A Rational Option

John Canham-Clyne

In September 1993, President Clinton proposed a major reform of the health care system -- a complex scheme of managed competition loved only by the largest insurance companies. Following the defeat of Clinton's proposal (and all its competitors) last year, and the Republican victory in the 1994 elections, a powerful conventional wisdom congealed in Washington: comprehensive health care reform is off the political agenda. As usual, that wisdom has proved as reliable as the daily weather forecast. Reform is back, but with congressional Republicans working to balance the federal budget on the backs of seniors and the poor, it has a new and vicious twist.

In late June, Congress passed a budget resolution calling for one trillion dollars in federal spending cuts over seven years (along with a $245 billion tax cut, most of which will be targeted to corporations and wealthy individuals). The lion's share of the spending cuts will come from reductions in the rate of projected growth in Medicare and Medicaid -- $452 billion over seven years. Ironically, the Republicans have taken a page from the White House blueprint they scorned as socialized medicine a year ago. Their plan to cut Medicare and Medicaid closely resembles President Clinton's scheme for the whole population: they propose to jack up premiums for seniors who want to choose their own doctors, and shunt those who can't afford them into corporate-run HMOs.

The plan reflects a fantasy shared by majorities in both parties -- that Medicare and Medicaid are inefficient "government programs" that can be fixed in isolation from the rest of the health-care economy. That fantasy rests on the myth that the "private sector" is inherently more efficient and fair than government. When it comes to health care, there simply is no evidence to support this belief. Medicare, for example, spends 2-4 percent of each premium dollar on its own bureaucracy. The corporate HMOs who stand to gain millions of patients from the privatization of Medicare frequently grab more than 20 cents on the premium dollar for overhead and profit. Thus, shifting seniors to corporate managed care plans will transfer $30-40 billion a year from health services to the pockets of executives and sharcholdcrs of some of the largest corporations in the country.

Just as Clinton's unwieldy managed competition scheme offers an inadequate model for Medicare, the best solution to the overall health care crisis points the way to genuinely improving Medicare and Medicaid. Rather than slash Medicare benefits we need to fully fund Medicare to make its coverage comprehensive, and extend the program to the entire population: in short, the best hope for Medicare reform is a single-payer health care system. Of course, neither President Clinton nor this Congress has the stomach for taking on the political power of large insurance companies. But single payer was the best proposal on the table in the 1993-94 debate, and continues to hold the greatest promise for an equitable and efficient system of health insurance -- even if it conflicts with the ideology of state incompetence that constrains current American political debate. With access to health care for some 68 million Americans hanging in the balance, it is time to restate the case for single payer.

What is a Single-Payer System?

Doctors and hospitals in the United States are now paid by private insurance companies, employers who self-insure, government programs including Medicaid and Medicare, and patients themselves. Switching to a single-payer system would simplify all this: one institution--the government--would pay the nation's health care bills.

Canada, Great Britain, and several other countries have single-payer health care systems, but of very different kinds. In Canada, provincial governments cover every patient with the same package of benefits, but doctors can remain in private practice and hospitals are mostly privately owned (though non-profit). In Britain, doctors receive a salary directly from the government, or a lump-sum fee (capitation) for each patient who signs up with them, and government owns and operates most hospitals. In short, Canada has socialized insurance; Britain has socialized medicine.

In 1987, more than 6000 physicians came together to form Physicians for a National Health Program (PNHP)--a nationwide group devoted to promoting a Canadian-style, single-payer system.[1] PNHP's proposal would remove all financial barriers to medical care. Everyone would receive a card entitling them to standard medical care as well as mental health services, long-term care in nursing homes or at home, dental services, occupational health services, prescription drugs, and equipment. With the card, patients could visit the hospital or doctor of their choice, and receive all needed medical care. Bills would be paid by the NHP--with no deductibles, co-payments, or out-of-pocket costs.

