Healthcare in the US:
Why We Still Need A Single
Payer System!!!
Paul Y. Song, MD
Physicians for a National Health Program
Hippocratic Oath

“I will follow that system of regimen, which
according to my ability and judgment, I consider
for the benefit of my patients, and abstain from
whatever is deleterious and mischievous”.
The Problem

The US spends $2.5 Trillion a year which is 17.3% of our
GDP on healthcare and more than any other industrialized
country in the world by far.

The CBO estimates it will grow to 25% of our GDP by 2025.

The average family premium is $14,000 a year.

17% of American income now goes to pay for health care.

75 million Americans are underinsured.

The number of uninsured in the US now exceeds 50.7
million and has actually increased since the passage of the
healthcare bill.
Bad in California Too

From 2003–2010 health insurance premiums increased
52% to an average of $13,819 per family and to $4,811 for
individuals while average salaries only increased 4%.

Between 2007 and 2009, the number of uninsured
Californians swelled to 28% or over 8.2 million.
U.S. Health Costs Rising More Steeply,
1970-2008
Broken System??
The Commonwealth Fund 6/23/10
Millions of Uninsured Americans
51 Million Americans
Without Insurance Today
45
40
35
30
25
20
1976
1980
1985
1990
1995
2000
2008
Source: Himmelstein, Woolhandler, Carrasquilo
– Tabulation from CPS and NHIS data
Who are the Uninsured?
NON-WORKER
19.5%
PART-TIME
WORKER 14%
FULL-TIME
WORKER 66.5%
Of
the 50.7 million, over 20 million are fully employed and
Urban families
Institute and with
Kaiser Commission
on Medicaid
and the Uninsured
70% of all uninsured are from
one or more
full-time
workers.
estimates based on the Census Bureau's March 2008 and 2009 Current
Population Survey (CPS: Annual Social and Economic Supplements).
Uninsured Deaths
 45,000
annual deaths are
attributed simply to a lack of
coverage.
Medical Related Bankruptcies

Number of medical related bankruptcies
increased 50% during the last 9 years.

In 2011, there were over 4 million bankruptcies.
- 2/3 are due to a medical illness.
Most of the Medically Bankrupt
Had Insurance Coverage
Insurance at
onset of
illness
Source: Himmelstein et al. Am J Med, Aug. 2009
Hard for Employers Too!

For every $100 that US companies spend on
health care, companies in Japan, Germany,
France, and Canada spend 63 cents which leads
to more off-shoring of jobs and less job creation.

Ford spent $3.2 Billion on health premiums; Prior
to the bailout, GM spent more on health
premiums than on steel.

It is estimated that health care costs add $15002000 to the sticker price of a US made car.
How did we get here?

As far back as Mesopotamia, under the code of Hammurabi,
it was expected that successful healthcare was a standard
service performed in exchange for a fee.

Individual health insurance became available during the
Civil War (1861-1865) when accident insurance providing
coverage of injury related to travel by railroad or steamboat
was offered.

Massachusetts Health Insurance of Boston began to offer
the first ever group policies with a relatively comprehensive
list of benefits as early as 1847.

Early coverage was referred to as “sickness insurance”
which covered lost wages from illness and not healthcare.
History of Health Insurance

Up to the 1920’s most Americans did not feel health insurance was
necessary and stayed with sickness insurance plans as medical
technology and overall costs were still far less than wages.

Before 1936, healthcare was less than 1% of the US GDP.

Most paid out of pocket or relied on charity care.

In 1929, a group of Dallas-based teachers formed a partnership
with Baylor hospital to provide a set amount of sickness and
hospitalization days in exchange for a fixed, prepaid monthly fee.
This was encouraged by the American Hospital Association and
these plans began to grow.

Individual hospitals and community care organizations began
competing with one another for such plans, so to provide better
coverage, hospitals joined together under the name of Blue Cross
(1936).
History of Health Insurance

To maintain some autonomy and a closer physician-patient
relationship, physicians organized their own prepaid plans in the
Pacific Northwest and Blue Shield (1939) was developed to not
only to compete with Blue Cross, but to offer another choice.

Both BS and BC gave discounted care in exchange for increased
volume and prompt payment.

Employee Benefit plans proliferated in the 1940s and 1950s as
war-time government imposed wage freezes (1939-1945) forced
employers to offer better benefit packages including health
insurance coverage as a way to attract workers.

