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What's so good about multi-payer, anyway?

I recently had a conversation with someone about whether the German healthcare system is superior to ours. I made two comments, which the person did not refute. Firstly, Germany spends more on healthcare than us; and this is likely a key contributor to any better health outcomes that they have. And secondly, the German system of paying – compulsory insurance – is not really any different from the UK system. There are only two differences: the UK, for some strange reason, reduces the percentage paid on earnings above about £40k; and Germany has multiple insurance companies where the UK has just one.


Imagine if the UK and Germany took the same percentage of earnings for health insurance, and spent the same amount on healthcare. The only difference would be that in Germany you chose your insurer, and in the UK there’s only one insurer so you can’t choose. Is that important? Does a choice of health insurers – rather than, say, a choice of which doctor you see or which hospital you go to – make a difference to health outcomes?


Who pays?

The German system is called ‘multi-payer’, whilst the UK system is ‘single-payer’. What this means is that in Germany there are a multitude of health insurance companies who pay for the healthcare of those people insured with them. In the UK, there is only one ‘insurance company’ – the government. They are the single payer.


Whilst there are multiple factors effecting the performance of a healthcare system, such that any given multi-payer system may outperform a single-payer system or any given single-payer outperform a multi-payer, on average the single-payer system is modestly cheaper.[1] On this evidence, there is at the very least no basis for moving to a multi-payer system. There is no support for the idea that the German multi-payer model is better. If anything, the UK single-payer model is better.


There are a number of advantages to the single-payer model. Inefficiencies of competition – money spent on the duplication of effort and on advertising, as well as on competing where collaboration is needed – are avoided. Administration can therefore be cheaper. The single-payer model means a single buyer of healthcare services, a monopsony, which can use its power to push costs down. And because that payer is usually the government or a semi-governmental body, there is a greater and more natural incentive to invest in public health measures. There is also a greater and more natural means for investing in public health measures by that spender, because it is the government. When a private health insurer – whether for-profit or not-for-profit – is spending on preventative measures you have to ask what has gone wrong in society to make it worth that insurer’s while.


It should not be necessary for a purchaser of healthcare to get involved in matters that belong to government. In so far as it does – as is seen also in the NHS, as it starts to prescribe heating to poor people with respiratory failure – the government has failed. In a single-payer system, the government ought to see the inefficiencies of this approach. Of course, this assumes that the government has an commitment to single-payer systems rather than an ideological desire for another model, and that the government therefore at the very least will not support measures that undermine the very model it is currently using. The UK government’s current lack of commitment to single-payer healthcare or the concepts of ‘spending to invest’ and investing in public health measures naturally hamper the abilities of the NHS. Given that inequality and bad jobs harm health, it is really surprising that the NHS should get such good results as it does. It is starting from a worse position than healthcare systems in a more equal country.


What is chosen?

One of the ideas behind the multi-payer model is that it is good to be able to choose your healthcare insurer. But is that really who/what you want to choose? Choosing a healthcare insurer means comparing lots of different policies, working out what is included and excluded from each and trying to decide if you’ll need it in the future or not, and checking customer reviews for whether the service was actually any good. But you’re not an expert on healthcare, let alone on insurers.


What I want to know is, what could an insurance company possibly vary on that would be meaningful to you without compromising on the healthcare you’ll get when you need it? If insurers offer different services according to your ability to pay, how is that fair to poor people who now can’t get needed healthcare because of their poverty? If insurers offer a different mix of services, how do you know in advance of any ill-health which one you will need? If some companies offer more for your money, what is it that the other companies are missing out, and why, and do you need it, and how do you know? If they all offer the same treatments – because the treatment you’ll get is determined by your doctor with oversight from a national body that also accepts individual appeals – then what is the point of different insurers?


You don’t know what health issues you will have in the future, you don’t know which treatments will work for them, and you don’t know what side effects you’ll get. You don’t know what you’re going to need or whether you’re going to be the oddball with treatment-resistant X who needs that carefully guarded, only-rarely-handed-out, highly expensive medication. You don’t know what you can safely let be excluded from your insurance policy.


What you want to access is not a good health insurer, but a good doctor. And a good health insurer does not guarantee that. What you want is the confidence that the healthcare you will be offered is tailored to what you need and what works for you, not according to artificial limits set because you couldn’t afford to top-up your health insurance to a better level, or because your insurer doesn’t provide that (though the one down the road does). Every single person should get the healthcare that they need – and if they’re getting that, what is there to choose between healthcare insurers? They all offer the exact same product.


