Is It “Rest in Peace” for Single Payer Healthcare?

Richard Quint MD, MPHPNHP California

Illustrative Case: Sra. Perez

52 yo divorced woman , twin 18 yo sons, has family health insurance through her job as a store clerk. Bored.

Becomes a real estate agent (no job benefits). Uses COBRA to buy an interim policy. Income $60,000 per year.

Develops breast cancer while on COBRA. Receives potentially curative surgery, radiation, and chemotherapy. COBRA expires.

Shops for individual policy. Insurers either refuse to sell her a policy or offer an outrageously expensive one ($ 2,300 per month with a $5,000 per year deductible).

She becomes uninsured. Unable to afford daily drug to prevent breast cancer recurrence and so takes it only every 3rd day.

Physician21%

Dental/Other Professional

10%

Nursing home/home health

8%

Drugs/Medical Supplies

13%

Insurance Administration

7%

Investment7%

Govt.Health Activities3%

HospitalSource: Centers for Medicare& Medicaid Services

70% spent on services &infrastructure

30%

U.S. Health Expenditures 2009:

$2.3 trillion

U.S. Health Care Financing

Funds Payers Providers

Public & PrivateMany "pools"

Employer Multiple private payers Doctors& many benefit plans Hospitals

Premium contrib. PPO vs capitated, Pharmacies many blends/variants Device vendors

Income taxes Public: Medicare, Medi-Cal, Skilled Nursing Fac. S-CHiP, VA, Indian Health,. Other

Out-of-pocket ~ 60 safety net programs

Admin costs of insurance 15%Admin costs overall 30%

Multi-payer health care financing

Root Causes of Health Care Crisis

I. Dysfunctional health insurancePrivate insurance– Job-based– For-profit– Multiple plans, pools– Fee for service (FFS)– FFS rewards procedures

Public insurance– Limited eligibility– Tied to state budgets

II. No real health care systembased on population needs.

Most adults 21-65 excludedEligibility/means testingCapricious, low fundingLow reimbursementFew providers accept itCost shifting

Covers only workersEmployer’s discretionExcludes or penalizes sickestComplex administrationCostlyUninusuranceOpen ended expensesAnswers to investors

No way to rationally allocate resources, plan or budget

The Health Care Crisis in USA

High Cost • > $7500 spent per capita is double that of other

industrialized nations: >16% of our GDP• Costs are rising rapidly and 2-3X faster than CPI

Decreased Access• 50+ million uninsured• > 60 million underinsured

Impaired Quality• Chaotic “system”• Poor health outcomes

50 Million Uninsured = Combined Population of 25 States

N DakotaS DakotaMontanaOklahomaIowaKansasArkansas

Mississippi

AlaskaOregonIdahoNevadaNew MexicoArizonaUtahHawaii

MaineVermontNew HampshireDelawareConnecticutRhode IslandW VirginiaMissouriConnecticut

In addition, 1/5 of those with insurance are really underinsured (drug costs, deductibles, out of pocket expenses, etc.)

Uninsured Californians

• 54% are Latinos• Ages 0-64: 28% Latinos vs. 9% whites

uninsured• Children 0-17: Latinos 14.3% vs. whites 5.5%

uninsured• Employer-based insurance: 43% Latinos vs.

73% whites

Latino Coalition for a Healthy California, 2007Robert Wood Johnson and Urban Institute report, 2008

PPACA………

……..further entrenches the rationing of health care based on ability to pay.

2011: Where do we go from here?

Phony vs. Real Change

Phony

• Choice of HMO/insurer

• Coverage = Copays, exclusions etc.

• Security = Lose it if you can’t work or can’t pay

• Savings = Less care

Real

• Choice of doctor and hospital

• Coverage = First $, Comprehensive

• Security = For everyone, forever

• Savings >$400 billion on bureaucracy

Principles for Reforming Health Insurance:An Improved Medicare for All

• Universal coverage

• Comprehensive scope of coverage: all necessary care

• Equitably distributed

• High quality with goal of health improvement

• Choice

• Affordable

• Shared responsibility for funding: individuals, employers, government

• Sustainable funding mechanism

• Accountable, transparent

Institute of Medicine, 2004

What is a Single-Payer System?

