If there will be more patients then will there not be more need for equipment and other products care-givers utilize?

Just the possibility that a customer *might* not like a for-profit plan wouldn’t worry the insurer if there’s no alternative the customer could move to. Just being there, even if it offered near identical features, would mean any for-profit insurer has to think twice about ticking off a customer.

Thank you for advancing my/our understanding somewhat further.

One thing I try to keep in mind while listening to the sausage-making unfold is that we already spend almost 2x for health care than other countries, not all of them are single-payer, most of them are mixed public-private, but there are plenty of models out there to emulate. Constraints on profits seems to be the key to a workable system.

1. Once you’re in Medicare or any type of single-payer system, then from the payer’s point of view, this is like cost-of-service utility regulation. In a regulatory scheme, markets don’t set the prices; regulators do, though they may resort to auctions or other market mechanisms to procure/price some elements. But the important point is that the regulators has a dual obligation.

One the one hand the regulator is trying to protect consumers; don’t allow prices above what is reasonable.

On the other hand, the regulator has to be fair to the supplier/provider. You have to cover their reasonably incurred costs, and that includes both fixed and variable costs, and profit — including the cost of capital.

So Medicare can’t just lower payments to please consumers; it has to set prices at levels that are sustainable. If current Medicare rates are too low to retain providers, then they may need to be raised.

2. Next problem is opportunity costs — what could the providers receive if they sold their services to another buyer — like the private insurers. So Medicare has to think about matching that, unless they think private insurers pay too much (see point 1). So are private insurer payments to providers too high? Since payments cut insurers’ profits, you’d think not. But if insurers can simply pass cost increase through in higher premiums, which is what they apparently have been doing, then there’s a problem in looking to private insurer payments to guide Medicare.

3. Enter the folks who think we pay for quantity and not quality and want to change the incentives. This is a new world, and neither the current private insurer payments or the Medicare payments are a good measure of what the right payment would be if we paid for quality/results and not quanity/fee for service.

This stuff makes my head hurt. It’s hard enough to explain it conceptually, but now think about Congress trying to put this in statutory language. Shudder.