their spending patterns. But only about 4% of citizens in industrialized countries are seriously ill at any given time. Politicians in search of votes are loath to spend huge sums on such a small population.

Instead, they buy votes by funding relatively inessential health programs to coddle the larger numbers of worried well. In Britain, the government provides transportation to and from its filthy hospitals and hellish emergency rooms.[2] In 2001, Lisa Campbells physician suspected appendicitis and sent the 18-year-old to the Royal Cornwall Hospital with a letter requesting urgent attention. She spent 12 hours on the hospital floor wrapped in a blanket. Despite a high fever, vomiting, and excruciating pain, the hospital would not examine her until a gurney was available. It took two more days to diagnose appendicitis.[3]

As treating sick people is more expensive than letting them die, single payer systems also discriminate against the elderly and powerless. An 80-year-old American woman can expect to live almost a year longer than her British counterpart.[4] In the Netherlands, elderly patients fear the hospital. The Dutch government lets doctors kill their patients. Dutch physicians in need of a hospital bed have simply administered lethal drugs to people they think will die anyway.[5] Some countries do not even classify babies under 2 pounds as live births. This explains why U.S. infant mortality rates are high by international standards even though babies born in the U.S. have superior chances of survival.[6]

In 1997, an estimated 20 to 30 percent of all patients on Canadian waiting lists were expected to die before getting care.[7] Canadian officials responded to critics by saying that it was good that Canada used its health care resources to their fullest capacity. Under single payer care it is better to let sick people die than to let expensive machines sit idle.

The poor performance of single payer systems can be seen in cancer mortality ratios, the death rate divided by the incidence of disease. For breast cancer, the U.S. mortality ratio is 25%. In Canada and Australia it is 28%, in Germany it is 31%, in France it is 35%, and in New Zealand and the United Kingdom it is 46%. For prostate cancer, the U.S. mortality ratio is 19%. In Canada it is 25%, in New Zealand it is 30%, in Australia it is 35%, in Germany it is 44%, in France it is 49%, and in the United Kingdom it is 57%.[8]

Single payer systems in the U.S. also generate poor results. Elderly veterans trapped in the Veterans Administration pharmacy benefit program have access to only 12 of the 31 drugs most commonly used by elderly and disabled Medicare patients.[9] In 1994, Medicaid bureaucrats decided to spend less on Epogen, a drug for treating anemia in dialysis patients. Patients denied Epogen got sicker, death rates increased, and hospital bills went up. Only after five years of intense lobbying was this arbitrary policy changed.[10]

The largest single payer systems in the United States, Medicare and Medicaid, have sabotaged private health care by systematically over promising, over regulating, and underpaying. Providers responded by charging private payers more. Now that private payers have reached their limit, providers are simply refusing to take Medicaid and Medicare patients. The result has been skyrocketing private costs and a shortage of care for the poor and elderly dependent on government programs.

Market systems reward those who reduce costs by increasing their profits. Government systems offer no such incentive with the result that single payer health care is extraordinarily costly to run. Wharton professor Patricia Danzon calculated that with all costs included the overhead of the Canadian system is about 45% of claims.[11] Her estimate of overhead for U.S. private insurers, net of government cost shifting, was about 7.6% of claims. Health actuary Mark Litow estimated that Medicare and Medicaid spend about 27 cents on overhead for every dollar of benefits. Private insurers spend about 16 cents.[12] In Oregon, a decade long attempt to rationalize Medicaid spending by running it like a single payer system succeeded only in reducing access and doubling spending.[13]

Unlike single payer, market based reforms offer a real opportunity to reduce costs. The RAND health insurance experiment conclusively demonstrated that people who used their own funds to buy health care reduced spending by 30% without harming their health.[14] Medical savings accounts (MSAs) build on this result by making it possible for people at all income levels to self-insure for routine health care costs. Reducing claims reduces everyones overhead making health care, and health insurance, more affordable.

The savings are surprising. Calculations for the Denver market using current premiums for individual policies suggest that a MSA health insurance plan would save a couple with two children and average medical expenses about $500,000 over 40 years. At age 65, $140,000 would be left to cover additional expenses in old age.[15]

Fifty years of experience has shown that single payer systems produce lousy health care at exorbitant cost. Isnt it high time to try something else?

[1] Oregon Health Services Commission Report: Prioritized List of Benefit Packages for OHP Standard. October 2001. The Office of Oregon Health Policy and Research, Salem, Oregon. pp. 28 and 32.

