Conjecture about how to get to Single Payer.

[Motown_Johnny]

Cross posting, this was a response on a GDP thread.



My guess, phase it in.



Of course, you could always deficit spend, but lets pretend that doesn't exist.


You start with a public option. Allow people to buy into Medicare. Because Medicare overhead is ~6% and private insurance companies overhead plus profit is ~20% (from the 80/20 rule in the ACA), there is 14% of premiums paid that can be resourced for purposes other than CEO bonuses.


So, you cut that 14% in half, give the person buying in a 7% reduction on premiums and use the other 7% as start up money for the new system. (I know that is a gross oversimplification but I am hoping that because we are talking about a great many people, the numbers will average out.)

There would also need to be a phase in of the taxes used to finance the system. I would think that people still paying private insurance companies would get a tax break while the people buying into Medicare would be taxed to support the system. Then we phase out those tax breaks after 10 years to force people onto the single payer system, unless they want to keep paying private insurance companies too. I guess that would be up to them.

The problem here is that I can't tell you how many people will sign up how quickly. Maybe people won't want to change over and there won't be much money for the start up. This would slow things down and the phase in could take longer, or even fail. I admit, that is a possibility.

Maybe so many people would want to sign up (myself among them) that the system could not handle the influx. Then you might need to limit availability. I would assume you let lower income persons in, especially those in the states that did not expand Medicaid. Beyond that you could do it by age. First people above 50, then 35, then everyone.(Again I can't predict a timeline and this is just one hypothetical path based on a 10 year estimate.) Then there are the people already on Government health care. Medicare and Medicaid are the obvious ones but also VA benefits, Tricare, CHIPs and government employees who have part or all of their premiums paid for as part of their compensation. I am sure there are more but I am just winging this.




A rough attempt at inaccurate numbers:



http://healthcareforamericanow.org/ourissues/health-insurance-industry/

^snip^

The $884-billion-a-year private health insurance industry, once a collection of home-grown, tax-exempt companies dedicated to fulfilling public service missions, has evolved into a Wall Street-driven profit machine controlled by the world’s biggest investment houses. Most of the shares of the largest health insurance companies are owned by huge financial institutions, and their top priority is maximizing returns on investments, not improving health. Using sophisticated technology and the vast financial resources generated by stupendous premium revenue streams, insurance companies have cadres of actuaries and skilled managers to keep them miles ahead of consumers and regulators. Because they are active in every part of the country, the business practices of dominant, national for-profit insurance companies have become the model for the nonprofit insurance companies with which they compete.


I don't know how accurate that number is but I am going to use $884 Billion a year as a base.

884 billion paid in premiums, 20% of which goes to overhead and profit.

20% of 884 billion is 176.8 billion

Cut that in half and we have the potential of $88.4 Billion a year being used to help fund the phase in and $88.4 Billion in savings for those buying in to go spend elsewhere. Per year. Plus any money transferred "in house" from the programs I listed above. (VA, CHIPs, etc.). If administrative costs can be cut by incorporating multiple programs into one, then some of those cost savings might also be used to fund the phase in.


Now lets say we phase this in over ten years. We will ignore any possible "in house" money and just take 1/10 of that potential $88.4 Billion.

It seems reasonable to assume that we could access $8.8 Billion to fund the phase in during the first year if we can sign up 10% of the people now paying premiums to private insurance companies. We would then increase that number by $8.4 Billion each year that we add another 10% of people paying private insurers, so that would be $17.6 Billion in year 2, $26.4 B year 3, $35.2 B year 4.... all the way up to that $88.4 billion dollar number we started with.




*Note* Those are 2014 numbers, so the actual ones would be higher, and these are only very rough estimates. Also this is only the money saved from the lower premiums. It does not include what people will need to pay into the Medicare system.


Also, that 6% number is probably really really high. I used the very worst number available.

http://www.pnhp.org/news/2013/february/setting-the-record-straight-on-medicare%E2%80%99s-overhead-costs

^snip^


The traditional Medicare program allocates only 1 percent of total spending to overhead compared with 6 percent when the privatized portion of Medicare, known as Medicare Advantage, is included, according to a study in the June 2013 issue of the Journal of Health Politics, Policy and Law.

The 1 percent figure includes all types of non-medical spending by the Centers for Medicare and Medicaid Services plus other federal agencies, such as the IRS, that support the Medicare program, and is based on data contained in the latest report of the Medicare trustees. The 6 percent figure, on the other hand, is based on data contained in the latest National Health Expenditure Accounts (NHEA) report.

The journal article, written by Minneapolis-based researcher Kip Sullivan, finds that the gap between the two measures has been growing over the last two decades as enrollment in private Medicare plans has risen.

“The high administrative costs of the privatized portion of Medicare are no surprise,” says Sullivan. “What’s surprising is that the high administrative costs of the Medicare private insurance companies haven’t provoked a debate about whether spending more money on insurance industry overhead is a good use of scarce tax revenues.”





I hope that made some sense, I am just pulling it out of my ass. I hope it isn't all s**t.

Please feel free to correct my math. It would not surprise me in the least if I made errors.

[Proserpina]

1. I think the American people are owed, big time

and the govt. can do this at least as well as they did the original Medicare roll-out.

But they must plug the big holes in Medicare! Or it's not going to work.

[eridani]

2. HR 676 eliminates deductibiles and requires price negotiation all down the line n/t

[libdem4life]

3. Thank you for the information. It's not for the faint of heart. n/t