I grant that different people have some different ideas on what is right to offer, but this is generally only at the boundaries where medicine is still finding out what to do, or in alternative medicines that medical research studies have found don’t work. Chances are that if you’re at that boundary, you don’t want your previous uninformed choice of medical insurer to be the factor that decides whether you get the experimental or expensive or last-resort, rarely-successful treatment or not. You want some sort of official body, with the option for individual appeals on a case-by-case basis, to determine whether the treatment is appropriate for the cost or the risks. You don’t want to find out, too late, that there’s only one health insurer in the country that will pay for that treatment, and you’re not with them, and you can’t swap now.


Like I’ve said, I don’t see the point in choosing between healthcare insurers. What I’m interested in is whether I can choose the doctor I see or the hospital I go to, and some degree of choice over the investigations that I have and treatment that I take. In the UK, we have that, albeit it may be limited by geography and waiting lists. Does a multiplicity of insurers ensure a choice of doctors – or does it constrain the choice, if certain insurers only let you go to certain doctors and certain hospitals?


A national insurer can take steps to even out inequities of geography in ways that a multiplicity of insurers not only cannot, but may deliberately avoid. It is highly plausible that one insurer would choose to focus in richer areas or people in more highly salaried jobs, where in general any given healthcare issue is less complicated and costs less to treat. This allows the health insurer to pay their staff more or maybe offer a wider range of holistic and ancillary services, maybe keep you in bed longer after an operation or offer nicer food. Meanwhile another insurer may, out of charity, focus in the poorer areas where health needs are greater and more complex; even more refractory, in part because of the worse living and working conditions of the people suffering them. Where the former insurer has money to spend on luxuries because their clients are less costly than the average, the latter insurer doesn’t have enough money for the necessities. Is this fair? Is it morally right and acceptable?


Unless there is some sort of government oversight and redistribution of money so that insurers receive more money per client from a deprived area, these insurers will not be able to offer as much as those who are in private areas, because they are not getting enough money per client as those clients need. And that is inequitable. Richer people in posher areas already enjoy better health. They should not also be getting better healthcare under an ostensibly national or universal system.


The point of multiple insurers is that the client chooses where ‘their’ money goes. The implication is that every part of your money goes to the insurer that you choose. And every part of it goes to the healthcare coverage that you are buying, pooled with other people buying the same level of healthcare as you but not pooled with people paying less than you (or you’d be subsidising their needs) or with people who pay more (or they’d be subsidising you). But people in greater poverty have less money and more health needs. They can’t choose to pay more, yet they need more.


So how does that work? How is it funded? If the government tops it up, do they top it up to your level? If the government tops up poor people’s insurance to the amount that you pay, what is it that you’re ‘choosing’ when you pay ‘more’? What about people who pay more than you do – do they get better healthcare than you? Or does the government top you up to their level? And if contributions aren’t topped up, what is it that richer people are paying for that the government thinks isn’t appropriate – and are you a gubbins for paying for it, or is the government shafting poor people?


Or is it that ‘your’ money goes into a central pot, and when you choose a health insurer it is a fixed amount – maybe the same for everyone, or maybe set according to your demographics – which goes to the insurer? So then the amount that the insurer receives is set by government. Maybe you can top it up, but then we come back to the question of what are you buying that isn’t so important that everyone should have it according to the need for it, but is so important that it’s worth you paying more for. And don’t say beating queues: there are, at any one point of time, a given number of doctors and resources in the country, and if you’re paying to access that doctor first then you have pushed someone else down the queue. And that’s not equitable or morally right.


Patients should be able to make informed decisions, guided by the expertise of a medical professional, as to the investigations that they are happy to undergo and the treatments they are willing to receive. It is reasonable to have some form of constraint, so that patients are not sent for tests that are extremely unlikely to reveal what’s wrong, but that constraint should not be the blanket decision of a random healthcare insurer. Nor should it be the constraint of what you can pay for.


I see a lot of complications with the multi-payer system and a lot of background machinations needed to make it fair and to ensure that every single person gets the healthcare that they need regardless of how much they paid towards the ‘insurance’ and regardless of which insurer they went with. At which point, what is the point? What are you getting for your ‘choice’? Coupled with the inefficiencies of multiple insurers – the duplication of effort, the cost of advertisement, the loss of economies of scale, the loss of monopsony purchasing power – I can’t see the benefit of it right now. Add on the evidence that multi-payer systems do cost more than single-payer systems, and the argument gets even weaker.


When the UK spends as much as Germany does on healthcare, and when we have a country as equal as theirs with an economy which fosters good jobs for the working class, maybe then we can revisit the question of how healthcare is provided. Maybe we’ll find that we don’t need to.

[1] Glied S (2009) Single payer as a financing mechanism. J Health Polit Policy Law (4):593-615. doi: 10.1215/03616878-2009-017.

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