A larger international and historical perspective supports the case.

In many countries in the SPNHI model— Canada, for example9—the demand for and reality of private insurance is increasing. Even within an efficient single-payer system, a parallel private insurance sector inevitably tends to emerge. Why shouldn’t this historical sequence be reversible? Start with a largely publicly funded but competitive insurance system in which a public insurance plan is but one option among others. Set appropriate ground rules—a mandate that every person be insured, a mandate that plans cannot reject individual applicants, a minimal basic package of benefits to be included in all options, limits on price variation, and so on. Then let people vote with their feet. If the advocates of SPNHI are correct, the public insurance option will grow to be robust, and it may eventually lead to full-scale adoption of SPNHI with private insurance around the edges. Note that this would be virtually the same result one is likely to end up with if one starts with unadulterated SPNHI! But if a hefty amount of private insurance survives direct and fair competition with the public plan, so be it. It will be difficult enough to enact a framework for universal insurance competition that contains a public insurance option. Why push a more exclusively single-payer model whose political prospects are utterly bleak?

1. G. Harris, “Looking at Dutch and Swiss Health Systems,” New York Times, October 30, 2007. 2. P. Menzel and D.W. Light, “A Conservative Case for Universal Access to Health Care,” Hastings Center Report 36, no. 4 (2006): 2-11, at 4-5. 3. An example from Washington state provides an illustration of such efficiency on a smaller scale. State and public school retirees can select an essentially public plan, “Uniform Medical Plan,” or a number of private plans. Uniform’s premiums are noticeably lower than those of all the private competitors even though its coverage appears to be just as robust (both on paper and in the experience of my family and numerous acquaintances). Uniform’s motto is “Your Health, Your Plan, Your Choice.” 4. P. Healy and R. Toner, “Wary of Past, Clinton Unveils a Health Plan,” New York Times, September 18, 2007. 5. Harris, “Looking at Dutch and Swiss Health Systems.” 6. D. Brooks, “Hillary Clinton, From Revolution to Evolution,” New York Times, September 18, 2007. To be sure, he regards Republican candidates’ plans as effectively nonexistent, but he also has many words of praise for the new Clinton plan. 7. M. Barbero and R. Abelson, “A Health Plan For Wal-Mart: Less Stinginess,” New York Times, November 13, 2007. 8. R. Pear, “A Battle Foreshadowing a Larger Health Care War,” New York Times, October 6, 2007. 9. N. Kenny and R. Chafe, “Pushing Right against the Evidence: Turbulent Times for Canadian Health Care,” Hastings Center Report 37, no. 5 (2007): 24-26.

On the Moral Superiority of a Single-Payer System
BY

LEN M. NICHOLS

D

avid DeGrazia has sketched out a health reform proposal that combines the monopsony purchasing power of a single public payer with managed competition among health plans and implicitly among providers, alone or in groups. The proposal differs from the archetypal “Medicare fee-for-service for all” model in creative ways, and indeed it is developed to address some of the standard fears about whether a single-payer system

Len M. Nichols, “On the Moral Superiority of a Single-Payer System,” Hastings Center Report 38, no. 1 (2008): 36-38.

squelches choice and incentives for innovation. But DeGrazia’s truly novel claim is that this version of single payer is the “most morally defensible reform model.” That is a strong statement, and difficult to prove or disprove, not least because the paper does not argue that the features and predicted outcomes of the model are consistent with any particular theory of distributive justice or any other moral yardstick, scriptural or secular. Rather, the paper essentially argues that a single-payer system with managed competition would do a better job, on balance, of achieving the widely accepted goals of universal coverage, containing costs, protecting patient freedom, and delivering high quality care. I consider each in turn. The author agrees that most of the plans discussed by Democratic presidential candidates represent mixed models of individual plus shared responsibility among employers and government. He also agrees that with purchase
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36 H A S T I N G S C E N T E R R E P O R T