Publicly Funded, Privately Delivered

Improved and Expanded Medicare for All

Single Risk Pool with a Single Plan

One System Run by a Public Entity

U.S. Health Care Financing

Funds Payers Providers

Public & PrivateMany "pools"

Employer Multiple private payers Doctors& many benefit plans Hospitals

Premium contrib. PPO vs capitated, Pharmacies many blends/variants Device vendors

Income taxes Public: Medicare, Medi-Cal, Skilled Nursing Fac. S-CHiP, VA, Indian Health,. Other

Out-of-pocket ~ 60 safety net programs

Admin costs of insurance 15%Admin costs overall 30%

Multi-payer health care financing

MedicareMedicare

MedicaidMedicaid

Payroll TaxPayroll Tax

Income TaxIncome Tax

Single-Payer Single-Payer Health Care Health Care

FundFund

$$$$$$

Financing Improved Medicare for All

Negotiated formulary with physicians, global budget for hospitals, increased Negotiated formulary with physicians, global budget for hospitals, increased primary and preventive care, reduction in unnecessary high-tech interventions, primary and preventive care, reduction in unnecessary high-tech interventions, bulk purchasing of drugs and medical supplies = bulk purchasing of drugs and medical supplies =

long term cost control.long term cost control.

Why is a Single Payer System Better?

• Stop segregation of healthy and sick• Everybody in, nobody out

• Single plan• Emphasize prevention and primary care

• Non-profit• Bulk-buying power

• Streamline administration• Greater patient choice

Cost Comparison I

Cost of the PPACA individual mandate for:

Family of 4: income of $80,000; adults: 55 years old; medium cost factor

Out-of-pocket premium (with the subsidy) is $7600.00 (9.5% income)

Out-of-pocket for the co-pays, deductibles, etc., could be as high as $8,333.00

Total health insurance bill could be $15,933 a year. 

Cost Comparison II

Cost under a single payer system:

The California LAO in 2008 said it would take a 16% payroll premium (high estimate) to fund single payer.

If employers paid 10% and individuals paid 6% under a

California single payer system, the individual’s payroll tax would be $4800.00 a year.

No claim forms, no restrictive physician list, no money necessary, no hassle when you change jobs/move. 

Much worse

Worse No Δ Better Solved

Coverage x Universal (> 99%) covered

Pre-existing illness exclusion x Universal lifelong coverage

Chronic disease premium cost x No premiums for individuals

Recission (revoking policy) x Coverage is permanent.

Primary care strengthening x Various initiatives, more levers.

Quality of care x "Accountable care" & "comparative effectiveness", more levers

Medical malpractice x Special court? With health care covered, drop medical component.

Comprehensive benefits x Broad standard package.

Financial burden to individuals x Progressive financing, low or no cost sharing.

Administrative burden / costs x Single core insurance product, one payer or one method of payment.

Insurer profits x Minimal private for-profit insurance.

Federal govt costs ? If single payer, more money routed thru govt. Budget neutral if taxes raised.

System costs x Save on admin (~$300 billion / year), bulk purchasing, & methods above.

Prospective report card on single payer (or single product not-for-profit insurers)

Why do physicians support it?

• Eliminate the role of insurance companies• No more arguing over compensation

• Lower practice overhead costs• Lower the cost of malpractice fees• Negotiate fair and timely reimbursement

• Patient centered care• Increase continuity of care for patients• Increase access for new patients

Who will Run the Single Payer System?

