who needs insurance companies anyway? or “get the insurance companies out of my health care”...
TRANSCRIPT
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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 ChapterComments: [email protected]
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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
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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
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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
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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
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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*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.
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Our Public System Covers Fewer, and Private Insurance Dominates
Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
0
10
20
30
40
50
60
70
80
90
100
Pe
rce
nt
Population Covered by Public System
Private Health Insurance Percent of Total Cost
United States
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How Does the U.S. Compare with Other Countries?
• We provide the same medical care • We use the same medical technologyBut…• 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.
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Hospital Inpatient Days Per Capita
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Physician Visits Per Capita
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Bone Marrow Transplants
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MRI Units/Population
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CT Scanners per million population 2002
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US Life Expectancy is Less than Many Other Countries
65
70
75
80
85
Un
ited
Sta
tes
Jap
an
Icela
nd
Sp
ain
Sw
itzerl
an
d
Au
stra
lia
Sw
ed
en
Italy
Can
ad
a
No
rway
Fra
nce
New
Zeala
nd
Au
stri
a
Neth
erl
an
ds
Fin
lan
d
Un
ited
Kin
gd
om
Germ
an
y
Lu
xem
bo
urg
Belg
ium
Gre
ece
Irela
nd
OE
CD
Po
rtu
gal
Den
mark
Ko
rea
Czech
Rep
ub
lic
Mex
ico
Po
lan
d
Slo
vak
Rep
ub
lic
Hu
ng
ary
Tu
rkey
Yea
rs
Source: OECD 2005
Un
ited
Sta
tes
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…and its Infant Mortality is Higher
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The US spends more, but our system doesn’t work well, and we aren’t happy with it.
Per Capita Spending
Overall System
Performance*Public
SatisfactionUnited States 1 17 14Austria 5 4 3Belgium 11 11 7Canada 9 14 12Denmark 7 16 1Finland 12 15 2France 3 1 6Germany 2 13 9Greece 17 6 17Ireland 14 10 8Italy 10 2 15Luxembourg 4 7 5Netherlands 8 8 4Portugal 16 5 16Spain 13 3 13Sweden 6 12 10United Kingdom 15 9 11
* World Health Organization, The World Health Report 2000Source: R.J.Blendon et al, Health Affairs, 2001
Ranking by:
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Number of Uninsured Americans (Millions)
1980 1985 1990 1995 2000
45
40
35
30
25
20
Source: U.S. Census Bureau
Rising Number of uninsured
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Playing Doctor? (cartoon)
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U.S. Health Costs are 70% Greater than the Median of Other Countries
Un
ited
Sta
tes
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Our Public Sector Alone Spends More than Other Countries:
Americans Pay for National Health Insurance but Don’t Receive It
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
UK Sweden Germany Canada Norway U.S.
Public Expenditures Private Expenditures
OECD and “Paying for National Health Insurance—And Not Getting It”
Health Affairs: July / August 2002
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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
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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
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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.
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THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE …
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%Source: National Center for Health Statistics, 2003
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…BUT IT PAYS MUCH LESS THAN HALF THE COST
2004Personal Health ExpendituresPrivate Funds
• Private health insurance - Self-funded plans - Insurance company plans• Out-of-pockets payments• Other private fundsPublic 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%
* Does not include tax subsidy for private insurance. See Woolhandler & Himmelstein, HealthAffairs 2002Source: Centers for Medicare and Medicaid Services, 2006
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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?
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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.
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CEO’S COMPENSATION 2004
Note: Total Pay=Salary+Stock Options
Source: Modern Healthcare, Aug. 1, 2005; NYTimes, Apr. 3, 2005
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Private Insurers’ High Overhead
16.3%
19.9%
26.5%
3.1%
0%
10%
20%
30%
Medicare Non-Profit Blues CommercialCarriers
Investor-OwnedBlues
International Journal of Health Services 2005; 35(1): 64-90
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Hospital Billing & AdministrationUnited States & Canada
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Physicians' Billing & Office ExpensesUnited States & Canada
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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 includedSource: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005
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Half of Middle- and Lower-Income Adults Experience Serious Problems Paying Medical Bills or Insurance Premiums
1928 30
11 6
19
22 18
23
16
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat serious
Very serious
2127 31
1910
17
2019
15
13
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat seriousVery serious
38
50 48
33
21
38
4850
35
23
Percent Percent
Medical bills Health insurance
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
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Worries About Affordability and Access to High-Quality Care
Spreading to Middle-Income Families
2334 30
1611
25
32
20
31
23
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat worriedVery worried
1927 23
169
28
2627 38
28
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat worriedVery worried
48
66
5047
34
47
5250
53
38
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
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
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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
1623 18 15
7
2323
21 2226
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000 or
more
Somewhat serious
Very serious
Percent
3946
39 3833
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
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The US Health Care System! – Uwe Reinhardt
The U.S. Health Care System!The U.S. Health Care System!
