Getting Real About Single Payer: The Economic Argument for the Long Term

Walter Tsou, MD, MPH

Health Care for All Pennsylvania

February 7, 2015

Pennsylvania in a Pickle

• $2+ billion dollar deficit

• Revenue from shale gas much less than predicted

• Huge pension obligation

• Restore $1 billion of public education funding?

• Republican legislature tax adverse

• Cut spending? But where?

What would you cut to get $3 billion?

Zogby, 2014-15 Mid Year Budget Briefing, Dec. 3, 2014

What is the biggest ignored waste of taxpayer funds?

US spends more per capita

OECD Health Data, Kaiser Family Foundation

$750 Billion on Unnecessary Care?

The Cost of Unnecessary Care?

Institute of Medicine, “Best Care at Lower Cost, Sept 2012

Billing and Insurance Costs18% of US Health Care Costs

Jiwani et al. BMC Health Services Research (2014)14:556

Single Payer savings $375 BILLION in US

Jiwani et al. BMC Health Services Research (2014)14:556

Why single payer saves money?

• Competitive purchasing of services (free market)

• Negotiated fee schedules and prices

• Reduced administrative costs

• Robust information management system

Affordable Care Act vs. Single Payer

State single payer bill

• The Family and Business Health Security Act would cost 10% of payroll and 3% personal income tax for individuals

• Comprehensive coverage for all medical, vision, dental, mental health and long term care services

• Coverage for life (eliminates need for retiree health costs for those who stay in Penna)

Outside Economic Analysis

• Dr. Gerald Friedman, Professor of Economics, Univ. of Massachusetts studied the plan

• $17 billion annual savings

Education funding

• Restore $1 billion in cuts

• 10% payroll vs. 2009 school district health spending (19.4%)?

• Savings for school districts? $1.15 billion

Pension funding, 2 parts

• Pensions – wages post retirement –somewhat funded

• Other Post Employment Benefits – pay as you go

– Health care premiums

– Life insurance premiums

– Deferred compensation

Retiree Health CareThe hidden costs

Zogby, 2014-15 Mid Year Budget Briefing, Dec. 3, 2014

Accrued Retiree Health Unfunded Liability is over $16 BILLION!

Hay Group, August 21, 2013, “Actuarial Valuation of the Post Retirement Medical Plan”

Bottom Line, $2.5 Billion annually for Retiree Health Costs just in PA

Hay Group, August 21, 2013, “Actuarial Valuation of the Post Retirement Medical Plan”

Retiree Health Care Costs

• Only a single payer plan can you guarantee coverage of future health care costs

• Converts an accrual $16 billion liability to a pay as you go liability – much more affordable

Expand Medicaid

• While we support, it maintains the enormous administrative waste

• No cost containment features

Summary

• Single payer is the only solution that can generate billions in state savings

• Able to save in education, pensions, and Medicaid

• The alternative budget are unconscionable cuts