Whither A Health Care Solution? Oh, Canada

For months, the single-payer, or Canadian-style, solution to health-care reform has been dismissed as a nonstarter. Little wonder. At first blush, the idea of turning over one-seventh of the U.S. economy to the federal government seems about as politically palatable as eliminating the tax breaks for home-mortgage interest. But now that the flaws of President Clinton's and other reform plans have become painfully evident and the debate has veered toward gridlock, it's time to give the single-payer plan a hard second look.

Admittedly, single-payer is radical. It would decimate the health-insurance industry in one swift stroke. And the Congressional Budget Office estimates that it would require a breathtaking $556 billion increase in federal spending by 1998. But this radicalism would serve some profoundly conservative purposes. No other plan would do more to preserve the two traditional bedrocks of American medicine: the freedom to choose your own doctor and the autonomy of physicians to order care as they see fit. Both these principles are seriously compromised by more "conservative" proposals that would force most Americans into managed-care plans. For this reason, the American College of Surgeons recently backed fundamental aspects of a single-payer plan.

LESS OVERHEAD. For U.S. business, the predominant concern should be controlling runaway spending on health care. This year, the U.S. will devote 14% of gross national product to health care: at least 40% more than Canada, Japan, or the European Community. Even so, the U.S. ranks below many of these nations in life expectancy and infant mortality. By combining huge administrative savings with caps on national health spending, the single-payer approach has the potential in the long run to cut spending more than any other plan.

Under the leading single-payer proposal, sponsored by Representative Jim McDermott (D-Wash.) and 92 other House Democrats, the government would become responsible for virtually all medical bills, including prescription drugs, mental-health treatment, and long-term nursing-home care. A few frills--such as private hospital rooms--would not be covered. As in Canada, the government would pick up the entire tab for covered procedures. No other plan is as generous.

McDermott would finance all this with stiff federal tax increases, which would be offset by a steep decline in insurance premiums. Businesses with more than 75 workers and wages averaging more than $24,000 per employee would face an 8.4% payroll tax. Smaller businesses would pay 4%, while individuals would pay 2.1%. But taxes would probably have to be even higher. In addition, McDermott would increase the federal cigarette tax to $2 a pack from 24 and impose a new 50% excise tax on handguns and ammunition.

Ultimately, McDermott estimates, 75% ef Americans would pay less than they do now for coverage. By 2003, the savings would amount to about $1,000 a year per family. Critics challenge some of McDermott's projections. But single-payer will do the most to eliminate much of the bureaucracy that has become the plague of American medicine. Thanks to the paperwork and complexity of private insurance, some 24% of the nation's health-care spending now goes to administration, compared with only 11% in Canada. Yet the CBO estimates that the single-payer system would trim overhead by up to $100 billion a year--enough to provide coverage for 40 million uninsured Americans.

For consumers, single-payer offers equally compelling advantages. It would grant every legal U.S. resident full coverage starting in 1997, while many of the alternatives would continue to leave millions uninsured. Single-payer would also allow consumers to choose a doctor without paying higher premiums or extra charges for this fundamental privilege. Thanks to the proliferation of managed-care plans, this freedom is increasingly being constrained. "Single-payer provides the best assurances that patients would be able to seek care from any doctor of their choice," says Dr. David Murray, chairman of the Aeerican College of Surgeons.

That group's stand shocks many observers, since under single-payer the states would negotiate fee schedules with physicians, effectively capping their income. But most managed-care plans also limit doctors' income. The difference is that under single-payer, physicians would have more freedom to order necessary medical services without the constant second-guessing and micromanagement of managed care.

LIBERAL PROVISIONS. Opponents have raised some legitimate concerns. Many fear that single-payer would lead to runaway demand for services and then rationing, and give the government unbridled power to make life-and-death decisions. To control spending, single-payer would establish a national health budget indexed to economic growth. Proponents contend that this would force better planning, thus sharply slowing the medical arms race that has burdened the U.S. with underutilized facilities. By 2003, the CBO estimates, health-care spending would be cut by $114 billion, to $175 billion, or as much as 8.6% below what it would be without any changes.

Canada and many other nations have already proven such budgets work. But at what cost? The CBO predicts that single-payer's liberal provisions would jack up demand for physician services by 30%, home health care by 50%, and triple demand for drug-abuse treatment. The fear is that the states would then have to ration care by imposing waiting lines and limiting spending on new technology. Opponents foresee a nightmare. "Americans get quite antsy--if not furious--about waiting 45 minutes to fill up their gas tanks," says Jack A. Meyer, president of New Directions for Policy, a Washington-based think tank. "They're lot going to wait weeks or months for surgery."

But Canada's 30 years of experience with single-payer suggests care would not be compromised anywhere near as much as opponents predict. Canadians do face waiting lines for some nonemergency procedures and have far less high-tech equipment. Even so, "the Canadian system has served society, and the average citizen, better than the U.S. system," argues Vickery Stoughton, an American who has worked as CEO of both Toronto Hospital and Duke University Medical Center.

In the U.S., de facto rationing already exists, based upon how much you or your insurer can afford to pay. McDermott's plan, sometimes called Canada Deluxe, would minimize constraints by continuing to allocate about 14% of GNP to health care, vs. 9.5% in Canada.

Few believe there's any chance Congress will approve a single-payer plan this year. But if Congress approves a bill that allows states to opt for single-payer, as Clinton's plan would, many observers expect it to be adopted by one or more states. Such laboratories would soon demonstrate that single-payer is not "socialized medicine." Rather, it's by far the best way to control costs while preserving the freedom of choice and physician autonomy that made American medicine great.

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