Health Care in Obama’s 1st Year:More of the Same is not Reform – It’s a Placebo :Health Care in Obama’s 1st Year:More of the Same is not Reform – It’s a Placebo Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY and NY Metro Chapter, Physicians for a National Health Program Sept. 17, 2009 www.pnhpnymetro.org


Why Health Care Is On the Agenda: Escalating Cost :Why Health Care Is On the Agenda: Escalating Cost Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.


Number of People Without Health Insurance Coverage: 1987 to 2008 :Number of People Without Health Insurance Coverage: 1987 to 2008 Source: U.S. Census Bureau, Current Population Survey, 1988 to 2009 Annual Social and Economic Supplements. Numbers in millions Recession 50 40 30 20 10 0 1987 1990 1993 1996 1999 2002 2005 2008 7.3 million 8.2 million 31.0 million Children All people 46.3 million 9


The Epidemic of Underinsurance :The Epidemic of Underinsurance Source: Too Great a Burden, Families USA, December 2007 Number of people spending more than 10% of income on health care (Millions)


Goals of Health Care Reform :Goals of Health Care Reform Reduce or eliminate uninsurance Improve coverage for those with insurance (i.e., reduce or eliminate underinsurance) Reduce the cost of health care Slow the increase in the cost of health care


Most People Get Their Coverage from the Private Sector… :Most People Get Their Coverage from the Private Sector… Source: Income, Poverty, and Health Insurance Coverage in the United States: 2008, Census Bureau, 2009 (180 million) (43 million) (43 million) (45.7 million) (27 million)


But Most of the Money Comes from the Public Sector :But Most of the Money Comes from the Public Sector Private Insurance 34% Out of pocket 12% Other private funds (charity, etc.) 7% State and Local Government (existing Medicaid, other) 13% Federal Government (existing Medicare, Medicaid, other) 34% Source: Health Affairs, Feb. 2008; data for 2006


The President’s Fateful Choice :The President’s Fateful Choice In creating a reform plan, the President could have chosen to build on the public sector (especially Medicare), or on the private sector. He chose to seek universal coverage by expanding private insurance. Since private insurance is costly and deficient in many ways, this has created a series of problems we are now witnessing.


Progress(?) of US Health Reform :Progress(?) of US Health Reform Employer mandate Public option** Individual mandate* * “each eligible individual must enroll in an applicable health plan for the individual and must pay any premium required with respect to such enrollment.” (S.1775) ** “you can choose to enroll in the new public plan” Medicare ??


The Mandate Model :Everyone required to have insurance Employers must offer insurance or contribute Continued reliance on private insurance, with the option of a public plan “You can keep what you have” No regulation of insurance company premiums, deductibles, co-pays, or payment and denial practices Increases the system cost by hundreds of billions of dollars No cost savings or realistic way to control costs No change in the structure of health care finance The Mandate Model


The Plan :The Plan New requirements for “qualified plans” -- no pre-existing-condition exclusions -- no co-pays for preventive care -- $5,000/$10,000 annual limits on cost-sharing -- no limits on lifetime coverage  higher premiums Employment-based insurance otherwise unchanged -- Employers can change coverage and plan -- Insurers can change provider networks -- Employees are still locked into their jobs -- No access to a public option Employees must accept employer plan if they can afford it (premium < 11% or 12.5% of income)


The Plan (cont.) :The Plan (cont.) Starting in 2013, the uninsured and small employers can access an insurance “exchange” Subsidies (“affordability credits”) in the exchange up to 300% or 400% of the Federal poverty level Public plan option available in the exchange only “Hardship waiver”: those who can’t afford premiums can remain uninsured Expand Medicaid eligibility to all below 133% poverty


What Happened to the Public Plan? The Original “robust” Plan :What Happened to the Public Plan? The Original “robust” Plan Open enrollment Medicare-like, backed by the Federal Government 119 million members (Lewin) The Current Plan Restricted enrollment (only the uninsured) Self-sustaining, follow same rules as private insurers Perhaps 10 million members (5% of population) The 800-pound gorilla has turned into a mouse!


