What Obamacare Can’t Do

Single-payer is still the best way to achieve universal health care.

As the Democratic presidential primary race tightens to a virtual tie nationally, the debate over single-payer health care is growing increasingly tense — and consequential.

In the past several weeks, Hillary Clinton and a host of pundits and policy wonks have articulated an evolving set of arguments about why “Medicare for All” is not affordable, achievable, or worth the effort. A number of rejoinders have made the case that it is, on the contrary, all of these things. More recently, a new line has emerged: yes, current reforms fall short of universal health care, but no, single-payer isn’t necessary to achieve it.

Clinton argued as much at the most recent debate: “I don’t want us to start over again . . . I want to build on the progress we’ve made. Go from 90 percent coverage to 100 percent coverage.” Scott Lemieux outlined a similar vision in a Guardian article last Friday headlined “Americans don’t need single payer healthcare to get universal coverage.” “Single payer healthcare,” Lemieux writes, is not interchangeable with “European-style healthcare.”

He notes that some continental European countries have non-single-payer systems that achieve universal coverage through a combined public/private model. We could thus follow the same path by expanding the Affordable Care Act (ACA) rather than charting a new, more disruptive one (i.e. single-payer).

But while the incremental approach might sound appealing, staying on the track set out by the ACA would be the wrong move. As other countries show, trying to achieve equitable, universal health care within the confines of a private insurance system is bound to result in disappointment.

The Dutch Road

Perhaps more than any other, the Netherlands’ health system is held up as a potential model for the US. Lemieux mentions it as a possible framework. And Paul Krugman describes the Netherlands (and Switzerland, which has a similar system) as having “near-universal coverage even though they rely on private insurers.”

This isn’t a novel pitch. In 2008, as health care reform was under intense debate in the US, an article in the journal Health Affairs noted that “Americans may be interested in the Dutch system” insofar as “it combines mandatory universal health insurance with competition among private health insurers.”

The Netherlands archetype is fairly new. Before 2006, Dutch health care wasn’t single-payer, but it was predominantly public: a social health insurance program covered some two-thirds of the population, and the wealthier minority relied on private insurance.

Though two-tiered, as André den Exter describes in The Right to Health at the Public/Private Divide, insurance status at this stage affected neither hospital reimbursement nor waiting time (and benefits were basically the same). Thus, he notes that “there was no incentive [for providers] to treat patients differently.”

If the concern was greater equity, the Dutch could have moved toward a single-payer system, perhaps by first extending the social insurance scheme to everyone. Instead, as Exter describes, the “radical” 2006 reforms did the exact opposite: the social insurance scheme was replaced by an individual mandate–based system for everybody, “carried out by for-profit insurance companies.”  In other words, Obamacare before Obamacare: a regulated, subsidized marketplace of competing private insurance plans (that, to be sure, cover more of the population at a lower cost than in the US).

The 2006 Dutch reforms were based in part on a school of health policy thought associated with the US economist Alain Enthoven, a man who got his start analyzing military strategy for the Pentagon before becoming the foremost proponent of competing private-sector health plans (so-called “managed competition”).

Outside the Netherlands, Enthoven’s ideas have influenced health reform efforts in both his home country — first under Bill Clinton, then President Obama — and in Britain, where Margaret Thatcher began the push to marketize the National Health Service (NHS) in the late 1980s. The 2006 Dutch reforms should therefore be seen as part of a wider, if uneven, neoliberal transition in health systems internationally.

A 2011 article in the New England Journal of Medicine captures the flaws of the Dutch system well. It counts four main shortcomings. First, the 2006 reform did not control expenditure growth — instead, the unwieldy attempt to introduce quasi-market competition “produced high administrative costs and complexity.” Second, uninsurance was not fully eliminated, so some residents still defaulted on their premium payments (and could then be dropped by their insurance company).

