Obamas Health Insurance Reform is Simply a Bandaid Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY and NY Metro Chapter, Physicians for a.

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Obamas Health Insurance Reform is Simply a Bandaid Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY and NY Metro Chapter, Physicians for a National Health Program PHIMG-PNHP-HCN Teach-in April 24, 2010 www.pnhpnymetro.org Slide 2 Why Health Care Is On the Agenda: Escalating Cost Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009. Slide 3 Percent 15.4% 29.0% 58.5% 66.7% 75.5% Government coverage Employment-based coverage Any private coverage Recession 62.1% 12.9% 23.3% Uninsured rate Note: The estimates by type of coverage are not mutually exclusive. Source: U.S. Census Bureau, Current Population Survey, 1988 to 2009 Annual Social and Economic Supplements. But the Percent Uninsured has Hardly Changed at All 80 60 40 20 0 1987 1990 1993 1996 1999 2002 2005 2008 19 Slide 4 The Epidemic of Underinsurance Source: Too Great a Burden, Families USA, December 2007 Number of people spending more than 10% of income on health care (Millions) Slide 5 Medical costs create serious financial problems for millions of us Source: Health Tracking Poll, Kaiser Family Foundation, April 2008 Slide 6 Goals of Health Care Reform Assure access to health care for everyone At a cost that the nation, and every individual, can afford. Obamas health insurance reform fails to achieve either universal access or cost containment. Slide 7 International Comparison: Universal Coverage at Less Cost -- They Must Be Doing Something Right! * PPP = Purchasing Power Parity. Data: OECD Health Data 2008, June 2008 version. Average spending on health per capita ($US PPP*) None rely on private for-profit insurance, all have a strong role for government. Slide 8 The Outlier Nation: Our Public System Covers Fewer Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004 United States Slide 9 While Private Insurance Dominates Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004 United States Slide 10 Most People Get Their Coverage from the Private Sector Source: Income, Poverty, and Health Insurance Coverage in the United States: 2008, Census Bureau, 2009 (180 million) (43 million) (46.3 million) (27 million) Slide 11 But Most of the Money Comes from the Public Sector Out of pocket 12% Other private funds (charity, etc.) 7% State and Local Government (existing Medicaid, other) 13% Federal Government (existing Medicare, Medicaid, other) 34% Source: Health Affairs, Feb. 2008; data for 2006 Private Insurance 34% (Federal tax subsidy) Slide 12 And Even More Will Come from the Public Sector after Reform Federal Government ( Medicare, Medicaid, other) 40% State and Local Government (Medicaid, other) 12% Other private funds (charity, etc.) 7% Out of pocket 12% Private Insurance 29% Source: CBO and Lewin projections (Federal tax subsidy) Slide 13 The Presidents Fateful Choice In creating a reform plan, the President could have chosen to -- build on the public sector, especially Medicare, or -- expand the private sector. He chose to expand private insurance. Since private insurance is unaffordable to many and deficient in so many ways, he has created a program that will not achieve the basic goals of health care reform. Slide 14 The Great Dealmaker The Obama Administration made a series of deals to pass this law: The insurance industry: Assured that everyone would be required to buy their product, and there would be no public option The drug industry: No negotiation on price The AMA: No cut in physician fees Hospitals: No cut in reimbursements, only slower growth in payments Employers: Continued control of health benefits Nervous members of the public: You can keep what you have Slide 15 The Result: Costs Will Keep On Rising 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 Slide 16 And Millions Will Remain Uninsured (and Millions More Underinsured) Millions Note: The uninsured includes unauthorized immigrants. Source: Congressional Budget Office. Slide 17 The Patient Protection and Affordable Care Act (PPACA) will be implemented over ten years Between 2010 2013: Insurance companies required to cover dependent children up to age 26 Establishes high-risk insurance pool for persons with pre- existing conditions Prohibits lifetime limits on coverage Tax credits for small ( Citizens and legal immigrants required to buy insurance Penalties up to 2.5% of income for failing to be insured Large (>50) employers must offer