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How the United States Ended Up with a Single-Payer System: A Fable

By Emily Friedman. First published in Hospitals & Health Networks Daily on February 5, 2013

Some saw the ACA as the answer to health care's woes; others wanted market-based incentives. In the end, there was a single-payer system, but not the one advocates envisioned.

Emily Friedman

The little boy and his grandfather walked through the metal detector at the entrance to the hospital. "What's that for, Grandpa?" the boy asked. "Years ago," his grandfather replied, "sometimes people would come into the emergency department or somewhere else in the hospital and shoot innocent people with powerful weapons that fired a lot of bullets in a very short time." He winced, remembering the mass shootings that had occurred at the end of the 20th century and in the early years of the 21st, in hospitals and elsewhere. He remembered the 20 young children and six educators who were murdered in Connecticut in 2012, a massacre that led to the passage of tougher laws, and the 700 children hit by gunfire in Chicago the same year, 66 of whom died, although much less was made of their deaths. "So now the hospitals screen people to make sure they are not carrying guns."

"But those kinds of guns are illegal, aren't they?" the little boy asked. "Yes," the old man replied, "and the penalties for having them are very severe."

"So why do we still have to be worried about this?"

"Because, Grandson, sometimes people don't care what happens to them, and penalties don't mean anything to such folks. However," he went on, trying to assuage the little one's concerns, "since the laws were enacted and mental health screening of all gun buyers became mandatory, these terrible things don't happen very often."

"That's good," said the little boy, somewhat pensively.

A Glimpse of the Old Days

They walked past the shuttered cashier's window and the closed finance department to the outpatient center. The computer chip embedded in the bracelet the old man wore contained all his personal health information, so registration was a breeze.

The receptionist welcomed them, offered them tea (juice for the boy) and explained that there had been an emergency and that the wait would be longer than usual. "Thank you, Ah Fong," said the grandfather, and the two of them settled in to choose among the 143 television channels, 76 video games, 300 musical selections, 115 educational offerings and Internet Wi-Fi12 (the latest version) on their personal entertainment systems, which were available at every chair. The grandfather adjusted the boy's system to prevent him from getting into any mischief and allowed himself a bit of reminiscence over how the health care system had evolved.

It had begun a long time ago, of course, when health care costs in the 1980s and succeeding decades kept outstripping overall inflation, sometimes by 150 or 200 percent or more. Everyone fretted about it, but no one could find an answer — blame was assigned to hospitals, physicians, pharmaceutical companies, medical device manufacturers, insurers and patients, and each came in for criticism, followed by pushback, but the trend continued.

The grandfather was a retired health policy analyst, and he remembered those days well. His judgment on that period was that everyone was willing to blame someone else, but was unwilling to give up anything. Should something be proposed that might work, the cry of "RATIONING!!" echoed across the land, as opponents of the proposal tried to terrorize patient and provider alike into believing that necessary health care would be made unavailable. The tactic was usually successful.

The rationing argument was especially powerful when it came to a single-payer system, which a significant minority of the public and some people working in health care supported, often passionately. However, the threat it represented to health insurers and to entrenched government interests was too strong, and it never developed political legs. Besides, anyone who had experience with these systems knew that a full spectrum of care on demand was simply not available. Some services were; some weren't.

Meanwhile, a hospital building boom, rapid consolidation of physicians into large groups that discouraged the provision of charity care (or prevented it entirely), and record insurer profits led to public unrest. And as the number of uninsured Americans pushed past 50 million, there was concern in most sectors.

Fallout from the Affordable Care Act

All this and more had contributed to the passage in 2010 of the Patient Protection and Affordable Care Act, a hugely controversial statute that reconfigured American health care.

Many people had high hopes for the new law; others despised it. In 2012, the U.S. Supreme Court had upheld most of its provisions in a landmark decision that did nothing to end the controversy. Among other things, the Supreme Court granted states the right to refuse to participate in a massive expansion of Medicaid without losing federal funding for their Medicaid programs as they existed. The governor of Maine promptly announced that this meant he could slash Medicaid enrollment; the governor of Florida said he would not participate in the expansion, thereby leaving 1 million Floridians uninsured, people who otherwise would have qualified for coverage. A few other governors rejected the Medicaid expansion, but most went along with it in the end, at least as long as there was a 100 percent federal subsidy of the increased expenditures.

