... imagine a system in which all payments are negotiated, as with a single payer system. Hospitals negotiate an annual global budget. That budget includes their costs of services, such as coronary bypass surgeries, without the need to itemize each single item for the services, nor the need to bundle payments in some sort of pretense that global costs are reduced. The hospital already has incentives to improve efficiencies to stay within budget.

Likewise, physicians collectively negotiate their payments, whether fee-for-service, capitation, or salary, as appropriate to their clinical circumstances. Payments are adequate to ensure a very comfortable net income.

Other nations have proven that negotiated, administered payment is effective in obtaining greater value for health care spending. We’ve now proven that intrusion of market-model games players such as outside disease managers, or pay-for-performance administrators, have failed to improve value. So we should go with a system that really does work – a single payer national health program.

Why would Ron Wyden cooperate with Paul Ryan in this effort to defuse the Democrats’ strategy of using the premium support vote against the Republicans? It is because he is more supportive of his own previous proposal for health care reform than he is for the Democrats to prevail in the next election. His Healthy Americans Act that he pushed throughout the reform process called for an individual mandate to purchase private plans, shifting the tax benefit from employers to individuals (a concept included in this white paper). He has said that Democrats want universal coverage, Republicans want choice, and his plan, and now the Ryan-Wyden proposal, would enable both.

The problem for single payer supporters is that this is a digression that shoves the concept of an improved Medicare for all further into the background. The substance of the debate will be over converting the Medicare Advantage plan into a voucherized program competing on price. Single payer supporters will not be welcome participants in that debate, nor should we.

Now the insurers want to do their own “distributed model” of risk adjustment, preventing federal or state bureaucrats from looking over their shoulders as they do their dirty deeds. This applies not only to Medicare Advantage plans but to all plans in and out of the exchanges, except for grandfathered plans. They claim that this secrecy is necessary to maintain patient privacy and to protect the insurers’ proprietary data, but risk adjustment of the Medicare Advantage program has demonstrated that these are not valid concerns.

Risk adjustment does not work, as the insurers will always game the system. The insurers’ solution is to allow them to do it in greater secrecy, with a “trust us” attitude that certainly has not been earned based on their previous behavior.

Under this policy, many of these very healthy young people will decide to take the chance that they will not need expensive care, and most will win that bet.

There are two problems with this. Some will have major trauma, some will develop serious disorders such as cancer, and some will develop severe chronic problems such as type I diabetes. These people should receive the care that they need regardless of the fact that they made the unwise decision to decline insurance. Who pays for that care?

The other problem is that we do need the many who are healthy to pay into the risk pools to cover the fewer with greater health care needs. Otherwise those pools end up with a death spiral of ever higher premiums.

Just as our nation does not allow me, a pacifist, to not pay through my taxes the costs of our ill-considered wars, our nation should also prohibit the rugged individualists from not paying their share of our collective national health expenditures.

What do all of these have in common? They are all methods of perpetuating the private insurance industry, while shifting risks from the insurers to the insured individuals. They reduce the financial commitment of employers and the government, but increase the financial burden for workers, their families, and retirees – most of us. However, it is a jobs program – for personal bankruptcy attorneys, as if our health care system didn’t give them enough work already.

Defined contribution is a nefarious conspiracy directed at the masses to benefit the well off. We can counter by demanding an end to a system dominated by private insurers and replacing it with a single, publicly-financed and publicly-administered national health program – an improved Medicare for everyone.

(After we fix Medicare, we may want to think about greatly reinforcing our publicly-financed, publicly-administered, defined benefit Social Security program so we wouldn’t have to put up with the abuses of our private, defined contribution pension plans. Really.)

Suppose the states decided against establishing basic health programs, what would happen under the baseline ACA structure with just Medicaid and the private exchange plans? Half of individuals would no longer be in their initial programs. This is only over a period of two years. Because of continual fluctuations in eligibility (changing income levels, etc.), stability over a decade or two would be virtually nonexistent.

This instability can be quite disruptive. Between Medicaid, basic health programs, and private exchange plans, there may be little or no overlap in provider networks. A change in coverage could also have a major impact on out-of-pocket expenses required of the insured individuals.

One intent of the basic health programs would be to save the government money by paying providers at levels close to those of Medicaid. Many physicians already reject Medicaid because of these low rates. Adding many more new patients to the Medicaid program, plus introducing an entirely new, under-funded, basic health program, would surely cause providers to flee both Medicaid and the basic health programs. The patients might have a basic health ticket, but nowhere to use it.

The entire ACA infrastructure is irreparably fragmented and dysfunctional. It needs to be replaced with… yes, an improved Medicare for all.

The fundamental defect here is that we keep trying to match payment for a specified package of medical benefits to the incomes of specific individuals. Since a reasonable package is no longer affordable by median-income individuals, some form of subsidization is required for the majority of us. Yet recognized experts in the policy community have very different concepts as to how much and in what form the subsidies should be.

Averaging these wide ranges of opinions on how much each person should pay is not a satisfactory solution since the averages or medians place too much of the burden of health care costs on those with modest incomes. These averages also would not satisfy those dispassionate experts who believe that individuals should pay dearly for their health insurance and health care, so they won’t waste their money on things like flat-screen TVs (or really, “wasting” it on healthier foods, transportation to their employment, 401k plans, and so forth).

Financing health care and providing health benefits need to be totally separated. The correlation between ability to pay and medical need is negative, not positive. Payments based on ability to pay should be made into a common risk pool covering everyone, most easily accomplished through the tax system. Health care benefits should be provided to everyone out of that risk pool based on medical need. That is sort of the way Medicare works now for selected populations, but it could be improved.