insurance or pay fine of $2000 per employee Employment-based insurance otherwise unchanged, so most people will see little change Continued reliance on private insurance No regulation of insurance company premiums, or payment and denial practices No public option No cost savings or realistic way to control costs No change in the structure of health care finance Starting in 2014: The Insurance Mandate Slide 20 Starting in 2014 (cont.) : The uninsured and small employers can access a state- based insurance exchange Premiums can vary with age (3:1), geography, family composition, tobacco use, not medical condition Subsidies in the exchange up to 400% of Federal poverty level ($43K individual/$73K family) Undocumented immigrants cannot use the exchange No subsidies for abortions Deductibles/copays up to $5,950 individual/$11,900 family Hardship waiver: If premium > 8% of income, can remain uninsured Medicaid expanded to all below 133% of poverty level Slide 21 Still later: In 2017, allow state experimentation with alternative insurance arrangements (no change in ERISA) In 2018, starting taxing insurance plans worth $10,200 individual/$27,500 family Slide 22 What Happened to the Public Plan? The Original robust Plan Open enrollment Medicare-like, backed by the Federal Government 119 million members (Lewin) The House Plan Restricted enrollment (only the uninsured) Self-sustaining, follow same rules as private insurers Perhaps 6 million members (2% of population) [Public Medicare has 32 million members!] The 800-pound gorilla turned into a mouse and then it was gone! Slide 23 Change in Coverage under the Act (millions) Slide 24 New Federal Spending and Revenues 2010-2019 (billions) Slide 25 Medicare and Medicaid Savings 2010-2019 (billions) Slide 26 Many will remain uninsured (millions) Slide 27 Insurance Costs in the Exchange with Subsidy Income (%FPL) Income for family of 3 (Middle of range) Annual Premium Premium as % of income Total Potential Costs (% of Income) 150$22,000$1,0994.0%18.1% 151-200$32,000$2,3076.3%16.9% 201-300$46,000$5,2189.8%20.1% 301-400$64,000$6,9589.8%20.1% Source: Community Catalyst and PICO National Network Slide 28 Annual Costs in 2016 at the 2 nd Silver Level without Subsidy Average Average Total Premium Cost-Sharing Cost Individual: $ 5,200 $ 1,900 $7,100 Family: $ 14,100 $ 5,000 $19,100 Actuarial Value of Policy = 70% Source: Congressional Budget Office, Nov. 30, 2009 Slide 29 The Bottom Line This plan will: Make the worlds most expensive system even more costly Not achieve universal coverage Not make affordable insurance available Leave millions underinsured Not control the continuing growth in cost Why? Because it doesnt really change the way we pay for health care. Slide 30 The Public Route to Real Health Care Reform: Conyers Expanded and Improved Medicare for All HR 676 Extend Medicare to cover everyone Comprehensive benefits Free choice of doctor and hospital Doctors and hospitals remain independent Public agency processes and pays bills Financed through progressive taxes Costs no more than we are now spending Slide 31 Billing and Insurance: Nearly 30% of All Health Care Spending 28% Slide 32 Covering Everyone with No Additional Spending Additional costs Covering the uninsured and poorly-insured +6.4% Elimination of cost-sharing and co-pays +5.1% Savings Reduced hospital administrative costs -1.9% Reduced physician office costs -3.6% Reduced insurance administrative costs -5.3% 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 134 107 241 -21 -76 -111 -59 -46 -313 $ B Total Costs +11.5% Total Savings -15.8% Net Savings - 4.3% - 73 Slide 33 How Single Payer Could Be Paid For: One Example from a Recent Study of a California Plan Slide 34 Single payer offers real tools to contain costs Budgeting, especially for hospitals Capital investment planning Emphasis on primary care, coordination of care, and alternative ways of paying for services Bulk purchasing Slide 35 Conclusion This system based on private insurance plans will not lead to universal coverage, and it cannot control costs. An expanded Medicare for All system can provide comprehensive services while costing no more than we now spend and providing tools to control costs in the future. The problems of the health care system will not go away. Real health care reform, built on Medicare for All, continues to be essential. Slide 36 We Cant Wait Another 16 Years! We Need Real Health Care Reform Before the Premium Takes All our Income! Source: American Family Physician, November 15, 2005 Today