Health Care Reform? ACA vs. Single Payer Oliver Fein, M.D. Professor of Clinical Medicine and Healthcare Policy Associate Dean Office of Affiliations Office.

Health Care Reform?ACA vs. Single Payer

Oliver Fein, M.D.Professor of Clinical Medicine and Healthcare Policy

Associate Dean Office of Affiliations

Office of Global Health EducationWeill Cornell Medical College

[email protected]

Retiree chapterProfessional Staff Congress

November 3, 2014

DISCLOSURES

Dr. Oliver Fein has no relevant financial relationships with commercial interests

Dr. Oliver Fein is Chair of the NY-Metro Chapter and past President of Physicians for a National Health Program (PNHP), a non-profit educational and advocacy organization. He receives no financial compensation from PNHP.

PRESENTATION OUTLINE  

1.The Politics behind the ACA

2.Challenges facing the U.S. Health Care System 3. Policy Options: ACA vs. Single Payer

HEALTH REFORM:OBAMA’S FATEFUL CHOICE

• He did not want to “start from scratch”

• He had two fundamental choices:

1) to build on the private sectoror2) to build on the public sector (Medicare)

• Which did he choose?

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

??

WHAT HAPPENED TO THEPUBLIC OPTION?

The original “robust” Plan – March 2009• Open enrollment: “Medicare for

everyone who wants it”• Medicare rates, backed by the

government• 119 million members (Lewin)• But maintained multiple payers

$1.2 Billion Spent on Health Care Lobbying!

Center for Public Integrity, March 26, 2010

WHAT HAPPENED TO THEPUBLIC OPTION?

The House Plan – November 2009• Restricted enrollment (only the uninsured)• 6 million members (<2% of the population)• Negotiated rates, self sustaining

The Senate Plan – December 2009• No public option

THE PATIENT PROTECTION AND

AFFORDABLE CARE ACT(ACA)

March 23, 2010

The Structure of the Affordable Care Act (Partial)

10

InsuranceReform

DeliveryReform

IntegratedCare

BetterCoverage

QualityFocus

MorePeople

Innovation

MedicaidExpansion

Exchanges

GuaranteedIssue

PreventionBenefits

Cost: MLR,Rate Review,M’Care Adv.

CareTransitions

Dual Eligibles

ACOs,Bundles,

PrescriptionDrugs

PreventionFunds

Fraud andAbuse

Transparency& Data Sharing

Value-Based

Payment

CMMI

PricingReforms

FQHCsKids < 26

ACA(a MANDATE MODEL)

Everyone is required to have health insurance or pay a penalty.

1. Individual mandate: penalty =$695 for singles; $2,085 for families

2. Employer mandate (50 or more employees): penalty =$2,000/employee

3. Necessary for the survival of private HI.Private HI lost 3.2% (6.3 million) enrollees in 2009 and more than 15 million in the last decade.

Improved MEDICARE FOR ALL (a Single Payer Model)

Build on the original Medicare

1. Expand Medicare to the entire population2. Improve Coverage: preventive services, dental care, long term care3. Eliminate deductibles and co-payments4. Expand drug coverage: public

administration5. Re-design physician reimbursement

CHALLENGES FACING

HEALTH CARE REFORM

1. Declining access

2. Escalating costs

3. Lack of comprehensive benefits

4. Restricted choice

5. Uneven Quality

6. Insufficient primary care

7. How to pay for reform

CHALLENGE #1

DECLINING ACCESS

Number of people spending more than 10% of income on health care (Millions) 

MILLIONS

RISE IN PERSONAL BANKRUPTCIES

62% of personal bankruptcies are due to medical expenses and over 75% had health insurance at the outset of their

bankrupting illness.*

* Himmelstein, et.al. Am J Med, August, 2009

ImprovedMEDICARE FOR ALL

• Automatic enrollment

• Federal guarantee

• All residents of the United States

• “Everybody in, nobody out”

HEALTH INSURANCE REFORM (ACA)

• Mandates purchase of private HI (2014)

• Expands Medicaid eligibility to 138% FPL (2014) - single $15,856; family $26,951, but not in 24 states

• Subsidizes premiums up to 400% FPL(2014) - single $45,960; family $78,120

• Insurance market reforms: Coverage up to age 26; no pre-existing condition exclusions; no annual/lifetime limits

Millions Will Remain Uninsured…

54 55 56 56 56 56 57 58 58

26 26

53 53

4136

30 29 29 29

53

3732

26 25

0

20

40

60

80

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Current law

ACA 2010

ACA Post-Supreme Court

Millions

Note: The uninsured include about 5 million undocumented immigrants. Source: Congressional Budget Office

CHALLENGE #2

ESCALATING COSTS

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings,

1999-2011

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011 (April to April).