Paralleling the Canadian system, the NHP would be federally-funded and state-administered. In Canada, the provinces qualify for federal block grants by meeting certain minimum specifications: universal, comprehensive coverage, portability of benefits, public administration, and no financial barriers to care (provinces retain some flexibility in defining benefit packages). Similarly, PNHP's proposal would establish health boards in each state to oversee the plan, set policy, and negotiate fee schedules and budgets; those boards would be either elected or appointed from the ranks of industry and consumers. Most hospitals and nursing homes would remain privately owned and operated, but their finances would be radically simplified. Instead of billing for each bandaid and aspirin tablet, they would annually negotiate a "global," lump-sum budget with the regional NHP board to cover all operating costs.

Regional NHP boards would also formulate health-planning goals to guide the allocation of capital funds for new buildings and equipment. Current health care inflation is driven by competition between private hospitals and HMOs, each seeking to attract patients and physicians with glitzy new buildings and high-technology equipment. For instance, Boston's Massachusetts General Hospital recently opened a new obstetrical service, despite being within three miles of five well-established maternity programs, each with surplus beds. The impulse makes sense for an individual hospital: sparkling maternity suites make hospitals attractive to insurance plans hoping to enroll affluent young families. But competition-driven capital spending is badly inefficient. For example, the United States already has a surplus of at least 5,000 mammography machines. Because most machines are used only part-time, the excess raises the cost per mammogram. And because staff may not perform enough mammograms to maintain their competence, operating facilities at low volumes often reduces quality.

Under a single-payer system, private doctors could continue to practice on a fee-for-service basis. The regional NHP board would set simple, binding fee schedules. Non-profit HMOs could continue receiving a yearly lump sum from the NHP for each patient to cover operating expenses, but capital would be allocated separately. Neighborhood health centers, clinics, and home care agencies employing salaried doctors and other health practitioners would also be funded directly from NHP on the basis of a global budget. And the NHP would pay pharmacists' wholesale costs plus a reasonable dispensing fee for prescription drugs on the NHP formulary.

In short, health care would remain largely private; health insurance would not. A single-payer system would prohibit private insurance for services covered by the national plan, saving at least $40 billion a year in insurance industry profits and overhead,[2] radically simplifying paperwork for doctors and hospitals, and saving more than half of the billing and administration costs of hospitals. With 24.8 percent of hospital budgets now paid for billing and administration, that simplification (welcome in itself) would generate billions in additional savings.[3]

Commodity or Right?

Single-payer is, then, a simple idea; it also has a compelling rationale: that health care should be considered a right, not a commodity.

American policy makers typically treat health care as a commodity to be bought and sold like cars or soap. Indeed, proponents of market-based approaches argue that a fundamental problem with America's current health delivery system is that Americans do not spend enough of their own money on health care. Patients are too insulated from costs because their insurance pays most bills and government or an employer buys the insurance. To hold down spending, consumers need to be more cost-conscious. And that means patients should bear more of the costs of their care.

But Americans already pay higher out-of-pocket medical costs than Canadians or Europeans, yet they see doctors less often, spend less time in hospitals, have fewer procedures performed, and die younger.[4] The notion that insurance coverage over-insulates patients from the price of medical care blames the patient for a system which now provides inadequate care.

The alternative is to acknowledge a right to health care, and to ensure the universal coverage suited to that right. In the 1960s, Congress and the Johnson Administration took tentative steps in that direction by creating Medicaid and Medicare. Medicaid offered government insurance for about half of the poor, mainly women and children. Medicare established a partial health care safety net for elderly Americans. For some fifteen years, from the start of Medicare and Medicaid until the early 1980s, access to care improved, and morbidity and mortality rates dropped. Between 1965 and 1980 the proportion of black women receiving early prenatal care increased 50 percent; infant mortality rates among African-Americans declined by more than half; and the percent of poor Americans who had not seen a physician in more than two years was halved. For the population as a whole, the proportion of health care costs paid out-of-pocket declined from 52 percent to 28 percent, while the infant mortality rate fell 4.6 percent per year, and overall death rates decreased 21 percent.