Strong Unions bargained for tax-free, employer-sponsored health
insurance.

Commercial life insurance companies begin selling health
insurance to employers.
US Government Health Insurance

Medicare (fully federally funded) established in 1965 when
only 56% of adults over 65 years of age were insured.

Prior to Medicare, 1/3 of all seniors were living in poverty.

Medicaid (up to half have funded by states) – program for
poor which is determined by means testing. Currently over
50 million Americans enrolled.

US still remains the only major industrialized nations
without universal access to healthcare!
Government Guarantees of Universal
Health Insurance










1947 – Sweden
1945 – Belgium
1948 – United Kingdom
1961 – Japan
1966 – Canada
1973 – Denmark
1978 – Italy
1986 – Spain
1996 – South Africa
2002 – Taiwan
History of Health Insurance
Today the Blue Cross Blue Shield Association is a federation of
39 separate health insurance organizations and companies in
the US providing coverage for over 100 million Americans.
Prior to the tax reform act of 1986, they were tax exempt and
considered social welfare plans. This status was revoked as
they sold commercial type insurance.
They soon became 501(m) organizations which had special
“tax benefits” and in 1994 most became “for-profit”
companies.
The 14-state Wellpoint is the largest BC/BS member and a
publicly traded company.
The For-Profit Insurance Industry is
Not Your Friend!

Take 31 cents out of every dollar away from actual patient
care.

Increase overall health care costs by discouraging people
from receiving preventative care and by driving the sick into
more expensive care settings

1/6 of all policies are actually grossly inadequate to cover a
serious illness.

70% of losses (money paid out in claims) goes to cover
about 10% of their subscribers creating a powerful
incentive to screen subscribers and harass them to drop
their coverage and go elsewhere.

They encourage higher deductibles and co-pays by
increasing premiums to insure they cover very little.
3,000%
Administrators Are Growing
Faster Than Physicians
2,000%
Administrators
1,000%
0
1970
Physicians
1980
1990
2000
2009
Source: Bureau of Labor Statistics; NCHS; Himmelstein/Woolhandler
analysis of CPS
The For-Profit Insurance Industry is
Not Your Friend!
Over the past 9 years:

Only recession proof industry that consistently raises prices
10-15% every year regardless of the economy. Far
outpacing inflation.

Average premiums have increased nearly 120%
– Profits at the 10 largest publicly traded insurance
companies have rose 428% (reported).
– Average annual CEO salary at these companies was
$11.9 Million which is 468 times what the average US
worker makes.
– In CA, the six largest insurers denied over 45.7 million
claims in the last six years.
CEO Salaries (2008)


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


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



Roy Williams – CEO Aetna - $ 24,300,122
H. Edward Hanway – Cigna - $ 12,236740
Angela Bray – Wellpoint - $ 9,844,212
Dale Wolf – Coventry Healthcare - $ 9,047,469
Michael Niedorff –Centene - $ 8,744, 483
James Carlson – Amerigroup - $ 5,292,546
Michael McAllister – Humana - $ 4,764,309
Jay Gellert – Health Net - $ 4,425,355
Steven Helmsley – United Health Group - $ 3,241,042
Billy Tauzin – CEO PhRMA - $2,000,000
Karen Ignani – Amer. Health Insurance Plans - $ 1,580,000
Whenever profits are not enough, patients get crucified!!
Anthem Blue Cross proposed 39% rate increases in 2010.
Blue Shield of California proposed to raise health insurance rates a
whopping 59% for individual policyholders in 2011, saying the increase is
“absolutely necessary” to deal with rising health care costs and
restrictions in the new health care law.
Insurance Industry Efforts

4525 lobbyists for the 535 Congressional
members (8:1) – 450 lobbyists are former
congressional staffers and 12 were former Max
Baucus Staffers.

$1.4 Million was spent each day!!

$260+ Million was spent by the health insurance
industry and big Pharma – more than on the 2004
Bush-Kerry presidential campaign.

Insurance stocks hit a 52 week high once there
was no public option.
What Happened?!!
June 17, 2009 – As 22 Senators began hearings and work on
healthcare reform, the room was full of registered healthcare
Lobbyists.
Easy to Blame the GOP, but…

The Democrats had a supermajority for most of
the debate.

60% of all money went to Democrats.