[2] A number of articles about this have run in the British press. For an example see “Hospitals failing hygiene tests,” January 6, 2001, BBC News online edition. http://news.bbc.co.uk/1/hi/health/1103485.stm accessed January 12, 2003.

[3] Jenny Booth, Olga Craig, Lorraine Fraser, and Alec Marsh. August 26, 2001. “Revealed: the NHS scandal of his and hers trolley corridors. News.telegraph.co.uk, accessed January 10, 2003. http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2001/08/26/nnhs126.xml .

[4] John C. Goodman and Devon M. Herrick. 2002. Twenty Myths about Single-Payer Health Insurance. Dallas, Texas: National Center for Policy Analysis, p. 73 of online edition. http://www.debate-central.org/topics/2002/book2.pdf They cite Michael Lowe, Ian H. Kerridge and Kenneth R. Mitchell. December 1995. “These Sorts of People Dont Do Very Well, Race and Allocation of Health Care Resources,” Journal of Medical Ethics, 21, 6.

[5] Richard Miniter. April 28, 2001. “The Dutch Way of Death: Socialized Medicine Helped Turn Doctors into Killers. The Wall Street Journal online version posted at Opinion Journal, opinionjournal.com/forms/printThis.html?id=95000390, accessed January 11, 2003.

[6] Nicholas Eberstadt. 1995. The Tyranny of Numbers: Mismeasurement and Misrule. Washington, DC: American Enterprise Institute. Chapter 2, The U.S. Infant Mortality Problem in an International Perspective, p. 43-73. For a discussion of the low birthweight problem see Nicholas Eberstadt. January 20, 1992. “Americas Infant Mortality Problem: Parents,” The Wall Street Journal.

[7] John C. Goodman and Davon M. Herrick. 2002. Twenty Myths about Single-Payer Health Insurance. Dallas, Texas: National Center for Policy Analysis, p. 73 of online edition. http://www.debate-central.org/topics/2002/book2.pdf, fn 22.

[8] Gerard F. Anderson and Peter S. Hussey. October 2000. Multinational Comparisons of Health Systems Data, Commonwealth Fund. Cited in John C. Goodman and Davon M. Herrick. 2002. Twenty Myths about Single-Payer Health Insurance. Dallas, Texas: National Center for Policy Analysis, Figures 6-2 and 6-3 of online edition. http://www.debate-central.org/topics/2002/book2.pdf.

[9] Naomi Lopez Bauman. October 2, 2000. What Americans Should Know Before Letting Government Control Medicares Medicine Cabinet. Alexandria, VA: Hispanic Business Research Center.

[10] Robert Goldberg. October 1999. Ten Myths about the Market for Prescription Drugs. Policy Report no. 230, National Center for Policy Analysis, Dallas, Texas, p. 16. http://www.ncpa.org/studies/s230/s230.html as posted on the web on 20 June 2000.

[11] Patricia Danzon. Spring 1992. “Hidden Overhead Costs: Is Canada’s System Really Less Costly?” Health Affairs.

[12] Mark Litow and the Technical Committee, “Rhetoric vs. Reality” Comparing Public and Private Health Care Administrative Costs,” Council for Affordable Health Insurance, March 1994.

[13] Linda Gorman. November 2002. Treatment Denied: How State Government Health Care Monopolies Care for the Mentally Ill. Portland, Oregon: Cascade Policy Institute. http://www.cascadepolicy.org/pdf/health_ss/I_122.pdf accessed January 11, 2003.

[14] Willard G. Manning, et al. June 1987. “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment,” American Economic Review, 251-277; Also Manning et al. 1987. Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment. Publication Number R-3476-HHS, Santa Monica: Rand Corporation. For an online synopsis see Martin Zelder. 2000. Canadian Health Reformers Should Understand RAND. Fraser Forum, online edition. Fraser Institute, Vancouver. http://oldfraser.lexi.net/publications/forum/2000/02/section_01.html.

[15] Linda Gorman. April 2002. Why Pay More? Simple Insurance Reform Would Save Coloradans Millions. Issue Paper Number 2-2002. Golden, CO: Independence Institute. Why Pay More? Simple Insurance Reform Would Save Coloradans Millions https://i2i.org/Publications/IP/HealthCare/WhyPayMore.htm

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Copyright (c) 2003, Independence Institute

INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.

JON CALDARA is President of the Institute.

LINDA GORMAN is a Senior Fellow at the Independence Institute.

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