Connecticut Coalition for Universal Health Care   

The Single Payer Solution To Connecticut's Health Care Problems

Speech Given Before The Connecticut State-Wide Medicare Conference UAW Hall, Farmington, CT March 6, 1999
by John R. Battista, M.D.

Introduction

I represent the CT Chapter of Physicians For a National Health Program (PNHP) which has written a single payer, universal health care Bill for Connecticut. This Bill is now before the Labor Committee as Raised Bill No. 7030.

Physicians For a National Health Program is a nation-wide organization of over 8,000 physicians with chapters in every state in the United States. It was founded in the late 1980's be two Harvard Medical School faculty members, Dr. David Himmelstein and Dr. Steffie Woolhandler. Dr. Himmelstein and Dr. Woolhandler, along with a number of other academic physicians within PNHP, such as Dr. Tom Bodenheimer, Director of the National Campaign to Protect, Improve and Expand Medicare, have devoted themselves to studying our American health care system and advocating for a single payer, universal health care system based on empirical research which shows a single payer health care system is the most efficient, democratic and ethical health care system in the world.

Single payer, universal health care refers to a publicly financed and publicly administered health care insurance system available to all residents of a particular state or country as a right of citizenship. It is the system that is in place in every industrialized country in the world except Germany and the United States.

Germany, like the United States, utilizes a multipayer system in which health care access is provided through a variety of public and private providers. The German system, unlike ours, provides universal coverage for all German citizens. It is similar to the universal health care system proposed by the Clinton administration for the United States. It is very different from the single payer system that our Bill would enact in the State of Connecticut.

We are opposed to multipayer universal health care systems, like Germany's, because they are inefficient and expensive. The United States and Germany have the two most expensive health care systems in the world, primarily because they spend between 50 and 100% more than single payer systems to administer health care through multiple payers.

The advantage Germany has over the United States is that Germany insures health care access to all their citizens. The United States is the only industrialized country that does not provide health care insurance as a right of citizenship. As a result we have the worst health care statistics of any industrialized country despite having the best trained health care givers, the best medical infrastructure, and spending more per capita on health care than any other country. The United States has the best health care available, but because 17% of the population is uninsured, and the majority of American citizens have difficulty accessing health care due to financial concerns, or difficulties with managed care approval, the United States ranks 20th in life expectancy, 23rd in infant mortality, and between 50th and 100th in immunizations, depending on the immunization selected.

Instead of having the best health care system in the world, as is commonly believed, we have the tragic honor of having the most expensive health care system in the world, the best health care available, but among the worst health care statistics in the industrialized world. Something is seriously wrong with our health care system that requires fundamental change-- not more expensive Band-Aids on an ailing multi-payer, managed care system. What is required is a change to a single payer health care system. That is what our Bill would provide for Connecticut.

About one year ago our Connecticut Chapter of PNHP began to write a single payer, universal health care bill for Connecticut. In order to support this Bill we formed the Connecticut Coalition For Universal Health Care. The Connecticut Coalition For Universal Health Care is a broad based coalition of health care, business, labor, political, religious, and citizen advocacy groups.

We have received a crash course in how a bill becomes a law. Our original bill, "The Connecticut Health Care Insurance Act" was transformed to the "Connecticut Health Care Security Act" by Naomi Shaiken. When our Bill was sponsored by Representatives Donovan and Beals it became "An Act Concerning the Connecticut Health Care System". Now it has been raised by the Labor Committee as "An Act Concerning Access To Health Care For Working Families." At the rate we are going, when this Bill is signed into law it will be "The Governor John G. Rowland Health Care Act."

People laugh at me when I talk about the Governor signing this Act. They point out to me that this is most unlikely state in the United States for a single payer, universal health care act to pass, Connecticut being the Insurance Capital of the World, and the Governor's family owning an insurance agency. However, if the Governor is serious about revitalizing the republican party and making a national reputation for himself, this is exactly how he could do it. This Bill resolves the health care crisis we have in the State of Connecticut and saves money at the same time. It would revitalize the republican party because it is what people want, it is what people need, is fiscally conservative, and is fully ethical and democratic to boot.

