In Lewis Carroll's Alice's Adventures in Wonderland, a young girl cautiously explores a fantastic realm and meets remarkable creatures. It is a classic tale. With the help of experts, we have also created a world-one that some may think to be just as incredible, and others may find to be just as desirable. Yet, on this trip you won't encounter a mischievously smiling Cheshire cat or a caterpillar smoking dope. And you'll be happy to learn that a queen will not shout, "Off with her head!"
For this world represents a vision of health-care reform. You've all heard the rhetoric: "Health care for all!" and "Everybody in, nobody out!" Yet how many of us really understand what this means and how it would work? To aid in clarifying this vision, we've asked three national health plan experts to help us create an imaginary realm illustrating the single-payer universal health-care model. Compared to other reform efforts-and there are many-single payer certainly demands a complete overhaul of our current market-based system.
Our guides for this tour are: Dr. Claudia Fegan, president of Physicians for a National Health Plan (PNHP) and a Chicago internist; Dr. David Himmelstein, head of Harvard's Center for National Health Program Studies and an internist at Cambridge Hospital; and Dr. Bob LeBow, former president of PNHP and a family practitioner in Idaho. Yet despite the knowledge of experts like these, no one knows for sure how a single-payer universal health-care system would exactly play out in the United States. Much of this story contains educated conjecture.
With these conditions in mind, enjoy your exploration with Alice and Dr. Hatter, for it's time to leap into the rabbit hole.
It was a day of firsts for Alice, a 30-year-old cashier at the 14th Avenue Gas 'N' Gulp. It was the first day of April and the first time she used her new health insurance. The National Health Plan (NHP)-universal coverage for all Americans-had become law two years prior. One card, one plan, one payer-Uncle Sam. But this was not the socialized medicine like they have in Great Britain, mind you. For although private health insurance no longer existed, at least not for things the NHP covered, private ownership of health providers still did. Uncle Sam was funding this plan, but he didn't own it. Physicians still ran their own practices. Nonprofit and for-profit entities still owned hospitals, yet all had to follow the NHP universal guidelines.
Before the NHP, U.S. health-care bureaucracy spending totaled $250 billion annually, so a lot of money was freed up when 1,500 private health insurers were eliminated. Seventy-five percent of those funds were redistributed to insure individuals like Alice, who had been among the 43 million uninsured. The funds were also redirected to improve preventive health care for everyone. The United States was still spending 14 percent of its gross domestic product on health care, so this new system didn't cost Americans any more than the old one, nor did it save money. The idea, NHP advocates had said, was not to spend less money but to provide better care and access to care.
And now Medicare and Medicaid were gone. So was the patchwork of safety-net programs states struggled to keep stitched together for the uninsured and underinsured. For Alice, health care was now a right, not a commodity.
Americans could have started using the program six months ago. A cautious woman, Alice decided to postpone her visit to the doctor-after all, she felt fine. Now tired of waiting, Alice chose today as her day to try out the new system.
VISITING DR. HATTERAlice checked in at the Northland Clinic for her first routine physical since she was a child. A receptionist scanned the bar code on Alice's NHP card. "Kind of how I scan milk and eggs at the Gas 'N' Gulp," Alice thought. "Could it really be this easy?" she wondered while sitting in internist Dr. Matthew Hatter's waiting room. Her enrollment in the NHP was automatic. Her card came in the mail with a letter that said, "Enclosed is your National Health Plan card. Keep it with you at all times."
Alice studied her card. A walleyed pike stared back at her-the Minnesota state fish. Her brother in Wisconsin had a badger hologram on his. Had she lived in some other state, it might have been a cardinal, a cactus, a maple tree or another significant symbol. She'd prefer something more dignified than a fish, but she was willing to tolerate the finned fellow if it meant she could see a doctor when she needed to and in most cases pay nothing out of pocket.
While waiting in Dr. Hatter's office, Alice thought about what she'd learned last year at Gas 'N' Gulp's employee benefits meeting. The benefits lady, Ms. Caterpillar, had explained that Alice would still have health insurance if she lost her job or changed jobs. If she got sick while visiting her sister in North Dakota, she'd be covered. If she moved to Oregon to be closer to her parents, she'd automatically get an Oregon NHP card once she established residency, which would usually take several weeks or a couple months depending on state law. Oregon's card had a beaver on it, her parents reported.
