Single-Payer: Highlights for The Curious and Advocates Alike

HR676, the House Bill to create a National Health Insurance Plan, has been promised a floor debate and vote when congress returns from recess. Please take a few minutes to review these highlights and then contact your representative to support this measure; the real cure to our health care problem, not just another band-aid. Think it's "politically unfeasible"? We'll never really know if we don't really try, and try again.

Thanks!
-Todd
ps; Senate Bill S703 will be offering the same legislation to the U.S. Senate.


CRITIQUE OF OUR CURRENT SITUATION

-The U.S. spends twice as much as other industrialized nations on health care, $7,129 per capita.

-Our system performs poorly in comparison on major health indicators:
Ranked 30th for Life Expectancy- right behind Bosnia
Ranked 46th for infant Mortality Rate, right behind Cuba and Guam
and 20th out of the G20 for deaths by treatable causes
(source: CIA World Factbook)

-The U.S. system leaves 46 million citizens uninsured and millions more inadequately covered.

-The private insurance industry’s bureaucracy and paperwork consume nearly one-third (31 percent) of every health care dollar.

-Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Not to mention political advertisements and lobbying….

-For example, the healthcare corporations are currently spending 1.4 million dollars a day to kill a single-payer or public option through lobbying, advertising and other propaganda. (All paid for by premiums and deductibles of policy holders)

-The complexity of the current reimbursement schemes requires providers to fight with insurers for payment. This results in massive administrative waste that private insurers inflict on hospitals, doctors, nursing homes etc. (In contrast, a single payer system would greatly streamline providers’ paperwork to one payer, one policy, one set of rules)

-70% of bankruptcies are due to medical causes, and
that more than half of those are among people with health insurance.

-Thousands of people are losing their jobs--and their health insurance—daily.
It is clear that an employer-based system of healthcare is a failure.

-The U.S. once had a lower infant mortality rate than Canada…. until they passed national health insurance. Canada’s rate fell sharply. Similarly, their advantage in life expectancy emerged shortly after the single-payer system was implemented.

-60.5% of current health spending in the U.S. is funded by the government. Through:
1. Tax subsidies for private insurance: $188.6 billion annually. These predominantly benefit wealthy taxpayers.
2. Government purchases of private health insurance for public employees such as police officers: $120.2 billion annually.
The U.S. government’s true share amounts to 9.7 % of gross domestic product:
$4,048 per capita. By contrast, government health spending in Canada was 6.9 percent: $2,337 per capita. Government health spending per capita in the U.S. exceeds total (public plus private) per capita health spending in nearly every other industrialized country.

ABOUT SINGLE-PAYER

H.R. 676, The United States National Health Insurance Act, is a bill to create a single-payer, publicly-financed, privately-delivered universal health care program that would cover all Americans without charging co-pays or deductibles.

-Currently, the average family of four covered by an employer-provided health care plan spends roughly $4,225 on health care each year. This figure does not include the annual Medicare payroll tax, currently at 1.45%.

+Under the plan created by H.R. 676, a family of four making the median income of $56,200 would pay about $2,700 in payroll tax for all health care costs. No deductibles, no co-pays, no worrying about catastrophic coverage.

-Employers who provide health insurance currently pay, on average, 74% of employee health premiums. For a family of four, the average employer share is $8,510 per year.

+Under H.R. 676, the employer pays a 4.75% payroll tax, not a premium to health insurance companies, which averages out to be considerably less for most employers

+Potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.

+Under a single-payer system, all Americans would be covered for all medically necessary services, including: doctor, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs.

+A single-payer system would be financed by eliminating private insurers and recapturing their administrative waste. Modest new taxes would replace premiums and out-of-pocket payments currently paid by individuals and business. Costs would be controlled through negotiated fees, global budgeting and bulk purchasing.

+Single-payer will help businesses by removing the onus of providing healthcare to their employees.

+Single-payer will increase entrepreneurship and the ability to truly pursue happiness, not just jobs that offer decent benefits.

+Patients will be free to seek care from any licensed health care provider, without financial incentives or penalties; aka: free choice of providers

+Medical decisions will be made by patients and providers rather than dictated from afar. The current, market-based, mechanisms empower employers and insurance bureaucrats pursuing narrow financial interests, putting profit before healthcare.

+Alternative Care that is proven in clinical trials to be effective will be covered.

How will the transition to the new system work?
The total transition time will be roughly a 15-year period.
• Private health insurance companies will be prohibited from selling coverage that duplicates the public plan.* The private companies will, however, still be able to sell coverage for services that are not deemed medically necessary, thus excluded from the public plan (such as many cosmetic surgery procedures).
• Private insurance company workers who are displaced as a result of the transition will be the first to be hired and retained by the new single-payer entity. Any of the displaced workers who are not rehired will receive two years of unemployment benefits and job re-training and placement services.

How will the universal program be paid for?
First, by billions of dollars saved in reduced administrative costs from eliminating the multi-payer bureaucracy.
Second, a "Medicare For All Trust Fund" will be created and funded by:
• Maintaining current federal and state funding for existing health care programs
• Closing corporate tax loopholes
• Repealing the Bush tax cuts for the highest income earners
• Establish employer/employee payroll tax of 4.75% (includes present 1.45% Medicare tax)
• Establish a 5% health tax on the top 5% of income earners; a 10% tax on top 1% of wage earners
• One quarter of one percent stock transaction tax

* Allowing such duplication of coverage weakens and eventually destabilizes the health care system. It undermines the principle of pooling the risk. Health care systems act as universal insurers. At any one time the healthy help pay for those who are ill. If private insurers are allowed to cherry-pick the healthy, leaving the public health care system with the very sick, the system will fail.

