Reforming Health Care: Making Sense of Health Care Finance

1. Reforming Health Care: Making Sense of Health Care Finance Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY Prepared for the Congressional Forum on National Lessons for Health Reform: Examining US Health Insurance April 1, 2009

2. International Comparison: Universal Coverage at Less Cost -- They Must Be Doing Something Right! Average spending on health per capita ($US PPP*) * PPP = Purchasing Power Parity. Data: OECD Health Data 2008, June 2008 version. All have a strong role for government in funding and regulating their health care system.

3. Millions are Uninsured and Underinsured An Estimated 116 Million Adults Were Uninsured or Underinsured in 2007 Medical bill/debt problem 17.7 million 10% Adequate coverage and no bill or access problem 61.4 million 35% Medical bill/debt and cost-related access problem 54.4 million 31% Uninsured anytime during the year 17.6 million 10% Cost-related access problem 25.9 million 15% 177 million adults, ages 19–64 Source: S. R. Collins, J. L. Kriss, M. M. Doty, and S. D. Rustgi, Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families: Findings from the Commonwealth Fund Biennial Health Insurance Surveys, 2001–2007, The Commonwealth Fund, Aug. 2008.

4. Medical costs create serious financial problems for millions of us Source: Health Tracking Poll, Kaiser Family Foundation, April 2008

5. Underinsurance is Growing Number of people in families spending more than 10% of pre-tax income on health care (millions) Source:Too Great a Burden, Families USA, December 2007

6. An Example of Underinsurance on the Federal Employee Health Benefit Program Two days in a hospital for bronchitis & heart exam: Co-pay Total Bill

7. Health Care Costs Are Concentrated Among a Few People in Any One Year Percent of Health Care Costs This Year’s Underinsured Source: Medical Expenditure Panel Survey, US Agency for Healthcare Research and Quality, 1999 We’re all underinsured --it’s just that we don’t know it until we get sick!

8. The Private/Public Mandate ModelNixon  Obama • Everyone mandated to have insurance • Employers should offer insurance or contribute • Continued reliance on private insurance, with the option of a public Medicare-like plan • You can “Keep what you have” -- doesn’t address widespread underinsurance:For most families, the problem is not the lack of insurance, it’s the insurance they already have! • No regulation of insurance company premiums or practices • Increases cost of the system by hundreds of billions of dollars • No way to control costs so long as there are many separate plans and payers.

9. CBO: Mandate Plans Will Not Lead to Universal Health Care or Cut Costs • “…national compliance rates [with mandates] range from 63 percent to 86 percent.” (p. 49) • “The adoption of more health IT offers many benefits, but it is generally not sufficient to produce substantial cost savings.” (p.147) • “The evidence was insufficient to conclude that disease management programs generally reduce health care spending.”(p. 142) • “Although new research into comparative effectiveness might lead to net cost savings over a long period of time, its effects during the conventional 10-year horizon for budgetary estimates would be limited.” (p.146) Source: Key Issues in Analyzing Major Health Insurance Proposals, Congressional Budget Office, December 2008.

10. Conyers: Expanded and Improved Medicare for All“single payer national health insurance” HR 676 • Automatic enrollment • Comprehensive benefits • Free choice of doctor and hospital • Doctors and hospitals remain independent • Public agency processes and pays bills • Financed through progressive taxes • Costs contained through capital planning, budgets, emphasis on primary care

11. How Single Payer Could Be Paid For: One Example from a Recent Study of a California Plan

12. Billing and Insurance: Nearly 30% of All Health Care Spending 28%

13. Covering Everyone with No Additional Spending $ B 134 107 241 Additional costs Covering the uninsured and poorly-insured +6.4% Elimination of cost-sharing and co-pays +5.1% Savings Reduced hospital administrative costs -1.9% Reduced physician office costs -3.6% Reduced insurance administrative costs -5.3% Bulk purchasing of drugs & equipment -2.8% Primary care emphasis & reduce fraud -2.2% Total Costs +11.5% -21 -76 -111 -59 -46-313 Total Savings -15.8% Net Savings - 4.3% - 73 Source: Health Care for All Californians Plan, Lewin Group, January 2005

14. The Bottom Line The Private-Public Mandate model will Make the world’s most expensive system even costlier. Not improve insurance coverage for the average person. Not make affordable insurance available. Not contain the continuing growth in cost. In other words, it won’t work! Only single payer national health insurance will Cover everyone for comprehensive services. Cost no more than we are now spending. Provide mechanisms for containing the growth in cost.

15. Will We Get Real Health Care Reform Before the Premium Takes All our Income? Today Source: American Family Physician, November 14, 2005