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OpEdNews Op Eds    H2'ed 3/27/09

Change we can believe in: Americans need single payer now

By       (Page 1 of 2 pages)   5 comments
Message Claudia Chaufan

As president Obama recently acknowledged, the need to reform health care is no longer an issue. Indeed, on March 5th the White House convened a Health Care Summit, that so far have been followed by Regional Forums in Michigan on March 12, in Vermont on March 17, in Iowa on March 23rd, and upcoming ones in North Carolina on March 31st and in our state, in Los Angeles on April 6th.


But the question remains: what sort of health care reform will serve our needs so that we do not find ourselves having this conversation again ten or twenty years down the road? After all, back in 1973 we also “hoped” that the HMO Act introduced that year by President Nixon would resolve the problem of rising costs and of an increasing number of individuals unable to protect themselves from the financial burden of disease.


Yet we are no better today than we were back then. And we will not be better tomorrow unless we get things right. Which is why I want to argue that, special interest groups aside, from a strictly policy perspective neither the State of California nor the nation as a whole can afford not to choose single payer. It is no longer just the moral problem of millions of uninsured, underinsured, or the thousands dead for lack of health insurance – and we will keep counting the bodies unless we get things right -- but also the severe economic problem that is eroding the fiscal health of our state and of our nation.


Let me illustrate my claim with the example of our state. As both Democrats and Republicans in Sacramento are well aware, the State of California spends a great deal on health care, to fund public programs and insure state employees and their families, including retirees. Just recently, it was reported that retiree health care costs for our state will exceed 50 billion dollars this year. From the point of view of the current budget this is unaffordable. And even if it were affordable this year, unfortunately for the California General Fund the revenue that purchases that care keeps growing at a rate roughly equal to that of the economy, yet costs of health care are growing four times faster. This means that unless costs are controlled, the state will be forced to continue cutting benefits, reimbursement rates, or enrollment – most likely all of these.


And here is where single payer becomes critical: it is the only well tested financing mechanism, internationally, and nationally, that can bring costs of health care down, because it is the only one which embodies two demonstrable policy principles critical to cost control.


The first, risk pooling, simply means putting all those who will be insured into large pools, preferably a single one, which is precisely what single payer does. Risk pooling is critical to cost control for several reasons: the most obvious one is that it allows the system to purchase on behalf of a large number of people, an extremely powerful, and well documented, cost-cutting strategy in health care. For instance, while people in Spain, that has a single payer system, pay 9 dollars for Lanzoprasol, a widely used drug to reduce acidity, people in Maryland, U.S., with its public-private financing system, pay $329 for the same dose of the same product.


Risk pooling also cuts costs by reducing administrative waste, because it eliminates useless paper pushing, which results from marketing multiple plans or underwriting policies for different categories of people and eats up no less than 30 cents of each health care dollar. While this administrative overhead is not “waste” for private for profit insurers – indeed, their very survival depends on being able to separate “good” from “bad” customers to meet their first and foremost responsibilities with shareholders – from the perspective of a high-performing health care system this overhead stands in the way of meeting the very goal of the system: eliminating financial barriers to medically necessary care. Attempting to regulate these solidly engrained business practices among experience-rating private insurers, as some have suggested, would not only be largely futile – it has been tried repeatedly, and has failed -- but also extraordinarily expensive. 


Last yet not least, risk pooling allows for cross-subsidizing, which means that at any given moment the least costly majority, roughly 80%, subsidizes the most costly minority, roughly 20%. We do not know who will be in that minority at any given moment, but we know that the division between those who need more or expensive care and those who need less or less costly care gravitates towards those proportions, which is why cross-subsidizing is critical to the system being not only financially sustainable as a system but also affordable to individuals and families participating in the system when they most need it, that is, when they need medical care.


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Claudia Chaufan, M.D., Ph.D., is Associate Professor at the University of California, San Francisco. She is also a member of Physicians for a National Health Program-California (

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