Transcript Problems created by private insurance #1: High cost

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
74
84
82
82
80
77
84
96
93
90
104
101 103 103
110
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at
ga
nd
St
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i te
Po
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Ire
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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
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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
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Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
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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
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