By Richard Master
Today, Sen. Bernie Sanders (I-Vt.) introduced legislation to Congress advocating a “Medicare for all” solution to our country’s health care crisis. For progressives, offering a government-funded, privately-delivered system affirms their conviction that health care is a human right. But you don’t need to be a progressive to see why single-payer is a logical option for America. For a growing number of business leaders, including myself, transitioning to a single-payer, centrally-financed health care system makes sense from a purely economic perspective.
As a chief executive officer, I decided four years ago to investigate where the $2 million per year my company spends to provide access to health care for our workers and their dependents was going. Needless to say, I was shocked. Before any of it goes to the actual delivery of health care, its purported purpose, much of it is swallowed up by the administrative and operational costs of insurance companies.
Some goes to the insurance agent who helps the company select a plan and negotiate rates. More funds insurance company’s sales teams, marketing operations, administration and profit margins, which even defenders say covers at least 17 percent of revenue. By comparison, Medicare administrative costs are about 2 percent of revenue. Finally, more premium dollars are eaten up by the costs to providers to handle the red-tape my insurance company creates with pre-approval demands, denials and other payment issues.
As if that weren’t bad enough, I learned that while private insurance companies want you to believe they’re the best at negotiating prices, the truth is they are less efficient than Medicare and Medicaid. For instance, in my home state of Pennsylvania, hospitals on average charge private insurance companies more than twice as much for a patient to spend a day in the hospital than they charge Medicare. Then, the pharmacy benefit managers run by insurance companies take kickbacks from drug manufacturers from drug manufacturers, further driving up the cost of prescriptions.
I was so startled by my research that I reached out to award-winning filmmakers to create the documentary “Fix It: Healthcare at the Tipping Point.” We conducted interviews with some of the nation’s leading health policy experts, including Dr. Gerald Friedman and Dr. Uwe Reinhardt, and learned that the insurance industry has been selling us a false bill of goods for years, that insurers comprise an unnecessary middleman adding enormous costs to our health care system with no value added, and that they pass those costs on to Americans and their employers.
As a consequence of all this waste and inefficiency, physicians in this country now have to spend $83,000 on average just to interact with private health insurance companies. By comparison, doctors in Canada spend a little more than one-fourth of that interacting with that country’s single-payer system. While in Canada, we spoke with medical professionals and business leaders who were baffled by our tolerance for this inefficient system. Some of them even indicated that they didn’t extend their business into the United States because of the crushing cost of providing health insurance to employees.
David Steil, a fellow Pennsylvania business owner who served as a Republican member of the legislature for 16 years, told us, “Conservatives should be supportive of single-payer because it costs less. When they look at the single-payer model they will come quickly to the conclusion that it is the least expensive, the most supportive of a free market, and will have the most direct effect on the costs of their operation.” I think Steil is right. Though Sanders’s bill will likely be hailed mainly by progressives, business-minded Americans who want to see companies succeed should seriously consider the financial upsides of single-payer health care.
It is time we realize we don’t have to tolerate a $3.2 trillion system in which there is excessive waste, a few sick employees can create enormous costs for a company, pharmaceutical manufacturers can charge twice as much for lifesaving drugs in the United States as other advanced countries, and employers bear the brunt of the bad business model of insurance companies. A single-payer system makes good economic sense, and would free up American businesses to work smarter and better, creating a better economy for all of us.
Richard Master is chief executive officer of MCS Industries, the producer of multiple documentaries about health care in the United States. He is a member of Business Leaders Transforming Healthcare, founder of the Business Initiative for Health Policy and a member of Patriotic Millionaires.