"The NHP pays for all necessary doctor visits, routine physicals, screenings and tests," Ms. Caterpillar said. "It pays for prescription drugs, except for a small co-pay. It covers the care you get in a hospital, nursing home or even your own home." From mental health to dental health, Alice wouldn't pay a dime unless she wanted special extras like a private hospital room, orthodontic services or cosmetic surgery, like the laser de-wrinkling her sister had done.
"You're paying for it through a national health tax taken out of your paycheck," Ms. Caterpillar had said. "The more you earn, the more you pay, just like income tax. The average tax is 9 percent."
The NHP worksheets had explained that the tax wouldn't cost the average employee more than the old system's health insurance premiums, out-of-pocket deductibles and co-pays had.
"Gas 'N' Gulp is paying half that tax for you," chimed in Mr. Dumpty, the portly company owner. "I'll admit I was dead against it in the beginning, but I'm not paying any more now in health taxes than I used to pay in health premiums. Plus I've saved time and money by not having all that insurance company paperwork. And now all of you good people are insured, not just some of you. Plus, I don't worry about large premium hikes anymore."
"That's because the NHP controls costs by global budgeting and caps on spending," Ms. Caterpillar said. "Of course, smaller businesses that did not offer employee health insurance before have new increased costs through taxes. Employers can't opt out of paying their share of the health tax, just like they can't opt out of paying part of each employee's Social Security tax. This new cost, though, is partially offset by tax credits."
Alice's friend, Bill Carpenter, a tanker driver for Gas 'N' Gulp, voiced some doubts. "How can 43 million more people be insured for the same amount of money spent on health care before they were insured?" he asked.
"Because," Ms. Caterpillar said, "the NHP provides everybody necessary health care by skipping the middle-man-the private health insurance industry, which used to skim 9 percent to 15 percent of every dollar spent on health care. It's too soon to tell what NHP overhead will cost, but if it's anything like the old Medicare program, we're looking at 2 percent to 3 percent."
Alice's memories of that benefits meeting were interrupted when her name was called. "Dr. Hatter will see you now," the nurse said. Alice never had her own doctor before. She always relied on emergency rooms and free clinics for care, except for the brief time she qualified for Medicaid. Dr. Hatter smiled at Alice, looked at his pocket watch and apologized for the 45-minute wait. He explained that since the NHP took effect, previously uninsured people who had delayed care for serious illnesses were now scheduling appointments. "This initial surge will level off," he said. "But until then, we all have to be patient."
During the physical, Dr. Hatter examined Alice's leg, which ached in cold weather ever since she was a little girl and stepped into a rabbit hole. He also ordered a mammogram. She'd have to go to the hospital up the street for that. Under the NHP, high-tech services were concentrated at what were being called "regional centers of excellence." Alice's city of 150,000 had just one mammography center. "The more mammograms a doctor reads, the better that doctor gets at it," Dr. Hatter assured her. He explained there are 10,000 mammography machines in the United States. "If they were used efficiently, we'd only need 2,500. By making more efficient use of one machine, we'll get better readings at a lower price," he said.
Alice might wait a couple weeks for her screening, but probably no longer than that, despite what she'd heard from the naysayers about Canada's single-payer system. "We've still got so much more high-tech capacity and money invested in health care compared to other countries," Dr. Hatter said. "For example, there are more MRI machines in Orange County, California, than in all of Canada. It's not like we're going to smash all of our extra machines just because we have a single-payer system. Even if spending slows for such equipment under the NHP, the United States will still spend more on health care per capita than other countries do."
Dr. Hatter told Alice if she ever needed a specialist, she could pick the one she wanted. She may have to wait a few weeks, unless it's urgent, he said. "But don't worry, other countries that have waits for such high-tech services haven't seen a negative effect on outcomes," he said. A few weeks were nothing to Alice. On Medicaid, she once waited six months for a routine preventive mammogram.
Alice left Dr. Hatter's office feeling good about her visit. Her initial skepticism of the system had diminished. She liked Dr. Hatter, and she also liked the idea that she could see any primary care physician anywhere. The NHP would even pay for a chiropractor or midwife.
DR. HATTER GOES ABOUT HIS DAYAfter his appointment with Alice, Dr. Hatter took the skywalk to Northland Hospital to read some EKGs in diagnostic services. Most hospitals were still community nonprofits. The ownership status had not changed for any of the city's small group practices or large multispecialty clinics. There were still some solo practitioners. In fact it was easier to go solo under the NHP. You didn't have to worry about being part of a health plan network or losing your patients with the stroke of an HMO pen.