There was a similar donnybrook over state health insurance exchanges, which were designed to serve as markets where uninsured individuals and uninsured employees of small firms could find coverage at an affordable price. Some states chose to run their own; others partnered with the federal government; still others left it to the feds to create and run their exchanges, which the feds were largely unprepared to do. In many cases, federal authorities contracted with private entities to run exchanges, which worked out sometimes and in other instances was a disaster.

It was not surprising that the problems in implementing such a complex and problematic law were legion. The time frames were short; the unknowns were many.

The Specter of Unintended Consequences

Other major difficulties emerged early. Chief among them were massive increases in the cost of health insurance. Although the secretary of Health & Human Services was granted a bully pulpit by the ACA to complain about such increases, she had no power to do anything about them; that authority belonged to the states. A few state insurance commissioners tried to reduce premium escalation, with some success, but most state governments did little to stem the alarming trend. Meanwhile, insurers, worried about the potential cost-containment effect of the exchanges, as well as their own fiscal situations (and pressure from stockholders, for the publicly held firms), were determined to raise premiums as high as they possibly could, while they could.

This gold rush disfavored nonprofit insurers, which were more heavily regulated, and that led to a new wave of conversions to for-profit status. The CEOs, executive teams and board members of many of the converted plans were handsomely rewarded with stock options and cash; indeed, when Forbes magazine published its list of the 50 wealthiest Americans in 2016, 25 of them were insurance executives. The rest were largely Wall Street types, with a smattering of celebrities, including former actress Lindsay Lohan, whose ghostwritten novels of life in a women's prison were constantly on the The New York Times bestseller list. Lohan, having avoided imprisonment for any of her 37 recent crimes, had relocated to the Amalfi Coast and paid U.S. women inmates to write her books.

Another problem with implementation of the ACA was that firms with fewer than 50 employees were exempt from the mandate that employers provide coverage to their workers or pay a fine, and many larger firms had realized early on that it would be far cheaper to pay the penalty than to continue to offer coverage as premiums skyrocketed. In addition, some major employers, including very large fast-food chains and big-box retailers, were allowed to retain the federal waivers they had been granted that allowed them to offer skimpy, substandard coverage after they threatened to drop employee insurance entirely.

Many smaller firms stopped offering coverage, thus flooding the exchanges with workers desperate for insurance, yet confronted by unaffordable prices, even with federal subsidies. Some firms on the dividing line simply laid off enough employees to fall below the 50-worker limit. Larger firms offered employees a choice: massive cost-sharing (sometimes upward of 50 percent) or go to the exchanges. And, of course, some people just ignored the requirement to obtain insurance. The result was a huge spike in the number of uninsured and underinsured Americans.

Hospitals and physicians soon felt the pinch, not only from the uninsured, but also from the cost of caring for patients who had chosen high-deductible and threadbare plans and could not afford the co-payments or charges for services that were not covered.

Medicaid and Medicare under Pressure

The exchanges were overwhelmed, especially when the federal rules for operating them kept changing, and insurers found new and creative ways to avoid enrolling people who were sick or whose genetic profiles were suspect (genetic testing by everyone from insurers to employers to prospective parents had become commonplace, because Congress could not agree on protections). One popular approach was simply to remove certain services and pharmaceuticals from the benefit package.

Much of this was definitely or probably in violation of the ACA, but the federal government was so busy implementing the law that enforcement often was left by the wayside.

Public insurance programs did not fare any better. Medicaid became the poster child for coverage without access, as states continued to slash provider payments under the program, and virtually no physicians would accept its beneficiaries. Community health centers and hospital EDs became the only accessible providers, and their staffs spent most of their time begging specialists to see these patients.

That was made somewhat easier by the fact that most physicians had chosen salaried practice of one type or another by 2016, whether in a group practice, a hospital, a community health center or other setting. Thus, their potential personal losses from providing indigent care were greatly lessened — if their employers allowed them to provide it. So there was still some access, although, primary care increasingly was provided by nurses, pharmacists and physicians' assistants, in some cases in independent practice, particularly in rural areas.

