PROPOSALS FOR HEALTH CARE REFORM: WHAT IS “REALISTIC”? Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY and NY Metro Chapter Physicians for a National Health Program Presented to the DC Chapter, PNHP September 25, 2008 THE ARGUMENT 1. Americans are concerned about the high cost of health care and their access to it. 2. Our reliance on multiple private insurance companies is responsible for the high cost. 3. The Presidential candidates’ proposals will not solve the problems we face. 4. Single payer national health insurance will address these problems effectively. Why Health Care Is On the Agenda 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 * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008. $12,000 $14,000 ..And Costs Will Continue to Rise A Declining Number of Firms Are Offering Insurance… …Leading to a Rising Number of Uninsured Rising Number of uninsured High Cost of Health Insurance Premiums: It’s Even Too Expensive for the Middle Class Today National Average for Employer-provided Insurance Single Coverage Family Coverage $4,704 per year $12,680 per year Note: Median household income = $50,233 Source: Kaiser Family Foundation/HRET Survey of Employee Benefits, 2008; U.S. Census Bureau, 2008 Lowest-cost – but Very Costly – Unsubsidized Insurance under the Massachusetts Plan Family Characteristics Annual Income 30-year old individual $30,636 or more 30-yr old couple w/2 children $61,956 or more 55-year old couple $41,076 or more Annual Cost Deductible* $2,348 $2,000 $9,015 $3,000 $6,303 $3,000 * Also MD co-pays & hospital co-insurance Source: www.mahealthconnector.org (Boston Area) February 2008 Medical costs, and underinsurance, is Medical costs create financial a serious problem for millions of us... problems Source: Health Tracking Poll, Kaiser Family Foundation, April 2008 …and they create health problems as well. Source: Source: Health Health Tracking Tracking Poll, Poll, Kaiser Kaiser Family Family Foundation, Foundation, AprilApril 2008 2008 United States U.S. Health Costs are 70% Greater than the Median of Other Countries … and our Health Status is Worse Mortality Amenable to Health Care, 2002-03 9 Mortality from causes considered amenable to health care is deaths before age 75 that are potentially preventable with timely and appropriate medical care. Amenable Mortality 2002-3 Deaths per 100,000 population* 150 100 71 65 74 71 77 74 84 82 82 80 84 96 93 90 101 103 103 104 110 es at ga nd St d i te Po la Ire r tu Un Un * Countries’ age-standardized death rates, ages 0–74; includes ischemic heart disease Source: WHO mortality database from Nolte and McKee,Health Affairs, 2008 l m d Ki nm ng ar do k nd i te w Ne De a la Ze nl an d y Fi an rm Ge Au st ce Gr ee en ed ria s Sw er la nd ay th Ne No rw da Ca na ly I ta ai ra st Au Sp l ia n pa Ja Fr an ce 0 n 50 THE COMMONWEALTH FUND The Outlier Nation: Our Public System Covers Fewer… 100 90 80 Population Covered by Public System Percent 70 60 50 40 30 20 10 m d U n it e d K in g d o rl a n a in w it ze p S S o rt u g a l d a e Z w e P la n o ic M e x a o re K It a ly d la n e Ic e G re e c c e F ra n a rk D e n m d a n a C a tr ia A u s N U n it e d S ta te s 0 Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004 S ta t A us es tr a A lia us B tria el gi C um ze C ch an R ad ep a u D bli en c m a Fi r k nl an Fr d an G er ce m a G ny re ec H un e ga Ic ry el a Ir nd el an d It al Ja y pa Lu K n o xe r m ea bo ur N Me g et xi N her co ew la Z nd ea s la N nd or S w lo P va o ay k rtu g R ep al ub lic S pa in S S we w d it ze en rl U an ni d te T ur d K ke in y gd om ni te d U Percent While Private Insurance Dominates 40 35 30 Private Health Insurance Percent of Total Cost 25 20 15 10 5 0 Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004 Private Insurers’ High Overhead 30% 26.5% 19.9% 20% 16.3% 10% 3.1% 0% Medicare Non-Profit Blues Commercial Carriers International Journal of Health Services 2005; 35(1): 64-90 Investor-Owned Blues The insurance industry is highly concentrated and profitable $80.0 Annual Revenue 2007 ($Billion est.) $70.0 $60.0 Profits 5% of revenues $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 UnitedHealth Wellpoint Aetna Humana Cigna Health Net Billing Costs: Nearly 20% of All Health Care Spending Allocation of Spending for Hospital and Physician Care Paid through Private Insurers Other Insurer Costs and Profit 5% Insurer Billing 9% Hospital Billing 4% Physician Billing 5% Medical Care 67% Medical Care Administration 10% Source: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005 Everybody’s Got a Health Plan! McCain/Wyden-Bennett: Individual Responsibility “You’re On Your Own” • End employer-based