How to Pay for Single Payer Health Insurance

PAUL JAY: Welcome to The Real News Network.
I’m Paul Jay in Baltimore. This is a continuation of our series of interviews
looking at single-payer or government-run health insurance plan and focusing particularly
on Maryland. And as I said, I’m in Baltimore, and I guess I should have said earlier in
this series of interviews that I guess we have some kind of conflict of interest here
because we live in Maryland and if there was a single payer plan system, I guess we would
benefit from it. Oh, we’re ordinary people. We would benefit from this. Oh, terrible thing,
isn’t that? Okay. So now we’re going to continue our series
of interview, and now joining us again is Gerald Friedman. Gerald is a professor of
economics at the University of Massachusetts Amherst. And we’re–if you haven’t watched
part ones and two and–I can’t remember. Are we three or four now? Anyway, you’ll see all
the other parts down below this video player. So thanks for joining us again, Gerald. GERALD FRIEDMAN: Thank you. JAY: Alright. So in the last segment, we went
through your report and we looked at the savings, which came to just over 24 percent over existing
insurance coverage and health care expenditure. But that doesn’t cover everything, does it?
And then so what isn’t paid for out of these cost savings, and how are you going to pay
for it? FRIEDMAN: Okay. Well, first of all, the cost
savings are there. There are also extra expenses, as we were saying, with the Medicaid rate
fix. Also, we would be covering everybody. Now 15 percent of the population of Maryland
is currently without health insurance. Extend health insurance to them, they’re extra expenses.
Also, the plan for the Maryland Health Security Act does away with copayments, deductibles,
and all of those expenses. We expect that people would use health services more. JAY: And let me just–I may not have made
this clear enough in the earlier segments, or I may have missed in one of the segment,
but this Maryland Health Security Act is an actual piece of legislation. It’s been proposed
in the Maryland assembly. It’s not been passed yet, and this debate is sort of going on.
Okay, go on, Gerald. FRIEDMAN: Okay. Yeah. Yeah. The study I did
projects that it would be enacted this year and looks at the savings and expenses for
next year. And as I said, covering everybody, doing away with copayments would lead to greater
utilization of health care. That’s a good thing. You know. So, you know, people would
be healthier. They would live longer. They would be more productive. They wouldn’t be
sick as much, so they wouldn’t miss as much work. Kids would be healthier in school and
would do better. JAY: And if I understand correctly, infant
mortality amongst the poor in Maryland is actually getting worse. FRIEDMAN: Yes. Yes. It’s really quite appalling.
Overall the United States is about 45th in the world in life expectancy and infant mortality.
With one of the richest countries in the world, how is it that we’ve gotten to a position
where we’ve gone from second or third in the world 35, 40 years ago to 45th? We’re obviously
doing something wrong. We’re putting tons of money inefficiently into the health care
system. So fixing that would involve spending some extra money. Now, even taking account of those extra costs,
there would be savings of billions of dollars for Maryland. But we’d also be reallocating
what we’re spending. Much of the spending now comes through premium dollars paid by
individuals or companies. We would do away with those. There would be no private insurance.
You wouldn’t be buying private insurance. Instead, that bill for that, for what used
to be paid for by the private insurance, would be picked up by the government, by this health
security trust, which would be funded through taxes. JAY: Where I–you know, I still spend a lot
of my time and grew up in Ontario. Yeah, you pay your taxes, you get a health card, you
go see the doctor. And it’s a progressive tax system, so that people that are richer
pay a little more–or, hopefully, a lot more, one wishes. FRIEDMAN: That’s right. And, in fact, what
we’ve proposed here would be we would use payroll taxes and progressive income taxes
to pay for the health insurance plan. What happens now is if you have health insurance,
you buy it yourself or you pay for it through work. A certain fixed amount gets paid for
everybody. And that is a trivial amount for the heads of large companies but is a very
large amount for people who are earning minimum wage or something close to it. So what happens
now is poor people and working people pay a very high proportion of their earnings for
health coverage. We would switch that by taking a percentage of people’s payroll and then
a percentage of your earnings. We would be taxing the rich more than the poor. It would
be a little bit progressive. But compared to the current system, it would be a huge
gain for working people and certain loss for people at the very highest income. JAY: And what would it mean for businesses?
One of the arguments that’s often given against this is that it would make, for example, Maryland
uncompetitive compared to other states that don’t have this. FRIEDMAN: I so want to go to chambers of commerce
and to businesses and talk to them about what a great savings this is for them. This is
the best thing that could happen for Maryland business that the Maryland state government
could do, because, first of all, businesses would get this off their to-do list. Small
businesses around Amherst that I talk to, they hate having to do health insurance. They
feel obligated to provide health insurance to their workers, they’ve been providing it,
they have to keep providing it, but dealing with it is a gigantic hassle. Also, it’s a
big expense. And it’s an unknown expense. Every year you find out, oh my God, my insurance
premiums are going to go like this. We would take care of that. It would be handled
every year by the state. It would be–you wouldn’t have to think about it. You wouldn’t
have to explain to your worker why this thing is or is not covered. Also, because it would
be more efficient–remember the 24 percent savings–because it would be more efficient,
Maryland would be able to provide health care to its population at lower cost than their
businesses are paying now. Businesses in Maryland would save several percentage points of payroll
every year because of this, because of the single-payer system. JAY: Yeah. If people want some evidence of
this, they should go look at–one of the biggest supporters of the Ontario health care plan
was General Motors, which found that their costs towards health care and their costs
per employee in Ontario was far lower than it was, like, for example, in Windsor, right
across the border in Detroit. And General Motors was very much in favor of this kind
of system. FRIEDMAN: That’s right, because it’s saving
them money. And I would expect that businesses in Maryland, when they realize how much they’d
be saving and how they would be able to outcompete businesses in Virginia or Pennsylvania–.