But during those same 15 years, inflation-adjusted per capita health spending doubled. New and improved technology brought increased costs, and a much-needed expansion of medical care took place within the boundaries of an unduly expensive, profit-based medical system. Beginning in the late 1970s, then, the focus in American health care policy shifted to cutting costs. Private insurers raised deductibles and co-payments, expanded exclusions from coverage (e.g., refusing to pay for "pre-existing" conditions), and intensified efforts to avoid insuring people with a high risk of illness. State governments threw people off Medicaid rolls and reduced coverage. While these policies have not contained costs, their toll has been high in terms of restrictions on care and inequalities in health. Decades of improvement in health standards have been halted, and in many instances, reversed.

The current health care crisis is a consequence of these reversals, set within a context of declining wages and increased inequality. In 1992, 38.9 million people were uninsured, more than at any time since the passage of Medicare and Medicaid. Overall, roughly 13 million more people are uninsured today than in 1980, and the number of uninsured increased 2 million between 1989 and 1991 alone. Moreover, the distribution of health insurance reflects wider social inequalities. Nearly one-third of the Hispanic population and 21 percent of African-Americans were uninsured in 1992; but only 11 percent of non-Hispanic Whites lacked insurance. While the poor and minority group members are most likely to be uninsured, substantial numbers of people from virtually all racial and ethnic groups lack coverage. Among those who were uninsured in 1992, 5.3 million had family incomes above $50,000. Nor does insurance guarantee security. Nearly all policies leave significant gaps in coverage, charge deductibles and co-payments, and cap lifetime benefits, promising bankruptcy for anyone with a long-term illness. Moreover, the number of underinsured, like the number of uninsured, is rising, in part because cost-sensitive employers have reduced the comprehensiveness of private insurance coverage and/or increased co-payments.

A Canadian-style single-payer system would reverse these trends. Based on the premise that health care should be treated as a right of citizenship, not a commodity, the NHP would have people pay their insurance premiums by paying their tax bills. Within its framework of universal care, anyone would be entitled to walk into any hospital or doctor's office in the country and receive necessary care, without incurring any out-of-pocket expense.

But would a single-payer system work in the United States? Critics say "no," and offer five reasons for rejecting it. They argue that an NHP:

* Costs too much
* Would ration care, and generate long queues
* Requires a tax increase
* Would not improve health
* Is not politically feasible.

Let's consider these in turn.

Costs Too Much

According to the insurance industry, a Canadian-style health care system would promote costly bureaucracy. Serious analysis refutes this charge. In a December 1993 report analyzing a single-payer proposal introduced in the Senate, the Congressional Budget Office (CBO) estimated that the proposal would generate a 5.5 percent reduction from projected national health expenditures by 2003. The CBO study also identifies the source of these reductions: "administrative savings [emphasis added] from switching to a single-payer system would offset some of the cost of the additional services demanded by consumers."[5]

We can save a great deal because we now waste so much. Between 1970 and 1991 the number of health care administrators in the United States increased by 697 percent, while total health care personnel increased 129 percent. In 1991, the costs of health insurance overhead, hospital and nursing home administration, and doctors' office overhead amounted to $159.1 billion, 21 percent of all health care spending.

More fundamentally, the conventional view mistakenly assumes that government means more bureaucracy. In reality, private insurers spend far more on bureaucracy than do government insurance programs. Americans paid the 1,500 private insurance companies $241.5 billion for premiums during 1991. Those companies paid out $209.2 billion in benefits. The remaining $32.3 billion, more than 13 percent of every premium dollar, went for overhead--claims processing, marketing, building and furnishing insurance company offices, executive's salaries, and, of course, perks and profits.[6] In contrast, Medicare spent about 2 percent on administration, and Canada's public insurance system pays less than 1 cent of each premium dollar to insurance overhead.

