Transcript Paying for Health Care Reform: Single Payer vs. Democratic

The New Health Reform Law:
What Does It Mean?
Will It Work?
Leonard Rodberg, PhD
Urban Studies Dept., Queens College/CUNY
and
NY Metro Chapter, Physicians for a National
Health Program
www.pnhpnymetro.org
Presented at
Weill Cornell Medical Center
Why Health Care Was On the Agenda:
Escalating Cost
Worker and Employer Contributions to Family Coverage
1999
$1,543
$4,247
2000
$1,619
2001
$1,787*
$5,791
Worker Contribution
$6,438*
$4,819*
$5,269*
Employer Contribution
$7,061*
Why Health Care Was On the
Agenda: Escalating Cost
$2,137*
2002
2003
$2,412*
2004
$6,657*
$2,661*
2005
$2,713
2006
$2,973*
2007
$3,281*
2008
$3,354
2009
$3,515
2010
$8,003*
$5,866*
$7,289*
$2,000
$9,950*
$10,880*
$8,167*
$11,480*
$8,508*
$8,824
$12,106*
$9,325*
$12,680*
$9,860*
$3,997*
$0
$9,068*
$13,375*
$13,770*
$9,773
$4,000
$6,000
$8,000
$10,000
$12,000
* Estimate is statistically different from estimate for the previous year shown (p<.05).
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010.
$14,000
But the New Reform Plan Seeks to Address
this Problem Instead:
The Rising Number of Uninsured
(Though the Rate is Steady)
Number and Rate of Uninsured
1987-2009
Source: U.S. Census Bureau, Current Population Survey, 1988-2010 Annual Social and Economic Supplements
The New Health Reform
Plan*
• Provides insurance coverage for some
• …but it does almost nothing about cost!
* The formal name for the legislation is the Patient Protection and
Affordable Care Act (PPACA). The Obama Administration refers to
it as the Affordable Care Act (ACA).
International Comparison: Universal Coverage at
Less Cost -- They Must Be Doing Something Right!
Average spending on health
per capita ($US PPP)
Total expenditures on health
as percent of GDP
8000
16
U.S.
Norway
Switzerland
Canada
Netherlands
France
Germany
Sweden
U.K.
Italy
New Zealand
Australia
8
20
20
19
19
19
19
Source: OECD Health Data 2009.
U.S.
France
Switzerland
Germany
Canada
Netherlands
New Zealand
Sweden
Norway
Italy
U.K.
Australia
20
05
0
19
80
0
05
2
00
1000
95
4
90
2000
85
6
80
3000
20
00
4000
10
19
95
5000
12
19
90
6000
14
19
85
7000
it
ed
A
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us e s
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a
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ay
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it
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d
it
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r
K ke
in
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gd
o
m
U
n
Percent
The Outlier Nation:
Our Public System Covers Fewer…
100
90
80
70
Population Covered by Public System
60
50
40
30
20
10
0
Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
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et
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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
Most People Get Their Coverage
from the Private Sector
Medicare (43.4 million)
Medicaid (47.7 million)
Employerbased Private
Insurance
(169.7 million)
Military (12.4 million)
Uninsured (50.7 million)
Individual
Private
Insurance (27.2 million)
Source: Income, Poverty, and Health Insurance Coverage in the United
States: 2009, Census Bureau, 2010
But Employer-sponsored Insurance is
Declining…
Source: U.S. Census Bureau, Current Population Survey, 1988-2010 Annual Social and Economic Supplements
…And Most of the Money
Comes from the Public Sector
Private Insurance
25%
Private Insurance
34%
Federal Government
(existing Medicare,
Federal
Government
Medicaid, other)
34%
(existing
Medicare,
Medicaid, other)
34%
Federal tax subsidy
(Federal tax subsidy)
9%
State and Local Govt
Out of pocket
Out-of-pocket
(existing
Medicaid,
other)
State and
Local
Government
12%
13%
Other
private
funds
(charity,
12%
etc.)funds (existing Medicaid, other)
Other private
7%
(charity, etc.)
13%
7%
Source: Health Affairs, Feb. 2008; data for 2006
Even More Money Will Come from
the Public Sector after Reform
Private Insurance
19%
Private Insurance
29%
Federal Government
(Medicare, Medicaid,
subsidies)
41%
Federal Government
( Medicare, Medicaid,
other) 40%
Federal tax subsidy
(Federal tax subsidy)
9%
Out-of-pocket
Out of pocket
12%
12%
Other private funds (charity,
Other private
etc.)funds
7%
(charity, etc.)
7%
State and Local Govt
(existing
Medicaid,
other) Government
State
and
Local
12%
(Medicaid, other)
12%
Source: CBO and Lewin projections
The President’s Fateful Choice
• In creating a reform plan, the President could have
chosen to
-- build on the public sector, especially Medicare, or
-- expand the private sector.
• He chose to build his program on private insurance:
-- leave the basic structure unchanged
-- attempt to achieve the goals of health reform
by changing the behavior of private insurance
companies through regulation.
The Problems Facing the Program
Private insurance is
-- too expensive for many people
-- complex and deficient in many ways
-- profitable for the insurers when they can
avoid sick people and limit what they have
to pay for.