I mean, a restaurant in Maryland would be less expensive to operate than a restaurant
across the border in D.C. or in Virginia. JAY: Well, one of the arguments will be is
that there’s a lot of businesses that don’t provide health care at all, and they will
become less competitive if all of a sudden they have to start making some payments towards
this plan. FRIEDMAN: That’s right. That’s right. Small
businesses and some large businesses don’t provide health care. Now their workers are
getting free care, are getting Medicaid, are getting some sort of subsidized care, and
their workers are not getting care at all and are being unhealthy and sick. They would
benefit if their employees were healthier and had a more reliable source of care. On
the other hand, they would be paying somewhat more in the payroll tax than they’re paying
now. JAY: But in your study you looked at the overall
jobs effect. What did you find? FRIEDMAN: Oh, the overall jobs? Maryland would
benefit. It’s a little hard to say exactly, but I would estimate over 100,000 additional
jobs would be created by this because of this competitive interstate effect, that Maryland
employers would be able to outcompete employers in Pennsylvania and Virginia and elsewhere. Probably some businesses would move to Maryland.
You know, if you’re in Northern Virginia, hey, locate in Montgomery County, get the
cheaper health insurance. Your life is easier and it’s cheaper. So you’d get maybe 100,000
extra jobs. And also, though I didn’t put this in, I didn’t
factor this in, if you actually did get those 100,000 extra jobs, the tax rate could be
lower for health care. So that would–the effects would become more [crosstalk] JAY: Because the bigger the pool, the more
economy of scale. FRIEDMAN: Yes, exactly. Exactly. Costs become
lower and you get on this virtuous cycle. The biggest beneficiaries would be employers
who are currently providing health care, and the biggest group there are local governments,
because local governments not only provide health care to their workers, but they provide
health care to their dependents. What I found was the so-called pickup rate, the proportion
of people actually using the health insurance that’s offered, it’s only about 60 percent
of private employers, but it’s over 90 percent for public employers. So local governments
would be benefiting even more, which would mean lower taxes. JAY: Okay. So this whole thing’s a no-brainer.
I mean, if you look at the data, it’s really a no-brainer. And, you know, as someone who,
again, grew up in Canada, we always shook our heads and just could not understand how
Americans can live with the system they have. But what are the politics of this in Maryland
now? What do you get a sense of? Is there support for this? And what’s the role of the
insurance companies? FRIEDMAN: Well, what I hear in Maryland, what
I hear in other places as well, is politicians saying, yes, yes, you’re right, this has been
studied before. I’m not the first one to find these sorts of savings. And we’ll get there
eventually, but we need incremental steps. And right now the major focus is on working
out how to implement the Affordable Care Act, which is a little bit of a step towards universal
coverage and single-payer, but it’s a small step in that direction. What I think will happen in the next couple
of years is people are going to learn that the Affordable Care Act covers a lot of people;
it doesn’t cover everybody, so it doesn’t provide the universal coverage that we want,
and it doesn’t control costs, which is something that the people involved in writing the Affordable
Care Act admitted. You know, they have a lot of things in there that they hope will maybe
help control costs, but it’s not expected to control costs very much, with the result
that the share of income going to health insurance and health care is going to keep on rising.
We’ll still have the private insurers with a rising administrative burden, and in five
years were going to be back where we are now, except instead of 17 percent of our income
going to health care, it will be 25 percent. JAY: And one of the points you make in your
paper is that one way or the other these costs are going to have to be contained. So if you’re
not getting this out of the private insurance plan, you’re going to have to get it by not
providing as much health care. FRIEDMAN: Yes, which is the point we’re getting
to in Massachusetts, where there’s talk about ways to cut back on health care. A lot of
the talk about consumer-driven health care is basically how can we get people to stop
asking for health care. As it is, Americans go to the doctor and go to dentists less often
than people in other countries. We’re less healthy. We go to the doctor less often. I
mean, it’s like, put the two together and it starts to make sense. But it’s–we’re already underserved as a population,
and we will be in a worse position in several years, spending more, getting worse service.
And I think at that point a lot of the people who have been looking for incremental gains
will say we’ve got to go all out. JAY: Okay. And we’re going to–you’ll find
below this video player a link to Gerald’s report, and it’s worth looking at the detail
of this, because it’s about time we had this discussion based on public policy with research
and not just some rhetoric in either direction. Thanks very much for joining us, Gerald. FRIEDMAN: Thank you. Bye-bye. JAY: And thank you for joining us on The Real
News Network. And don’t forget there’s a “Donate” button over here, and if you don’t click on
that, we can’t do this.


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