Vol. 178 October 1, 2017 What is Single-Payer Health Insurance?

October 1, 2017

Now that Bernie Sanders is again firing up the discussion about single-payer health insurance, it might be a good idea to review this complex issue. So, here’s a short self-test for you to gauge your understanding of what Bernie, and a lot of other people, are talking about.  The correct answers are supplied right away, so you won’t stay confused for long. Since this is an internet-based test, YOUR ANSWERS, of course, WILL BE COMPLETELY ANONYMOUS. Nothing will  be recorded by NSA , Equifax, or the Russians.

 

“Single-payer” means:

  1. socialized medicine
  2. 100% of health care costs are paid for with taxes
  3. Pop-Pop picks up the dinner bill for everyone
  4. none of the above

Answer: 4. none of the above – In socialized medicine health care facilities and providers are owned by the government. “Socialized medicine” is a pejorative term which is now irrelevant since at least 70% of U.S. healthcare costs are already met by tax dollars  from Medicare, Medicaid, or the Veterans Administration. “Single-payer” is just an insurance scheme for public or privately owned services. In countries with universal health care insurance 77%-87% of costs are met by taxes. In the U.K. private insurance pays for about 13%. Pop-Pop gladly picks up the dinner bill for his children, but health insurance is still on them.

The number of countries with universal health insurance are:

  1.  1
  2.  2
  3.  3
  4. 58

Answer: 4. 58 – Germany in 1883, France in 1945, UK in 1946, Australia in 1975, Canada in 1984, Israel in 1995.

A basic tenet of single-payer insurance is that everyone will be covered without regard to income level:

  1. true
  2. false
  3. true, but …

Answer: 3. True, but … it will take years to bring everyone in the U.S. under “Medicare For All”.  Each year or so another decade of ages will be added to the coverage. States will need to coordinate their income-based Medicaid programs with “Medicare For All”.  Some states could request and receive waivers from the national program. Etc., etc., as incrementally we always go.

Universal health care insurance in other countries is administered:

  1. nationally
  2. regionally
  3. locally (municipalities)
  4. all of the above

Answer: 4. all of the above – Germany has 1100 public and private “sickness funds” with a national standard level of coverage. In the Netherlands health insurance is administered by municipalities that levy local taxes to pay the costs. This  apparently enhances transparency and both taxpayer and patient satisfaction. Conclusion: If you have seen one system of universal health coverage, you have seen ONE. By the way, isn’t “sickness fund” a much more honest name for insurance which pays for medical care and does not necessarily buy “health”. (Leave it to the Germans to say it like it is).

Universal health insurance is based on which basic insurance principles:

  1. spread the risk over the greatest number of people
  2. use education and regulation (i.e.. fire laws) to reduce the highest risks of loss
  3. if you win (stay healthy), you “lose” (your premiums). If you “lose” (get sick), you win (care is paid for)
  4. use excess premium revenue to build fancy office buildings and pay for expensive lobbyists .

Answer: 1-3 (see subsequent question for further information on #4)

Single payer health insurance will cost less to administer than our present system:

  1. true
  2. false
  3. true, but …

Answer: 3. true, but… maybe not as much reduction as we hope. Administrative costs for the individual provider will probably remain the same because “meaningful criteria” compliance, complex diagnostic coding, need for medical necessity justification, and need for data showing that quality is not being eroded will continue to require significant personnel time and computer capability. Remember also that Medicare is currently administered in large part by “fiscal intermediaries” like Blue Cross. That probably won’t change. Some predict that because of continued pressure on a single-payer to reduce costs, it may, if fact,  get even more complicated for providers to get paid for their services. Of course, the huge consumer advertising, employer marketing, and lobbying expenses of private health insurance companies will be greatly reduced when the market share of private insurance is reduced to 10-15% as has occurred in other countries. If only we could get Visa to run Medicare’s fraud protection system!

Why not “Medicaid For All”;  could individual states institute universal health insurance so that we wouldn’t have to wait for a national consensus?