However democratic single payer, universal health care is, single payer health insurance is not a democratic or republican party issue. If any political parties can lay claim to this approach it is the independents. Ross Perot of the Reform Party ran on single payer because it provides universal health care and is fiscally conservative. Ralph Nader of the Green Party ran on single payer because it is the right thing to do, and allows citizen participation in health care, while saving money.

Single payer is good for people. It provides comprehensive health care benefits: all medically necessary services, including dental care, mental health care, preventive health care, nursing home care, and all medications, without any copayments, while decreasing the health care costs to the average business, the average resident, and the State of Connecticut. This sounds too good to be true because it promises more for less. It flies in the face of what we have gotten used to in health care-- less for more.

Let me challenge you. If it is true that single payer, universal health care is capable of providing comprehensive health care for less money than we are currently spending, shouldn't every one of you, including the Governor, want to back and sign this Bill.

This Bill is the most significant piece of legislation under consideration in the State of Connecticut this year. It resolves the health care problem in Connecticut, something of concern to every resident of the state of Connecticut. It resolves the problem of the 12% of our state population who are without health insurance, a group of predominantly working individuals and their families who have increased by 74% since 1990. It resolves the problem of the underinsured, the 25% of insureds who would be bankrupted by a major medical illness. It resolves the problem of the 35% of moderate income workers who are locked in unwanted jobs because they would lose their benefits if they leave their job. It resolves the problems of Medicare recipients who spend on average 35% of their incomes on health care. It resolves the problem of quality health care for those recipients of Title 19 who are given substandard medical care because the low reimbursement rates of Title 19 keeps the best health care givers from accepting it. It resolves the medical care access problems of the homeless and those who fall between the cracks of our current system. It resolves the problems of small businesses in our state who have trouble paying for health insurance benefits for their employees. It resolves the problems of all businesses who are stuck with expensive workman's compensation medical expenses. Most importantly, it resolves the problems of managed care: the breach of patient confidentiality that comes from subjecting physician's treatment recommendations to insurance company pre-approval, the compromise of patient care that results from health care recommendations being managed to minimize costs, the disruption of the doctor-patient relationship that results from insurance companies having limited provider networks, and the frustration that many patients and health care providers experience in accessing and providing health care through the managed care system.

Single payer solves our health care crisis and saves money. If this Bill does not pass, it will reveal plainly and clearly the vested economic interests of our elected officials. If it does pass, the second Bill we will write for the State of Connecticut, will be to declare the day the Governor signs this Bill a Connecticut State Holiday.

Substance of Single Payer Bill No. 7030

Bill No. 7030 would provide all medically necessary services, medications, and long term health care for all residents of the State of Connecticut without copayments. Residents would have free choice of any licensed health giver in Connecticut. Decisions about health care would be made by licensed health care givers and patients without insurance pre-approval.

The public health insurance program would be administered by a health care trust accountable to state government. Benefits and fees would be determined by the health care trust in collaboration with a consumer advisory board, a health care provider advisory board, and a hospital advisory board, subject to state budgetary approval.

Funds from the State of Connecticut tobacco settlement would be used to enroll residents and establish the administrative structure for the health care insurance program. Year to year funding would be obtained from employee payroll taxes, individual income taxes, and excise taxes on activities detrimental to health, such a cigarettes, alcohol and air pollution, to the extent these activities can be shown to contribute to the health care costs of the residents of the State of Connecticut.

The act demands that the health care budget be balanced each year. Any overruns in a previous year's budget must be compensated for by budgetary changes in the subsequent years budget.

Furthermore, the Bill mandates that the cost to the average citizen and business be less than comparable private health insurance available in other states. The Bill also mandates that any increase in the state health care budget be less than the percentage of increase in the national health care budget for the preceding year.

I hope the question on everyone's mind is how can this occur. Furthermore, if I can show you why this would occur if this Bill is enacted, you will wholeheartedly work to pass this Bill in this Congressional Session this year.

How does a single payer system reduce health care costs?

