Single Payer Slows Cost Escalation

It has been suggested by the proponents of some of the
leading models of reform that we can control costs through measures such as the
adoption of electronic medical records, integrated information technology,
disease management, prevention programs, and tort reform. Although these
proposals may be beneficial, they each have their own costs and are very
unlikely to significantly slow the rate of increase in actual health care
costs.

In contrast, the single payer model is specifically designed to slow the
rate of cost escalation. Numerous simulations and the experience of other
nations have shown that the administrative efficiencies of changing from our
fragmented system of a multitude of payers to a single public program would
save more than enough – a few hundred billion dollars – to provide
comprehensive benefits for everyone. The single payer model also uses
negotiation to set fair prices based on legitimate expenses and fair profits.
Global budgeting of hospitals results in more efficient use of health care
funds by reducing the inclination to push more lucrative services not
demonstrated to be of benefit.

As a monopsony, the single payer also would be
able to realign incentives to improve our primary care infrastructure, enabling
the establishment of medical homes for everyone – a model which has been shown
to provide higher quality care at lower costs. Budgeting of capital
improvements prevents excess capacity of high-tech facilities and associated
services, which has been a major contributor to regional overutilization. John
Wennberg, Elliott Fisher and their colleagues at Dartmouth have demonstrated
that this overutilization not only increases costs, often it also results in
poorer quality outcomes. These various measures are not a one-time benefit, but
by changing the financing structure, they will slow cost increases to
sustainable levels throughout the foreseeable future.