Questions

Medicare For All Isn't The Answer   

By ALAN B. MILLER, WSJ Aug 13, 2009

 

My company ran a hospital in London. We don't want to go the government route.

 

With Congress now in recess, the debate over health-care reform has moved to each member's home district. The American people have rightly been asking elected officials many probing questions. While few Americans deny we need health-insurance reform (too many people lack adequate coverage), most believe we receive the best quality health care in the world and do not want to see it compromised.

 

Several advocacy groups and members of Congress want a single-payer insurance system, modeled after Medicare, to cover all Americans. They say Medicare works to provide health care to seniors, so government should extend the program to Americans of all ages. Others want to create a government-run plan, sometimes called a "public option," which they say would compete with private insurance but would only be two steps away from a single-payer system.

 

There are more than 1,300 insurance companies competing for business without unneeded competition from a federal government plan. Backed by tax dollars, a government-run option could offer artificially low rates without regard to profitability, or even meeting operating expenses. That would push businesses to move employees to the public-option plan, ultimately putting private insurers out of business and leaving only a single-payer system run by the government.

 

A single-payer system may appear attractive to some. But as someone with more than 30 years of experience running a leading hospital company with international operations, I have firsthand knowledge of the hidden costs.

 

Medicare reimbursements to hospitals fail to cover the actual cost of providing services. The Medicare Payment Advisory Commission (MedPAC), an independent congressional advisory agency, says hospitals received only 94.1 cents for every dollar they spent treating Medicare patients in 2007. MedPAC projects that number to decline to 93.1 cents per dollar spent in 2009, for an operating shortfall of 7%. Medicare works because hospitals subsidize the care they provide with revenue received from patients who have commercial insurance. Without that revenue, hospitals could not afford to care for those covered by Medicare. In effect, everyone with insurance is subsidizing the Medicare shortfall, which is growing larger every year.

 

If hospitals had to rely solely on Medicare reimbursements for operating revenue, as would occur under a single-payer system, many hospitals would be forced to eliminate services, cut investments in advanced medical technology, reduce the number of nurses and other employees, and provide less care for the patients they serve. And with the government in control, Americans eventually will see rationing, the denial of high-priced drugs and sophisticated procedures, and long waits for care.

 

My company's experience with health care in the United Kingdom illustrates the point. In the 1980s, we opened The London Independent Hospital to serve the private medical market in the U.K.  The hospital had not been open long when representatives of a 1,000-bed government-run hospital located a short distance away approached us to borrow high-tech equipment and instruments. Because people were ill and needed procedures the government hospital could not provide, we provided that hospital with the help it needed. But that experience convinced me that under a single-payer system hospitals do not receive the money required to purchase advanced technology or provide quality care.

 

Advocates of a single-payer system say that hospitals would survive if they learned to operate more efficiently. While we are always looking for ways to improve efficiency, the economic conditions of the past few years have already forced most institutions to reduce expenses and increase efficiency as much as possible.

 

The reality is that Americans have come to expect the best health care in the world, and to provide that, hospitals must continue to invest in advanced medical technology, salaries for well-trained nurses and technicians, and state-of-the-art facilities.  If hospitals were required to operate solely on revenue from a single-payer system, they could no longer afford to provide the care that Americans deserve.

 

Single-payer systems have proven to be wholly inadequate in Canada and the U.K. Most people in America are satisfied with the care they receive, so it is important that we take the time to fix only the parts of our system that need repair. Let's not destroy a system that works well for most Americans. Let's judiciously change only the areas in need.