Health Care in Obama’s 1st Year
or
More of the Same is not
Health Care Reform
Leonard Rodberg, PhD
Urban Studies Dept., Queens College/CUNY
and
NY Metro Chapter, Physicians for a National
Health Program
Teach-in New York City
July 25, 2009
www.pnhpnymetro.org
Why Health Care Is On the Agenda:
Escalating Cost
Average Annual Premiums for Single and Family
Coverage, 1999-2008
$2,196
1999
$2,471
2000
$7,061
$3,083
2002
Family Coverage
$6,438
$2,689
2001
Single Coverage
$5,791
$8,003
$3,383
2003
$9,068
$3,695
2004
$9,950
$4,024
2005
$10,880
$4,242
2006
$11,480
$4,479
2007
$12,106
$4,704
2008
$0
$2,000
$4,000
$6,000
$12,680
$8,000
$10,000
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.
$12,000
$14,000
International Comparison: Universal Coverage at
Less Cost -- They Must Be Doing Something Right!
Average spending on health per capita ($US PPP*)
$7,000
United States
Germany
Canada
Netherlands
France
Australia
United Kingdom
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
20
06
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
$0
* PPP = Purchasing Power Parity.
Data: OECD Health Data 2008, June 2008 version.
None rely on private for-profit insurance,
all have a strong role for government.
High Cost of Health Insurance
Premiums: Even the Middle
Class Can No Longer Afford It
National Average for Employer-provided Insurance:
Single Coverage
Family Coverage
$ 4,704 per year
$12,680 per year
Median household income = $50,233
Source: Kaiser Family Foundation/HRET Survey of Employee Benefits, 2008;
U.S. Census Bureau, 2008
The Epidemic of Underinsurance
Number of people spending more than 10% of income on health care (Millions)
70
60
50
40
30
20
10
Insured
Uninsured
0
2000
2007
Source: Too Great a Burden, Families USA, December 2007
Medical costs create serious financial
problems for millions of us
Source: Health Tracking Poll, Kaiser Family Foundation, April 2008
Health Care Costs Are Concentrated
Among a Few People in Any One Year
80
70
60
Percent
of
Health
Care
Costs
50
This Year’s Underinsured
40
30
20
10
0
0%
10%
20% 30%
40% 50%
60%
70% 80%
90%
Population by Decile in Health Care Costs
Source: Medical Expenditure Panel Survey, US Agency for Healthcare Research and Quality, 1999
While millions are underinsured,
millions more don’t think there’s a problem!
The President’s Principles for
Health Care Reform
• Protect Families’ Financial Health…reduce growing
premiums and other costs…protect from bankruptcy
due to catastrophic illness.
• Make Health Coverage Affordable... reduce high
administrative costs, waste, inefficiencies.
• Aim for Universality… put the United States on a clear
path to cover all Americans.
• Provide Portability of Coverage… not locked into their
job just to secure health coverage.
• Guarantee Choice… provide a choice of health plans
and physicians… have the option of keeping their
employer-based health plan.
-- “A New Era of Responsibility,” President’s Budget, Feb. 26, 2009
The Progress of US Health Care Reform
Employer mandate
Individual mandate*
* “each eligible individual must
enroll in an applicable health plan
for the individual and must pay any
premium required with respect to
such enrollment.” (S.1775)
Public option**
** “you can choose to enroll
in the new public plan”
The Mandate Model
• Everyone required to have insurance
• Employers must offer insurance or contribute
• Continued reliance on private insurance, with the
option of a public plan
• “Keep what you have”  Doesn’t address
underinsurance.
• No regulation of insurance company premiums,
deductibles, co-pays, or payment and denial practices
• Increases the system cost by hundreds of billions of
dollars
• No cost savings or realistic way to control costs, as long
as there are many separate plans and payers.
The Obama/Congressional Plan
• Employment-based insurance unchanged, so
-- Employers can still change coverage
-- Insurers can still change networks
-- Employees still locked into jobs
• Employees must accept employer plan if they can
afford it (premium < 11% or 12.5% of income)
• Starting in 2013, the uninsured can access an
insurance “exchange” with subsidies up to 400%
of the Federal poverty level
• Public plan option available in the exchange
• “Hardship waiver” for those who can’t afford it
The Massachusetts Plan: Insurance Still
Costly and Unaffordable
Family Characteristics
Annual Income
30-year old individual
$31,212 or more
30-yr old couple w/2 children
$63,612 or more
55-year old couple
$42,012 or more
Annual
Cost
Deductible*
$2,459
$2,000
$8,900
$3,500
$10,476
$4,000
* Also physician & hospital co-pays
Source: www.mahealthconnector.org (Boston Area, Jan 2009)
Why a Public Option?
• Provide stability, wide pooling of risks, transparency,
affordability, broad provider access, source of data
• Competitive benchmark to force private plans to
reduce prices,improve coverage (“keep them honest”)
• Lead in restraining costs and improving quality
• Without it, there’s no reform, since there is no other
change in the system
Source: Jacob Hacker, Healthy Competition, Berkeley Law and Institute for America’s
Future, April 2009, Howard Dean, Barack Obama
Why Not a Public Option?
From supporters of private insurance –
• “Unfair competition” from government
• Would undermine private insurance, use inherent
powers of government to limit competition, underpay
doctors and hospitals
• Will eventually lead to “government-run” system
From single payer supporters –
• Private insurers will selectively market to the healthy
(“adverse selection”)
• Retains private insurance
• Doesn’t get all the savings possible with single payer
What Happened to the Public Plan?
