Getting to Single Payer, Part II

By Jill Zorn

chess-pawn-social-mobilityGetting to universal health care in the U.S. is a political challenge. The two big obstacles are:

  • Individuals fearing change, worrying that they could end up worse off
  • Health industry vested interests knowing they will be worse off

The first blog in this series addressed the fear of change by individuals that can be ignited when wholesale alteration of their health coverage starts to become a real possibility.

This blog focuses on industry fears, and their investment in maintaining the status quo.

There is a huge amount of money in the US health care system.  As we heard over and over again in the recent fight to stop repeal of the Affordable Care Act (ACA), it is one sixth of the US economy.

We spend an average of twice as much per-person on health care as any other wealthy nation.  Pharmaceutical corporations and many hospital companies and systems are making a lot of money off of that system.  Health insurance company profits are booming, too.

As dysfunctional as our current health care system is, changing to a government-funded, highly regulated health care system is not seen as a positive goal, instead it poses a clear threat to industry players.

The Threat of Losing Negotiating Power to Set Prices

While many single payer supporters focus on its ability to eliminate a huge amount of administrative expenses, the more hidden reason single payer is expected to save money is that the system will have the negotiating power to pay lower prices for care.

The top reason that the US health care system is so expensive is high and rising prices.  Monopoly pricing is the name of the game for pharmaceutical corporations, for brand name drugs and, increasingly, for generics, too.  Right now Big Pharma is largely able to charge what the market will bear, even in the Medicare program.

Hospital systems are learning that forming monopolies is good business.  They are buying up physician practices and taking over competitor hospitals.  Research shows that hospital consolidation leads to higher prices, by strengthening hospitals’ negotiating power.

A fragmented insurance industry has generally passed along huge hospital and pharmaceutical price increases to their customers, after taking their cut.

All three of these industries and their shareholders, as well as many other companies in health-related businesses, are not going to walk away quietly when the health care for all fight picks up steam.


High prices fund profits, but they also fund lobbying capability.  Pharmaceutical corporations spend more money on federal government lobbying than any other industry.  The insurance industry is right behind them.

Since Medicare expanded to cover prescriptions pharmaceutical corporations have successfully fought any effort to require them to negotiate prices.  If the recent single payer fights in Colorado and California are any indication, the health care industry will be ready and willing to expend significant dollars to stop single payer legislation.

High Prices

The fact that health care prices are already so high in the US poses a major threat in itself to a successful transition to single payer.  As Joshua Holland’s article published this week in The Nation explains:

(Other countries) established their systems when they weren’t spending a lot on health care, and then kept prices down through aggressive cost-controls.“Bringing costs down is a lot harder than starting low and keeping them from getting high,” says (Dean) Baker.

Eliminating Administrative Costs = Eliminating Jobs

And finally, there is the jobs issue.  As health industry players are only too ready to point out, we also can’t forget that cost savings for the health care system will translate into job losses.

A more streamlined system with much greater power over costs will certainly impact employment not only in the insurance industry, but in hospital and physician billing departments, insurance brokers and many other more hidden parts of our complex system.  As Charles Gaba points out:

Well over half a million people work directly for health insurance companies, plus a couple million people in directly related industries…Now, I know what you’re saying, “Cry me a river! Different industries are changing and becoming obsolete all the time! You don’t see anyone shoring up the abacus or slide rule industry these days, do you?”… True, and I’m not saying making such a sweeping change shouldn’t be done … I’m simply pointing out some of the reasons why it’s extremely difficult to do so.

It’s Political AND It’s Personal

The jobs issue brings us full circle back to individuals’ fear of change, as discussed in the first blog.  Health care is personal for all of us, even if we don’t work in health care.  As Gaba reminds us,

Remember, changing healthcare policy isn’t only about what looks logical on paper, it’s about persuading people (either voters, politicians, or both) to agree with you. The emotional aspect is a tough nut to crack, especially when it changes from the hypothetical to the here and now.

That’s not to say we shouldn’t fight for universal health care – of course we should.  But that IS to say that HOW we get there is going to be very important.

To read the rest of the blogs in this series, click here.

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