"Life is good," he thought as he passed through the skywalk flooded with warm afternoon sun. "I make the same amount of money as I did before the NHP. I work the same number of hours and spend an hour-and-a-half less on paperwork each day. That used to be the most frustrating part of being a doctor." Now when he ordered a test, procedure or prescription, he didn't have a dozen forms to fill out. "And I don't have to wait six months to get paid," he said aloud, to no one in particular.
Billing was easier. Imprint the patient's card on a universal charge slip. Check some boxes to indicate complexity of diagnosis or service. Send the slip to the state's physician payment board, part of the state's department of health. It received money from the NHP and paid physicians in 30 days or less. Dr. Hatter still billed his patients for services not covered by the NHP, a tiny fraction of services provided.
"Now I spend more time figuring out how to help patients, which is what I was trained to do. Medicine is fun again," he said to himself as he waved to the head nurse at the end of the skywalk. "I'm seeing more patients, and I don't have to hurry through their exams." The NHP paid Dr. Hatter on a fee-for-service basis. "The more patients I see," he thought, "the more I can earn." About half of U.S. physicians are salaried like they were under managed care. The NHP allowed doctors to still work for capitated health plans like Kaiser and Group Health of Puget Sound.
As he entered the hospital, Dr. Hatter passed Dr. Walrus, the orthopedist. Dr. Walrus looked unhappy. "What's wrong?" Dr. Hatter asked.
"My salary has dropped under this NHP," Dr. Walrus said. As a result of NHP's preventive medicine emphasis, specialists were earning less than before. Primary care physicians like Dr. Hatter were earning the same. Reimbursement rates were negotiated between physicians' state medical professional societies and the state physician payment boards. Because of federal incentives, all physicians could earn more if they practiced in remote or underserved areas. Outside of specialists like Dr. Walrus, most of Dr. Hatter's colleagues seemed to be adjusting to the NHP.
"The program seems to be working well for patients," Dr. Hatter said, somewhat embarrassed at his inconsiderate response to Dr. Walrus's complaint. Dr. Hatter had learned at the monthly medical staff meeting that outcomes hadn't changed for patients who had employer-based insurance under the old market-based system. At the same time, outcomes had improved for the previously uninsured, mostly because they no longer delayed care or rationed their medicine. "Their death rates will soon go down," Dr. Hatter thought.
Surgical mortalities-deaths per 100 procedures-were remaining the same. They'd even gone down a bit in some states, Dr. Hatter had read, because specialty care was now concentrated. Northland, for example, was known as the regional heart "factory." Waiting times for coronary artery bypass grafts (CABGs) were either unchanged or only a bit longer than before. CABGs, angioplasties and catheterizations weren't done as often now. Instead, some patients received less invasive modalities, and this didn't seem to have a bad effect on death or reinfarction rates. And mental health services had improved. The NHP allocated more money to this area, with much of the extra funding used to care for individuals with serious mental health conditions.
Dr. Hatter knew from his own experience that preventable hospitalizations had declined for things like asthma, pneumonia and diabetes. They'd especially gone down in the poorer parts of big cities now that everyone could get good outpatient care. At the same time, inpatient lengths of stay had increased by as much as 30 percent for some procedures-a result of removing many managed-care restrictions on length of hospital stay.
Medical innovation was not suffering under the NHP. Cost-effectiveness still drove the system, so a demand for high-tech equipment and procedures that paid for themselves by offering greater efficiency remained. Dr. Hatter wasn't surprised by this. After all, laparoscopic surgery was invented in Newfoundland under Canada's single-payer system. And heart and lung transplants were developed in Toronto. Plus, he knew that rates for these and other transplants like kidney and bone marrow were about the same in Canada as they had been in the United States under managed care.
"Clinical research seemed to be faring better under the NHP," Dr. Hatter thought. The United States had lagged behind countries like the United Kingdom, Israel and Sweden but was now narrowing the gap, just as it was increasing the number of published peer-reviewed medical articles. "We're no longer just in the middle of the pack," he thought.
Dr. Hatter was still adapting to evidence-based practice guidelines, though. They were now being used more consistently than before. Some of his colleagues griped that big government had replaced big business, but that wasn't exactly true. "At least the new guidelines are written and approved by the internal medicine state medical society, instead of an insurance company," he had commented to a colleague yesterday. "Peer-developed guidelines are a good thing," he said to himself, remembering when he served as a medical director for a large metropolitan health system. Thirty physicians treated myocardial infarction several different ways. How one physician treated it was 10 times more expensive than how another one did, even though outcomes were the same.