The consequences of current American bureaucracy for hospitals and medical professionals are equally striking. The Canadian system pays hospitals on a lump-sum basis, as we pay fire departments. This eliminates per-patient billing, and hence the need to attribute costs for each aspirin tablet to individual patients and insurers. So a typical Canadian hospital's billing department employs about three people, mainly to send bills to Americans who wander across the border, and 9-11 percent of their total budgets on administration.[7] By contrast, the multi-payer structure in the United States--1,500 different insurance companies, along with Medicaid, Medicare, and employer-provided plans, pay hospitals, doctors, and laboratories--has spawned a complex system of accounting with each payer imposing its own rules and documentation requirements, and aiming to shift costs onto other payers. As a result, a typical American hospital employs 50 people to process bills, and one quarter of its spending goes to administration.[8]

The story in physicians' office is the same. Although we lack precise figures for the time and expense devoted to administration, some suggestive indicators are available. In 1991, American physicians incurred professional expenses of $66 billion, 45 percent of their gross income. Fully 47 percent of all people employed in doctor's offices are clerical and secretarial staff. Much of their time goes to tasks that do not exist in Canada: patient and third-party billing. Furthermore, administrative costs are rising even more rapidly than overall health care costs. In the most recent year for which we have figures, overall health care spending went up 10.3 percent and medical bureaucracy costs increased 16.4 percent.[9]

A single-payer system would generate considerable savings, then, by eliminating many administrative tasks. The General Accounting Office (GAO) estimated the difference in bureaucratic costs between the U.S. and Canadian systems at 9 percent of health spending, equivalent to $99 billion in 1994.[10] Based on more recent Medicare data on hospital administrative spending, it appears that the bureaucratic savings from switching to a single-payer system would be at least $117.7 billion annually, slightly more than half of current spending on health care bureaucracy.

Rationing and Long Queues

Single-payer opponents complain about rationing in the Canadian system, and tell stories about long waiting lists for services. Again, the facts indicate otherwise. Canadians only occasionally wait for a handful of expensive high-tech procedures. In a study of Ontario province, the GAO found significant queues for emergency cases only in lithotripsy. For urgent but non-emergency care, the GAO found queues for several other services, including heart surgery. The GAO also concluded that "primary care is easily accessible to Ontario residents. Patients visit their family physician or other general practitioner with no evident queues or lengthy waiting times for appointments." The report added that the substantial surplus of high-tech equipment and services in the United States would obviate any need for queuing in the short-run under an American single-payer system.[11]

In 1992, former Massachusetts Senator and then-presidential candidate Paul Tsongas personalized hostility to a single-payer system by pointing to his own cancer treatment. Tsongas claimed that Canadian-style systems stifle research, and said that if the United States had had such a system he might have died for lack of a bone marrow transplant to treat his lymphoma. In fact, one of the critical research breakthroughs that led to bone marrow transplants was made in Toronto during the early 1960's. As for availability, Canadians receive bone marrow transplants at a higher rate than Americans--20 percent higher, between 1988 and 1990.

More generally, the criticisms of rationing are misleading. The issue is not whether a system rations--they all do--but how it rations. Consider the record of American medicine. In 1987, the National Medical Expenditure Survey found that a million Americans who needed emergency attention never got it. Long queues in emergency departments (EDs) are common in American hospitals, both public and private. In an August 1988 survey of hospital ED's, the average ED reported transferring patients to other facilities on 7 percent of all days, and turning away ambulances on 12.

The American system rations by income and insurance status. Some one-third of all Americans are either uninsured or underinsured. Many of them face grave difficulties getting needed care, and they are sicker and die younger because of this poor access. Lack of insurance is a strong predictor of failure to get needed medical care. The uninsured, regardless of income, spend fewer days in the hospital and see doctors less frequently than comparable insured persons, according to data from the National Health Interview Survey.

An increasing proportion of Americans report avoiding care because of costs--up from 27 percent in 1981 to 36 percent in 1987. The proportion of the population that avoids medical care because of costs is nearly three times greater than the proportion of those who are uninsured, and financial barriers to access affect insured Americans. According to a 1986 Robert Wood Johnson Foundation Survey, 12 percent of all insured adults under the age 65 who had a serious or chronic illness experienced a major financial problem due to illness within the last year. A further 19 percent had failed to see a doctor, and 15 percent failed to secure necessary medication, physical therapy, or other ancillary services due to the expense.