High Cost of Health Insurance Premiums: It’s Even Too Expensive for

the Middle Class Today

National Average for Employer-provided Insurance

Single Coverage $ 6,025 per year Family Coverage $16,834 per year

Note: employee contribution: Single (19%) = $1,081

Family (28%) = $4,823

Source: Kaiser Family Foundation/HRET Survey of Employee Benefits, 2014

ImprovedMEDICARE FOR ALL

Low Administrative Costs = Single Payer

• Administrative cost and profit

- Medicare: 2-3 %- Private insurance: 16-30%

• $400 billion* saved by converting from for-profit private HI to Medicare-for-all (single payer)

* NEJM 2003:349;768-775 updated to 2010

Covering Everyone and Saving Money through Medicare for All

Additional costs

Covering the uninsured and poorly-insured +6.4%

Elimination of cost-sharing and co-pays +5.1%

Savings

Reduced insurance administrative costs -5.3%

Reduced hospital administrative costs -1.9%

Reduced physician office costs -3.6%

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

134107

241

-111

-21

-76

-59

-46 -313

$ B

Total Costs +11.5%

Total Savings -15.8% Net Savings - 4.3% - 72

Private insurers’ High Overhead

SINGLE PAYER OFFERS TOOLS TO BEND THE COST-CURVE

• Global budgeting of hospitals

• Capital investment planning

• Emphasis on primary care; coordination of care; alternative ways of paying for care

• Bulk purchasing of pharmaceuticals

HEALTH INSURANCE REFORM(ACA)

Market Theory:

Mandate the young, healthy uninsured buy private health insurance

(they usually don’t get sick and don’t get

health insurance = low risks)

Then, the premiums for everyone will

go down.

WILL MARKET THEORY WORK?Premiums*

Single Coverage $6,025 per year

Family Coverage $16,834 per year

*national average for employer-provided insurance

Penalties under P-PACA

Individuals $695 per year

Families $2,085 per year

Employers $2,000 per employee

HEALTH INSURANCE REFORM (ACA)

Offers unproven tools to contain costs

• Health Information Technology (HIT)

• Chronic Disease Management

• Payment reforms (e.g., ACOs, bundled payments, value-based purchasing)

…and Costs Will Keep On Rising

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

PPACA (CMS Actuary)

Current projection

PPACA (Commonwealth Fund)

National Health Expenditures (trillions)

Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center for American Progress and The Commonwealth Fund, December 2009. Estimated Financial Effects of PPACA as Amended, Richard Foster, CMS Actuary, April 2010

$4.67$4.5

6.4% annual growth

6.6% annual growth

6.0% annual growth

$4.7

National Health Expenditures as Percent of GDP 17.8 17.9 18.0 18.2 18.8 19.3 19.8 20.2 20.5 21.0

CHALLENGE #3LACK OF

COMPREHENSIVE BENEFITS

• Service Coverage: Doctors, NPs, Hospitals, Drugs; Dental, Mental Health, Home care/nursing home

• Financial Coverage: Copays and deductibles

ImprovedMEDICARE FOR ALL

Comprehensive coverage- Preventive services- Hospital care- Physician services- Nurse practitioner and Physician Assistants- Dental services- Mental health and substance abuse services- Medication expenses- Reproductive health services-Home Care/nursing home care“All medically necessary services”Any exclusions? How decided?