CUTTING THE FATOn his way to diagnostic services, Dr. Hatter took a shortcut through what used to be called "mahogany row." The long corridor of hospital administrators had been converted to exam rooms and storage space. Through a glass door that still bore the faint imprint of the former HMO chief's name, Dr. Hatter could see boxes of fluorescent light bulbs, toilet paper and cleaning products. A small contingent of hospital and clinic administrators remained, but they were focused on patient care, not market share. Gone was the herd of generic administrators who attended meetings all day. Dr. Hatter used to feel like an assembly-line worker in a Charlie Chaplin film, where the "product" passed by on a conveyor belt at faster and faster speed. Not anymore.
As he continued on his way, he noticed that clinical staffing in the hospital had improved; there were more registered nurses (RNs). In the final years of market-based care, many hospital-employed RNs were replaced by aides-an effort by managed care to cut costs and increase profits. Dr. Hatter liked this new emphasis on patient outcomes.
He agreed with many of his colleagues-the NHP interfered little in physicians' daily practice of medicine. He could take care of patients the way he was taught, not just give them what their insurance would allow. True, someone was still looking over his shoulder. If his complication rates or costs were consistently high and a difficult case mix wasn't the reason why, he might receive a note from his professional society and be required to attend some continuing medical education classes. "But that's a more collegial approach than being denied reimbursement by a non-physician," he thought. The cost of taking care of patients was now controlled through budgeting at the state and federal levels, not through micromanaging the physician. No more patient-by-patient utilization review. No more little red flags on patient charts. No more accounting for every aspirin and IV.
Dr. Hatter's small group of six internists used to have three full-time people who just did billing. Now it had one. Single payer was saving the 200-physician multispecialty clinic up the street tens of thousands of dollars in overhead. Physicians used to spend 10 percent of their gross revenues on billing costs. Now they were spending 1 percent. Likewise, the state department of health was spending less than 1 percent of its budget on NHP bureaucracy.
Nationwide, there were now 1.3 million fewer people employed in medical center billing departments and health insurance companies. Many of these personnel were retrained to handle paperwork in patient care areas, which freed nurses to take care of patients. Others became public health employees, helping through education to reduce the rate of nine preventable diseases that cause more than half of the deaths in the United States. Under the old system, only 3 percent of health-care spending went to prevention.
BRICKS, MORTAR AND MACHINES THAT GO BEEPWhen Dr. Hatter arrived in diagnostic services, workers were busy next door renovating unneeded billing office space into more diagnostic procedure rooms. Capital budgets for renovations and new equipment were handled separately from the budget for operating the hospital day to day. "Separating these budgets discourages hospitals from skimping on care just so they can afford to add a new wing to the building," he thought.
If Dr. Hatter's small group practice wanted to buy new equipment, they simply would buy it, just as they did under the old system. But large capital purchases at a public clinic or nonprofit community hospital now went through a budget appropriations process done annually at the state department of health care. The state health planning board determined how much capital improvement money Northland Hospital received each year. When St. Mary's, a nonprofit community hospital across town, requested approval to buy a new MRI machine, their petition was denied, even though they had the money from private donations to pay for it. An additional MRI machine for a service area of 150,000 would unnecessarily increase future operating expenses for the hospital, the health planning board had said. Yet privately owned health providers could expand or purchase equipment without needing an approval, if they had private funds to pay for it.
To keep the hospital operating day to day, the state health planning board gave Northland a lump sum of money each month. The amount was negotiated yearly between the hospital and the state. Operating money could not be used for marketing, expansion or major capital purchases. In the old days, the hospital got paid per service or per patient. "Getting paid a lump sum based on an annual budget saves time and money," Dr. Hatter thought.
Dr. Hatter finished reviewing his patients' EKGs, then drove up the hill to Northland University School of Medicine, where he taught a class in clinical preventive medicine to third-year medical students. "It was too soon to tell," he pondered while driving, "but so far the NHP had not changed the type of person who enrolled in medical school. It might discourage a few who'd planned to make millions, but perhaps that weeds out those entering the profession for the wrong reason. If anything, the NHP seemed to make medicine more appealing. It reduced paperwork and bureaucracy.
"And it gives me more time to take care of patients like Alice."