Delaying essential care causes suffering and can be fatal. In Massachusetts, researchers asked hospitalized patients if their hospitalization had been delayed. The uninsured poor were twice as likely as those with private insurance to report a delay of hospital care, while those with HMO coverage reported slightly more delays than those with traditional private insurance. Among those delaying care, hospital stays were longer and death rates higher than for patients without delays, even after adjustment for age and diagnosis. Under a single-payer system, Americans would not suffer or die because they cannot afford a comprehensive insurance policy. Managed care explicitly rations services as a primary cost control strategy. HMOs sell themselves by offering each patient a "personal" primary care provider to take care of primary and preventive care. But these providers (more and more often non-physicians) also function as "gatekeepers" whose blessing patients must receive before obtaining specialist care. Millions of patients are now finding themselves shifted into such explicit rationing arrangements as the result of actions by policymakers who justify their failure to create a fair, efficient system with exaggerated fears of rationing under a government-run insurance system.

Increased Taxes

Creating a single payer national health program would eliminate health insurance premiums but require new taxes. The NHP would continue to spend the amounts now devoted to Medicare and Medicaid, and would need new revenues to cover the uninsured and privately insured. There are many ways to raise those revenues; the fairest way is a graduated income tax, or some other form, of progressive taxation .

During a transition period, funding that mimics current spending patterns would minimize economic disruption. Congress would set funding at the same percent of GNP spent on health care the year before the NHP goes into effect. A tax earmarked for the NHP would be levied on all employers, with the rate set so that total collections equaled the previous year's total for employer health benefit expenditures (adjusted for inflation). Additional taxes would then be fixed at a level equal to or less than the amount now spent by individuals for insurance premiums and out-of-pocket costs.

Overall, average Americans would pay no more for health care in the first year under the NHP than they do now. In ensuing years, the NHP would hold down cost increases to the level of GNP growth. Within a short period of time, the NHP would cost Americans considerably less than either the status quo or managed competition proposals. With health care costs projected at one trillion dollars in 1994, each American will pay an average of $4,000 in premiums, co-payments, deductibles, federal taxes for Medicaid and Medicare, property taxes to fund health care for municipal workers, and so on. By the year 2000, without serious reform, we will spend 18 percent of GNP on health care--roughly $5,000 per person in 1994 dollars.

Taxes will increase, then, but what is the alternative? We can pay $5,000 to five or six different institutions for health care coverage with enormous gaps, or $4,000 in earmarked taxes for guaranteed comprehensive care. Americans may not like government these days, but that's a steep price to pay for steering clear of it.

Will It Make Any Difference?

The point of health care reform is not simply to save money, or change the form of insurance, but to improve health. On this dimension, too, a single-payer system looks good. In the 1970's the Rand Corporation conducted a health insurance experiment (HIE) to determine the effects of various types of health insurance on health and cost. HIE randomly assigned 2,005 families to different health insurance plans and measured the health and cost outcomes over three to five years. Several plans required co-payments, and one had completely free care--unlimited access to medical care without deductibles or co-payments, as in a Canadian-style system.[12]

Families assigned free care, as one might expect, had more ambulatory visits, more hospital admissions, and higher medical expenses than families with co-payment plans. The study excluded populations with the highest risk of dying: newborns, the elderly, and chronically ill. As a result, very few people in the study population died. But Rand researchers calculated the future risk of dying for each person in the study, based on blood pressure, smoking habits, weight, and serum cholesterol. When researchers focused on the 25 percent with the highest risk factors at the start of the experiment, they found that free access to medical care produced a 10 percent drop in the risk of dying.

To extrapolate the results to the whole population, the Rand investigators adopted a conservative assumption: that free care would have no greater health benefit for the highest risk people in society, who were excluded altogether from the HIE, than for the low risk people studied. On this assumption, the Rand study concluded that free care would avert 106,000 deaths per year.