ImprovedMEDICARE FOR ALL

Eliminates Co-Pays or Deductibles

• Reduce use of needed and unneededservices equally

• Result in under use of primary care services

• Not as effective in reducing over use of technology intensive services, as

- Eliminating self-referral to MD owned facilities- Reducing defensive medicine

HEALTH INSURANCE REFORM (ACA)

• No Standard Benefit Package mandated

• Eliminates co-pays and deductibles, but only on preventive services

• Stipulation that health insurers have medical lost ratios (MLR) of 80-85%

• No regulation of the magnitude of premiums, deductibles and co-pays – just the stipulation that benefits have an actuarial value of 60% or higher

http://www.whatmattersbywellmark.com/premiums.php

Average employer plan 87% actuarial value

NY State of Health – Standard Bronze Plan (Family)

• $6,000 deductible• Out-of-pocket maximum: $12,700 for a family with

income-based adjustments …• 50% coinsurance after deductible for:

– “Ambulance services”– Emergency department (unless admitted)– Urgent Care Center– “Advanced imaging”– “Diagnostic tests”– Dialysis– Hospice care– Inpatient care for end of life care (preauthorization

required)

Source: NY State of Health Standard Products; courtesy of Len Rodberg

CHALLENGE #4RESTRICTED CHOICE

• 42% of employees have no choice

• Private health insurance limits choice to

the network of doctors and hospitals with

whom they have negotiated contracts

• You pay more to go out of network

ImprovedMEDICARE FOR ALL

Expands Choice for Everyone

• No limit to a network of providers

• Free choice of doctor and hospital

• Delinks health insurance from employment

HEALTH INSURANCE REFORM (ACA)

Creation of HI Exchanges Expands Choice for Some in 2014

• Enrollment is limited to those in the individual and small group market

• Market-place of private HI plans

• No public option

• State-based, but no standard national plan

• No state single payer plan allowed until 2017

Vermont is using its Exchange to facilitate transition to Single

Payer:

Health Care Reform in New York State:

Gottfried’s New York Health Bill A7860/S5425

• Universal coverage• Comprehensive benefits• Coordination of care, but no gatekeeping• No cost sharing• No private insurance that duplicates New York Health• Funding by graduated payroll tax

CHALLENGE #5:UNEVEN QUALITY

• In 2014, U.S. was last among 11 industrialized nations in health system performance (quality, access, efficiency, equity and healthy lives).

• In 2004, we were 5th.

* Mirror, Mirror on the Wall

Commonwealth Fund (2014)

ImprovedMEDICARE FOR ALL

• National data on health care quality vs. proprietary data held by private HI

• National standards and public reporting

• HIT for the nation with patient protections – every patient their own medical record on a “credit” card

HEALTH INSURANCE REFORM (ACA)

• Comparative Effectiveness Research

• Innovation Center in CMS to test new payment and service delivery models – PCMH + ACOs (2011)

• Value based purchasing – hospital payments based on quality reporting measures (2013)

• Readmission penalties (2014)

• Reduce hospital payments for hospital-acquired conditions (2015)

CHALLENGE #6:INSUFFICIENT PRIMARY CARE

• Average medical school debt = $170,000

• Primary care is under-reimbursed

• Medical school graduates going

into specialties

ImprovedMEDICARE FOR ALL

• Free tuition/GME payback

• Debt forgiveness for primary care

• Malpractice payment for primary careproviders (MDs, NPs and PAs)

• Patient-Centered Medical Homes (teambased care, open access, coordination ofcare; phone/internet medicine)

HEALTH INSURANCE REFORM (ACA)

• 10% Primary Care Bonus Payments (2011-2017) – estimate = $4-10,000/provider/year

• Increase Medicaid payment to Medicare rates for primary care (2013)

• Independent Payment Advisory Board –

I-PAB (2014)

CHALLENGE #7

HOW TO PAY FOR REFORM

ImprovedMEDICARE FOR ALL

• Public funding

- Graduated payroll tax

- Corporate taxes

- Income taxes

- Tax on unearned income (stocks, bonds, etc.)