The reform program tries to solve these
problems through
-- subsidies for individuals and employers
-- trying to tame the insurance companies
through regulation
The Great Dealmaker
The Obama Administration made a series of deals to
pass PPACA:
• The insurance industry: Assured that everyone would
be required to buy their product -- and there would
be no public option
• The drug industry: No negotiation on prices
• The AMA: No cut in physician fees
• Hospitals: No cut in reimbursements, only slower
growth in payments
• Employers: Continued control of health benefits
• Nervous members of the public: “You can keep what
you have”
Overall Consequences of PPACA
• Continued reliance on private insurance
• Employment-based insurance unchanged
• Market competition will determine what health care
costs (insurance premiums, co-pays, deductibles) and
how it works (payment and denial practices)
• Nothing but experimental pilot programs to try and
reduce system costs, so there will be no likely
reduction in costs or waste
Result: The program will make very little difference in
the lives of most people.
Why? Because there’s no change in the way we will be
paying for health care.
PPACA will be implemented over ten years.
Beginning now:
• Insurance companies required to cover
dependent children up to age 26
• No lifetime limits on coverage
• Begin closing the Medicare drug benefit “donut
hole”, finally closed in 2020
• Government review of insurance premiums
• Experimental programs in Medicare to reduce
costs (e.g. primary care medical home,
accountable care organizations)
Starting in 2014:
The Insurance Mandate
• Citizens and legal immigrants required to be
insured. Penalties up to 2.5% of income.
• Insurers required to take everyone.
• State-based insurance “exchanges” for
individuals and small employers
• Subsidies up to 400% Federal poverty level so
premium (only) is less than 9.5% of income
• “Hardship waiver” if premium greater than 8%
of income  Can remain uninsured.
• Medicaid for all below 133% poverty level
Still later:
• In 2017, allow state experimentation with
alternative insurance arrangements
• In 2018, start taxing “Cadillac” insurance
plans worth $10,200 individual/$27,500
family
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 6 million members
The 800-pound gorilla turned into
a mouse – and then it was gone!
Millions Will Remain Uninsured (and
Millions More Poorly Insured)
Millions
80
Current law
PPACA
60
51
51
50
51
51
52
53
53
54
23
23
23
23
2016
2017
2018
2019
50
40
35
28
20
0
2012
2013
2014
2015
Note: The uninsured include about 5 million undocumented immigrants.
Source: Congressional Budget Office.
…and Costs Will Keep On Rising
National Health Expenditures (trillions)
$5.0
PPACA (CMS Actuary)
$4.5
Current projection
$4.0
PPACA (Commonwealth Fund)
6.6% annual
growth
$4.7
$4.67
$4.5
6.4% annual
growth
$3.5
6.0% annual
growth
$3.0
$2.5
$2.0
National Health Expenditures as Percent of GDP
$1.5
$1.0
17.8 17.9 18.0 18.2 18.8 19.3 19.8 20.2
20.5 21.0
2010
2018
$0.5
$0.0
2009
2011
2012
2013
2014
2015
2016
2017
2019
Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization of
services by previously uninsured.
Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center for
American Progress and The Commonwealth Fund, December 2009. Estimated Financial Effects of PPACA as
Amended, Richard Foster, CMS Actuary, April 2010
Annual Costs in 2016
nd
at the 2 “Silver” Level
in Exchange
without Subsidy
Individual:
Family:
Premium
$ 5,200
$ 14,100
Average
Average Total
Cost-Sharing
Cost
$ 1,900
$7,100
$ 5,000
$19,100
Actuarial Value of Policy = 70%
(“Bronze” level: 60%)
Source: Congressional Budget Office, Nov. 30, 2009
Insurance Costs in the Exchange
with Subsidy
Income
(%FPL)
Income for Annual
Premium Total
family of 3 Premium as % of Potential
(Middle of range)
income
Costs
(% of Income)
150
$22,000
$1,099
4.0%
18.1%
151-200
$32,000
$2,307
6.3%
16.9%
201-300
$46,000
$5,218
9.8%
20.1%
301-400
$64,000
$6,958
9.8%
20.1%
Source: Community Catalyst and PICO National Network
Change in Coverage under the Act
(millions)
Many reasons for remaining
uninsured (millions)
The Bottom Line
• The world’s most expensive system will become
even more costly
• PPACA will not lead to universal coverage
• It will not make affordable insurance available to
everyone
• It will leave millions uninsured and poorly
insured
• It will not control the continuing growth in cost
Why? Because it doesn’t change the
way we pay for health care.
The Alternative Public Route to
Real Health Care Reform:
Conyers’ Expanded and
Improved Medicare for All
HR 676
•
•
•
•
•
•
•
Extend Medicare to cover everyone
Comprehensive benefits
Free choice of doctor and hospital
Doctors and hospitals remain independent
Public agency processes and pays bills
Financed through progressive taxes
Costs no more than we are now spending
Big Savings from Single Payer:
Billing
and
Insurance
Overhead
Allocation of Spending for Hospital and Physician Care
Paid through30%
Private Insurers
Consume Nearly
of Spending
Spending 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
How Medicare for All 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
Medicare for All 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
Conclusion
•
•
A reform plan based on private insurance will
not lead to universal coverage and can’t control
costs.
An expanded Medicare for All program can
provide comprehensive services, cost no more
than we now spend, and provide tools to
control costs going into the future.
The problems of the health care system will
not go away under PPACA.
Real health care reform built on Medicare
for All continues to be essential.
Can We Wait Another 16 Years? We
Need Real Health Care Reform Before
the Premium Takes All our Income!
Today
Source: American Family Physician, November 15, 2005