May 26, 2017

Single payer is cheaper than what we've got

Shadowproof -The Lewin Group, a health care consulting firm owned by United Health Group, has repeatedly concluded that single-payer would cut health care costs. For example, they analyzed a single-player plan for Minnesota and concluded, “that the single-payer plan would achieve universal coverage while reducing total health spending for Minnesota by about $4.1 billion, or 8.8 percent.” It reached the same basic conclusion looking at a national single-payer plan in years past.

Similarly, the Congressional Budget Office studied allowing a small group of people to buy into Medicare like a public option. They concluded this public plan would have premiums 7-8 percent cheaper than private insurance, so it would immediately cut health care spending.

The simple fact is large government health care programs like Medicare and Medicaid are much better at negotiating lower prices from providers than private insurance companies. The incredibly high rates private insurance pays providers is the main reason American health care is so expensive.

As a result, any reasonable shift of a large number of people from private insurance to public insurance will cut health care spending.

This overwhelming belief among hospital CEO’s that single-payer would reduce their revenue is what makes single-payer so politically difficult.

Hospitals don’t like dealing with hundreds of different private insurance companies, each with different pay rates. It creates a massive administrative burden for hospitals compared to hospitals in single-payer countries. Hospitals put up with this administrative headache because they know can charge private insurers so much more for the same services.

The Lewin group also found that if you simply allowed all companies to buy into Medicare, the vast majority of companies would abandon private insurance for it and, as a result, hospitals would see a major drop in revenue.

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