• No premiums: regressive

• No increase in overall health care spending, because of administrative savings

ImprovedMEDICARE FOR ALL

Non-profit/private delivery system under local control

- This is not “socialized medicine”- Doctors not salaried by government - Hospitals not owned by government

A publicly funded-privately delivered partnership

HEALTH INSURANCE REFORM (ACA)

1. Increased taxes - Excise tax on “Cadillac” health insurance plans (2018)

- Medicare payroll tax increase from 1.45% to 2.35% if income greater than $200-250K- 3.8% tax on investment income

2. Savings from Medicare- Advantage: ($132 bill over 10 yrs)- Cut DSH payments ($36 million)- Cut Medicare payments to hospitals

($136 bill over 10 yrs)- Cut payments for home care/nursing homes ($60 bill)

3. Revenue from cracking down on fraud and abuse

AFFORDABLE CARE ACT1. Expanded coverage, but not universal

2. Cost control by market means

3. No definition of benefits

4. Risk of increasing under-insurance

5. Choice thru State-based exchanges,but no public option

6. Primary care/ACO pilots

7. Funding: Excise tax on high cost (comprehensive coverage) private HI and Medicare cutbacks

Single Payer MEDICARE FOR ALL

THE PHYSICIANS’ PROPOSAL(JAMA, August 13, 2003 p. 798-805)

1. Universal coverage/automatic enrollment2. Low administrative costs=single payer3. Comprehensive coverage without co-pays

and deductibles 4. Maximum choice of Doctor, NP, Hospital5. Improved quality through nationwide HIT6. Expanded primary care 7. Publicly-funded/privately delivered

MEDICARE 2.0

Conyers’ Expanded and Improved Medicare for

All/Single Payer HR 676• Universal - Extend Medicare to everyone

• Comprehensive benefits• Choice of doctor and hospital• No co-pays or deductibles• Funded through progressive taxes• Cost-effective – Costs less than we now

spend and contains future costs

Sanders (& McDermott): American Health Security Act

S 1782 (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

April 14, 2010

Overall, do you think the benefits from government programs such as Social Security and Medicare are worth the costs of those programs for taxpayers, or are they not worth the costs? (results in %)

Worth It Not Worth It DK/NANational Sample 76 19 5Tea Party Sample 62 33 6

Summary

• A system based on private insurance plans-- will not lead to universal coverage-- will not create affordable insurance

• A Medicare for All System-- can lead to universal, comprehensive coverage without costing more

-- has the greatest potential to increase choice, improve quality and expand primary care

-- can be financed fairly

By 2037, under the ACA,

Total Healthcare Costs Will Equal Median Income

Young, R. Ann of Fam Med March/April 2012 vol 10 no. 2 156-

162

$120,000

$90,000

$60,000

$30,000

2000 2005 2010 2015 2020 2025 2030 2035 2040

Household Income Optimistic ACA Assumptions

IS THE ACA - A STEP FORWARD OR BACKWARD?

• Forward: Expands coverage –Medicaid + subsidies

to buy private health insurance.

 • Backward: Gives taxpayers $ to private insurers.

• My conclusion: ACA is a great leap sideways!

We must go beyond the ACA to a single-payer system.

“The arc of history (the moral universe) is long , but it

bends towards access to heath care for all.”

WHAT CAN YOU DO?1. Sign up to testify at the NYS Assembly Health

Committee Hearings - Website: NYHCampaign.org 

• New York City, Tuesday, December 16th 10 AM

NYU, 238 Thompson St

• MINEOLA, Wednesday, December 17th 10 AM

Nassau County Leg Building, 1550 Franklin Av

2. Write letters to your legislators 

• Join

• PNHP-NY Metro Chapter: website: www.pnhpnymetro.org

• Healthcare-NOW: website:

www.healthcare-now.org

CONTACTS AND REFERENCES

• PNHP National: www.pnhp.org

• PNHP-NY Metro: www.pnhpnymetro.org

• Bodenheimer TS, Grumbach K. Understanding Health Policy: A Clinical Approach. McGraw-Hill (2012)

• Fein O, Birn AE. (editors). Comparative Health Systems. Am Jour Public Health (2003) 93: 1-176

• O’Brien ME, Livingston M (editors). 10 Excellent Reasons for National Health Care. New Press (2008)

• Potter W. Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans. Bloomsbury (2010)

• Geyman, J. Health Care Wars: How Market Ideology and Corporate Power are Killing Americans. Copernicus Healthcare, Friday Harbor, Washington (2012)

• Himmelstein, DU, et. al. A Comparison of Hospital Administrative Costs in Eight Nations: US Costs Exceed All Others by Far. Health Aff (2014) 33:1586-1594.