The Business Case for Single-Payer National Health Insurance

1. The Business Case for Single-Payer National Health Insurance Ana Malinow, MD Associate Professor Pediatrics, BCM Co-founder, Health Care for All Texas September 22, 2009

2. The Basics • Rising health care costs are the root of most of the problems in health care • Most costs arefixed whether health care is used or not • Other countries cover everyone, have more services, higher quality and live longer yet spend far less than we do • We are already paying thewhole bill • You can’t hold down costs without a system!

3. Rising Health Care Costs

4. Average Health Insurance Premiums and Worker Contributions for Family Coverage, 1999-2009 $13,375 131% Premium Increase $5,791 128% Worker Contribution Increase Note: The average worker contribution and the average employer contribution may not add to the average total premium due to rounding. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.

5. Cumulative Changes in Health Insurance Premiums, Inflation, and Workers’ Earnings, 1999-2009 Note: Due to a change in methods, the cumulative changes in the average family premium are somewhat different from those reported in previous versions of the Kaiser/HRET Survey of Employer-Sponsored Health Benefits. See the Survey Design and Methods Section for more information, available at http://www.kff.org/insurance/7936/index.cfm. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2009 (April to April).

6. Percentage of All Firms Offering Health Benefits, 1999-2008* *Tests found no statistical differences from estimate for the previous year shown (p<.05). Note: Estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.

7. Total Annual Household Income and Federal Poverty Level *Does not include out-of-pocket costs; group market only

8. Getting Public Insurance in Texas Take a family with a 2-mo old, 4 y/o & parents who make $40,792/year (185% FPL) and no employer-sponsored health insurance: The 2 month-old qualifies for Medicaid The 4 year-old qualifies for S-CHIP Parents make over the limit to qualify for public health insurance. The limit? $6,000 /year

9. Public Health Insurance Public Health Insurance is financed through federal and state taxes TX pays 40% Medicaid bill and 30% S-CHIP bill Source: www.kff.org State Facts

10. Distribution of Total Population by FPL www.statehealthfacts.org Nonelderly Population and Poverty Rate: Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureau's March 2007 and 2008 Current Population Survey (CPS: Annual Social and Economic Supplements). Data are for states (2006-2007) and U.S. (2007).       

11. Number of Uninsured Americans 1976 - 2006

12. 44,840 Adult Excess Deaths AnnuallyDue to Uninsurance in U.S.17-64 years Sourxe: AP Wilper, et al. American Journal of Public Health, Dec 2009, Vol 99, No. 12

13. Administration is the Fastest Growing job in Health Care Source: Bureau of Labor Statistics and NCHS

14. One-Third of Health Spending is Consumed by Administration Administrative Costs $775 Billion Clinical Care 31% 69% Total: $2.5 Trillion Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004

15. Costs Are Fixed

16. Distribution of National Health Expenditures, by Type of Service, 2007 74% Fixed Costs Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc. Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2007; file nhe2007.zip).

17. The Implications of Fixed costs • The cost of the infrastructure is there whether or not it is used (nurse, hospital) • 84% of hospital costs are fixed • Cost containment for utilization won’t work if most costs are in infrastructure • Trying to save money by keeping patients out of the hospital is like trying to save money on schools by keeping kids home for the day • It is much more cost effective to invest in only what we need.

18. Important Question Whose responsibility should it be to pay for the health care services we all expect to be there should we need them?