Source: Uwe Reinhardt, Ph.D., Princeton University
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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
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And Health Insurance Costs Keep Rising
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Wall Street Journal, July 31, 2006
Health insurance premiums have risen faster than health care costs
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US Health Costs Rise Faster than Other Countries’ Costs
Source: Health United States 2005, Natl. Center for Health Statistics
0
2
4
6
8
10
12
14
16
18
1960 1970 1980 1990 1995 2000 2004
Hea
lth
Co
sts
as
Per
cen
t o
f G
NP US
Canada
France
Germany
Japan
UK
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Health Insurance is a Rising Share of Employment Benefits
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Firms Shift Health InsuranceCosts to Workers
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A Declining Number of Firms Are Offering Insurance…
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And Small Businesses Especially Can’t Afford to Offer Insurance
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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.
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CLAIMS BY HEALTH INSURANCE COMPANY SUPPORTERS
Private health insurance gives consumers:
• Greater choice
• Efficiency through competition
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Most Employers Offer Only One Plan
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Many With Insurance Lack Choice
42% Are Offered Only 1 Plan
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Less expensive17%
Better care9%
Employer changed*
74%
Employers Control their Choice: Reasons for Changing Health Plans
*Changed job, or employer changed plan offerings
Source: Health Affairs 2000; 19(3):158
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Some Choices Don’t Really Matter!
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The Choice that People Really Want:
• Choice of doctor • Choice of treatment and location of treatmentNOT• Choice of health planToday’s managed care plans limit the patient’s
choice of doctor, treatment, and location. The only choice they offer is: How much freedom from our limits are you
willing to pay for?
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The Health Insurance Industry is Highly Concentrated
Source: Modern Healthcare, Aug. 1, 2005; PacifiCare was bought by UnitedHealth in December 2005
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Annual Revenue 2004 ($Billion)
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…And the Concentration is Growing
• Between 1995 and 2005, there were more than 400 mergers involving health insurers and managed care organizations.
• In 95% of metropolitan areas, a single insurer had 30% or more of the market
• In 56% of the areas, a single insurer had 50% or more of the market.
Source: Competition in Health Insurance: A Comprehensive Study of US Markets, American Medical Association, 2005.
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THE TRUTH ABOUT HEALTH INSURANCE COMPANY CLAIMS
They fail to provide real choice or competition
• Many employees have no choice of plan
• Many employers change plans
• People want choice of provider, not plan
• Competition is declining through mergers
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OTHER PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE
• Financing by income-independent (and often unaffordable) premiums is highly regressive
• Millions have inadequate coverage and highout-of-pocket expenses
• One million households each year face health-related bankruptcy
• The “hassle factor: Filing of claims by consumers is confusing, costly, stressful
• Claims are often denied or delayed
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STILL MORE PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE
• Insurers avoid covering those who are sick
(underwriting or risk selection)
• Insurance companies interfere in physician
decision-making
• Trust in the doctor-patient relationship erodes
• Money is spent on treatment, not prevention
• Health care is treated as a commodity to be purchased rather than a service to be provided
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THE ULTIMATE PROBLEM
“Physicians have a professional and ethical obligation to their patients; health insurers’ primary legal obligation is to their shareholders.”
Competition in Health Insurance: A Comprehensive Study
of US Markets, American Medical Association, 2005(Note: Perhaps now the AMA will reconsider its support for private for-profit insurance over publicly-provided insurance plans.)
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This Familiar Headline is Wrong!
• It is not the employer-based system that is collapsing -- it is the unaffordable and
inefficient private insurance system.• U.S. employers should contribute their fair share,
but not through private insurance.• Many countries use employer-supported non-profit
industry-based sickness funds – and they achieve universal coverage with lower cost.