insurance by eliminating the employers’ tax deduction for health insurance • Make individuals more cost-conscious consumers • Use tax credits to help low-income individuals • Control costs through market competition No evidence - “Faith-based health policy” Will Mom & Pop do better than GM and the Federal Government (FEHBP)? The Mandate Model Clinton/Obama Jacob Hacker Commonwealth Fund • The problem: Too many uninsured • The solution: Require everyone to have insurance, employers to contribute • Continued reliance on private insurance • Control costs through market competition, computerization, chronic disease management • No regulation of insurance company premiums or reimbursement practices Will Mandates Lead to Universal Coverage? 100% 90% 80% Compliance 70% 60% 50% 40% 30% 20% 10% 0% Currently Insured below 65 yrs Hawaii's Employer Mandate Auto Insurance Child Support Childhood Immunizations Individual Income Tax Minimum Wage Laws Mandate Source: Sherry Glied et al, “Consider It Done? The Likely Efficacy of Mandates for Health Insurance,”, Health Affairs, 26(6), Nov/Dec 2007; Insurance Research Council, June 2006 The Mandate Model Won’t Work • Will not lead to universal coverage • Private health insurance will be a continuing consumer’s nightmare (copays, deductibles, denials) • Does not address widespread underinsurance • Increases the cost of the system by hundreds of billions of dollars • Will not control rising costs It treats the symptom – the uninsured – and ignores the disease – private insurance. These Plans Offer a Public Plan along with Private Plans. What’s Wrong with That? • Private plans avoid sick people leading to “adverse selection” and high cost for the public plan. • Many payers remain, so costs are increased. • The savings from a single funding source cannot be achieved. • There is no way to control costs. These Plans Are Not Politically Realistic! • They cost hundreds of billions of dollars • Little public support, since they benefit only those without insurance • Insurance companies will resist regulation • They don’t solve any of the problems -especially rising costs -- that concern everyone A FALSE POLICY CHOICE Assertion: “Let’s first cover everybody. Then we can deal with the system’s inefficiencies.” Fact: We will never have enough money to provide everyone with decent coverage until we eliminate the principal sources of waste and inadequate coverage. Conyers HR 676 Expanded and Improved Medicare for All “single payer national health insurance” • • • • • • Automatic enrollment Comprehensive benefits Free choice of doctor and hospital Doctors and hospitals remain independent Financed through progressive taxes Costs contained through capital planning, budgeting, quality reviews, primary care How We Pay for Health Care TodayCare Today Paying for Health Federal Government (existing Medicare, Medicaid, other) Private Insurance Out-of-pocket State and Local Govt (existing Medicaid, other) Source: Health Affairs, Feb. 2008; data for 2006 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 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 insurance administrative costs Reduced hospital billing costs Reduced physician office costs Bulk purchasing of drugs & equipment Primary care emphasis & reduce fraud Total Savings Net Savings +6.4% +5.1% +11.5% -5.3% -1.9% -3.6% -2.8% -2.2% -15.8% - 4.3% Source: Health Care for All Californians Plan, Lewin Group, January 2005 It’s Not Only the Cost, it’s the Growth in Costs that Must be Addressed Single payer offers tools to contain costs – • Budgeting, especially for hospitals • Investment planning • Emphasis on primary care and coordination of care Mandate plans offer only hopes – • Computerization • Chronic disease management • Insurance company competition There is no data or experience to suggest that these will cut costs or limit the rise in cost. Why a National Health Insurance Program is Possible Today • Everyone benefits: the uninsured, the underinsured, and everyone else who is insecurely insured. • Employers will no longer face rising costs and competition from those who don't offer insurance. • Limited reforms have been tried and failed. • Every other advanced country has done it. “Would you prefer the current system or Universal Health Insurance…like Medicare…run by Government…financed by Taxpayers” Don’t know 6% Current 32% Universal Health Insurance 62% Source: Washington Post/ABC News Poll, 10/20/03 Will We Get Real Health Care Reform Before the Premium Takes All our Income? Today Source: American Family Physician, November 14, 2005 Physicians for a National Health Program For more information: www.pnhp.org www.pnhpnymetro.org