The argument that a single-payer system is essential to cost containment has been around for a long time, and it resurfaced in the policy discussion last Wednesday sponsored by the policy journal Health Affairs (see accompanying story). However, one healthcare economist says that while the single-payer notion deserves some attention, it is not necessarily that last essential ingredient.
Harvard's Michael Chernew, PhD, told Medical Device Daily that he sees the single payer-as-monopsony argument as a "theoretically coherent argument, and I think it's an important one and one that is not made enough in this debate." He then stepped back by asserting, "I'm not arguing for an insurer monopoly," only that the topic deserves greater exploration.
"The market power of the providers is important" in the cost dynamic, Chernew said. As to the question of whether fee schedules could achieve the same results as a monopsony, he cautioned that fee schedules "are extraordinarily hard to make work" regardless of scale. "At the state level it can be even harder than on the national level," he testified. Chernew pointed out that Blue Cross-Blue Shield entities in Massachusetts have an insurer quality contract that might serve as a model for fee schedules, but the Massachusetts experiment is still a bubbling beaker of uncertainty. Hence, while one cannot say insurers could never be successful in imposing a fee schedule on providers, "it's not obvious it will ever happen," Chernew said.
The frequently heard allegation about insurers is that having five or fewer offering coverage in a given geographic area is an unconscionable insurance oligopoly, but Chernew said that market concentration among payers is not necessarily the crux of the cost problem. "Some research suggests you could do competition with few providers," he said, but this is "not always a simple question of the number of providers." Some research suggests that three or four providers could generate a competitive field, he said.
"If you try to fragment the insurance industry" with more competitors, Chernew said, policy makers could end up weakening the payers' market power against hospitals and other providers. "I think there's a general misconception about the role that insurers play vs. the role providers play" in this competitive market.
Regarding whether health insurance exchanges (HIEs) with several tiers of plans will help clarify the true cost of coverage to enrollees, Chernew answered, "they're a step in the right direction. I can't tell you over time – and well see if this works out in Massachusetts first – how this will play out," All the same, he said HIEs would force people "to confront the cost of care."
When asked whether the dilemma of the healthcare triad – cost, universal coverage, and full choice of physicians and therapies – was still in force, Chernew said, "I think that's a fair characterization. If you want cost containment, you're going to have to give up something on choice of plan or choice of therapy," assuming universal coverage is a fait accompli. Other nations "take away the autonomy of physicians to set fees," and in doing so, "it gives them the extra oomph to be able to get to the other goals they want to accomplish," he said.
"We have a hard time in the U.S." with the idea of stripping away physician autonomy, he noted, so the dilemma persists.
"If all Americans wanted the same trade-offs," it would be no problem, Chernew suggested. Many of the proposed answers are "much less rooted in science and much more in philosophy," a view he said leads him to conclude that "a lot of how this debate plays out is a little about the substance and a lot about a Rorschach test" about the roles of market and government.
– Mark McCarty