since the cost control mechanisms are similar. so I don’t see much difference arising here. DeGrazia suggests that the basic required benefit package might have to be scaled back to allow more freedom.S. Yet it is these preferred methods of January-February 2008 This may be the true test of morality: do a majority of the stakeholders accept the way “no” is conveyed? practice that have led to such stunning inefficiency throughout our health care system. universal coverage could be attained through some of the mixed models. by ending underwriting. governed as they might be by elites focused on population health. cost control (while holding quality constant or even improving it) is equivalent to exercising appropriate stewardship over our collective health system’s resources. This may be the true test of morality: do a majority of the relevant stakeholders accept the way “no” is conveyed? I fear that Congress. Indeed. managedcompetition plans of the candidates propose. and market reforms. I see HASTINGS CENTER REPORT 37 . adequate subsidies. responding as it must to providers who are. can a single-payer system with managed competition control costs better than the best of the new proposals for system reform? It seems unlikely to perform better. A single-payer system with managed care. and quality transparency throughout our health delivery system. I do not share this assumption. yet the mixed plans have more private sector discretion built in to “say no” when the evidence for coverage is demonstrably weak. Finally. Those proposals would create comparative effectiveness or “best practice” institutes. is more likely to override weak evidence than are clinicians and health plans working to earn enrollees in a competitive marketplace. Ability to control cost is the main reason for asserting that a single-payer system with managed competition is morally superior. would be more efficiency-enhancing than under any other current or proposed system. it would subject the process to the same provider-promoting lobbying and marketing that plague the Medicare program (and less monopsonistic buyers in the private sector) today. marketing activities. Since the government buyer can dictate what services will be covered. as well as such inferior cost growth performance over time. health care system has not controlled costs. by dispensing with copayments and multiple billing and coding forms. Since virtually all the Democratic plans would utilize some more or less aggressive form of managed competition among health plans and implicitly among providers. Some argue that a single-payer system with managed competition is more “provider friendly” because it eschews micromanagement and interference with clinicians’ preferred methods of practice. because a single-payer system would turn coverage decisions into purely political decisions. but again these are ultimately political decisions in both frameworks. however. payment reforms. reformed with the principles of transparency and accountability firmly in place. after all. respectively. the power of the argument hangs on whether a single payer with managed competition would control delivery system cost growth over time better than any other reform model. compared to what? To today. In any system. as do the mixed models of the mainstream Democratic candidates. could end up very near where we are today. and the need for profit. superior cost performance would be guaranteed if unproductive variation in medical practice could be eliminated and if technical advances offering little clinical value added were not approved for future use. And little doubt exists that archetypal single-payer systems would lower administrative costs—of insurers. Thus. No one disputes that the current U. Cost control is morally important because savings permit us to cover more people with less personal and collective sacrifice. The key to any coverage mechanism’s success at promoting efficiency is for the process to be based on high quality evidence and accepted by the plan’s enrollees in the case of a particular firm. Thus. and by the citizens of the country in the case of any single-payer variant. quality of care will depend on whether new comparative quality information and payment incentives drive provider behavior and patient choices. as the model as outlined seems to permit. The ability to protect patient freedom again seems similar. and of patients and providers.mandates. but the essentially identical performance of Medicare and the private sector since 1970 would cast some doubt even on this claim. especially if health plans are allowed to impose cost-sharing to reduce moral hazard. since DeGrazia’s single payer with managed competition would have competing private and public insurer options. The reality is that. In other words. DeGrazia may be implicitly assuming that coverage decisions. Thus. universal coverage is not the reason reform plans differ in moral impact. so health plans are forced to compete based on their demonstrable quality and service to enrollees. But this is exactly what the “regular” mixed. the claim about superior cost control must have to do with the single-payer aspect of the proposal—with the monopsony power of the government in specifying the conditions and price of health plan participation. perhaps. the claim of superior cost performance over time must be answered with. DeGrazia rules out charging premiums to people (they would get a voucher good for basic coverage from any insurer). also constituents. for I fear Congress will never delegate sufficient authority to those in charge of any “public” plan.

The Problem with Single-Payer Plans BY EZEKIEL J. Many working poor and lower middle class Americans pay taxes to support Medicaid and SCHIP. about 70 percent of whom are in families with full-time workers. It retains and solidifies the nineteenth century. I agree that a single-payer system with managed competition is the best form of single-payer system around. and among Americans sixty-five and older. Even if they acknowledge that a single-payer plan cannot be enacted.very little reason to think that a single-payer system with managed competition will do better than the straight managed competition envisioned by most Democratic candidates. but the contemporary need is for chronic care. 1 (2008): 38-41. Over 133 million Americans have chronic conditions. Emanuel. “The Problem with Single-Payer Plans. and—for Medicaid—complex determinations of eligibility. health care costs have risen 2–4 percent over growth in the overall economy. 70 percent of health care costs are devoted to patients with chronic conditions. each year Medicare beneficiaries see seven different physicians. but it would be a compromise. fee-for-service delivery system that provides profligate and bad quality care. This is wrong. EMANUEL M any liberals in America dream about singlepayer plans. Consequently. it is conservative. As proponents of single-payer systems note. Of the one billion office visits each year. The government part of the finance system is inefficient because it fails to address key policy issues. and one-third are to groups of four or fewer physicians. no. one-third are to solo practitioners. and 20 percent have five chronic conditions. Wealthy individuals receive much higher tax breaks than the poor. it is badly fragmented. 75 percent of physicians practice in groups of eight or less.” Hastings Center Report 38. forcing states to cut other programs. Over the last three decades. marginal. sales. low wages and in small businesses. On average. The employer-based and individual market parts of the financing system are inefficient because they have huge administrative costs. Also. nonbeneficial. Single payer is the ideal. Here’s the problem: while it proposes the most radical reform of the health care financing system. who are financially. First. Another proposal may be politically necessary to achieve universal coverage. single payer is not the best reform option. and eleven others on both sides of the aisle. cosponsored by Senators Wyden and Bennett (a Democrat and a Republican. and marketing. But the delivery system is also fraught with problems. a fall-back. or for that matter than the type envisioned in the Healthy Americans Act. I do not think the case has been proven that it is technically or morally superior to the best reform plans being proposed on the campaign trail or in Congress already. There are now forty-seven million uninsured Americans. fragmented. especially related to insurance underwriting. The January-February 2008 38 H A S T I N G S C E N T E R R E P O R T . Currently. or harmful services is common. the care that the system delivers is of much poorer quality than Americans realize. even nostalgic. Even in theory. and insurance premiums are a larger percent of wages for those working at Ezekiel J. fraud. A second problem is that the delivery system is structured for acute care. Medicaid is now the largest part of state budgets. 334. and unsustainable. Use of unproven. when it comes to the broken delivery system. inefficient. 75 percent have two or more chronic conditions. S. clinically. the financing system is inequitable. R eform of the American health care system needs to address problems with both the financing and the delivery systems. yet are excluded from these programs. and administratively uncoordinated. respectively). they still think it the best reform.