As for Medicare, aging baby boomers flooded into the program, many of the healthiest ones being recruited by, and choosing, private Medicare Advantage plans. The result was that the sickest and poorest ended up in the traditional program, whose costs were spiraling out of control, and, because of congressional inaction, private insurers were able to increase prices for Medicare supplemental and Advantage plans almost at will, with the federal government footing the bill for the latter. The optimistic projection by its trustees that Medicare would not go broke until 2024 was eclipsed; the program's back was to the wall by 2018.

The House of Cards Collapses

Then it all came apart. Because Congress would not undertake a serious debate on how Medicare should pay physicians, by 2017 the sustainable growth rate "adjustment" in physician reimbursement had risen to a 75 percent cut, although Congress kept postponing its implementation. That year, Congress, distracted by a bitter, partisan, filibuster-ridden debate over an international treaty dealing with the rights of woodchucks, adjourned in December without postponing the SGR reduction. Faced with a massive loss in income, half the nation's physicians retired. Some ran for public office; some established cash-only practices; still others went to work for medical-device manufacturers, but the pickings were slim, given that most physicians now were salaried and their employers had the final say on purchases.

The majority of physicians, however, opted to go into nursing, given the chronic shortages in that profession and its predominant role in primary care; pay had improved over the years as well. However, in a situation reminiscent of organized nursing's rejection of paramedics returning from Vietnam (they received no credit for their experience, which led to the establishment of the profession of physician's assistant), physicians were told that they would have to go to nursing school. It was agreed that they could attend community college, even though a BSN was the standard in the field. More than a few nurses were seen smirking at the role reversal, given organized medicine's fervent — and, in the end, futile — attempts to keep nurses from providing primary care at the beginning of the century.

So public and private programs were in turmoil; health manpower was in turmoil; and patients were frustrated, confused and angry.

The Big Selloff

External factors were not making things any easier. Battles continued over the ballooning national debt and taxes, the latter led by one of the first two senators from Washington, D.C., Grover Norquist, who won an election that was widely believed to be tainted. These fights prevented any serious spending cuts (for example, mohair farmers, who began receiving large federal subsidies in 1954 for providing wool for army uniforms that was never used, were still receiving them), and raising taxes was out of the question. The only option was to begin selling off federal assets.

The first to go was the federal prison system, which was sold to Germany in return for a favorable interest rate on U.S. debt. The programs for federal subsidies for higher education, student loans, and related college and university expenditures were sold to Australia, which had avoided the worldwide recession that began in 2008. The National Institutes of Health were sold to France, which saw this as righting a wrong that had occurred decades earlier when U.S. scientist Robert Gallo claimed credit for discovering the human immunodeficiency virus, which the French had identified first, although Gallo had linked it to AIDS. Brazil purchased most federal farm programs, which led to such interesting experiments as attempting to grow coconuts in greenhouses in North Dakota, where fracking for oil and gas had made the land too vulnerable to be used for general agriculture.

Switzerland made a handsome offer for the Federal Reserve System, but, in the end, it was sold to Goldman Sachs, which, it was generally conceded, had controlled it for years, anyway.

Inspired by the federal sell-off, states began making their own deals, which led to an embarrassing Constitutional crisis when the New Mexico legislature tried to sell the entire state to neighboring Texas. Having seen New Mexico's balance sheet, Texas declined the offer.

One by one, federal assets were sold into other hands. But this only raised operating capital and did little to reduce the national debt. U.S. military forces remained in American hands, of course, although the military colleges were sold off to Vietnam.

An Ill-Timed Entanglement

Ironically, it was military expenses that led to the downfall. Although the United States had managed to extricate itself from the wars in Iran and Afghanistan, subsequent federal administrations of both parties had maintained a robust military and had engaged in "police actions" here and there from time to time.

