Universal Healthcare: Can We Get There?

1. Universal Healthcare: Can We Get There? California Physicians’ Alliance Developed by Bree Johnston, Dorothy Rice, Jim Kahn, Vishu Lingappa, Beth Capell, and others

2. We are Going to Discuss Today • Problems with our current system • Potential solutions • Politics of change

3. The Health Care Crisis: Interconnections • >13% of GDP (50% more than Canada) • double digit inflation • employers shifting costs to employees • wasted resources in a fragmented system • 1 in 4 health care dollars not for health care • >40 million uninsured • most underinsured • pre-existing condition exclusions • deductibles and steep co-pays • erosion of choice of providers • provider no longer trusted to be advocate • bureaucratic intrusion • worse health care outcomes • distortion of clinical judgment

4. What is Right with our System? • Excellent hospitals, equipment, and health care facilities • Enough well trained professionals • Superb research • Sufficient spending

5. What is Wrong with our System? We spend far more money than any other country on health care... …but get far fewer benefits, far worse health outcomes, and far less patient satisfaction.

6. What is Wrong with our System? • Tens of millions of workers and others lack decent health care • Health outcomes are worse than other developed nations due to gaps in health coverage • We spend more per capita on health care than any other country … with worse access and outcomes • 38% of Americans report one or more problems getting access to care in the past year (Kaiser Commission, July 2002)

13. Some Comparisons

14. Access is a Huge Problem • 1 of 5 Americans postponed getting needed health care last year • 1 of 7 Americans had a problem paying for medical bills last year • 1 of 10 did not get a prescription drug they needed due to costKaiser Commission on Medicaid and the Uninsured, July 2002

15. Access Problems Harm Health • The Institute of Medicine estimates 18,000 excess deaths per year due to lack of health coverage • People without health insurance: • Receive too little medical care too late • Are sicker and die sooner • Receive poorer care when they are in hospitals, even for acute situations like car accidents Care Without Coverage, Institute of Medicine, May 2002

16. Illness is a Major Cause of Bankruptcy • Half of all bankruptcies involve a medical cause or debt • 326,441 families identified illness/injury as the main reason for bankruptcy in 1999 • 299,757 more had large medical debts at time of bankruptcy Source: Norton’s Bankruptcy Advisor, May 2000

17. Who are the Uninsured?

18. Why Should People with Health Insurance Care about the Uninsured? • With economic ups and downs, it could be you • Many people are tied to jobs that they don’t like due to health insurance • Working people age 50 to 65 are just as likely as younger workers to lose health insurance— just when they need it most • Fairness, humanity, and social obligation

19. Why Should People with Health Insurance Care about How Insurance Works? • Health insurance premiums are rising, and this may worsen during economic decline • Risk is being shifted to patients through Medical Savings Accounts & Defined Contributions… so sick people pay more Fuchs NEJM, 2002 • Insurance works best for patients if we are in one large risk pool

20. Why Should People with Health Insurance Care about How Insurance Works? • Health insurance premiums are rising, and in a down economy employers shift costs to employees • Medical Savings Accounts & Defined Contributions undermine the risk pool, seduce patients to gamble with their health, and threaten care for people with major disorders Fuchs NEJM, 2002 • So more and more people have less access to care, and what care they do get is getting worse.

21. Adverse Consequences of Investor Owned Health Care • Bankruptcy in physicians groups due to inadequate payments • Erosion of provider-patient trust • Conflicts of interest • Worse quality and access in investor -owned health systems and nursing homes, especially among those in fair or poor health Thomas SGIM 2000 Woolhandler et al JAMA 1999 Harrington AJPH 2001 Tu NEJM 2002

22. Why is Health Care Different From Most Market Commodities? • Health care is technically complex -- it’s hard to make choices that “maximize utility” • Health care is expensive, tempting HMOs to cheat (exclude the sick) rather than compete (profit by being efficient) • Poor choices cannotbereliably revisited • Providing it requires good clinical judgment All industrialized democracies have removed health insurance from the market and provided citizens with a national health insurance … except USA

23. Evidence of impact: • Negative impact on charity care JAMA 1999 • Nurses report spending less time with patients • Higher acuity patients and worse staffing • Less time to teach and comfort patients AJN 1996

24. Has a Decade in the Marketplace Improved Health Care? • Access is worse • Quality is eroding • Choice has substantially diminished • Trust in health care providers has been undermined • Once again, COSTS ARE SKYROCKETING

25. Are we paying for care? Or overhead? • Huge inefficiencies to operate a complex system with multiple private insurers plus Medicare, Medi-Cal, and other public programs • For-profit HMOs and hospitals where profits are “earned” by stockholders, not reinvested in the health care system • Administrative costs of $309 billion nationally, twice what is needed

26. Overhead & Profit As Percent of Premium

27. Growth of Physicians, RNs & Administrators 1970-1998 Percentage Growth Bureau of Labor Statistics, NCHS

28. Nurse Staffing Improves Care • Increased hours of nursing care is associated with better care of hospitalized patients Needleman et al NEJM 2002

