Commentary: Three Single Payer Health Care Systems (June, 2014)

by John McClaughryJohn McClaughry

The mounting VA hospital scandals have now moved Sen. Bernie Sanders’s cherished “socialized medicine” to center stage. For Vermonters, it’s worth understanding clearly how the Veterans Health Administration works, and how it compares with “single payer” Canadian Medicare and Vermont’s coming Green Mountain Care.

The VHA has 288,000 employees (two thirds of them unionized) serving 8.3 million veterans in 150 VHA hospitals and 1,400 affiliated centers. VHA is funded almost entirely by Congressional appropriations. The scandals have arisen because at least 42 VHA hospitals (so far) regularly miss waiting time benchmarks for patient appointments, and their staffs are fudging the data base to make it look like the benchmarks were met.

North of the border, all Canadians are entitled to medical services that are “free” at the point of service, with some small co-pay exceptions. The Canadian Medicare system is managed by a government authority, like the VHA, in each province. Most hospitals and doctor practices are not government-owned, but with minor exceptions, the government provides all of their revenues in accordance with the government’s “global budget” – hence “single payer”.  Like the VHA, the Canadian hospitals are heavily unionized.

In Vermont, Gov. Shumlin’s dream of “health care as a right” will be realized by the Green Mountain Care Board created by Act 48 of 2011. The GMC plan will most closely resemble not VHA but the Quebec model (although single payer supporters shy away from admitting the essential identity.)

Under Green Mountain Care, scheduled to launch in 2017 if federal waivers and funding can be obtained, hospitals will remain nonprofit and self-governing. Doctors will either be employed by hospitals or remain independent – but all of their GMC revenue will come from that one “single payer”. The GMC Board will define “essential benefits”, adopt the global budget, and inform the legislature how much it must raise in taxes to pay for it.

Health insurance will be extinguished, except possibly for wraparound policies and coverage for Vermonters traveling out of state. The $170 million Vermont Health Connect will be shut down after three failure-plagued years.

Since there is little likelihood that US Medicare beneficiaries, Federal employees, and self-insured companies can be forced into Green Mountain Care, the Shumlin plan won’t be true Quebec-style “single payer”.  That means that the enormous single payer “savings” ($580 million in the first year, according to consultant Dr. William Hsaio of Harvard) simply cannot be achieved. In fact, the Shumlin administration has long since buried Dr. Hsaio’s 2011 report and now promises only that any GMC cost containment “savings” will come from a lower rate of increase in health spending.

The major problem with both the VHA and Canadian single payer is that the government-assigned “global budget” requires hospitals and doctors to ration care, most obviously through denying certain services to patients as “inappropriate” and stalling service delivery to patients to reduce provider billings. There is no reason to believe that Vermont’s GMC will operate any differently.

Defenders of socialized medicine continually claim that any rationing, delaying, or quality shortcomings are a result of just one thing: stingy taxpayers who won’t pay enough for the system to work properly.  Given the ever-rising costs of health care and an aging population, demand will always grow faster than the supply taxpayers can afford to pay for.

Every government-run health system modelled after the Veterans Health Administration, Quebec Medicare and Green Mountain Care will suffer from the same inescapable defects. Medical providers will be forced to work at the direction of the bureaucrats and politicians who control all revenues. The politicians know that they won’t stay long in office if they vote for the taxes actually required to “make the system work”. So they will tell the bureaucrats to decide who gets “appropriate care at the appropriate time in the appropriate setting” (Act 48) from the limited number of dollars flowing in.

Under the VHA, the government unions can’t bargain over wages. Under Quebec Medicare, labor unions have extensive control over work rules and management. Under GMC, “provider bargaining groups” can bargain with the GMC Board over anything relevant to their working conditions, including compensation. Since the just-adjourned legislature authorized labor unions to bargain with state government over subsidies payable to providers of home health care and day care, it’s pretty clear that the GMC system is likely to be even more driven by collectively bargained rules and benefits than VHA and Quebec Medicare. Goodbye, “cost containment”.

Whatever their differences, VHA and Quebec Medicare both show how government-run health care systems like GMC will inevitably lead to rationing, waiting lines, maddening bureaucracies, inefficient work rules, demoralized doctors and nurses, shabby facilities, obsolete technology, declining quality of care, and of course much higher taxation.

Alas, Bernie Sanders, Peter Shumlin and their GMC supporters will never concede any of this, at least not until they find themselves standing sadly amid the wreckage.

- John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).


The Ethan Allen Institute is a 501c3 non profit organization dedicated to promoting liberty and free market solutions for Vermont. We are supported by small, local donors such as yourself. Join the Cause. Be part of the solution! JOIN HERE!

 

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