Contingencies Online - September/October 2009

National Health Insurance—Socialism or Realism?

There are three major health care insurance systems in the United States. Medicare covers people 65 and older. The Department of Veterans Affairs (VA) provides direct care to over 5 million disabled or low-income veterans. The rest of the population in the U.S. is covered (or not covered) by employ-er-sponsored or other types of private health insurance.

Of these three health care systems, only the VA is socialist in the true sense of the word. As is the case with the national health system in the U.K., the U.S. government employs all of the VA providers and the cost of the health care is paid to the federal government through taxes and other sources.

I don’t view Medicare as socialist but as social insurance. Most of Medicare is funded through a single payer (the U.S. government), but the majority of its providers work in the private sector. Because the Medicare system works much better than the private insurance system (or lack thereof ) that’s available to people under the age of 65, I believe it offers a middle-ground health care model for all Americans that is based in realism, not socialism.

WHAT’S IN A NAME? In the case of socialism, enough to stop a
reasoned debate on the future of the u.S. health care system dead in
its tracks.

Medicare Advantage plans. For the 78 percent of those eligible who select traditional Medicare, there’s one uniform national health insurance plan. Every hospital and physician knows what is covered and how much, if anything, the

physicians can afford to opt out of participation in Medicare. And Medicare can, and does, enforce a rule that physicians can’t cherry-pick their Medicare patients. Providers who take any Medicare patient must then take all Medicare patients who come to them for help.

Under Medicare, providers face two types of administrative expenses. There’s the direct administrative cost

two national Health models

Medicare is similar to an insurer in that it pays private providers for patient care. But it covers almost all citizens and permanent residents of the U.S. who are age 65 and older, leaving no pool of uninsured elderly and no fear among those covered by Medicare that the program will cease to exist or that they will lose their insurance.

Medicare participants can choose between the traditional Medicare fee-for-service plan and a variety of

patient will have to pay for the benefits. The providers all know what, if any, preconditions must be met for a treatment to be covered. The providers deal with one payer through a standard set of claims-payment procedures. Approved benefits are paid promptly and in full.

As the single payer, the federal government has the ability to adopt and enforce effective cost controls on all providers. No large hospital and few

to the insurer, and there’s the cost to the provider of obtaining payment. The direct administrative cost of Medicare Parts A and B is only 1. 5 percent of health care costs. Medicare does place substantial administrative burdens on providers, but there’s only one system for standard benefits and claims.