Max Baucus (Chairman of the Senate Finance
Committee) received over $2 million.

Ben Nelson received more money from the health
insurance industry than any other industry.

Joe Lieberman received over $1 million and his
wife was employed by several healthcare and
Pharma companies.
Arguments Against Reform

“Will explode the deficit!”
Nixon/Ford: 6.8%
per year
Carter: 2.0% per
year
Reagan: -1.3%
per year
Bush 1: 4.0% per
year
Clinton: 2.5% per
year
Bush Jr: 8.2% per
year
Arguments Against Reform
“Will explode the deficit!”
 “This is the largest government run health
care program ever”.

Originally passed in 2004 at a projected cost of
$400B over 10 years, some estimates suggest
it will cost over $900 Billion.
Passed by a GOP controlled house and senate
led by then Rep. Billy Tauzin (R-La) who left
immediately after its passage to become the
head of PhRMA.
Arguments Against Reform

“Will explode the deficit!”

“This is the largest government run health
care program ever”.

“Socialized medicine”
“If you don’t stop Medicare and I don’t do it, one of
These Days, you and I are going to spend our sunset
years telling our children, and our children’s children
what it once was like In America when men
were free”
- Ronald Regan 1961
Socialized Medicine was popularized by a public relations firm working for the American Medical
Association in 1947 to disparage President Truman's proposal for a national health care system.
It was a label, at the dawn of the cold war, meant to suggest that anybody advocating universal
access to health care must be a communist.
And the phrase has retained its political power for six decades.
The original meaning of “socialized medicine” was confined to systems in which the
government owns and operates health care facilities and employs
health care professionals, support staff, and all ancillary workers.
England, Germany, Israel, Sweden, Finland, New Zealand, France, Canada, Taiwan,
Japan all have “socialized medicine”.
October 22, 2009 - Veterans Health Care Budget Reform
And Transparency Act
More than 1400 hospitals, clinics and nursing homes, 14,800 doctors, 61,000 nurses , and 5 million
patients.
Rand Corporation found that 67% of veterans received appropriate care compared to 55% for the
general public.
University of Michigan study found 83% satisfaction for Veterans compared to 73% for general
public.
Let the Free Market Rule!

There currently is no free market! Only two industries in the
US have antitrust exemptions – Major League Baseball and
The Health Insurance Industry.

There has been heavy consolidation and near monopolies
established in the past 10 years.

One or two insurers generally control the top 94
metropolitan areas in the US.

In some states like Alabama, 90% have Blue Cross.

By allowing insurers to sell across state lines, patient
protections will be reduced due to variations between
states.
So What Did We End Up With?

The Patient Protection and Affordable Care Act,
not Obamacare.

It is not socialized medicine or a government
takeover of medicine.

There are no death panels.

CBO estimates it will cost $940 Billion over the
first 10 years.

Majority of the provisions will not begin until
2014.
Individual Mandate Model of Reform

Proposed by Richard
Nixon in 1971 to block
Edward Kennedy’s
National Health
Insurance Proposal
The Government Uses its Power to
Make People Buy Private Insurance
Expands Medicaid-like Program, Individual and
Employer Mandates, No Real Cost Controls, Adds
Layers of Administrative Complexity
What’s Been Implemented?

$727 Million to upgrade and expand community
health centers providing health care to 745,000
uninsured patients.

Medicare beneficiaries will receive a $250 rebate
to help fill the prescription drug donut.

Primary care doctors will get a 10% raise.

Insurers can no longer carry out rescissions when
insured use policies, set lifetime benefit limits, set
annual benefit limits, deny coverage to children
with pre-existing conditions (2014 for everyone).

Insurers must now offer coverage to kids on their
parent’s policies up to the age of 26.
What’s Been Implemented?

Insurers must now cover recommended
preventative care and immunizations without
charging cost sharing amounts.

Insurers will be forced to spend 85 cents out of
every dollar for actual patient care.

$350 Million to crack down on Medicare fraud.

Small businesses (< 25 full time employees with
annual wages less than $50K ($25K in 2014) will
get a 35% tax credit to help pay for premiums.

