Solving The Problem Of The Uninsured

John R. Battista, M.D.

President, Connecticut Coalition For Universal Health Care

http://cthealth.server101.com

St. Vincent’s Hospital, Department of Internal Medicine Grand Rounds, Bridgeport, CT

November 16, 2004

1.      Who Are The Uninsured?

·        45 Million Americans are uninsured, equal to the combined populations of  24 states: Connecticut, Oklahoma, Oregon, Nevada, Arkansas, Idaho, Vermont, Wyoming, Massachusetts, Arkansas, Mississippi, Rhode Island, North Dakota, South Dakota, Alaska, Iowa, Kansas, West Virginia, Montana, Maine, New Hampshire, Kentucky, Delaware and Nebraska.

·        12.1% of CT residents are uninsured.

·        80% of the uninsured come from families with someone employed full-time.

·        80% of the uninsured come from families making less than 300% of the federal poverty guidelines. 

·        In Connecticut 28% of nonelderly residents making less than 200% of the federal poverty guidelines are uninsured.

·        The uninsured are disproportionately women, children and people of color.

2.  The Problem Of The Uninsured

·        Lack of Health Insurance Kills People.  The uninsured are in poorer health than the insured.  They die earlier and are sicker when they seek treatment.  18,000 die prematurely due to lack of insurance.  There is a 43% higher adjusted mortality rate for uninsured people 55 to 64.  It is estimated that health insurance would lower mortality for the uninsured by 10% to 15%. 

·        A substantial aspect of the fall in US health care statistics from 1^st in the world prior to WWII to 21^st in infant mortality and 27^th in terms of longevity is directly attributable to other industrialized nations providing health insurance to their populations while the US does not.

·        Lack of Health Insurance Is Inefficient and Increases Health Care Expenses. 

·        There are hundreds of thousands of avoidable hospitalizations due to lack of insurance. 

·        About one-third of medical expenses for the uninsured, 41 billion of 125 billion, are uncompensated thereby raising the cost of health care for all Americans and increasing state and federal expenditures. 

·        The uninsured are a significant factor in why the US expenditures are on average around twice as much per capita as other industrialized countries.

3.  Proposed Solutions For The Problem Of The Uninsured

·        Employer Mandates.  Hawaii mandates that all employers provide health insurance for employees who work at least 20 hours/week.  California had enacted similar legislation in 2003, but this legislation was narrowly overturned in a state-wide referendum in 2004 before it could be enacted.  Maine has enacted a variation of this approach known as “pay or play” which encourages employers to provide workers health insurance or pay into state fund to assist workers without available health insurance afford health insurance.  Employer mandates would significantly lower the number of uninsured.  However, employer mandates create an incentive to hire part time workers and results in a interstate competitive disadvantage for employers in that state. 

·        Premium Support.   Democrats seek to use federal funds to lower the cost of health insurance for families below 300% of poverty line.  In addition Democrats support the use of federal funds to cover the cost of catastrophic medical expenses lowering the cost of health insurance for employers.  This approach would somewhat lower the number of uninsured.  The problem with this approach is simply that it will increase federal expenditures for health care without raising revenue or increasing efficiency.

·        Tax Credits And Consumer Control.  Republicans support high deductible insurance polices in which the high deductible aspect of medical expenses can be paid for out of tax free medical savings accounts.  In addition, they believe that making consumers responsible for health care expenditures through high deductibles will lower health care expenses.  This approach would have a limited effect on the uninsured who are not in a position to save the money necessary to create such a medical savings account and purchase high deductible health insurance.  Furthermore, outpatient discretionary spending represents a very small percent of total health care spending.  Finally, evidence suggests that consumers delaying health care would be at least as costly in the long run as it would provide savings in the short run.

·        A Publicly Funded, Universal Health Insurance System.  The Green Party, PNHP, the majority of health care advocates, and the majority of Americans support a publicly funded universal health care system in which all Americans would be part of a single, universal health care insurance pool and all health care expenses would be paid by a single payer—a Canadian style health care insurance system. 

4.      How Would A Universal Health Insurance System Be Funded And Administered?

·        Funding—Five funding sources are commonly identified:

·        Federal and State Governments would continue to contribute funding to pay for those people eligible for federally mandated health insurance programs: Medicare, Medicaid, Children’s Health Insurance Program.

·        Employer Payroll Tax:  Some advocate for a flat % tax on employer payroll, usually around 6%.  Others advocate for a sliding scale payroll tax with employers paying an increasing % of payroll as a function of the number of employees, varying from around 3% to 9%.  Others advocate for no payroll tax, although employees could seek to negotiate with their employers to have them cover all or part of the family health care tax liability they otherwise would have to pay.  This tax would go directly to the health insuring agency and not be part of the federal budget per se.

·        Family Health Care Insurance Tax:  there would be a flat % income tax, similar to the current Medicare tax, which would be paid by all taxpayers as part of their federal income tax.  This tax would go directly to the health  insuring agency and not be part of the federal budget per se.  Presumably, in the long run the Medicare system would be phased out and replaced by this system.  Until that occurs, those eligible for the Medicare system will pay a smaller percent of their income than others.

·        Tax on activities detrimental to health to the extent they can be shown to increase health care expenses.  This would cover items such a cigarette smoking, and production of air pollution by power plants or vehicular driving.  These taxes would go directly to the health care administrative entity and not be part of the federal budget.

·        Utilization Fees:  Not all advocates support these.  However, there might be utilization fees on office visits, emergency room visits, medications and possibly hospital procedures and hospitalizations.  Fees may vary by income. 