An Urban Institute study suggested more modest gains, while confirming that the availability of medical care does yield significant reductions in death rates. Jack Hadley examined health and health spending for 400 county groups in the United States, and calculated that a 10 percent increase in health spending was associated with a 1.57 percent decrease in mortality rates.[13] Hadley's results suggested, then, that 47,000 deaths would be averted each year by free care.

Although these results are forceful, they may appear to contradict the claim that universal coverage can lower system-wide medical costs. The HIE study, which found a 14.6 percent increase in health care costs, seems to imply that free medical care would generate a 14.6 percent increase the overall health care budget. But that conclusion does not follow. HIE measured increased charges to insurance companies, not the real cost of the increased care to hospitals, clinics, or doctor's offices. The United States now has a surplus of medical facilities and personnel. In 1991, the average U.S. hospital had 177 beds, but only 117 were occupied. In addition to their own care, those 117 patients also paid the hospital's fixed costs--building mortgages, heat, equipment, and round-the-clock staffing for laboratories. If hospital care increased 14.6 percent under a National Health Program, we would not need 14.6 percent more hospitals. Rather, the number of occupied beds in the average hospital would rise from 117 to 134. Fixed costs would be spread over a large number of patients, lowering the fixed cost per patient. Because marginal costs are less than average costs, the total cost increase would be less than 14.6 percent.

How much less is a matter of intense controversy within the medical industry. HMOs and other managed care plans negotiate discounts with hospitals in exchange for referring patients to otherwise empty beds. They haggle bitterly over the cost of adding an additional patient. Two older studies, one from the 60s and one from the 70s, estimated the marginal cost of hospital care at 55 and 74 percent of charges, respectively. Thus, free care would cause a larger utilization increase than cost increase, and most of the latter would be offset by administrative saving. In short, single-payer reform promises to save tens of thousands of lives without markedly increasing net health care costs.

For Example, Long-Term Care

To appreciate the health consequences of a single-payer system, consider its implications for long-term care (LTC)--currently one of the most dismal areas of American health care.

In the United States now, remarkable technical sophistication in the therapy of acute illness coexists with neglect for many of the disabled. Millions of Americans with disabilities cannot obtain the assistance that would enable them to live more independent lives. The fortunate few with Medicaid or savings often find themselves in nursing homes which amount to little more than warehouses. In the home, family and friends care for the disabled--unaided, uncompensated, and without respite. Good long-term care would change this: it would ameliorate disability, prevent unnecessary nursing-home placements, provide a genuine safety net, both medical and financial, and eliminate costly substitutions of acute for long-term care.

Private insurance companies, however, have made only tentative efforts to market LTC insurance, and currently insure less than one percent of Americans. LTC insurance is not affordable to most who need it, and rarely covers all necessary services.[14] Thus, about half of LTC expenses are paid out-of-pocket, with most of the remainder paid by Medicaid. The financial burden for LTC falls most heavily on disabled members of the middle and working class who can qualify for Medicaid only after impoverishing themselves by "spending down" their assets. Medicaid favors nursing home care by paying for it far more generously than home or community-based services.

Most politicians have also neglected the issue of LTC. LTC needs are largely invisible to policy makers because the majority of services for disabled people are provided by "informal" (unpaid) caregivers--mainly female family members, neighbors, or friends. More than 70 percent of the 3.2 million people currently receiving LTC rely exclusively on unpaid caregivers.[15] And of the more than 7 million informal care-givers, 75 percent are women, and 80 percent spend at least 4 hours every day providing care.[16] Such personal devotion can never be replaced by the assistance of even the kindest of strangers. It must be supported, not supplanted by formal care.

Within the medical profession itself, LTC is neither well understood nor loved. Geriatric training is woefully underfunded. Hence too few physicians are well-equipped to address remediable medical problems that contribute to disability, while many are called on to assume responsibility for care that has more to do with personal maintenance and hygiene than with more familiar medical terrain. Even when doctors know what should be done, the needed resources are often unavailable. The experts in providing care--nurses, homemakers, social workers--are often locked into a hierarchy which offers them little prestige for the important tasks they perform.