What Will Insurance Cost?In Massachusetts, Insurance Still Costly and Care Unaffordable :What Will Insurance Cost?In Massachusetts, Insurance Still Costly and Care Unaffordable * Also physician & hospital co-pays Source: www.mahealthconnector.org (Boston Area, Sept 2009)


How Will the Plan be Paid For? :How Will the Plan be Paid For? Why are Government funds needed? To subsidize the purchase of private insurance by low-income people To pay for Medicaid expansions Where will those funds come from? Taxes on employment-based insurance Reductions in Medicare reimbursements Cut subsidies to Medicare Advantage plans Reduced waste and fraud in Medicare and Medicaid


How Much is Needed? :How Much is Needed? The plan assumes added costs =< $1 Trillion over seven years or $130 billion/yr (5% of current health care spending) Number of Uninsured Remaining: 17 million [ Source: CBO, Letter to Rep. Charles Rangel, July 17, 2009] Number of Underinsured: 50 million+ Even a Trillion dollars is not enough! Total cost of making health care affordable: $200-300 billion/year


What Will Control Costs under the Plan? :What Will Control Costs under the Plan? Nothing in the Plan directly contains costs. Instead, it relies on: Competition among insurance companies Computerization Chronic disease management Payment reforms (e.g., medical home, “bundling”) “We do not see the sort of fundamental changes that would be necessary to reduce federal health spending by a significant amount” --Douglas Elmendorf, Dir, Congressional Budget Office


Mandates Won’t Lead to Universal Coverage :Mandates Won’t Lead to Universal Coverage Source: Sherry Glied et al, “Consider It Done? The Likely Efficacy of Mandates for Health Insurance,”, Health Affairs, 26(6), Nov/Dec 2007; Insurance Research Council, June 2006 below 65 yrs


The Bottom Line on the Plan :The Bottom Line on the Plan If it does pass in some form, it would: Make the world’s most expensive system even more costly Not achieve universal coverage Not make affordable insurance available Leave millions underinsured Not control the continuing growth in cost Why? Because it doesn’t really change the way we pay for health care.


The Public Route to Real Health Care Reform: Conyers’ Expanded and Improved Medicare for AllHR 676 :The Public Route to Real Health Care Reform: Conyers’ Expanded and Improved Medicare for AllHR 676 Everyone covered via automatic enrollment Comprehensive benefits Free choice of doctor and hospital Doctors and hospitals remain independent Public agency processes and pays bills Financed through progressive taxes Costs no more than we are now spending


Sanders (& McDermott): American Health Security Act S 703 (HR 1200) :Sanders (& McDermott): American Health Security Act S 703 (HR 1200) Automatic enrollment Comprehensive benefits Operated by States using Federal standards Free choice of doctor and hospital Doctors and hospitals remain independent Public agency processes and pays bills Financed through payroll taxes


Billing and Insurance: Nearly 30% of All Health Care Spending :Billing and Insurance: Nearly 30% of All Health Care Spending 28%


Covering Everyone with No Additional Spending :Covering Everyone with No Additional Spending Additional costs Covering the uninsured and poorly-insured +6.4% Elimination of cost-sharing and co-pays +5.1% Savings Reduced hospital administrative costs -1.9% Reduced physician office costs -3.6% Reduced insurance administrative costs -5.3% Bulk purchasing of drugs & equipment -2.8% Primary care emphasis & reduce fraud -2.2% Source: Health Care for All Californians Plan, Lewin Group, January 2005 134 107 241 -21 -76 -111 -59 -46 -313 $ B Total Costs +11.5% Total Savings -15.8% Net Savings - 4.3% - 73


How Single Payer Could Be Paid For: One Example from a Recent Study of a California Plan :How Single Payer Could Be Paid For: One Example from a Recent Study of a California Plan


Conclusion :Conclusion A system based on private insurance plans will not lead to universal coverage A system based on private insurance plans cannot control costs An expanded Medicare for All system can provide comprehensive services while costing no more than we now spend. An expanded Medicare for All system provides tools to control costs in the future. If a mandate plan is passed, the problems of the health care system will not go away. Real health care reform will continue to be essential.


We Can’t Wait Another 16 Years! We Need Real Health Care Reform Before the Premium Takes All our Income! :We Can’t Wait Another 16 Years! We Need Real Health Care Reform Before the Premium Takes All our Income! Source: American Family Physician, November 14, 2005 Today