·        Administration- 

·        Three models have been proposed.  1) A government run system like Medicare.  2) A not for profit NGO, like the Public Utility Commission.  3) A non-partisan, quasi-independent governmental organization, like the Federal Reserve.  In addition, any of these three models could be administered federally, regionally or state by state.  Ideally the administrative structure would be controlled by a board composed of all groups with a vested interest in the system:  providers, patients, taxpayers, medical suppliers, the federal and state governments.

·        The administration would have the power to negotiate fees, issue treatment guidelines, investigate fraud, conduct utilization review, and license.  

5.   The Advantages Of A Single Payer Universal Health Insurance System

·        Single payer is the only approach that would do away with the problem of the uninsured.  Other approaches would only decrease the number of the uninsured.

·        Single payer is the only approach that would lower health care expenses.

·        International experience and prospective state and federal studies all conclude that a single payer system would decrease total health care expenditures despite providing universal health insurance coverage.  In CT, for example, the prospective study concluded that medical expenditures would decrease by 1.7 Billion or about 10% of the total health care budget despite covering all the uninsured and providing a no-copay prescription drug benefit to all CT residents.

·        This would primarily be accomplished by lowering administrative costs from there current 25% to the range of 3 to 10%.  This 15%+ savings is the direct result of replacing multiple insurance systems, of which the private sector has the highest administrative overhead, with a single insurer, like Medicare, which has the lowest insurance overhead, around 2 to 3%.

·        Secondary savings would result from allowing the single payer system to negotiate the cost of prescription drugs.  Experience with the Veterans Administration, state Medicaid programs, and HMO’s reveal savings in the neighborhood of 35% to 60% resulting in an additional approximately 5% savings to overall health care expenditures.

·        Additional savings would accrue in the long run by emphasizing preventive health care, treating illness early in its course, and coordinating the health care system.

·        Single payer would finance health care more equitably.  Since all individuals would pay the same percent of their income for health insurance, the current situation in which in the poor pay a higher percent of their income for health care than the wealthy would end.  In addition, it would end the current  practice of charging the uninsured more for the same procedure as the insured.

·        Single payer would end the competitive disadvantage that American companies face with regard to international companies who do not have to pay health insurance premiums for their workers, or do so at a much lower percent of payroll than in the US. 

·        Such a system would do away with the hassles of the current health care system by ending pre-approval and the difficulties associated with complying with multiple insurance company requirements.

·        Such a system would end medical bankruptcy, the leading cause of bankruptcy in the United States.  Currently about 25% of people with health insurance would be bankrupted by a major medical illness and about 45% of all bankruptcies involve medical expenses.

·        Such a system would free workers from “job lock” in which workers stay in unwanted jobs because they would lose their health care benefits if they worked elsewhere due to pre-existing conditions or the lack of health insurance available in other jobs.  Presumably this would increase productivity in US companies.

·        Such a system would remove medical decision making from individuals whose motive is profit to those whose motivation is the health care of the population in conjunction with constraining medical expenses.

·        Such a system would lower malpractice insurance premiums and the premiums of other insurance, such as workman’s compensation and automobile insurance, which have a health care component by removing health care costs as an object of litigation and insurance coverage.

·        Single payer would bring the United States into compliance with the International Declaration of Human Rights to which it is a signatory.  According the International Declaration of Human Rights all citizens have a right to health care.  Only a single payer system would insure that right.

6. Physicians In a Single Payer Health Care System

·        Physicians would remain in fee for service private practice.  They would not be salaried employees of the health care system.

·        Physicians would experience much less administrative hassle and administrative overhead due to the simplified billing structure.  Pre-approval would also be eliminated.  As a result more time would be available for patient care.

·        Demand for physician services would increase as cost of services would no longer be an impediment to accessing needed care.

·        Physician malpractice insurance costs should decline substantially as patients would not have to sue to recover medical care expenses.

·        Physicians would be able to negotiate fees, something they can not do now.

·        Physicians income would not decrease.  Certainly not for primary care physicians.

7. Answers to Commonly Asked Questions About A Single Payer System

·        Socialized Medicine?  No.  Is an insurance program not a health delivery program.  Providers remain fee for service.

·        Government Intrusion/Control? No.  Decisions are made by provider, not insurer.  No managed care.  Cost control through education and review, not pre-approval.

·        Waiting Lines?  No.  Have underutilization in the current health care system.  Is oversupply of hospital beds, diagnostic equipment.  Physicians are maldistributed.  This would correct that problem by encouraging migration to underserved areas.  US will continue to spend around twice as much as other industrialized countries.  If Canada doubled its health care spending there would be no lines in Canada.

·        Quality of Care Decrease?  Should increase.  Poorest quality of care is in for-profits currently.  Overall US health statistics should improve dramatically to be more in line and eventually lead other countries who have universal health insurance due to our high funding levels, excellent infrastructure and well trained health providers.

·        Cost overruns like Medicare?  No.  Is a balanced budget program, not a prospective payment system like Medicare.  Demand to constrain taxes constantly in tension with the demand for increased services due to the way the administration is structured.

·        Destruction of Pharmaceutical industry?  Industry needs regulation.  Currently more spent on marketing than research.  Research is oriented toward product approval not improving quality of care.  Has highest return on sales of any industry.  Very high return on investment relative to other industries.  Need to rework how pharmaceutical research is funded, approved, and patented.   

·        Who Would Lose?  Medical insurance industry and its stockholders, and to a lesser degree the pharmaceutical industry and its stockholders.  In addition, under a single payer system wealthy individuals, those earning over $200,000, would pay more for health care than they would under the current system.  The average person and large industry on the other hand would pay substantially less.  Cost to state and federal governments would be the same or possibly somewhat more as all people eligible for federal plans would be signed up (not the current case) although the cost per capita would decrease.