Employer-Based Health Insurance System ‘Collapsing’
(Wall Street Journal, 7/17/06)
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SOME PROPOSALS BASED ON PRIVATE INSURANCE
• Employer mandate to provide insurance
• Individual mandate to purchase insurance
• Tax credits for the purchase of insurance
• Health savings accounts and high-deductible insurance (“Consumer-directed health care”)
ALL OF THESE WILL FAILThey are more of the same:
They all rely on private health insurance
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WHAT’S WRONG WITH THE ME/MA/VT PLANS
What is really wrong with these plans is not their details. The problem with them is:
They continue to rely on private insurance.• Covering the uninsured with private insurance
will increase the cost of health care.• Costs will continue to rise as long as there are
multiple private payers with no coordination, no budgeting, and no planning.
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SO WHO NEEDS INSURANCE COMPANIES ANYWAY?
The U.S. today runs a very successful program that
• Pays for comprehensive health services
• Covers more than forty million people
• Gives patients free choice of doctors and hospitals
• Is funded by a public agency, not by private
insurance companies
It’s called Medicare.
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THE EVIDENCE FROM MEDICARE
Since 1997, the US has conducted a head-to-head comparison between private insurance (“Medicare Choice+”, now called “Medicare Advantage”) and “public” Medicare.
The result:• Private insurance companies require a subsidy of at
least 15% just to stay in the business.• Fewer than 1 in 6 Medicare-eligibles choose the
private insurance option.
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Medicare Coverage is Better than Private
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SO HERE’S OUR SOLUTION:
• Expand Medicare to cover everyone• Improve the coverage it offers• Eliminate private insurance
Expanded and Improved Medicare for All
Conyers Bill - HR 676-- The “single payer” solution --
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HOW WOULD “MEDICARE FOR ALL” WORK?
• Everyone would receive a Medicare card assuring payment for all needed care
• Complete free choice of doctor and hospital
• Doctors and hospitals remain independent, negotiate fees and budgets with Medicare
• Progressive taxes go to Medicare Trust Fund
• Public agency processes and pays bills
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SOME IMPLICATIONS OF MEDICARE FOR ALL
• The same coverage for everyone: No means testing; coverage would not depend onincome, employment or age
• Medicaid would no be longer needed• Hundreds of billions of dollars in
administrative costs would be saved• Costs would be controlled through capital
planning and quality reviews conducted through the single insurer
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How Would It Be Paid For?One Example:
Revenue Sources for Single Payer Program
Employer Payroll Tax (8.17%)
33%
Federal Government
(existing)34%
Other8%
State and Local Govt (existing)
10%
Employee Payroll Tax (3.78%)
15%
Note: Payroll tax on incomes above $7,000 and below $200,000 only. Source: Health Care for All Californians Act: Cost and Economic Impacts Analysis, The Lewis Group, January 19, 2005
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Covering Everyone and Saving Money through Medicare for All
Additional costsCovering the uninsured and poorly-insured +7.2%Elimination of cost-sharing and co-pays +5.1%SavingsBulk purchasing of drugs & equipment -2.8%Reduced hospital administrative costs -1.9%Reduced physician office costs - 3.6%Reduced insurance administrative costs -5.3%Primary care emphasis & reduce fraud -2.2%Net Savings -4.3%Source: Health Care for All Californians Plan, Lewin Group, 2005
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WHY IS SUCH A NATIONAL HEALTH PROGRAM POSSIBLE TODAY?
• Private insurance is not addressing the fundamental problems of cost, choice, access and quality.
• Everyone is affected: the uninsured, the underinsured, and everyone else who is
insecurely insured.• Employers who provide insurance want to be relieved
of the burden of rising costs and unfair competition from employers who don't offer insurance.
• Small businesses want to offer insurance to their employees but can’t afford it.
• Every other industrialized country has done it.
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“Would you prefer the current system or Universal Health Insurance…like Medicare…run by
Government…financed by Taxpayers”
62%
32%
6%
Source: Washington Post/ABC News Poll, 10/20/03
Current
Don’t know
Universal HealthInsurance
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PHYSICIANS FOR A NATIONAL HEALTH PROGRAM (PNHP) says:Who needs insurance companies anyway?• Limited reforms that keep private insurance in place
have been tried and failed.• If we get rid of the insurance companies, we can have
a Medicare for All system that is:- Simpler- Less costly- Better for our health- Equitable, and- Covers everyone
Let’s do it!
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RESOURCES
• Physicians for a National Health Program (PNHP) www.pnhp.org
• PNHP New York Metro Chapter www.pnhpnyc.org.
• Rekindling Reform www.rekindlingreform.org
• HealthCare-NOW www.healthcare-NOW.org
• Citizens Health Care Working Group (US govt) www.citizenshealthcare.gov