  1. no
  2. yes
  3. yes, but…

Answer: 3. Yes, but … the hallmark of universal health insurance in other countries is a consistent standard of coverage for all residents. Medicaid programs are state-specific and coverage is extremely variable, as is provider payments. If you see one, you have seen one. Attempts to waive the Obamacare national standards by those wishing to repeal it spotlighted the potential glaring inequities. But, Massachusetts has done it for 90% of its population, and there are bills in its legislature to do it for all. California is attempting to do it. Most California families and businesses, a University of Massachusetts study has said, would pay less for health care than they do now, even with the new taxes, because they would no longer pay premiums, deductibles or co-pays. As Samantha Bee recently noted: “You don’t have to be racist anymore to believe in States’ Rights .”

Why is a single-payer sometimes described as a “double-edged sword”?

  1.  a single-payer could have much greater negotiating leverage with both suppliers (drug companies) and providers (doctors and hospitals)
  2. a single-payer would be perched on the sharpest edge of the cost-quality equation
  3. the standardization of payments by a single-payer could dampen innovation and hamper medical progress
  4. all of the above

Answer: 4. all of the above – More leverage against the drug companies is “good”. More leverage against the providers could be “bad”.  Despite studies that show that good quality care is less costly, many still see a dichotomy between cost and quality. Concern about hampering innovation (“new ways of doing things”) with excessive standardization (“the old ways”) was one reason Obamacare created a Center for Innovation within Medicare as part of the ACA .

Who is in favor of single-payer health insurance?

  1. 60% of those polled
  2. 38% of those polled
  3. depends on the nature of the poll
  4.  all of the above

Answer: 4. all of the above – The 60% in favor of single-payer health insurance dropped to 38% when the question was tied to one about increased taxes. The most recent Harris-Harvard poll (9/17/17) showed that 52% were in favor of single-payer insurance. 69% believe that it would provide more coverage, including 54% of Republicans. . Most of the other questions about a governmental single-payer were 50/50 pro and con. Some physicians, hospitals, and other providers are in favor of single-payer insurance.

What are some of the barriers to implementing single-payer, universal health insurance in the U.S.?:

What does President Trump think?:

 

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Vol. 160 December 15, 2016 ACA or Not ACA, That Is The Question.

December 15, 2016

Hub thumbnail 2015

As Trump continues to form his cabinet and Obama counts the days left while Hillary remains hidden in the woods, speculation about what will happen to the Affordable Care Act (ACA) is wide-ranging. Will it be repealed? CAN it be repealed? What will replace it? What if nothing replaces it?

It may help to remember that the vast majority of citizens who had health insurance before ACA were already heavily subsidized by government funds via Medicare, Medicaid, and tax subsidies for employer-sponsored insurance ($300 billion for the employer-sponsored policies alone). Studies have shown that 5% of the population accounts for 50% of health expenditures. The least costly half of our population accounts for 3% of the expenditures. (This is, of course, the essential element of risk spreading that makes insurance of anything “work”.)

ACA accomplishments since 2010

23 million citizens have gained health insurance coverage
-coverage that is not denied due to pre-existing conditions
-coverage of children up to 26 yo. on parents’ policy
-more than half of those (13.7 million) gained coverage under expanded Medicaid (by increasing the eligible income levels)
-all but 19 states took the federal subsidy to expand Medicaid coverage

Uninsured citizens dropped from 16% in 2010 to 9% in 2016
91% of U.S. citizens now have health insurance coverage (Spoiler Alert: in our big, or should I say “Hu-u-y-ge”, country that 9% translates into 29 million citizens still un- or underinsured.)

All this without additional net cost over the cost of medical services that was predicted in the U.S. without the ACA, i.e “no net increased cost due to the ACA.” (The largest single source of spending increase since 2013 was “retail pharmaceuticals”.)

Reduced “gender bias” by mandating maternal health benefits (coverage of contraception) as part of essential benefits package.

Mandated some mental health service coverage.

Mandated some coverage of substance abuse services.

What about repeal?

Unlikely, but possible. Outright repeal could immediately create another 23 million people without health insurance which would dump all that cost burden back on the states, the insurance companies, and the health care providers.

