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WHO NEEDS INSURANCE COMPANIES ANYWAY?or“Get the insurance companies out of my health care” Leonard Rodberg, PhD Physicians for a National Health Program New York Metro Chapter Comments: firstname.lastname@example.org
BEFORE HEALTH INSURANCE BEGAN… • Health care 1% or less of GNP • Out-of-pocket payment for physician care • Charity and public hospital care Before 1936
BEGINNINGS OF PRIVATE EMPLOYMENT-BASED HEALTH INSURANCE • Blue Cross is formed in 1936; Blue Shield in 1946 • WW II: health benefits linked to employment • IRS rules employer contributions tax deductible • Commercial life insurance companies begin selling health insurance to employers 1936 - 1965
LIMITED GOVERNMENT HEALTH INSURANCE • Rising cost of medical care due in part to innovations in medical technology and drugs • Medicare for those over 65 years • Medicaid for the poor • U.S. remains the only industrialized nation without universal access to health care 1965 - 1990
DOMINANCE OF FOR-PROFIT HEALTH INSURANCE 1990 – present • Experience-rated premiums (where the sick pay more) dominate the market • Expansion of for-profit managed care companies • Managed care restricts access and maintains profits • Non-profit Blue Cross plans convert to for-profit companies
EXPANSION OF UNIVERSAL HEALTH INSURANCE • 1883 - Germany • 1911 – Switzerland • 1935 – United States* • 1938 -- New Zealand • 1945 – Belgium • 1945 -- France • 1946 – United Kingdom • 1947 – Sweden • 1948 – United States* • 1961 – Greece • 1961 – Japan • 1966 – Canada • 1973 – Denmark • 1974 – Australia • 1978 – Italy • 1979 – Portugal • 1986 – Spain • 1994 – United States* • 1996 – South Africa • 2002 – Taiwan * Proposed by the President. Strong public support for the principle. Failed in Congress. None of these countries rely on private, for-profit insurance companies.
Our Public System Covers Fewer, and Private Insurance Dominates United States Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
How Does the U.S. Compare with Other Countries? • We provide the same medical care • We use the same medical technology But… • We have large numbers of uninsured • We spend much more • We remain the only major country that builds its health care system around private for-profit insurance companies.
US Life Expectancy is Less than Many Other Countries United States Source: OECD 2005
The US spends more, but our system doesn’t work well, and we aren’t happy with it.
Number of Uninsured Americans (Millions) Rising Number of uninsured 45 40 35 30 25 20 1980 1985 1990 1995 2000 Source: U.S. Census Bureau
U.S. Health Costs are 70% Greater than the Median of Other Countries United States
Our Public Sector Alone Spends More than Other Countries: Americans Pay for National Health Insurance but Don’t Receive It OECD and “Paying for National Health Insurance—And Not Getting It” Health Affairs: July / August 2002
THE COST OF CARE CREATES HEALTH PROBLEMS AS WELL AS FINANCIAL PROBLEMS • In nearly 3 in 10 (29%) households, someone skips a medical treatment, cuts pills, or does not fill a prescription because of cost • Nearly 1 out of 4 (23%) Americans have problems paying medical bills • More than 1 in 5 (21%) Americans had an overdue medical bill at the time of a 2004 survey • 1 million people experience medical bankruptcy each year Health Care Costs Survey, USA Today/Kaiser Family Foundation/Harvard School of Public Health, August 2005; D. Himmelstein et al, Health Affairs, 2005
HIGH COST OF HEALTH INSURANCE PREMIUMS National Average for Employer-provided Insurance Single Coverage $4,024 per year Family Coverage $10,880 per year Note: Annual income at minimum wage = $10,300 Annual income of average Wal-Mart worker = $17,114 Source: Kaiser Family Foundation/HRET Survey, 2005
CONNECTING THE DOTS: So why do we spend so much and have so many uninsured? It’s the insurance companies! Only the U.S. relies on private for-profit insurance companies, the most inefficient, ineffective, inequitable way to pay for health care.
Total Population Private health insurance - Employer-provided - Individual Public health insurance Medicare Medicaid Uninsured Million % 288 100.0% 174 60.5 % 160 55.6% 14 4.9% 72 25.0% 41 14.2% 31 10.8% 42 14.6% THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE … Source: National Center for Health Statistics, 2003
2004 Personal Health Expenditures Private Funds Private health insurance - Self-funded plans - Insurance company plans Out-of-pockets payments Other private funds Public Funds* Medicare Medicaid Other public expenditures $ Billion % $ 1,753 100% $ 965 54% $ 658 37% $340 19% $318 18% $ 236 13% $ 70 4% $ 789 46% $ 309 18% $ 293 17% $ 187 11% …BUT IT PAYS MUCH LESS THAN HALF THE COST * Does not include tax subsidy for private insurance. See Woolhandler & Himmelstein, HealthAffairs 2002 Source: Centers for Medicare and Medicaid Services, 2006
A PUZZLE: If private insurance pays for such a small portion of the total, how can it be responsible for the high cost of our system?
THE ANSWER: Reliance on private insurance companies accounts for 20% or more of total health care spending due to: • Insurance company profits, marketing, and overhead costs, and • Wasteful billing and administrative burdens imposed on the entire system.
CEO’S COMPENSATION 2004 Note: Total Pay=Salary+Stock Options Source: Modern Healthcare, Aug. 1, 2005; NYTimes, Apr. 3, 2005
Private Insurers’ High Overhead International Journal of Health Services 2005; 35(1): 64-90
Billing and Insurance Costs Account For More Than 20% of All Health Care Costs BIR = Billing- and insurance-related costs; profit and marketing costs not included Source: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005
Half of Middle- and Lower-Income Adults Experience Serious Problems Paying Medical Bills or Insurance Premiums Percent Percent 50 50 48 48 38 38 33 35 23 21 Medical bills Health insurance Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
Worries About Affordability and Access to High-Quality Care Spreading to Middle-Income Families Percent worried they will not be able to pay medical bills in event of serious illness Percent worried they will not get high-quality care when needed 66 53 52 50 50 48 47 47 38 34 Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
Insurance Complexity: Two of Five Adults Report Having to Spend Time on Paperwork or Disputes Related to Medical Bills and Health Insurance in the Past Two Years Percent 46 39 39 38 33 Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE #1 High cost • Excessive administrative costs • System complexity And, as a direct consequence of high cost, • Large numbers of uninsured and under-insured who cannot afford adequate coverage
Health insurance premiums have risen faster than health care costs Wall Street Journal, July 31, 2006
US Health Costs Rise Faster than Other Countries’ Costs Source: Health United States 2005, Natl. Center for Health Statistics
PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE #2 Failure to control costs Continuing double-digit annual cost increases Costs cannot be controlled in a for-profit multi-payer system that resists coordination, budgeting, and planning.
CLAIMS BY HEALTH INSURANCE COMPANY SUPPORTERS Private health insurance gives consumers: • Greater choice • Efficiency through competition
Employers Control their Choice: Reasons for Changing Health Plans *Changed job, or employer changed plan offerings Source: Health Affairs 2000; 19(3):158