Memo to Hillary: Try a Single-Payer Plan



Palo Alto, California. -- From the White House to Main Street the focus is on managed competition as the answer to the U.S. health-care system problems.

Missing in this rush to judgment, unfortunately, is any serious consideration of national health insurance.

Proponents claim managed competition will make insurers, hospitals and doctors more innovative. There will be incentives to form new health-care networks competing for patients through the better quality at lower cost they offer. Consumers' bargaining power will increase as they can shop around for alternatives if they are not satisfied.

But the key flaw in this model is that historically the private sector has been resistant to change.

For three decades, industry observers have argued that a nationally financed heath-care system be put on the back burner until reforms like managed competition had time to reorganize the system.

Yet system reforms have proceeded at a snail's pace while private insurance entrenched its power. Private insurers have not only fostered costly and fragmented specialty care, but provided incentives for excessive and expensive hospital care and diagnostic procedures.

In short, the market place has produced precisely those distortions that many experts feared would result from national health insurance.

In California alone, annual health-care spending for families rose from $2,670 to $4,433 over the past decade, according to a Harvard study sponsored by the Henry J. Kaiser Family Foundation.

A new survey of major employers shows that nationwide managed-care program costs rose more than 10 percent last year -- three times the rate of overall living costs. Health benefits now average almost $4,000 per employee.

Today an estimated 5.8 million Californians -- mostly black and Hispanic -- under the age of 65 have no insurance and difficulty in gaining any access to health care.

Even if the much touted managed competition is instituted, Clinton administration officials concede that caps on expenditures will be necessary. But caps will do nothing more than freeze the current excesses in place.

The arguments for creating a government-run health-care system are several:

* Experience shows that medical institutions cannot be relied on to address health manpower needs and to organize themselves efficiently. Increasingly, the leaders of medicine agree that the U.S. has too many specialists and not enough doctors devoted to front-line services and prevention. A glut of specialists creates tremendous pressures on expenditures.

* The ability of health-care consumers to make informed choices about doctors and hospitals will have little effect on the structure of a delivery system that operates as a professional monopoly.

* Reliance on market forces has demonstrated the wastefulness of competition, as evidenced by redundant high-tech diagnostic equipment and hospital construction in regions with hundreds of empty beds. This has even more distorted the health-care market.

* A publicly financed health-care system, unlike a privately funded one, can place effective ceilings on spending and set priorities among competing needs. It can achieve uniform basic benefits across state boundaries, subject to regional adjustments.

Not surprisingly, large U.S. employers and even many physicians increasingly want a national plan.

They point to highly industrialized nations, notably Germany, whose governments take responsibility for heath-care financing without mountains of paper or compromising doctors' decisions about what's best for the patient, as the U.S. insurance companies do today.

Even with national mandates for employee health insurance, our foreign competitors spend a far lower share of their national output on health care than the U.S.

If we follow suit, savings will be realized, not by cutting benefits but by a clean, single-payer system that would serve all equitably. The irrational link between a person's health coverage and job will be eliminated. Administrative costs will be sharply reduced. Consumers and institutions will have real, not nominal participation in local and regional decisions.

A nationally funded system must remain sensitive to the need for medical professionals to exercise autonomous judgment in patient-care decisions.

A national system can support private health-care programs -- like health-maintenance organizations and group-practice plans linked to prepayment -- by using federal financing mechanisms rather than insurance contracts to stimulate cost-effective health-care delivery systems.

In short, a more limited but courageous leap now to a national health-care system may lead eventually to a solution that does maintain quality while cutting costs.

Most private insurance would cease to exist. Whether insurance companies would have a role as administrators in the publicly financed system will have to be decided in the political arena. They currently serve only that role for the 50 percent of employees who work for self-insured employers.

Solving our health-care crisis presents President Clinton with an opportunity to unify the country. Health care ought to be a part of our social order, not separate from it. It should reflect the fact that we are one nation and one people, not just Californians, North Carolinians or Vermonters.

Unless we act now, under managed competition we can expect increasing chaos, higher costs and ultimately the gloomier prospect of a totally government-regulated system.

Spyros Andreopoulos is the director of the Office of Communications at Stanford University. He is the editor of ''National Health Insurance: Can We Learn From Canada,'' and ''Primary Care: When Medicine Fails,'' produced through the Sun Valley Forum on National Health Care. He wrote this commentary for Pacific News Service.

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