First, and foremost, a single payer system reduces health care costs by reducing administrative costs. Administrative costs vary greatly in our current multi-payer system. The publicly administered sector is by far the most efficient, despite the common misperception that it is least efficient. Medicare spends 3% on administration, and is the most efficient provider of any health care system in the world. The declining not-for-profit sector of our multi-payer system spends about 8% on administration, comparable with most not-for-profit administered systems world-wide. The dramatically increasing for-profit sector of our health care system is the least inefficient. For-profits spend between 20 and 30 cents of the insurance premium dollar on administrative expenses. About the same percentage of the health care dollar they spend on providing payments to all health care givers.

The for-profit sector of our multi-payer system is so expensive for four reasons. First, they have high salaries, at least for their CEO's. The CEO's of the medical insurance industry have the highest average pay of any industry in the world. Second they have extensive marketing expenses and enrollment costs. Third, they have great expenses in enrolling providers, communicating to providers their ever-changing plans, and recertifying that the providers are up to date on their malpractice insurance, state licenses, federal licenses, hospital privileges, and the like. Fourth they are involved in the extremely expensive venture of micro-managing the care of every individual that seeks medical benefits from their insurance.

When the administrative costs of each aspect of our multi-payer system are averaged, we spend about 15% of the health care dollar on administration. Repeated studies have shown that a single payer system that would simply do billing would reduce these administrative costs to 3%, in line with Medicare. When you include educating the public about preventive health care, continually researching the system to improve it, and providing quality assurance functions, these administrative costs rise to about 8%, in line with the administrative costs of all the other single payer countries who spend between 8 and 10% on billing, research, quality assurance, and preventive health combined.

The capacity of the single payer system to reduce administrative costs by about one half results from five basic sources. First, administrative costs are reduced by spreading out the cost of administrative systems over the entire state population. Furthermore, single-payer systems don't manage health care, saving money by eliminating this costly, and frustrating aspect of our current multipayer system. The State of Connecticut Office of Health Care Access Commission report, "Pursuing Health Care Reform In Connecticut," predicted a 65% decrease in insurer administrative costs as a result of switching from our multipayer system to a single payer system.

Second, administrative costs decline from having hospitals operate on a global budget instead of billing for each procedure for each patient. The State of Connecticut Office of Health Care Access Commission report predicted administrative savings of 14% for hospitals under a single payer system.

The third major way a single payer system reduces health care costs is by reducing physician administrative costs. The simplicity of a single payer system, which frees physicians from the burden of pre-approval and the difficulties associated with literally thousands of insurance companies and plans, would reduce the administrative costs of physicians by about 26%, according to the report of the State of Connecticut Office of Health Care Access Commission. This would allow physician fees to be reduced while maintaining income.

The fourth major way a single payer system reduces health care costs is by reducing the costs of purchasing medication and durable medical equipment, such as wheelchairs, crutches, and ventilators through bulk purchasing. Costs for medications and durable medical equipment would be reduced in the neighborhood of 30 to 40%, bringing these costs in line with the smaller countries of the industrialized world, such as Finland, who use a single payer system.

The fifth way a single payer system reduces health care costs is by coordinating and consolidating medical services and medical equipment. Under our current uncoordinated system, there is a great duplication of medical services. We have about 35% over capacity in our health care industry, and some equipment such as mammography machines, have a 300% oversupply. Although this oversupply would keep Connecticut from having lines for health care services despite the 15% increase in demand for services that a single payer system would bring, Connecticut would still have a 20% surplus of medical infrastructure. This oversupply makes each procedure more expensive, by having to spread the cost of expensive equipment such as CAT Scanners and radiation oncology machines over a less than full capacity of procedures. By reducing this oversupply to 5 to 10% through coordinated planning, our health care system can be made more efficient without influencing access to health care.

These five basic means of saving money under a single payer system: reducing administrative expenses to the insurer, reducing administrative expenses to hospitals, reducing administrative expenses to physicians, reducing the costs of purchasing medications and durable medical equipment, and the coordination and consolidation of medical services are large enough to "decrease total health care expenditures," despite covering all the uninsured and increasing benefits for the entire population, according to the 1995 report of the State of Connecticut Office of Health Care Access, "Health Care Reform In Connecticut: Analysis of Health Reform Options."

