There actually is a way ...: "the only true competitor to our health insurers are the employers who self-fund health care for their employees.".

• Author: Trobiani, Steven
• Position: Medicine & Health

IN MAY, the California Senate passed SB562, proposing a single-payer system for the state's health care system. In June, the U.S. Senate released its draft for health care reform. The Republicans blasted the proposal in California and the Democrats blasted the Senate proposal. Ironically, once you strip away the cosmetic differences, they essentially are the same plan.

Health care cost per capita in the U.S. has reached $10,345. While the proponents of California's single-payer system argue that eliminating the insurers will lower cost by eliminating corporate greed and needless administrative expenses, their financial projections undercut that claim.

The proponents estimate the annual cost to be $400,000,000,000. California has a population of 39,000,000 people, so the cost works out to $10,255 per person, essentially the same as the national cost--and, when you factor in the likelihood that California will be paying doctors and hospitals in a single-payer system for all services under the Medicare fee schedules, which are 25% to 50% below the commercial fee schedules, the cost of $10,255 per person actually is higher than the rest of the nation since the decrease in expenditure should have, at the very least, reduced cost by $2,500 per person.

Single payer is a euphemism. While California claims it will eliminate the health insurers, it will not because it cannot. The Federal and state governments, including California, outsourced the administration of Medicare and Medicaid to the commercial insurers in 1996 when Bill Clinton was president. They did so because the Federal and state governments lacked the bureaucracy needed to match the management of health-care delivery offered by the commercial insurers and could not afford to duplicate that bureaucracy.

Since 1996, the insurers have cemented their position in the management of health care by acquiring ownership of hospitals and clinics and by developing sophisticated software by which to run their various schemes for managing health-care delivery while adjudicating and paying claims. It is outside the realm of reason to expect that California will march into hospitals and clinics owned by entities such as Kaiser Permanente or United-Healthcare and announce that it is seizing ownership of the property and disbanding the management of those entities.

Under a single-payer system, California may forbid these entities from selling products or services directly to the public, but the state will not dissolve the entities. The populace of California no longer would pay the insurers directly. Instead, the state would collect taxes from all individuals, pay the bureaucracy created by the state from those taxes, and then pay the very same insurers that it claims to be eliminating under their current rhetoric with those tax dollars. This is why the cost projected by California under its single-payer system essentially is identical to the national cost under a pluralistic system--because, at the core, nothing has changed.

The cosmetic differences are, however, important. Under the Republican health plan, individuals could elect not to purchase...