By including universal coverage for LTC, then, the NHP would represent a sharp break from current practice. A comprehensive LTC program would require $70-$75 billion in new tax revenues, though much of this amount represents money currently spent privately that would be shifted onto the public ledger. Because LTC has been seriously underfunded, $18 to $23.5 billion in truly new spending ($100-$130 per adult) would be needed to expand care and improve its quality. These tax revenues could be raised from several sources: removing the current ceiling on Social Security taxes, imposing a 10 percent surcharge on estates above $200,000, and taxing capital gains at death would raise more than enough new revenue. Moreover, polls have found that four out of five Americans support government action for a universal LTC, and 75 percent would agree to increased taxes for LTC. [17]

Organizationally, the NHP would consolidate all current federal and state programs for LTC. At present 80 federal programs finance LTC services--including Medicare, Medicaid, the Veterans Administration, the Older Americans Act, and Title XX Social Services. State disability insurance programs also finance some LTC. Nevertheless, the current system permits enormous gaps in access and coverage, fosters consumer confusion, and imposes high administrative costs. In contrast, the proposed single-payer LTC program would be comprehensive, "user friendly," and administratively spare.

In general, the structure of the LTC system would parallel that of the overall single-payer scheme. Operating under federal mandate, each state would set up a network of local public LTC agencies. These local agencies would employ specialized panels of social workers, nurses, therapists, and physicians responsible for assessing individuals' needs, coordinating care, and in some cases, delivering services. The agencies would certify eligibility for specific services, and assign a case manager when appropriate. Each state's LTC operating budget would be allocated to the local LTC agencies based on population, the number of elderly and disabled, the economic status of the population, case-mix, and cost of living.

Each institutional provider or community agency, would negotiate a global operating budget with the local LTC agency. Physicians could be paid on a fee-for-service basis, or receive salaries from institutional providers. Providers participating in the public program would be required to accept the public payments as payment in full. And capital investment would be directed by state boards based on health-planning goals.

Coverage would extend to anyone, regardless of age or income, needing assistance with one or more activity of daily living (ADL) or instrumental activity of daily living (IADL). Local panels would have the flexibility, within their defined budgets, to authorize a wide range of services, taking into account such social factors as the availability of informal care. In all cases, programs would encourage independence and minimize professional intrusion into daily life. In particular, since most people needing LTC prefer to remain at home, services would promote independent living, using nursing homes as the last resort. As with acute care, removing financial barriers will increase demand for formal services. LTC insurance could legitimately result in a 20 percent increase in nursing home utilization and a 50 to 100 percent increase in community and home health care use.[18] But those increases might be expected to level off after about three years, as occurred in Saskatchewan's program. And they are worth incurring to avoid the disagrace of the current system.

Political Feasibility?

The 1993-94 health care debate provided an extraordinary opportunity for reform. Unfortunately, that debate turned out to be a sideshow to the Clinton era's main event: the accelerating corporate takeover of health care. When, early on, Clinton signaled that health care investors were safe on his watch--that for-profit HMO's, private insurers, and other health-care businesses would flourish--an unprecedented torrent of mergers and acquisitions followed. Never has control of so vast an industry shifted so rapidly from a dispersed array of small and medium-scale producers--in this case, doctors and local hospitals--to a few huge corporations whose leveraged financial clout is their only qualification for health care leadership.

Each week, thousands of physicians are forced into a bizarre variant of musical chairs: Sell your practice on the terms offered, or be left out for good as your patients are herded into restrictive managed care plans. In Springfield, Missouri, St. John's Hospital presented doctors with a deadline to sell out and sign on as employees of a new plan. Once doctors committed, their contracts called for $1,000-a-day penalty if they quit and practiced medicine within 25 miles of town.

In Springfield as elsewhere, the physicians' dilemma is caused by the likely collapse of existing medical practice outside the realm of managed care. HMOs typically employ one physician for every 800 enrollees, but the United States has one doctor for every 400 people. Hence HMO expansion will absorb many patients but relatively few physicians.