The 1992 report of the State of Connecticut Office of Health Care Access Commission predicted that if single payer health insurance had been enacted in Connecticut in 1992, the savings to the health care budget in our year, 1999, would have been 2.3 billion dollars out of a predicted 21.5 billion dollar budget.

This is consonant with the recently reported study of the Massachusetts Medical Society, the AMA of Massachusetts, which showed that the enactment of a single payer system in Massachusetts would immediately save 1.7 to 2.7 billion dollars from a 35.1 billion dollar health care budget.

Similarly, studies by the General Accounting Office and the Congressional Budget Office predict savings of over 100 billion dollars a year if single payer were enacted nation wide.

If this is not dramatic enough, there are many savings under a single payer system that were not considered in these studies. First, because a single payer system would emphasize preventive health and encourage the early treatment of disease, health care costs would decline in the long run because illness would be prevented and treated early, when it is cheaper and more effective to treat. Second, health care givers would work with the insuring agency to find pragmatic ways of lowering costs while assuring quality, thereby cutting ineffective testing and treatments while saving money. Third, non-health insurance plans which have medical benefits attached to them, such as workman's compensation insurance, malpractice insurance and car insurance, would cost substantially less under a single payer system because conflicts over the cause of medical injury would no longer have to be adjudicated by expensive legal proceedings, because these medical services would be covered as a basic right of Connecticut residency. Fourth, the State of Connecticut would experience administrative savings as a result of the consolidation of health care administrative functions that are spread out over a wide variety of departments and offices such as public health, social services, and the Office of Health Care Access. Finally, providing an equitable system of health care would promote a pro-social attitude and decrease crime.

The Democratic Nature of Single Payer, Universal Health Care

Single payer, universal health care is democratic. The system operates through a series of negotiations between the insurer, consumer and provider. Consumers would lobby the insurer for increased benefits and decreased taxes. Providers would lobby the insurer for increased quality of care and increased compensation. It would be easy and transparent to see the impact of increasing benefits and increasing provider fees on taxes. Similarly, it would be easy and transparent to see the impact of decreasing benefits and decreasing fees on taxes. The state, businesses, consumers, taxpayers and providers would be forced to work together to negotiate a fair and equitable arrangement. This is precluded in our current system where providers and consumers have no input into determining health care benefits or providers fees, except to choose one insurance plan over another. Our current system is autocratic. Decisions are increasingly made in corporate board rooms with stockholders interests, rather than quality of care, the driving force.

Single Payer, Universal Health Care Is Ethical and Moral

A single payer, universal health care system is ethical, moral, and consistent with the ideals of American culture. It is based on the ideal that health care, like education, is a right of all citizens under the law, regardless of income. Rich and poor, young and old, healthy and sick are all entitled to the same health care benefits. We all share the risks and benefits of this system. We all have a vested interest in making it work, and making one another healthy. Dr. Martin Luther King said "of all the inequalities in the world, the lack of access to health care is the worst." The Council of Bishops of the Roman Catholic Church in the State of Connecticut is on record in support of universal health care for all residents of Connecticut.

Conclusion

I conclude with the words of Winston Churchill, "You can count on Americans to do the right thing, but only after they have tried everything else." We have tried everything else with health care. I ask you to work with me to make our Constitution State the "Democratic Health Care State" as well as the insurance capital of the world.

Dr. Battista is a board certified practicing psychiatrist in New Milford, Connecticut. He began private practice in Connecticut in 1983 after assuming the practice of M. Scott Peck, M.D., author of A Road Less Traveled. Before coming to Connecticut Dr. Battista was an Assistant Professor of Psychiatry at the University of California, Davis where he directed the residency training program and outpatient services for the Department of Psychiatry. Dr. Battista is the recipient of a National Research Service Award. He attended Princeton University as an undergraduate, and Stanford University, where he received an M.D. and a M.A. in Psychology, before completing his residency training in Psychiatry at the University of California, San Francisco.