Sen. Kamala Harris (D-Calif.) sent ripples through the media when she declared during a town hall Monday that she wants to end private health insurance plans. Her comments on CNN shouldn’t have surprised anyone — Harris had previously made clear that she supports shifting to a single-payer healthcare system, specifically extending Medicare to all Americans. And a common feature of Medicare-for-All proposals is that they wipe out private insurance.
Nevertheless, the Republican National Committee pounced on the remark, and you have to admit this is clever:
But that’s a lash without a barb.
I imagine there are plenty of people out there who like their health insurance plans, especially if they have super-generous employee benefits that minimize their out-of-pocket costs. But the public in general isn’t so keen on the current system. J.D. Power surveys show that customer satisfaction with commercial health plans runs lower than for almost all other industries that it rates. Even Medicare, which many older Americans would defend with every fiber of their being, evokes as much dissatisfaction as satisfaction in Gallup polls.
There is, however, a real policy question at issue. Single-payer systems don’t have to eliminate private insurance plans; according to Larry Levitt of the Kaiser Family Foundation, private insurers play a role in many foreign single-payer systems. “A role for private insurers is more the rule rather than the exception in other high-income countries,” Levitt said in an email.
For example, the system in Switzerland has nonprofit insurers sell coverage for the standard benefits package that everyone must buy, with their for-profit affiliates selling coverage for optional benefits. Germany’s system is similar. France and the United Kingdom allow private insurers to sell supplemental coverage to reduce out-of-pocket costs or obtain some types of treatment faster.
But the trade-off for allowing a role for private insurers is significantly higher administrative costs for doctors, hospitals and other healthcare providers, said Dr. David Himmelstein, a primary care doctor in New York who co-founded the Physicians for a National Health Program, which advocates for single payer.
“As soon as you have multiple different payers,” Himmelstein said, “you have to have that entire hospital bureaucracy” devoted to billing and paperwork. “That’s a huge increase in the bureaucratic cost.” Himmelstein also argued that private insurers would add a “middleman cost” that’s higher than Medicare’s.
That defeats one of the main purposes of shifting to single payer, namely, lowering healthcare costs by lifting the heavy administrative burdens the current system imposes on healthcare providers. As Himmelstein noted, there’s a whole workforce and tech infrastructure within the healthcare industry that was created to deal with multiple insurers, each with its own reimbursement rate, exclusions and paperwork demands.
The doctor said he’s probably asked 100 different audiences whether they care who their doctor is, or which hospital they go to, or which prescription drugs they have access to, and the invariable answer is that almost everyone does. But when he asks whether anyone in the audience is concerned about which insurer pays their healthcare bill, Himmelstein said, “almost no one who doesn’t work for an insurance company cares about that.”
Obviously, supporters of single payer also see it as a way to extend affordable coverage to every American, albeit at the expense of taxpayers. Beyond that, pulling everyone into a single risk pool would also make it easier to make system-wide changes — for example, in the way healthcare is delivered — to try to rein in costs.
Nevertheless, some opponents of single payer warn that eliminating private insurers would eliminate some of the choices consumers have. For example, private insurers in Medicare Advantage offer a variety of supplemental benefits, and those in Medicare Part D offer different lists of covered prescription drugs. Critics like Himmelstein argue that the choices don’t make consumers better off, so there’s a debate to be had over whether private insurers make the system better or just more costly.
That’s a more nuanced argument than the one the RNC wants to have with Harris.