by John Geyman, M.D.

For those committed to serious health care reform, our goals for real reform have long been a system that is universal, covering all Americans, efficient, affordable, fair and comprehensive enough to include whatever services are known to be safe and effective. Since traditional Medicare brought that to seniors in 1965, various incremental “reforms” have been tried to address some of these goals. All have failed, as shown by the 50 million uninsured Americans, many more millions underinsured, and costs soaring way out of sight and unaffordable for a growing part of the population. 

Enter a breakthrough study that now shows how we can pay for, and even save money, by achieving all those goals. A new fiscal study by Gerald Friedman, Professor of Economics at the University of Massachusetts in Amherst, gives us an analysis of the Expanded and Improved Medicare for All Act, H.R. 676, again introduced into the 113th Congress by Rep. John Conyers Jr., D-Mich, with 45 co-sponsors in the House. (1)

Enactment of H.R. 676 would save an estimated $592 billion annually, including   $476 billion by slashing the administrative waste of the private insurance industry  (none of which is value-added) and   $116 billion by a public system’s ability to negotiate drug prices down to European levels. Over the next decade, it would save $1.8 trillion through new cost-control methods, including negotiated fees, global payments to hospitals and capital planning. All that despite insuring all Americans for the first time, assuring full choice of physician and hospital for all necessary health care services, with portability of coverage, decreased bureaucracy, increased accountability and sustainability. In addition, financial barriers to care would be removed with first-dollar coverage eliminating premiums, co-payments and deductibles. 

How would H.R. 676 be paid for? First of all, by the large cost savings noted above, which would be more than enough to cover all Americans with comprehensive national health insurance in 2014. Beyond that, with a more fair system of progressive taxation. Our regressive funding sources would be replaced by progressive taxes, including a new minimal tax on financial transactions (e.g. 0.5 percent on stock trades), a modest payroll tax, a 6 percent tax on unearned income, and a 6 percent surtax on the richest 5 percent of Americans. Ninety-five percent of Americans would pay less than they do now and get much more. The only people who would pay more in taxes would be those in the top 5 percent of taxpayers with annual incomes well above $200,000. Employers would pay less than they do now, would no longer carry the burden of managing their employees’ insurance coverage, and would gain a healthier workforce.  

The Friedman study is far from the first to demonstrate cost-savings in a single-payer public financing system along the lines of the Canadian system, coupled with a private delivery system. Many previous studies that have documented large cost-savings by the single-payer approach include those by the Congressional Budget Office, the General Accountability Office, and the Economic Policy Institute in the 1990s and that by another economist, Kenneth E. Thorpe in 2005. Many other state studies have also demonstrated cost-savings of state-based single-payer financing compared to any other approach. (2,3)

Why wouldn’t that make sense to lawmakers on both sides of the aisle? The main answer, of course, is the raw political power and money of stakeholders in our largely for-profit medical industrial complex. These stakeholders have been holding us hostage to achieving real reform in the public interest. They keep posturing their value even as they profiteer in our minimally-regulated marketplace and buy support of politicians in both parties. 

Then, of course, is the bugaboo of increased taxes. The political drumbeat, especially on the right, keeps telling us that we are a high-tax country, and that cutting taxes is the way to creating jobs. But the facts belie this view. A study earlier this year found that personal tax rates of U. S. taxpayers on $100,000 incomes are 55th from the highest out of 114 countries around the world. (4) Moreover, when it comes to corporate tax rates, corporations are expert at avoiding or limiting their taxes through such means as tax havens overseas, lobbying the government for special tax breaks, and “innovative” accounting practices. As an example, General Electric (G.E.) paid no taxes in 2010 on $5.1 billion in domestic operations, even claiming a tax benefit of $3.2 billion! (5)

Friedman’s new study coincides with Medicare’s 48th birthday. Why is the goal of universal access achievable today after nearly 50 years of increasing dysfunction of our “system”?  Because it is increasingly obvious as the only way that we can get a handle on our failing system. And because it better fits traditional American values—regardless of political party—of efficiency, choice, affordability, fiscal responsibility, equity, accountability, integrity and sustainability. (6)

The Friedman study and H.R. 676 should be front and center in the health care debate. Failing that makes even more blatant the stonewalling and self-interest by corporate stakeholders and their go-along legislators that have shackled the democratic process for too long. 

Suggested reading: 

1. Friedman, G. Funding H.R. 676: The Expanded and Improved Medicare for All Act. How we can afford a national single-payer health plan. July 31, 2013. gfriedma@econs.umass.edu Press release by Physicians for a National Health Program, July 31, 2013, info@pnhp.org 

2.  Single Payer System Cost? Physicians for a National Health Program. info@pnhp.org

3.  PNHP Research: The Case for a National Health Program. info@pnhp.org

4.  Thompson, D, How low are U. S. taxes compared to other countries? The Atlantic, January 14, 2013. http://www.theatlantic.com/business/archive/2013/01/how-low-

5. Kocieniewsky, D. G.E.’s strategies let it avoid taxes altogether. New York Times, March 24, 2011. www.nytimes.com/2011/03/25/business/economy/25tax.html

6. Geyman, J.P. Chapter 12. Empowering Patients and Taxpayers: Toward Achieving Health Care That We All Want and Need. In Geyman, J.P. Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans. Friday Harbor, WA. Copernicus Healthcare, 2012.  1009 words