Private insurance that duplicates the NHI coverage would undermine the public system in several ways. (1) The market for private coverage would disappear if the public coverage were fully adequate. Hence, private insurers would continually lobby for underfunding of the public system. (2) If the wealthy could turn to private coverage, their support for adequate funding of NHI would also wane. Why pay taxes for coverage they don’t use? (3) Private coverage would encourage doctors and hospitals to provide two classes of care. (4) A fractured payment system, preserving the chaos of multiple claims data bases, would subvert quality improvement efforts, e.g. the monitoring of surgical death rates and other patterns of care. (5) Eliminating multiple payers is essential to cost containment. Public administration of insurance funds would save tens of billions of dollars each year. Our private health insurers and HMOs now consume 13.6 percent of premiums foroverhead1, while both the Medicare program and Canadian NHI have overhead costs below 3 percent. Our multiplicity of insurers forces U.S. hospitals to spend more than twice as much as Canadian hospitals on billing and administration, and U.S. physicians to spend about 10 percent of their gross incomes on excess billing costs2. Only a true single payer system would realize large administrative savings. Perpetuating multiple payers - even two - would force hospitals to maintain expensive cost accounting systems to attribute costs and charges to individual patients and payers. In the U.K., market-based reforms that fractured hospital payment have swollen administrative
costs3 4.
Co-payments and deductibles endanger the health of the sick poor, decrease use of vital inpatient medical services as much as unnecessary ones, discourage preventive care, and are unwieldy and expensive to
administer5. Canada has few such charges, yet health costs are lower than in the U.S. and have risen more slowly.
Instead of the confused and often unjust dictates of insurance companies, a greatly expanded program of clinical effectiveness research would guide decisions on covered services and drugs, as well as on capital allocation.
--------------------------------------------------------------------------------
Payment for Hospital Services
The NHI would pay each hospital a monthly lump sum to cover all operating expenses - that is, a global budget. The hospital and the NHI would negotiate the amount of this payment annually, based on past expenditures, previous financial and clinical performance, projected changes in levels of services, wages and input costs, and proposed new and innovative programs. Hospitals would not bill for services covered by the NHI. Hospitals could not use any of their operating budget for expansion, profit, excessive executives’ incomes, marketing, or major capital purchases or leases. Major capital expenditures would come from the NHI fund, but would be appropriated separately based upon community needs. Investor-owned hospitals would be converted to not-for-profit status, and their owners compensated for past investment.
Global budgeting would simplify hospital administration and virtually eliminate billing, freeing up substantial resources for enhanced clinical care. Prohibiting the use of operating funds for major capital purchases or profit would eliminate the main financial incentive for both excessive interventions (under fee-for-service payment) and skimping on care (under capitated or DRG systems), since neither inflating revenues nor limiting care could result in institutional gain. Separate and explicit appropriation of capital funds would facilitate rational health care planning. These methods of hospital payment would shift the focus of hospital administration away from lucrative services that enhance the “bottom line” and toward providing optimal clinical services in accord with patients’ needs.
|