Free Market Healthcare in a Single Payer System

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Over the last few months I have been giving thought to the health care system in the US.

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Right now, in the debate, we have two sides. The free market side that wants not only a free market in provider services, but also a thriving private insurance, or payer, industry. The single payer side wants to do away with the need for an payer industry and its inefficiencies, centralizing the administration of benefit payouts in the government, leaving the provider industry to manage itself as it does now.

The clear problem with the current free market solution is that the insurance industry is horribly inefficient because it is for profit and thus only makes money by denying care to customers. This can have disastrous results, as was seen recently with the girl in California who needed a liver transplant to live but was denied because the insurance company labeled a liver transplant along with her other conditions as being experimental, though the procedure is done many times per year under similar conditions. The girl died due to this lack of care. The clear problem with the single payer health care as it currently stands is that it either does not look at prices, which will result in ballooning costs, or, in some plans, it dictates the prices, resulting in poor economics.

Equally clear are the benefits of both systems. The free market plans create a market for the providers. A market that can be traded upon for services such as ER visits for particular procedures, and how much a heart transplant will cost, etc. Such a futures market in provider prices will regulate prices that conform to the other forces in the economy. In the single payer plans, you do away with the thousands of insurance companies, their 30% administrative costs, and the profit motivation for paying for care. You turn it into a highly efficient administration of the funds that does not take a profit and has very low administration costs. Traditional Medicare, for instance, pays out 98% of its funding toward the care of the beneficiaries.

I propose a solution that is easily accomplished. There is a natural separation between care providers and care payers. They are separate markets and thus should not be pushed together when designing a solution for one or the other. Prices are controlled on the provider side, thus that is where the free market must be. Futures trading on procedures performed in hospitals, and properly localized to best reflect the local economic realities, can regulate the prices for procedures performed not only by a doctor's office, but also hospitals and pharmacies. Along with extensive reporting on the prices charged by these entities, you will have a very easy to navigate market and you do away with the "how do I choose a hospital when I am unconscious" issue because the baseline prices provided by the futures trading, and the reporting of costs by providers will keep competition high and prices in a specific region controlled enough as to keep the payer from worrying too much about where the injured party ends up.

What about the payer side of the equation? Under a single payer system that administers the money to the billing provider, the worry of the patient as to where they end up out of fear of the treatment not being covered disappears. a lock in to a specific health system and doctor also vanishes so there is widened competition between providers, bringing prices further into alignment with economic realities.

If you are not a fan of single payer at all, then I implore you to focus your energy on non-profit payer systems. in a health care provider market, a traditional blue cross plan that covered 70% of costs will not create too much of a burden on a family or individual. The lower prices of the providers will also keep insurance prices low. Another alternative I think you may want to look at from the payer side is a hybrid of the single payer and the non-profit. a system that is administered by the government but provides a premium free coverage with deductibles and % coverages like a traditional insurance plan. This keeps the costs of health care from being insulated from the individual while making sure that everyone is afforded heath care coverage.

In the next 8 years, there is a very good chance that a health care solution will arrive in the US. I hope that the people in congress can give considerations to ideas similar to mine here today so that we can make health care accessible, affordable, and fair to everyone in the United States.

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