A high risk pool will be established for the sickest
patients who are currently uninsurable.
Impact of Health Reform
On the Uninsured
Less uninsured Americans
• 46 million today; ~23 million in 2019
Less funding for safety net hospitals
• Medicare funding cut by $36 billion through 2019
Community health center funding enhanced
• Increased by $1 billion annually
Problems With the Reform Bill

$475 Billion subsidy to the insurance industry
that forces 30 Million Americans to buy coverage
from these companies that do not care about
patients!

23 Million people will still be uninsured nine years
from now.

Millions of middle income people will be forced to
buy commercial policies costing up to 9.5% of
their income, but covering only 70% of their
medical expenses, leaving them still very
vulnerable to medical related bankruptcies due to
high deductibles and co-pays which will still be
permitted.

Fee-For-Service
Problems With the Reform Bill

While Insurers will no longer be able to deny coverage or
set maximum caps, they will still be able to increase copays, deductibles, and premiums which will only serve to
preclude access to healthcare.

Enforcement of new regulations such as ending denials on
the basis of pre-existing conditions are riddled with
loopholes and waivers, and there is nothing to prevent older
people or women from being charged more based on age or
gender until 2017.
– HHS has already scaled back rules on health insurance appeal
denials making the process even more difficult for patients!

People with employer based coverage will remain locked in
their plans and have no choice of providers or hospitals. No
competition for most of us!
Crime and Punishment in
Massachusetts

The Crime

The Fine

Violation of Child Labor Laws
Employers Failing to Partially
Subsidize a Poor Health Plan for
Workers
Illegal Sale of Firearms, First
Offense
Driving Under the Influence, First
Offense
Domestic Assault
Cruelty to or Malicious Killing of
Animals
Communication of a Terrorist
Threat
Being Uninsured In Massachusetts

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$50
$295

$500 Maximum

$500 Maximum
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$1000 Maximum
 $1000 Maximum
 $1000 Maximum

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$1212
Medicare – A Single Payer System!!

Established in 1965 when only 56% of adults over 65 years
of age were insured.

Prior to Medicare, 1/3 of all seniors were living in poverty.

Commonwealth Fund Study (5/09) – Medicare patients had
much greater satisfaction, better access to care, and fewer
billing problems than those with employer sponsored plans.

Kaiser Family foundation study showed greater overall
satisfaction and much more cost efficiency than private
insurance companies.

Medicare spends approximately 3.6% on administrative
costs and 96.4% on actual patient care!

Patients have greater choice and do not need preauthorizations.
Medicare – A Single Payer System!!

The government does not tell doctors how to practice, what
tests to order, which hospitals to go to, or what medications
to prescribe.

It is the private insurance companies that tell patients who
to see, where to go, and what doctors can do.

Since 2008, more providers are dropping more patients with
private non capitated insurance than patients with
Medicare.
A Few Sick People Drive Most Costs
Percentage of total health spending in 2001
Top two deciles
account for 78.3%
of spending
Decile of privately insured
Source: MEPS data, from Thorpe and Reinhart
Current Medicare Has Limitations

Medicare doesn’t cover everything – 45% of outpatient mental
health services, no dental coverage.

Medicare Part B which covers doctors’ services generally pays for
80% of all reasonable charges, leaving seniors responsible for the
remaining 20% which can be very expensive when dealing with a
life threatening or serious illness.

Medicare is fully privatized and there is no price negotiations for
bulk purchasing.

Without PPACA, Medicare is forecast to be bankrupt by 2016.

Due to the anticipated savings due to PPACA of more than $120
Billion, Medicare should now be insolvent in 2024.

In 1999, the Bipartisan Commission on the Future of Medicare
predicted that Medicare would be bankrupt by 2008.
Private insurers waste 31 cents of
every dollar on overhead, sales and
marketing, lobbying, billing,
underwriting, and exorbitant
executive compensation.
This waste is now estimated to be
over $400 Billion a year!!
Single Payer System

Single payer financing is the only way to recapture this wasted
money and provide comprehensive coverage to everyone without
paying more than we already do.

Would be financed by eliminating private insurance and
recapturing their administrative waste.

Modest new taxes would replace premiums and costs would be
controlled through negotiated fees, global budgeting, and bulk
purchasing.

Unified risk pool – everybody in, nobody out, continuous which
would provide a new financial solvency to Medicare!!

Everybody contributes to fund health care based on ability to pay.

