Proposals for “Universal” Health Care
or
Back to the Health Care Future
Leonard Rodberg
Urban Studies Dept, Queens College
And
NY 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 Insurance
Costs to Workers
Number of Uninsured Americans (Millions)
45
40
Rising Number of uninsured
35
30
25
20
1980
1985
1990
1995
2000
Source: U.S. Census Bureau
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The Outlier Nation:
Our Public System Covers Fewer…
100
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80
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Population Covered by Public System
60
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Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
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Private Health Insurance Percent of Total Cost
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Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
United States
U.S. Health Costs are 70% Greater
than the Median of Other Countries
THE MAJORITY OF AMERICANS
HAVE PRIVATE INSURANCE …
Total Population
Million
288
Private health insurance 174
- Employer-provided
- Individual
160
14
Public health insurance
72
• Medicare
• Medicaid
Uninsured
41
31
42
Source: National Center for Health Statistics, 2003
%
100.0%
60.5 %
55.6%
4.9%
25.0%
14.2%
10.8%
14.6%
…BUT IT PAYS MUCH LESS THAN
HALF THE COST
2004
Personal Health Expenditures
Private Funds
$ Billion
$ 1,753
$ 965
%
100%
54%
• Private health insurance
$ 658
37%
- Self-funded plans
- Insurance company plans
• Out-of-pockets payments
• Other private funds
$340
$318
$ 236
$ 70
19%
18%
13%
4%
Public Funds*
$ 789
46%
• Medicare
• Medicaid
• Other public expenditures
$ 309
$ 293
$ 187
18%
17%
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
Family Coverage
$4,024 per year
$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 employerbased 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 an
Individual Mandate is Bad Policy
10. 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 an
Individual Mandate is Bad Policy
5. 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!
Employer-Based Health Insurance System ‘Collapsing’
(Wall Street Journal, 7/17/06)
• It is the unaffordable, inefficient private
insurance 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.
SOME
OF Problems
THE PROBLEMS
Some
of the
created by
CREATED private
BY PRIVATE
INSURANCE
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 on
income, 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%
Employee Payroll
Tax (3.78%)
15%
Federal
Government
(existing)
34%
Other
8%
State and Local
Govt (existing)
10%
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 costs
Covering the uninsured and poorly-insured
Elimination of cost-sharing and co-pays
Savings
Bulk purchasing of drugs & equipment
Reduced hospital administrative costs
Reduced physician office costs
Reduced insurance administrative costs
Primary care emphasis & reduce fraud
Net Savings
Source: Health Care for All Californians Plan, Lewin Group, 2005
+6.4%
+5.1%
-2.8%
-1.9%
-3.6%
-5.3%
-2.2%
-4.3%
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