Follow-up: Single-payer health care

There was a point in yesterday’s Midmorning show on single-payer health care when one guest — Dr. David Himmelstein, a proponent of single-payer health care — called another guest — Tom Miller a resident fellow at the American Enterprise Institute — a “liar” for disagreeing with Himmelstein’s assertion that 31 cents of every health care dollar goes to bureaucracy.

Here is their exchange:

That prompted some discussion in the comments section of my live-blogging post relative to fact checking and whether having different data constitutes “lying.”

Miller offered to send information to anyone who e-mailed him; so I did. Here is his additional data and commentary.

(1) The Casalino paper is from the Institute of Medicine “Health Care Imperative” conference last month. It’s not the final word on estimating the costs imposed on physicians by health plans, and how much could be saved from that amount, using a survey and Canada as a gold standard. Note the various caveats within it. Still a serious piece of work. (See the pdf)

(2) The spread sheet on administrative costs within the premiums for private health insurance (still being cleaned up, because it’s an update of work from several years ago, to incorporate the latest data as of calendar year 2007) is developed straight from the National Health Expenditures reported each year by a unit of CMS. Some of the numbers were recalculated by CMS, and indicate more of a relative downward % trend for these admin costs in recent years than previously reported. (See the spreadsheet)

(3) The Sherlock company reports on administrative costs are considered the best in the private sector consulting world. I also did not include older work by Milliman from earlier in the decade, because I haven’t seen it updated more recently. PriceWaterhouseCoopers also provides an interesting breakdown of the components of private insurance admin costs, and how the relative increase in those costs contributes very little (proportionately) to this decade’s increase in health costs compared to underlying claims costs. (See pdf)

(4) The Zycher critique of single payer cost savings is a bit further than I would go, personally, but still raises a number of valid points. (See pdf)

(5) Himmelstein’s work on medical bankruptcy is also quite biased and methodologically flawed (to be charitable). But I didn’t want to get into that on the air, because it wasn’t the core topic — see the various critiques by my colleague Aparna Mathur, as well as others like McArdle and Dranove.

(6) David tried to claim that CBO had endorsed his findings. There was some earlier (IMHO flawed) CBO support for single-payer WAY BACK in the early 1990s, before more evidence and thought was developed in the analytical world. But note the dog that did not bark in CBO’s more recent laundry list of health policy reforms. That’s probably why the Physicians for a National Health Program only cites CBO studies from the early 1990s. I could not pull apart the pdf version of the Dec 2008 options document that I have at home, but if you go to pp. 69-71, and Table 3-1 within it, that should help to begin to put the issue of private administrative costs for health insurance in better perspective. (See pdf)

To the extent that folks like the Lewin company, and (old) CBO once scored significant savings from single-payer in the past, they primarily reflected unusual and unsustainable assumptions about paying much lower rates of reimbursement to doctors and other health care providers (monopsony pricing power aka price controls) rather than “efficiency” savings from eliminating private insurers. Zeke Emanuel’s 2008 book with Victor Fuchs (which I have criticized in other respects at Health Affairs) actually does a very good job of puncturing the single payer and administrative cost savings myths.

(7) Regarding Canada, most of my files are on my office desktop rather than my home laptop, but you can find the O’Neill study at O’Neill JE, O’Neill DM. Health Status, Health Care and Inequality: Canada Vs. The U.S. Cambridge, MA: National Bureau of Economic Research; 2007. NBER Working Paper 13429 And, on the working papers section of, we have some extensive analysis by Ted Frech of UC-Santa Barbara that picks apart the limits and flaws of comparisons of various national health systems done recently by the OECD. Should have a shorter paper from him soon on that front, as well (draft just arrived yesterday).

He also provided these additional papers:

  • Medical bankruptcy: Myth vs. Fact