The Public – Through a vote would elect: The California Healthcare Agency: A public body with

representatives of patients and medical experts▪ Commissioner, regional boards ▪ Chief Medical Officer▪ Health Planning, Quality, Funding, Payments▪ Patient Advocates

Transparency

Economic Pluses

Implementing Single-Payer Health Insurance will be a major stimulus for economy:

2.6 million new jobs

$317 billion in business revenue

$100 billion in wages

Source: Institute for Health and Socioeconomic Policy 2009

How do we know this will work?

SB810: Healthcare for All in California

• Inpatient and outpatient• ER visits• All physician services,

including pregnancy• Prescription drugs• Mental health and

substance abuse treatment

• Rehabilitation

• Vision care, incl. glasses• Hearing exams and aids• Durable Medical

Equipment• Home health and adult

daycare• Dental care• Laboratory and diagnostic

tests

How will California save money?

29 billion in the first year• Streamlining administrative costs: $20 billion• Bulk purchasing: $5.2 billion• Primary preventive care emphasis: $3.4 billion• Health benefits for gov’t employees: $900 million

($21 billion to extend coverage to all)

Net savings = $8 billion

Over 10 years: > $300 billion

Lewin Group, 2005

Challenges and Hurdles

• Status quo is deeply entrenched• Satisfaction with health care arrangements• Expansion of government authority• Paying for health care reform• The vested interests• Confronting PPACA

NEJM 10/25/2007

What You Can Do

Join the California Health Professional Students Association (CaHPSA): www.cahpsa.org Join PNHP California: www.pnhpcalifornia.org Contact your legislatorsWrite letters and op-ed piecesEducate yourself and others Organize in your community

FIN

You Bet Your Life: Why We Need a National Health Program

Richard D. Quint, MD, MPHPhysicians for a National Health Program-California

Health Sciences Clinical Professor of Pediatrics, Emeritus (UCSF)

Our Health Care Crisis

1. Description

2. Causes

3. Solution

0

10

20

30

40

50

60

70

80

10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Source:Agency for Healthcare Research and QualityMEPS, 1999

Percentof health CareExpenditures

1% 1% 2% 4% 6%

13%

73%

0% 0% 0%

80% use less than $1000 of care per year

Sra. Perez just went from here…..

0

10

20

30

40

50

60

70

80

10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Source:Agency for Healthcare Research and QualityMEPS, 1999

Percentof health CareExpenditures

1% 1% 2% 4% 6%

13%

73%

0% 0% 0%

20% use 86% of the care

…..To here:

Medicare = 3%Kaiser = 2.4%

Unnecessary Procedures

Major Causes of Rising Costs

• Aging population, burden of chronic disease

• Rising cost of health insurance premiums

• Expensive new technology

• Administrative waste

• Pharmaceuticals

• Unnecessary care

• Delayed care sicker patients

Quality of Care

Too little care• Uninsured or underinsured can’t access care• Hurried office visits• Crowded ER’s , closed trauma centers

Too much care• Unnecessary care • Duplicated care

Uncoordinated care• Many specialists, few primary care doctors• Changing insurance carriers

Poor outcomes• 45,000 deaths per year due to lack of health coverage• USA ranked 37th in overall quality by WHO

What are the goals of a Single-Payer system?

• Universal• Comprehensive

• Continuous• Equitable• Affordable

• Sustainable

Single-Payer Cost Controls

Streamline payment: stop administrative waste

Single risk pool: stop profit on suffering

Only one plan: stop marketing waste

Bulk buying power: stop pharmaceutical profits

Emphasize primary care

Decreased Access: Falling Job-Based Insurance & Rising Uninsurance

60

62

64

66

68

70

1987 1989 1991 1993 1995 199714

15

16

17

18

19

% with employmentbased coverage % uninsured

Custer WS 1999

Decline in employer-sponsored health coverage accelerated three times as fast in 2009, Elise Gould, September 16, 2010http://www.epi.org/publications/entry/decline_in_employer-sponsored_health_coverage_accelerated

Erosion of employer-sponsored commercial insurance