America spends more than any other wealthy country on health care, yet we consistently experience worse health outcomes. In 2019, the U.S. spent a whopping 17.8% of its GDP on health care — 50% more than most European countries — while suffering the highest rate of deaths from treatable conditions and pregnancy-related complications. As individuals find themselves paying ever-rising costs for health insurance and medications, most voters now rate health care reform as a top concern. One oft-debated solution to our health care woes is a single-payer, universal health care system called “Medicare for All.”
Simplifying payment in health care has the potential to bring down costs and improve health as it has in many developed countries, but these outcomes depend on some fundamental differences. The federal government is already the largest payer in health care, with public insurance (Medicare, Medicaid, CHIP, VA and Department of Defense) accounting for 40% of total costs. But recent estimates based mostly on Medicare populations are that 25% of current spending on health care in the U.S. is simply waste. So how do we create universal coverage under a Medicare for All proposal and avoid paying for increased waste rather than better health? And if we choose not to adopt a single-payer model, are there other ways to cut our exorbitant costs?
Looking for successful models abroad, we find a different structure for accessing care. In England, Canada, Norway and other countries, the primary care provider acts as a health care resource and gatekeeper for patients, providing the required referrals for specialty care. This reduces systemwide costs and improves health because the PCP has the time, knowledge, and clinical support to manage all aspects of care for a patient. But the U.S. faces a significant problem in implementing a similar system: a lack of access to primary care.
To illustrate, let’s say universal health care becomes the law of the land in the U.S. in June 2021. Those without insurance and people delaying medical attention in 2020 are now more likely to seek it out. With no increase in access to a PCP, some of those patients will end up in the ER — the most expensive way to deliver services. Care is harder to coordinate when delivered in separate locations like urgent care and the ER, and leads to lower quality and more waste. The increase in ER volume may also make it harder to triage and see the sickest patients, causing delays in treatment and again lowering the overall quality of care. This isn’t just conjecture. An increase in ER visits lasted for at least two years in Oregon after expanded coverage under the ACA, but improved after extensive efforts to ramp up primary care options. Developing the capacity in the system for everyone to have a primary care home is essential to avoid paying more for medical care without actually improving health.
On the other hand, a single-payer system could have more immediate benefits in lowering drug prices and ensuring that newly emerging medications are cost effective. Drug costs are a significant contributor to high medical bills and they are increasingly visible to the individual who has to pay more out-of-pocket. Pharmaceuticals and medical devices account for 20% of our total spending, but we pay more for the same products than other nations. Our prices on top-selling items like insulin and pacemakers average four times more than in Germany. And though the U.S. has one of the highest percentage use of generics, the price of these drugs has also increased dramatically. What businesses can run successfully when they fail to insist on competitive prices for their supplies, and isn’t it even more important when that business takes up almost one-fifth of our economy?
We need to fix the underlying problems with our health care delivery before, or in parallel, with a single-payer system for it to actually improve costs and health. Our nation requires a bigger, better-supported, primary care workforce that can coordinate care and eliminate low-value care. Congress must allow the largest payer in the country, the federal government, to negotiate prices for drugs to bring them in line with the rest of the world. High quality care means we actually improve health by shifting the money we pay into high value care and preparing to judge new drugs and procedures on cost-effectiveness. Failing to take these steps now to reform our system, regardless of who is paying for it, will lead to ever-increasing costs in both dollars and lives as our population ages. Adopting a single-payer model may be our best long-term solution, but these initial changes will improve our nation’s health and costs in any system and would help pave the way for the success of Medicare For All.