29. Do you want your health care dollars spent Here or Here?

30. The Case for National Health Insurance • Fairness – everyone should have the health care they need when they need it • Efficiency – we could pay for comprehensive care for everyone and spend less money than now • We would spend more money on direct care • The current experiment with market driven health care has not worked … for patients, physicians, nurses, or society

31. Health Care Options Project (HCOP) Provides insights into Health Reform • Convened by California Health and Human Services Agency, based on Senate Bill 480 signed by Governor Davis in 1999. • Examined options for extending health care coverage in California • Nine reform option papers • Analyzed and compared by consultants from The Lewin Group and AZA Consulting

32. The Nine HCOP Proposals • Six partial proposals • Three take steps back, reducing coverage or access • Two take modest steps forward, expanding existing programs • One is nearly universal, combining expansions of existing public programs with “pay or play” for employers (we will discuss) • Three “universal coverage” proposals • Two “single payer” • We will discuss the Kahn proposal • One “health service”

33. Steps Forward, Almost Universal • Healthy California (Brown and Kronick) • Stage One: Covers Low Income Adults • Stage Two: Pay or Play • Covers 6 million more Californians, to 33 million • BUT: As with Single payer, costs to state government are high and assumptions about federal funding optimistic.

34. Pay or Play Pay Tax Offer Insurance Employers Choose Employees Choose Workers Covered Under Public Program Employer Plan

35. Net Change in Spending for Employers and Families Under Pay or Play

36. Universal Health Care Proposals • California Single Payer Plan (Jim Kahn and CaPA colleagues) • Cal Care (Judy Spelman and Health Care for All) • California Health Service Plan (CHSP) (Ellen Shaffer)

37. How does it work? • Universal coverage for residents of California • Comprehensive benefits, including long term care • Public administration

38. The power of single payer: Highly equitable, highly efficient. A rare combination.

39. What is Single-Payer Health Care? Health insurance with these features: • Public financing -- one public payer • Universal -- covers everybody • Comprehensive -- covers all medical needs • Private delivery-- private & some public providers • Controls costs-- through global budgets and bulk purchasing, not clinical micromanagement • Portable -- retained with move, change or loss of job • Accountable -- to participants

40. What do we get from Single-Payer? • Administrativeefficiency via simplified reimbursement. • Patient freedom to choose/change health care providers, without paying more. • Provider freedom to choose mode of practice (fee-for-service, capitation, or salary). • Fairer financing (lower cost to sick, poor/middle-income). • Explicitness in priorities (e.g., prevention) and financing (e.g., risk adjustment) • Shared dedication to success, via universal participation.

41. Benefits Under Single-Payer • All medically necessary health care services as determined by the patient’s chosen provider • Full mental health, prescription drug, and long-term care coverage • No exclusion of “pre-existing conditions” • No deductibles or life-time cap in benefits • Modest co-payments, if any • Choice of any willing licensed health care provider

42. How Does Single-Payer Do It? • Just collects money and pays bills without needing to intrude into individual doctor-patient relationships to make a profit.

43. How Does Single-Payer Do It? • Just collects money and pays bills without needing to intrude into individual doctor-patient relationships to make a profit. • Global budgeting controls costs while leaving clinical decisions in the hands of the patient’s chosen health care professional.

44. Ineffective and intrusive micromanagement by insurance companies (current system) involving an army of bureaucrats Global budgeting (under single-payer) makes cost control administratively simple and unintrusive

45. How Does Single-Payer Do It? • Just collects money and pays bills without needing to intrude into individual doctor-patient relationships to make a profit. • Global Budgeting controls costs while leaving clinical decisions in the hands of the patient’s chosen health care professional. • Enrollees are the shareholders in a health care system motivated to provide the best possible care while controlling costs.

46. Two Equal and Opposite forces: Desire to control costs (spent on someone else) Desire for the best possible care for loved ones • Today, enrollees are not the shareholders, so these forces are out of balance: HMOs cheat rather than compete, to increase profits and increase stock price. • Under single-payer costs must be controlled by eliminating waste and preventing disease, not by denying care to the sick to maximize profits.

47. How Does Single-Payer Do It? • Just collects money and pays bills without needing to intrude into individual doctor-patient relationships to make a profit. • Global Budgeting controls costs while leaving clinical decisions in the hands of the patient’s chosen health care professional. • Enrollees are the shareholders in a health care system motivated to provide the best possible care while controlling costs. • Eliminates hidden sources of waste

48. How Many Kinds of Waste can YOU Find in Health Care Today? • Unnecessary and wasteful bureaucracies • Inadequate primary care ... increased utilization of expensive ER services • Inadequate mental health coverage manifests as somatic complaints • Inadequate resources for public health, prevention, and research • Legal costs related to lack of health insurance • Hidden costs (e.g. workers compensation and liability insurance partly pay for the lackof universal healthcare)

49. FFS or integrated delivery system Hospital global budgets

50. Universal Health Care Proposals: Bottom line • Universal coverage, broad benefits • Expanded benefits for those with insurance! • Increased government spending but ... Lower total spending than now • Less spending on administration, overhead, and profits • More spending on direct care