Transparency and Accountability to the public

We can save over $4 Trillion in the next 10 years with a Medicare
for All program.
Covering Everyone and
Saving Money
Additional costs
Covering the uninsured and poorly-insured
Elimination of cost-sharing and co-pays
+7.2%
+5.1%
Savings
Bulk purchasing of drugs & equipment
Reduced hospital administrative costs
Reduced physician office costs
Reduced insurance administrative costs
Primary care emphasis & reduce fraud
-2.8%
-1.9%
- 3.6%
-5.3%
-2.2%
Net (Savings)
-4.3%
Source: Health Care for All Californians Plan,
Lewin Group, 2005
Single Payer System

Physicians would still be able to practice medicine the way they
think is best, but with far less paperwork and administrative
costs!!

Average private practice currently spend about 25% on
administrative costs. This would save about $70,000 a year.

All medically necessary care is covered. Patients would have
choice of physician and treatment.

Strong emphasis on comprehensive, focused, and preventative
care in a timely manner.

Would lead to higher wages as employers would not have to pay
for healthcare premiums.

Would lead to more capital investments by companies.

CA Nurses Association study found it would create 2.6 Million new
jobs and infuse $317 Billion in new business revenue.

Patients would not feel trapped in their current jobs due to the
fear of losing their health care coverage.
Benefits/Portability
Patients have unlimited choice of physicians, hospitals, and
clinics regardless of location
USNHI will cover all medically necessary services, including:





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preventative care
primary care
inpatient hospital care
outpatient care
emergency care
prescription drugs






durable medical equipment
long term care
mental health services
dentistry
eye care
substance abuse treatment
Single Payer System

HR 676 – Expanded and Improved
Medicare Act for All - Conyers (now with
64 co-sponsors)

California SB 810 – Mark Leno
SB 810
The California Universal Care Act




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

Introduced February 18, 2011
Author: State Senator Mark Leno
Similar legislation has been passed twice before
Both times vetoed by former Governor
Requires no new spending.
CA Federation of Teachers estimates that SB 810
would save over $300 Million on healthcare costs.
SB 810 would save over $20 Billion in year one on
reduced administrative costs and $29 Billion overall
SB 810
Legislative Digest



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

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Establishes California Healthcare System
Creates California Healthcare Agency
Healthcare Commissioner (appointed by Governor)
Receives all healthcare payments
Is the sole payer of healthcare costs
Duplication of coverage for benefits provided by
CHS is prohibited
On 1/31 - Failed in the CA Senate 19-15 (two votes
short!) – Six Democrats voted no or abstained!!!
Oh Canada!!

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
In 1965, the federal government offered a 50-50 cost
sharing arrangement with the provinces, if they met four
criteria of comprehensiveness, portability, public
administration, and universality.
By 1971, all Canadians were guaranteed access to essential
medical services regardless of employment, income, or
health.
Many doctors initially opted out due to low fees and directly
billed patients.
The Canadian Health Act of 1984 effectively forbid private
practioners from billing beyond provincially mandated fee
schedules.
This system in funded primarily by tax dollars.
Healthcare providers are primarily private and hospital
systems are largely non-profit.
Quality of Care Slightly Better in Canada Than U.S.
A Meta-Analysis of Patients Treated for Same Illnesses
(U.S. Studies Included Mostly Insured Patients)
Source: Guyatt et al, Open Medicine, April 19, 2007
GOALS OF H.R. 676
To ensure that all people living in the United
State have:

A single standard of high-quality, affordable
health care guaranteed by federal law

Access to health care services whenever
medical attention is needed
Who is Eligible?

Every person living in the United States is
eligible from birth throughout life

Every person living in the United States
and the U.S. Territories would receive a
United States National Health Insurance
Card & ID number once enrolled
Accessing Healthcare Services
Under H.R. 676

All patients are presumed eligible to receive services,
even if not carrying card at time of need

Patients will be able to seek treatment from the
physician, clinic or hospital of their choice
Growing Physician Support for NHI
Surveys of Random Samples of U.S. Physicians, 2002 & 2007
Support NHI, 2007
Support NHI, 2002
Generally,
31%
No, 32%
Generally,
31%
No, 40%
Neutral,
11%
Strongly,
18%
Neutral,
9%
Strongly,
28%
Source: Carroll & Ackerman, Ann Int Med 2008;148:566
We Have What it Takes!
•Excellent hospitals, empty beds
•Well-trained professionals
•Superb research
•Current spending is sufficient