Third, the system of “consumer choice,” in which the Dutch are expected to shop around for new insurance plans, didn’t deliver higher customer satisfaction. In a poll cited by the authors, 65 percent of those insured said they had “low or very low levels of trust in private plans.” And finally, while the reform was intended to introduce more market competition, it still brought heavy doses of regulation and bureaucracy.

A less critical September 2015 review in the Journal nonetheless offered some similar conclusions on the Netherlands’ turn away from a public system: “Almost 10 years in, the reforms have not led to the desired cost containment or a leap in quality,” while at the same time “individuals increasingly worry about cost-related access problems.”

The reality is that fragmented, multi-payer systems invariably demand costly administrative apparatuses. A recent comparative study of hospital administrative costs in the US, Canada, and several European countries makes this particularly evident. Among other high-income countries, the United States was found to spend the most on hospital administration. Not far behind it, however, was the Netherlands:

Himmelstein DU, Jun M, Busse R, et al. “A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs Exceed All Others By Far.” Health Affairs (2014).

Nor are these sums chump change. Indeed, in 2010, according to this study, 1.43% of US GDP went to hospital administration alone.

Now, it might seem surprising that England is right behind the Netherlands — doesn’t it have a single-payer system? To a large extent it still does. But as previously noted, Thatcher and her successors worked to inject an “internal market” into the NHS that — along with other pro-market initiatives — has created a much more administratively wasteful and privatized NHS in England. In contrast, the two nations with the lowest administrative spending — Canada and Scotland — have straightforward single-payer systems. The investigators thus conclude:

In the United States, administration consumes an increasing share of hospital budgets — a share that is far higher than in nations with simpler and less market-oriented payment schemes . . . Reforming the US health care system so that it operated on a single-payer basis could result in large savings on administration.

Equity and Solidarity

Not all universal health care systems are created equal. Genuine universal health care includes the following four features, at a minimum: universal coverage (i.e. none left uninsured or uncovered), the elimination of financial impediments to care (i.e. no copayments and deductibles), comprehensive coverage (including services currently uncovered or poorly covered in the US), and no inferior “tiers” of access for particular economic or demographic groups.

Achieving this would cost real money. Yet the transition to a single-payer system could achieve efficiency savings that would, as health policy scholars Steffie Woolhandler and David Himmelstein note in a recent op-ed, be “enough to cover all of the uninsured and eliminate co-payments and deductibles for the rest of us.” They estimate upwards of $400 billion annually in efficiency savings.

In contrast, reforms that fall short of single-payer — whether it’s the Dutch model of managed competition, “all-payer” initiatives, or even the “public option” — would not (among other shortcomings) generate those savings, making it more difficult to achieve universal health care worthy of the name.

Yet there is also a much larger political and philosophical issue at stake. For egalitarians, a just health care system must treat all equally. This is difficult — if not impossible — in systems with upper and lower tiers of coverage, with barriers that impede access to particular facilities or doctors for particular groups, and in which a for-profit ethos encourages excluding certain individuals or treatments. Exter raises similar concerns about equity in the case of post-2006 Netherlands:

[T]he new liberalized health insurance scheme has resulted in preferential health care arrangements that significantly challenge the notion of equity or solidarity within the Dutch health care system . . . Given the limited options of unhealthy and more needy individuals, a substantial inequality in access to health care between several socioeconomic groups will likely emerge over time in the Dutch system.

The same outcome could be expected in the US.

The Dutch system’s deficiencies also reveal the pitfalls of counterpoising a private US system to the “universal” systems of other high-income nations. Even if European countries’ health systems outperform the United States’, speaking of “European” health systems in the aggregate obscures more than it reveals.

If the Netherlands model demonstrates anything, it’s that some forms of “universal” health care are less worthy of emulation than others. Expanding access the Dutch way (itself based on US policy ideas) would leave intact much of the waste of the current system — without achieving the equity implied by the term “universal health care.”

A single-payer national health program must therefore remain a central goal for progressives and the Left. Placating the private insurance industry isn’t a price we can afford to pay.