Why do we need a single payer, national health insurer?
It is obvious that 2016 is the year of the great single payer debate. But most of the time available will be taken up by bobble heads making ridiculous claims about the presumed inefficiency of a national health insurer, such as Bernie Sander’s proposal of a Medicare for All, single payer system.
So let’s try to peel away some of this. For a more thorough discussion I wrote a book: “Standard Errors: Our Failing Health Care (Finance) Systems And How To Fix Them” which is available through my website at: http://www.standarderrors.org/.
We have more than 1,000 health insurers and health benefit plans in the United States. Many are very small, provide few benefits, engage in a lot of litigation to avoid paying benefits, and close their doors in bankruptcy on a regular basis. We have half a dozen very large health insurers with tens of millions of policyholders. They face very little risk, other than excessive overhead expenses, earn profits year after year, and face no possibility of actually losing money though they hire many accountants and actuaries who help them to make it appear that they are losing money.
Each of these more than 1,000 health insurers/health benefit plans has a redundant infrastructure: Executives, sales forces, underwriters, claims adjusters, lawyers, and clerical departments. They use billions of square feet of office space, incur operating costs such as rent, utilities, phone services, postage and handling costs. A single payer, national health insurer would eliminate almost all of this redundancy and that is just for starters, the real cost savings come from more efficient risk management, not the most obvious savings in redundant operating costs.
But that is for another story soon to come.