Proposals for “Universal” Health Careor

Back to the Health Care Future

Leonard RodbergUrban Studies Dept, Queens College

AndNY Metro Chapter

Physicians for a National Health Program

April 14, 2007

Psst! Wanna see my health plan?

Why Health Is On the Agenda

A Declining Number of Firms Are Offering Insurance…

Firms Shift Health InsuranceCosts to Workers

Number of Uninsured Americans (Millions)

1980 1985 1990 1995 2000

45

40

35

30

25

20

Source: U.S. Census Bureau

Rising Number of uninsured

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100

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Population Covered by Public System

The Outlier Nation: Our Public System Covers Fewer…

Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004Unite

d States

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Private Health Insurance Percent of Total Cost

While Private Insurance Dominates

Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004Unite

d States

U.S. Health Costs are 70% Greater than the Median of Other Countries

Un

ited

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THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE …

Total Population

Private health insurance - Employer-provided - Individual

Public health insurance• Medicare• MedicaidUninsured

Million % 288 100.0%

174 60.5 % 160 55.6% 14 4.9%

72 25.0% 41 14.2% 31 10.8% 42 14.6%

Source: National Center for Health Statistics, 2003

…BUT IT PAYS MUCH LESS THAN HALF THE COST

2004Personal Health ExpendituresPrivate Funds

• Private health insurance - Self-funded plans - Insurance company plans• Out-of-pockets payments• Other private funds

Public Funds*• Medicare• Medicaid• Other public expenditures

$ Billion %$ 1,753 100%$ 965 54%

$ 658 37% $340 19% $318 18%$ 236 13%$ 70 4%

$ 789 46%$ 309 18%$ 293 17%$ 187 11%

* Does not include tax subsidy for private insurance. See Woolhandler & Himmelstein, HealthAffairs 2002

Source: Centers for Medicare and Medicaid Services, 2006

HIGH COST OF HEALTH INSURANCE PREMIUMS

National Average for Employer-provided Insurance

Single Coverage $4,024 per year Family Coverage $10,880 per year

Note: Annual income at minimum wage = $10,300 Annual income of average Wal-Mart worker = $17,114

Source: Kaiser Family Foundation/HRET Survey, 2005

The Good News --and the Bad News

• “Universal health care” is accepted as the goal.

• It is defined simply as requiring that the uninsured buy private insurance.

The Massachusetts Plan

• Individual Mandate: Uninsured people must buy their own health care or face financial penalties.

• Sliding subsidies for uninsured up to 300% of the federal poverty level.

• Employer “Fair Share” Assessment: Fee of $295 per year per worker for businesses not covering their employees.

• Medicaid expansions: Children up to 300% of poverty.

“Personal Responsibility”

Incremental

Expansion

Wyden Healthy Americans Act“slash and burn”

Supporters: SEIU, Safeway, Families USA

• Eliminate the tax deductibility of employer-based insurance end employer benefit

• Require individual purchase of insurance• Transitional payments by employers• Subsidies to low-income individuals• Relies on competition to contain costs

John Edwards Plan“individual mandate with a pretty face”

• Individual mandate with community rating• Employer mandate (“play or pay”) • Medicaid and SCHIP expansion• Subsidies for low-income• Regional purchasing plans (“Health Markets”)• Offers government program (“single payer”?) as

well as private plans. (cf Medicare Advantage)Note: Jacob Hacker plan: Identical content,

different verbiage

Edwards’ Seductive Verbiage

• For everyone: Shared responsibility

• For the fearful: Lets people keep what they have

• For those worried about cost: Everyone will work together to make the system more efficient

• For single payer advocates: Individuals and businesses can choose if they want the government plan; if so, the system will “evolve toward a single-payer approach.”

(For more, see www.johnedwards.com)

Ten Top Reasons Why anIndividual Mandate is Bad Policy10. Enforcement is bad for public health 9. Insurance companies will resist and

undermine community rating and guaranteed issue

8. Will not lead to universal coverage 7. If premium is affordable, health care is

not (copays, deductibles)

6. Complexity/humiliation of means testing

Ten Top Reasons Why anIndividual Mandate is Bad Policy5. Even more bureaucracy (“Health Markets”)

4. Private health insurance will be a continuing consumer’s nightmare (copays, deductibles, exclusions, denials, appeals)

3. Increases the cost of the system, most going to private insurance companies

2. No cost control: continually rising cost

And the Top Reason Why an Individual Mandate is Bad Policy

1. It doesn’t reform the system at all. It would not help any of us who think we’re insured.

-- Half of middle- and lower-income adults experience serious problems paying medical bills or insurance premiums. (Commonwealth Fund 2006)

-- Three-fourths of those who declare “medical bankruptcy” had insurance (D.Himmelstein et al, Health Affairs, 2005)

It doesn’t solve any of the problems (especially rising costs) that concern everyone.

