Positions supported by the NRLN Health Care Advisory Committee (HCAC) April 2009

Some definitions and examples are necessary to assure that the terminology we are using is properly understood. The Veterans Administration is a perfect example of socialized medicine. By saying so, we are not saying it is bad.  The VA works very well for the tasks it pursues.  But because it owns all of its own facilities hires and pays doctors directly, all of which is paid for directly by the government and budgeted annually by Congress, it clearly fits the definition of socialized medicine.  Outside of the VA, HCAC does NOT support a system like the VA.  To extend such a system to the entire country would require the purchase of more than $One Trillion of health care facilities currently owned largely by non-governmental organizations, and the hiring all of the doctors and staff now working in those facilities.  We do not believe that Congress has any interest in following this path to universal health care.

Medicare is not socialized medicine; it owns no medical facilities, does not hire doctors, and pays for services via a highly structured reimbursement system, with all funding coming via the government with funding supplied through premiums, coinsurance, and payroll taxes.  Medicare uses the services of existing health insurance companies to administer the provider payment details of the Medicare reimbursement system.  Thus, Medicare is the "single payer".  HCAC fully supports the concept of single payer systems, and strongly believes that Medicare is a great example of a single payer system that could be extended to the entire country. 

The Federal Employees Health Benefits Program (FEHBP) is the system from which members of Congress and all Federal Employees receive health care insurance. Full details of that program can be seen at their web site[1]. This program has many options, all provided by private insurance companies like Blue Cross.  Coverage proposals are requested and monitored by the US Office of Personnel Management, which negotiates both special private plans (for the government employees only) and highly competitive costs because of their large negotiating power. Federal employees contribute to the cost of their health care, but the program is very highly subsidized, making it perhaps the cheapest and best coverage available anywhere. The FEHBP is a second good example of a "single payer" plan.

We fully support "universal health care" following a model set forth by the National Coalition on Health Care (NCHC).  The NCHC guidelines can be found at their web site[2]. We also fully support President Obama's 8 Principles as detailed in his health care budget proposal[3]. These two sets of guidelines are what we go by when evaluating health care proposals either in legislation or otherwise appearing in print. 

The current debate in Congress is focused on structuring a system which is very similar to the FEHBP.  That is, a plan paid for by the government and user contributions, but run by existing private insurance companies.  It is, however, unlikely that Congress will support either the degree of coverage OR the amount of subsidy given Federal employees in the FEHBP for a new national plan.  Furthermore, there is a concern, based largely on how the Medicare D program has functioned, that a program controlled by insurance companies would do little to reduce health care expenses.  Therefore, the Democratic Party has been requesting the inclusion of a parallel plan, structured, operated, and overseen completely by the government just like a Medicare single payer plan.  This proposal has become known as the "public plan option". HCAC fully and completely supports the inclusion of a public plan option in any universal health care program structured by Congress.  Two recent reports discuss the impact of a Public Plan Option[4],[5].

With this background, perhaps HR676, which is also a single payer system, can be viewed in a different light.  HR676 claims to be "like Medicare", but it is more like an unusual combination of some of the principles of the VA and some of the principles of Medicare.  HR 676 requires that the government pay for, but unlike the VA, not own the previously mentioned $One Trillion of medical facilities in the United States.  This step is necessary for the purpose of converting those facilities to not-for-profit status, which HR676 requires.  HR676 also reimburses doctors for their services, not on a fee-for-service basis like Medicare, but on a fixed fee basis determined by an oversight board.  Such pay is similar to a salary, even though the doctors do not work for the government. HCAC opposes such a structure, NOT because it is a "single payer" system, but because of its similarity to socialized medicine.  HCAC has prepared a separate analysis of HR 676[6]. 

So far, we have taken the position that Medicare is the ideal single payer system on which to base universal health care.  However, there are some serious shortcomings in Medicare.  Those shortcomings center on several areas. First, Medicare has no provision for catastrophic event coverage and does not limit member’s annual payments for services.  Without such a catastrophic limit on payments, members can be forced into bankruptcy by the required cost sharing of medical expenses. Second, Medicare is considered a low payer by many doctors, some of whom do not accept Medicare patients. Third, Medicare does not cover some preventative medical procedures. Also, the Medicare D drug program as run by private insurance companies does not allow price negotiation by the government. While we fully support the need for overall health care reform, we are also concerned that Medicare recipients are routinely excluded from any new health care reform proposals.

The HCAC strongly believes that Medicare should include catastrophic coverage limits to prevent the problems of the present system, and that Medicare D should have the ability to include a government-run public plan option, just as we support a public plan for universal health care.  Such a public plan would have the right for the government to negotiate directly with drug companies for the best price. To detail our position on catastrophic coverage, we have been supporting a proposal made by the Congressional Budget Office, Health Care Option 81[7], as a good starting point. For Medicare D, HCAC supports current Congressional Bills S330[8]/HR684, which call for the establishment of a government-run public drug program plan with drug price negotiation rights to be operated in parallel with existing Medicare D programs offered by private insurers.