Health Care Legislation in Utah: The Struggle to Resolve The Problem of the Uninsured

1. Health Care Legislation in Utah:The Struggle to Resolve The Problem of the Uninsured Roberta Q. Herzberg, Ph.D. Utah State University Department of Political Science

2. What is the problem? • How to measure the uninsured? • Not even the experts agree on definition • Those without insurance continuously for a fixed time period (1 year) • The number uninsured at a single point in time • Those without insurance at any point within a specified time. • The scope of the problem varies dramatically depending on which we use • 25 million, 46 million, or even 65 million

3. Who are the uninsured? • Not a single model Many cannot afford to buy in the current market • 3/5ths of the uninsured have incomes below 200% FPL • Some have health problems that raise the cost of insurance out of reach (uninsurable)

4. Many do not value insurance at its current cost • Most are young and in good health • They use relatively few health care resources

5. Just because you are healthy today….. …doesn’t mean you won’t use healthcare services.

6. Other Confounding Effects :Race and Ethnicity correlate with lack of insurance. • Highest level of uninsured is in the Hispanic population (Kaiser Study, 2006) • Why? • Income/industry type • May not qualify for government programs • Socialization

7. The uninsured create social problems • Cost shift to insured when services used by uninsured • Uninsured often do not receive needed or preventive services in a timely fashion • A significant number of U.S. bankruptcy filings have some level of health debt.

8. So, what should we do in Utah? • Consumer Based Proposals • HSA/HDHP/HRA plans or purchase exchanges • PEHP Buy-in for Small Employers or Individuals • A “Massachusetts-type” plan • Government provided/Single payer right to health care approach

9. Consumer Based Plans • Use the Individual Market or Individual Consumer Choice to Enhance Efficiency • Personal Savings and High Deductible Policy • HRA based plan to encourage individual market purchase and preventive care

10. Consumer Based • Advantages: • Lower premiums • more choice • lower administrative costs • less incentive for over-use • Disadvantages: • Tax advantage unequal • Mixed results regarding high use participants • May not increase take-up rate by uninsured very much without large subsidy • Could increase cost for the state-subsidized high risk pool

11. PEHP Buy In for Small Groups • Instead of purchasing a plan in the higher priced small group market, small groups could purchase PEHP plans • Risk spread across much larger pool receiving advantage of the large group market • No requirement to buy-in

12. PEHP Buy In • Advantages: • lower administrative costs • Greater risk spread • Purchasing clout of the state • Disadvantages: • Since all groups are not brought in, there is an incentive for most costly to buy in, while low cost groups go their own way • Could increase cost to state over time

13. Massachusetts Approach • Individual Mandate • Massachusetts Connector to link uninsured with plans -- options similar to FEHBP • Subsidies for low income up to 300% FPL • Basic Plan Intended but may not be delivered • Tax on Businesses who provide no insurance • $295 per employee • Cost Neutral – redirect money spent on uninsured care to provide subsidy

14. Massachusetts Approach • Advantages: • Helps address the free-rider problem • Moves towards universal coverage • Disadvantages • Reduces individual freedom • May not deliver “real” basic plan • New entitlement program – foot in the door • Mandate may be inadequate

15. Single Payer • Right to health care delivered through a universal mechanism • Revenue raised through tax mechanism • Services delivered through private health system

16. Single payer Advantages: Lower administrative costs Everyone has access Reduced cost over time through state bargaining Disadvantages Coercive Clout of the state can harm medical market Can make the state attractive to sicker individuals Political pressure for richer benefits Increased cost through greater use National Health Care? The compassion of the IRS! The efficiency of the post office! All at Pentagon prices! --Bumper Sticker from 1993

17. How to Judge? • Two major dimensions across which these plans vary • Dimension One: • Who provides the good? • Government versus private sector plan • Dimension Two: • Voluntary or Coercive? • State mandate or free-choice • Are these the right dimensions?

18. The Four Plans State system Private market Voluntary Mandated

19. So where to from here? • There are no easy answers • Every plan addresses part of the problem, • ignores other parts, • may exacerbate still others • If big answers are needed, then no reason to stop with insurance • Provision may need to be on the table as well eg. -- Veterans Affairs • Politics may be more important than any other factor • Those currently insured fear change, frequently they are the more powerful politically • Don’t oversell or overpromise solutions

20. Roberta Herzberg Department of Political Sience Utah State University UMC-0725 Logan, UT 84322-0725 (435) 797-1307 bobbi.herzberg@usu.edu Contact Information