20. Do we really have the best health care in the world?

21. Out of Pocket Costs are Higher $/per capita Source: OECD 2006 Data are for 2004 or for most recent year available Figures adjusted for purchasing power parity

23. Administrative Costs US vs Canada Source: Woolhandler et al. New England Journal of Medicine 349 (8): 768    August 21, 2003

24. Fewer Americans Smoke Compared with Other Nations OECD, 2006 (2003 Data)

25. We Drink Less Alcohol OECD, 2006 (2003 Data)

26. But… We Don’t Live as Long OECD, 2006 (2003 Data)

27. More Babies Diein the U.S. in the First Year of Life OECD, 2006 Data are for 2004 or more recent year available

28. We Do an Average Number of Bone Marrow Transplantsper million people OECD, 2006 (2003 Data)

29. We are Average in Number of Renal Transplants (2001/2002) Transplants/million population OECD, 2004

30. We are Average in the Number of MRI Units MRIs/ million population Source: OECD, 2005 Note: data are for 2004 ,or most recent year available

31. We Do Fewer Hip Replacements Procedures per 100,000 population 197 Source: OECD 2006 Data are for 2004 or most recent year available

32. Our Quality is Not the Best in the World Survival Rates for 5 Countries Source: Health Affairs Vol 23:#3 , 2004

33. (2007=$7,421/p/y www.cms.hhs.gov)

34. US Health Costs Rise Faster than Other Countries’ Costs Source: Health United States 2005, Natl. Center for Health Statistics

35. Other Industrialized Countries • Availability of expensive technology • Rising drug costs • Have similar demographics • Similar levels of service Why are their costs so much lower?

36. Why Costs Are So Much Lower in Other Countries • Administrative simplicity • Negotiated prices • More primary care and prevention • Health planning • Global budgets They have a system

37. Japan Has a $1400 Competitive Advantage on Every Car They Sell $/Car Source: Modern Healthcare 10/24/05: 14

38. Fundamental Features of a True Health Care System • Everyone Included • Public Financing • Clear Accountability • Public Stewardship • Budget Process

39. We Already Pay for National Health Insurance!

40. Individual health insurance Taxes for Medicare and Medicaid Lower wages Out of pocket Private employers pay for health insurance Property taxes Higher prices for goods Health insurance for public employees In the End Individual Households Pay for All of Health Care INDIVIDUAL HOUSEHOLDS

41. How Much is the U.S. Health Care System Costing You NOW? Share of total wage packet going to HC= (amount of total tax burden going to health + annual health insurance premium) (annual salary + payroll tax [FICA and Medicare] + annual health insurance premium) Source: Dollars & Sense, May/June 2008 OOP = co-pays, deductibles, co-insurance, uncovered expenses

42. 60% of our Health Care is Financed through Taxes100% Financed by Us!$2.5 Trillion Individuals 20% Taxpayers 60% {Medicare, Medicaid, Public employees, tax subsidies} Private Employers {Deferred Wages} 20% $1,500 B Source: NEJM 1999; 340:109; Health Affairs 2000; 19(3):150

43. We Need a System

44. One-Third of Health Spending is Consumed by Administration Administrative Costs $775 Billion Clinical Care 31% 69% Total: $2.5 Trillion Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004

45. Clinical Care $387 B + $1.75 T = $2.14 Trillion  85% Enough to pay for all uninsured and underinsured!

46. Investment Model • Healthcare is regarded as a public good with investment in needed services for the whole population • The costs of these shared services are spread across the whole population (when you are not using them, someone else is—that’s what keeps them operational) • Pools money and pays for health care directly

47. Single Payer Health Care Systems • Sweden, Norway, Denmark, Canada, Finland, Iceland, Australia, and Taiwan all have single payer financing • Single publicly financed risk pool that pays for health care directly from a fund ear-marked for health care • Everyone has access to privately delivered, publicly financed health care services • Public can buy health insurance for services not covered by public plan.

48. National Health Insurance Everybody in, nobody out Portable Uniform, comprehensive benefits Prevention oriented Choice of physician Ends insurance industry influence Reduced administrative waste Cost savings Common sense budgeting Public oversight Single-Payer Source: http://thomas.loc.gov/cgi-bin/thomas

49. Financing Single-Payer Medicare Single-Payer Health Care Fund $$$ Medicaid Payroll Tax Income Tax Negotiated formulary with physicians, global budget for hospitals, increased primary and preventive care, reduction in unnecessary high-tech interventions, bulk purchasing of drugs and medical supplies = long term cost control.