Repeal would require 60 votes in the Senate, and the Republicans are 8 short. There is speculation that some Democrats running for reelection in 2018 might join a repeal vote knowing that some of their Democratic colleagues that supported Obamacare lost reelection in 2016. The Gallup poll currently puts the public attitudes toward Obamacare at 50/50 “favorable/unfavorable”.

“Replacement” of selected provisions is more likely since it could be done as part of the “budget reconciliation process” which requires only a simple majority of 51 votes.

Replacement?

Coverage to age 26 on your parent’s policy and ban on denying coverage of pre-existing conditions are so popular that they are here to stay.
What parts might Republicans target to replace?
(An “ACA repeal bill” passed by the Senate in 2015 and vetoed by Obama gives us some clues).

Individual mandate – Even though this was proposed by Republican Mitt Romney and successfully passed the Supreme Court test as a tax, this penalty for not getting health insurance rankles the Republicans, and a sizable portion of the public. Proponents argue that it is essential to incentivize “healthy people” to buy insurance, a fundamental principle of spreading the risk over a large group.

Block grants to the states and/or vouchers for Medicare – Block grants would change this federal standard “entitlement” program into a state-controlled one with variable benefits and premiums. Vouchers, touted as making consumers more “powerful in the marketplace”, really shift the obligations (“unpaid bills”) to the states and health care providers

Reduce income level eligibility for Medicaid from the ACA level of 138% of federal poverty level (about $22,000 for a couple) back down to about $16,000 a year for a couple.

Middle-class subsidies via insurance marketplaces to be replaced by Health Savings Accounts (HSA), tax credits, across-state line insurance policies, and reestablishment of high-risk pools. All of these are advantages to people who have income, often sizable incomes.
-70% of HSAs are currently held by people with over $100,000 annual income.
-Many insurance companies already sell across state lines, but this provision would free companies from state mandated benefits and other state regulations.
-Reestablishment of high risk pools could provide higher premium policies for those with chronic diseases without unduly penalizing healthy individuals. This reflects a trend back toward indemnity or catastrophic insurance policies with few preventative benefits.

Rescind the new taxes to fund the ACA – details on how to pay for replacement provisions TBD.

Maternal health benefits– Trump suggests making contraception available over-the-counter without a prescription, thus avoiding the problem of exempting churches from this mandated benefit. Planned Parenthood would, of course, be defunded.

Medical liability reform – Though a cherished symbol of support of and a psychologically warm and fuzzy concept to physicians, all studies show that no significant cost reductions occur from tort reform because the actual cost of “defensive medicine” is very small compared to the total.

What about ACOs?

Remember them? Accountable Care Organizations are physician groups and hospitals organized together to reduce costs without degrading quality. The first ACOs, so-called “Pioneer” ACOs, could keep a share of any savings if they delivered care to a defined population at a cost below a “target cost” without missing any of the “quality targets.” If they overshot the “target cost”, they would owe money to the federal government at the end of the year.

This is the last year for the original 32 Pioneer ACOs, and only 16 remain in the program. Half have withdrawn from their contracts because of losing money, continuous wrangling over targets, and lack of flexibility in defining risks and benefits. The “Next Generation” ACOs are due to sign up in January 2017, and most will opt for sharing savings without taking financial risk for losses.

Bottom Line:

The vetoed 2015 Senate “ACA repeal bill” had a two-year transition period embedded in it, so even if a repeal bill is passed and Trump signs it the loss of health insurance will not be immediate. Many political experts, if we can still use that label for them after this election, suggest that even “replacement” of ACA provisions will be politically difficult and will take at least two years to pass. A new study by the Urban Institute shows that Paul Ryan’s proposed Republican replacement plan would result in more uninsured citizens than existed before ACA. 80% of those losing insurance would be part of a working family.

How high are the stakes? A 2009 study by Harvard Medical School and the Cambridge Health Alliance estimated that the lack of health insurance led to almost 45,000 unnecessary deaths. “Lack of health insurance can be fatal.”

So, for a variety of reasons, the next two years will be “vel-l-ly in-ter-esting” In the meantime if you have health insurance through a ACA-based insurance marketplace make sure you re-enroll by January 31 to continue coverage.


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