Then, also in 2018, the conflict between Estonia and Moldova erupted. Most people had expected the Middle East to be the source of the next major war, but they were apparently unaware of the long, bloody history of the Balkans. Estonia complained about discrimination against Estonians living in Moldova; the latter country protested the same about its citizens living in Estonia. Each accused the other of "ethnic cleansing," which soon did begin to occur.

The U.S. government, anxious to avoid being accused of turning its back on genocide, as it had done over the years in the cases of Hitler's Germany, Stalin's Soviet Union, the Chinese Cultural Revolution, the Cambodian autogenocide, Rwanda, Srebrenica, Bosnia, Croatia, Democratic Republic of Congo and other horrible situations, threatened to intervene.

Russia immediately rushed to side with its neighbor Estonia, and Latvia and Lithuania joined them. Ukraine aligned with its neighbor Moldova. Caught between the two alliances, Belarus announced neutral status and begged for help. It was backed up by its neighbor Poland, which knew a thing or two about being in the way of two armies seeking to fight each other. The United Nations could do nothing, as one member or another of the Security Council vetoed all proposals for resolving the situation.

The United States, in the end, believed it could not sit on the sidelines. It first sent observers, then military advisers, then trainers, and eventually tens of thousands of troops to keep the peace. Given the long supply lines and extensive amount of land involved, the intervention was extremely costly.

China, gravely concerned that Russia would use this situation to begin to rebuild the Soviet Union, greatly resented the U.S. involvement, which it believed would only egg Russian leaders on. So it played its trump card. As the largest holder of U.S. debt, China demanded repayment.

The U.S. government had virtually nothing left with which to repay the debt. But the nation's health care system, at that point, was almost totally in federal hands. Most private insurers, who had priced themselves out of the market, had left the field, choosing instead to sell shady disaster insurance as catastrophic hurricanes became a regular occurrence. Most states had abandoned Medicaid when the federal money stopped flowing, leading to a federal takeover of those programs. And Medicare was a federal operation already.

The Chinese Take Over

So when China demanded repayment on Feb. 5, 2019 (Lunar New Year, beginning the Year of the Pig), the United States duly turned its health care system over to Chinese control.

It was a painful adjustment. Central planning was reinstituted, as the Chinese wondered how a wealthy suburb could have six hospitals and a populous downtown area none. Pay for physicians and nurses nose-dived, but talented practitioners were rewarded with extra education, including instruction in useful Asian alternative approaches that the international pharmaceutical industry had managed to prevent from getting a serious foothold in the United States. The fight to retain patients' rights, including self-determination and access to information on one's health status, was long and bitter but, in the end, patients won, largely through court decisions.

Health promotion finally was taken seriously, with physical education reintroduced into all schools, augmented by tai chi, meditation and other activities. Early champions of healthy living and eating were celebrated; Mayor Michael Bloomberg of New York City, still in office, was named a Hero of the People's Republic for his efforts.

But there were many downsides. As is true of all single-payer systems, care upon demand was scarce outside of EDs. Because the program was funded by a general tax, no one knew how the money was divided up or how much of it was diverted. Corruption was not unknown, either, as favored individuals could always buy or influence their way to the front of the line. And a shadow private sector emerged for care of those who could afford it.

It was still a work in progress, and would be for many years. The old grandfather often asked himself, "What if?" What if all those who could have moved the system in the right direction had not been so selfish and obstinate? What if health care had not been such a political football? What if the country as a whole had not understood the critical role that Medicaid played in the health of tens of millions of Americans? What if implementation of the ACA had not been bungled? What if? What if?

His reverie was interrupted by the receptionist, Ah Fong. "The acupuncturist will see you now, Sir, and, of course, your grandson will be entertained in the children's play and education area."

As he rose to his feet, the old man said to the little boy, "Well, there is at least one silver lining to the Chinese takeover."

"What's that?" asked the little boy.

"There is great respect for elders. I haven't heard the term 'Kill Granny' in years."

Copyright 2013 by Emily Friedman. All rights reserved.

Emily Friedman is an independent writer, speaker and health policy and ethics analyst based in Chicago. She is also a regular contributor to H&HN Daily and a member of Speakers Express. The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.


First published in Hospitals & Health Networks Daily on February 5, 2013

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