The Original “robust” Plan
• Open enrollment
• Medicare-like, backed by the Federal Government
• 119 million members (Lewin)
The Congressional Plan
• Restricted enrollment (only the uninsured)
• Self-sustaining, follow same rules as private insurers
• Perhaps 10 million members (CBO)
The 800-pound gorilla has turned into
a mouse!
What Will Control Costs under
the Congressional Plan?
•
•
•
•
Emphasis on prevention
Computerization
Chronic disease management
Payment reforms (e.g., medical home,
“bundling”)
• Comparative effectiveness research
The Congressional Budget Office says these
will (1) not cut costs significantly and (2)
not limit the continuing rise in cost.
Covering the Uninsured
and the Underinsured?
$1 Trillion/seven years = $130 billion/yr
Number of Uninsured Covered: 37 million
Number of Uninsured Remaining: 17 million
[ Source: Congressional Budget Office, Letter to Rep. Charles Rangel,
July 17, 2009]
Number of Underinsured: 50 million+
Even a Trillion dollars is not enough!
Total cost of making health care affordable:
$200-300 billion/year
Single Payer can provide it!
Senate Finance Committee Considers
How to Pay for Health Care Reform
Senate Finance Committee Considers How to Pay for HCR
What’s on the table? New Taxes!
Surtax on the wealthy
Employer-based health insurance
Hospitals
Sodas
Alcohol
Tobacco
What’s off the table?
$400 Billion in savings from Single Payer
Elimination of private for-profit insurance
Savings in hospital and MD billing costs
The Invisible
Pot of Gold!
$400B
Will the Mandate Plan Pass?
• Will business accept the mandate to provide
coverage?
• Will private insurance companies accept
guaranteed issue and community rating?
• Will conservatives accept the new taxes needed
to fund the subsidies for the individual
mandate?
• Will the general public support a plan with a
mandate to purchase insurance?
The Bottom Line on the
Congressional Plan
If it does pass in some form, it would:
• Make the world’s most expensive system even
costlier.
• Not achieve universal coverage
• Not improve coverage for the average person.
• Not make affordable insurance available.
• Not contain the continuing growth in cost.
• Not achieve President Obama’s goals.
It doesn’t really reform the system.
It just won’t work!
Conyers: Expanded and
Improved Medicare for All
“single payer national
health care” HR 676
•
•
•
•
•
•
•
Automatic enrollment
Comprehensive benefits
Free choice of doctor and hospital
Doctors and hospitals remain independent
Public agency processes and pays bills
Financed through progressive taxes
Costs contained through capital planning, budgeting,
primary care emphasis
New – Sanders (& McDermott):
American Health Security Act
S 703 (HR 1200)
1.Automatic enrollment
2.Comprehensive benefits
3.Operated by States using Federal standards
4.Free choice of doctor and hospital
5.Doctors and hospitals remain independent
6.Public agency processes and pays bills
7.Financed through payroll taxes
How We Pay for Health Care
Today
Private Insurance
Private Insurance
34% 35%
Federal
Government
Federal Government
(existing Medicare,
(existing
Medicare,
Medicaid, other)
33%
Medicaid,
other)
34%
State and Local Govt
(existing Medicaid, other)
13%
Out of pocket
State and Local Government
Other private funds (charity,
etc.) funds (existing Medicaid, other)
12%
Other private
7%
(charity, etc.)
13%
7%
Source: Health Affairs, Feb. 2008; data for 2006
Out-of-pocket
12%
How Single Payer Could Be Paid For:
One Example from a Recent Study of a
California Plan
Employer Payroll
Tax (8%)
Employee Payroll
Tax (4%)
Surcharge on income
(1% above $200,000)
Federal
Government
(existing
Medicare,
Medicaid, other)
State and Local
Govt (existing
Medicaid, other)
Business (selfemployed) income tax
(12% )
Investment income tax
(4% )
Note: Payroll and income taxes between $7,000 and $200,000 only.
Source: Health Care for All Californians Act: Cost and Economic Impacts Analysis, The Lewin Group, January 2005
Billing and Insurance: Nearly 30% of
All Health Care Spending
Allocation of Spending for Hospital and Physician Care
Paid through Private Insurers
Other Insurer Costs
and Profit
11%
Insurer Billing
8%
Hospital Billing
4%
Medical Care
64%
28%
Physician Billing
5%
Medical Care
Administration
9%
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 with
No Additional Spending
Additional costs
Covering the uninsured and poorly-insured
Elimination of cost-sharing and co-pays
Total Costs
Savings
Reduced hospital administrative costs
Reduced physician office costs
Reduced insurance administrative costs
Bulk purchasing of drugs & equipment
Primary care emphasis & reduce fraud
Total Savings
Net Savings
+6.4%
+5.1%
+11.5%
-1.9%
-3.6%
-5.3%
-2.8%
-2.2%
-15.8%
- 4.3%
Source: Health Care for All Californians Plan, Lewin Group, January 2005
$B
134
107
241
-21
-76
-111
-59
-46
-313
- 73
Single payer offers real tools to
contain costs
• Budgeting, especially for hospitals
• Capital investment planning
• Emphasis on primary care,
coordination of care, and
alternative ways of paying for
services
• Bulk purchasing
Conclusions
•
•
•
•
A system based on private insurance will never lead
to universal coverage, nor can it control costs
Only single payer can provide comprehensive
services while costing no more than we now spend.
Only single payer can control costs going into the
future.
If a mandate plan is passed, the problems of the
health care system will not go away. Real health care
reform will continue to be essential.
We don’t need more money.
We need a new system.
-- Arnold Relman & Marcia Angell
We Can’t Wait Another 16 Years!
Will We Get Real Health Care Reform
Before the Premium Takes All our Income?
Today
Source: American Family Physician, November 14, 2005