By 1993 ten firms controlled 70 percent of the HMO market; two of them, Met Life and Travellers, have since merged. Bowing to marketplace necessities, Blue Cross is going for-profit, so it can sell stock to raise the billions it needs to buy hospitals and clinics for its own managed care networks. These companies are relentless predators. The Traveller's/Met Life merger, now called Metrahealth, purchased United HealthCare Corporation for $1.65 billion this summer. United had itself swallowed three other HMO companies during 1994. The latest merger created the largest health care service corporation in the country, "serving" 40 million people nationwide in 58,000 companies, including 40 of the Fortune 100.

The top ten for-profit hospital chains have been coupling like rabbits (though, unlike rabbits, each liaison leaves fewer firms). In September 1993 Columbia swallowed Galen; in February HCA; in July, it proposed the takeover of Medical Care America. Quorum acquired part of Charter in October 1993, growing to 32,000 beds. American Healthcare Management and Ornda merged in April 1994. Healthtrust bought Epic in May. And in most big cities, the non-chain hospitals are consolidating into a few giant groups. We were promised competition, and are getting oligopoly.

Meanwhile, as Congress debated coverage for the uninsured, the care of the insured was being transformed. The patient/doctor relationship is giving way to the employer/health plan contract. Managed care plans often force physicians and therapists to consult the plan's "utilization reviewers" (the insurers' representatives assigned to cut costs by limiting care) before discussing therapy with the patient, and then forbid disclosure of compromises on quality. General Electric employees in Boston are now forbidden to call their doctors for an appointment; instead, they must call a company reviewer, who filters requests. In California, Kaiser has told its primary care doctors that their patient caseloads have been increased to 2,000--more than double the prevailing HMO ratio. While the seven-minute doctor's visit becomes the norm, health planners fret that 165,000 doctors will soon be unemployed. Health plan administrators demand industrial "efficiency" at the level of each doctor/patient encounter, producing chaotic inefficiency for the health care system as a whole.

These shifts within the health care system are not creating a more favorable political environment for reform; on the contrary, they are consolidating the power of opponents of a single-payer system.

Still, current trends can be contested. Indeed, when one tallies the balance sheet of potential political support for a single-payer system, the outlines of a huge coalition emerge. Start with the 38.9 million uninsured Americans. Now add tens of millions of underinsured, including elderly Americans for whom a single-payer plan would dramatically improve coverage, and the tens of millions of HMO members who bridle at restrictions on their care. Medicaid recipients would find themselves with the same benefits as everyone else, removing the twin burdens of substandard care and the stigma of welfare. Big business, while wary of government social spending, might accede to a single-payer system because it could control their costs. Though the NHP would convert corporate health premiums into corporate health taxes, total corporate health spending would stabilize. Unions, who have watched health costs eat up wages for more than a decade, would find themselves in a position to bargain for wage increases again. And while many providers still resist a single-payer option, even formal opposition from the AMA may ultimately be reversed when the full implications of current trends become clearer to them.

Small businesses not currently offering health benefits and the insurance industry will remain prime opponents of a single-payer system. The National Federation of Independent Businesses stridently opposed the employer mandate provisions of the Clinton proposal, suggesting that any plan requiring taxes or payments by small businesses would be fought.

And then there is the insurance industry, which more than any other force has used its power to strangle genuine reform. A single-payer system would outlaw private insurance for most health benefits, so there is no squaring the political circle. The insurance industry must be beaten head on. And it can be beaten. Effectively mobilized, a popular coalition could sweep aside the insurance industry's PAC money and lobbying efforts. In the grand tradition of Social Security, the single-payer option represents a potentially powerful political agenda with winning politics at its core.

A dark outcome is not inevitable. For nearly half a century, Western European and Canadian single-payer systems have provided quality health care to every citizen at affordable costs. So we do not need to reinvent the wheel to reform health care or to "save" Medicare and Medicaid. But we do need to defeat an insurance industry that would deny us a rational solution. And that will require reinventing the art of popular politics.