It is not a real structural change.

Choice: What’s Wrong With Offering a Public Plan vs. a Private Plan?

• Purchaser cannot predict future health needs, and so has no basis for choosing plan

• Purchaser cannot know the impact of private plan restrictions until illness hits

• Private plans want to avoid (i) sick people and (ii) paying for illness

• Deceptive/seductive insurance company advertising compared to govt advertising

• A “level playing field” is impossible• It is not single payer!

THE EVIDENCE FROM MEDICARE

Since 1997, the US has conducted a head-to-head comparison between private insurance (“Medicare Choice+”, now called “Medicare Advantage”) and “public” Medicare.

The result:• Private insurance companies require a subsidy of at

least 15% just to stay in the business.• Fewer than 1 in 6 Medicare-eligibles choose the

private insurance option.

Common Features of these Plans

• They identify the problem as too many uninsured.• Their solution: Require everyone to have

insurance• Employers contribute but don’t necessarily offer

insurance• These plan don’t reform the structure at all• True objective of these plans:

Save the private insurance industry

A Familiar Headline – But It’s Wrong!

• It is the unaffordable, inefficient privateinsurance system that is collapsing.

• Employers should contribute their fair share,just not through private insurance.

• Going backwards to individual purchase of insurance is not the answer.

Employer-Based Health Insurance System ‘Collapsing’

(Wall Street Journal, 7/17/06)

Some of the Problems created by private insurance

SOME OF THE PROBLEMS CREATED BY PRIVATE INSURANCE

• Excessive administrative costs• Excessive complexity• Continuously rising costs• Lack of coordination, budgeting, and planning• Regressive financing via premiums• Widespread underinsurance and bankruptcy• Interference in physician decision-making• The “hassle factor”

SO HERE’S THE SOLUTION:

• Expand Medicare to cover everyone• Improve the coverage it offers• Eliminate private insurance

Expanded and Improved Medicare for All

Conyers Bill - HR 676-- The “single payer” solution --

HOW WOULD “MEDICARE FOR ALL” WORK?

• Everyone would receive a Medicare card assuring payment for all needed care

• Complete free choice of doctor and hospital

• Doctors and hospitals remain independent, negotiate fees and budgets with Medicare

• Progressive taxes go to Medicare Trust Fund

• Public agency processes and pays bills

SOME IMPLICATIONS OF MEDICARE FOR ALL

• The same coverage for everyone: No means testing; coverage would not depend onincome, employment or age

• Medicaid would no longer be needed• Hundreds of billions of dollars in

administrative costs would be saved• Costs would be controlled through capital

planning and quality reviews conducted through the single insurer

How Would It Be Paid For?One Example:

Revenue Sources for Single Payer Program

Employer Payroll Tax (8.17%)

33%

Federal Government

(existing)34%

Other8%

State and Local Govt (existing)

10%

Employee Payroll Tax (3.78%)

15%

Note: Payroll tax on incomes above $7,000 and below $200,000 only. Source: Health Care for All Californians Act: Cost and Economic Impacts Analysis, The Lewis Group, January 19, 2005

Billing and Insurance Costs Account For More Than 20% of

All Health Care Costs

BIR = Billing- and insurance-related costs; profit and marketing costs not included

Source: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005

Covering Everyone and Saving Money through Medicare for All

Additional costsCovering the uninsured and poorly-insured +6.4%Elimination of cost-sharing and co-pays +5.1%SavingsBulk purchasing of drugs & equipment -2.8%Reduced hospital administrative costs -1.9%Reduced physician office costs -3.6%Reduced insurance administrative costs -5.3%Primary care emphasis & reduce fraud -2.2%Net Savings -4.3%Source: Health Care for All Californians Plan, Lewin Group, 2005

WHY IS SUCH A NATIONAL HEALTH PROGRAM POSSIBLE TODAY?

• Private insurance is not addressing the fundamental problems of cost, choice, access and quality.

• Everyone is affected: the uninsured, the underinsured, and everyone else who is

insecurely insured.• Employers who provide insurance want to be relieved

of the burden of rising costs and unfair competition from employers who don't offer insurance.

• Small businesses want to offer insurance to their employees but can’t afford it.

• Every other industrialized country has done it.

PHYSICIANS FOR A NATIONAL HEALTH PROGRAM (PNHP) says:Who needs insurance companies anyway?• Limited reforms that keep private insurance in place

have been tried and failed.• If we get rid of the insurance companies, we can have

a Medicare for All system that is:- Simpler- Less costly- Better for our health- Equitable, and- Covers everyone

Let’s do it!

A Final Word