OTHER OPTIONS:

The “competing public plan” option won’t work to fix the health care system for 2 reasons.
1 - It foregoes at least 84% of the administrative savings available through single payer. The public plan option would do nothing to streamline the administrative tasks (and costs) of hospitals, physicians offices, and nursing homes, which would still contend with multiple payers, and hence still need the complex cost tracking and billing apparatus that drives administrative costs through the roof. These unnecessary provider administrative costs account for the vast majority of bureaucratic waste. Hence, even if 95% of Americans who are currently privately insured were to join the public plan the savings on insurance overhead would amount to only 16% of the roughly $400 billion annually achievable through single payer - not enough to make reform affordable.
2 - A quarter century of experience with public/private competition in the Medicare program demonstrates that the private plans will not allow a level playing field. Despite strict regulation, private insurers have successfully cherry picked healthier seniors, and have exploited regional health spending differences to their advantage. They have progressively undermined the public plan - which started as the single payer for seniors and has now become a funding mechanism for HMOs - and a place to dump the unprofitably ill. A public plan option does not lead toward single payer, but toward the segregation of patients; with profitable ones in private plans and unprofitable ones in the public plan.
-The “public plan option” will not expand our choice of caregivers, will not be universal, cannot offer comprehensive care (and thus can not lessen disparities in care or improve quality) — and above all there will be no way to pay for it, especially as the economy continues to tank. That it is not reform.
-The option to purchase a public plan within a market of private health insurance plans would merely provide one more player in our already inefficient, dysfunctional, fragmented, multi-payer system of financing health care. It would leave in place the deficiencies that have resulted in very high costs with the poorest health care value of all nations (i.e., overpriced mediocrity in health care).

Why shouldn’t we let people buy better health care if they can afford it?
Whenever we allow the wealthy to buy better care or jump the queue, health care for the rest of us suffers. If the wealthy are forced to rely on the same health system as the poor, they will use their political power to assure that the health system is well funded.
Allowing a parallel, private system for the wealthy means the creation of a permanent lobby for underfunding public care.

What is a Voucher Plan? What’s Wrong With It?
A Voucher Plan is when individuals would be given a health care certificate, an insurance “voucher,” which would entitle them to enroll in a private health plan of their choice. Employer-based insurance would be eliminated. The vouchers would be paid for through a value-added tax (VAT), essentially a sales tax on all manufactured goods and services. This is a highly regressive way of financing such a plan, since low-income people spend a much larger percentage of their income on purchases of goods and services than do higher-income people. However, the main problem with such a plan is that it leaves the wasteful, inefficient, and inequitable private insurance system in place, with no change at all in its operation. It simply makes it easier for us to purchase their defective product.

Health savings Accounts? . Once the account is depleted and a deductible is met, medical expenses are covered by a catastrophic plan, usually a managed care plan.
Individuals with significant health care needs would rapidly deplete their accounts and then be exposed to large out-of-pocket expenses;
Currently, HealthSavings Accounts (HSAs) offer substantial tax savings to people in high-income brackets, but little to families with average incomes, and thus serve as a covert tax cut for the wealthy.
Realistically? Who can afford to put money aside? Just like retirement accounts, college funds and personal savings. Way to many folks are living hand to mouth, check to check. Plus, this too leaves the wasteful administrative multi-payer nightmare in place.

Why not use tax subsidies to help the uninsured buy health insurance?
The major flaw of tax subsidies is that they would be used to help purchase plans in our current fragmented system. As already mentioned, the administrative inefficiencies and inequities that characterize our system would be left in place, and we would continue to waste valuable resources that should be going to patient care instead.

CONCERNS ABOUT SINGLE-PAYER

Won’t this raise my taxes?
A universal public system would be financed in the following way: The public funds already funneled to Medicare and Medicaid would be retained. The difference, or the gap between current public funding and what we would need for a universal health care system, would be financed by a payroll tax on employers and an income tax on individuals (about 4.75% ea.). The payroll tax would replace all other employer expenses for health care. The income tax would take the place of all current insurance premiums, co-pays, deductibles, and other out-of-pocket payments.
For the vast majority of people, a 4.75% income tax is less than what they now pay for insurance premiums and out-of-pocket payments such as co-pays and deductibles, particularly if a family member has a serious illness. It is also a fair and sustainable contribution.
For most employers, the 4.75% payroll tax would be considerably less than the 74% of plan cost they currently pay (which equates to 8.5% of an employee’s income making the median salary).
Health insurance would disappear from the bargaining table between employers and employees.

Is national health insurance ‘socialized medicine’?
No. There is a lot of confusion on the language here thanks to the spinmasters. Truly “Socialized” medicine is a system of publicly owned, democratically managed health cooperatives. “Nationalized” medicine, like Great Britain, is a system in which doctors and hospitals work for and draw salaries from the government. Doctors in the Veterans Administration and the Armed Services here are also paid this way. Most European countries, Canada, Australia and Japan have national health insurance, not nationalized or socialized medicine. Meaning that the government pays for care that is delivered in the private (mostly not-for-profit) sector. This is similar to how Medicare works in this country.

Won’t this result in rationing like in Canada?
The U.S. already rations care based on income:
-18,000 Americans die every year because they don’t have health insurance. Many more skip treatments that their insurance company refuses to cover. That’s rationing. Other countries do not ration in this way.
-Why do we hear about rationing abroad and not here? The answer is that their systems are publicly accountable, and ours is not. Problems with their health care systems are aired in public; ours are not..
-In U.S. health care, no one is ultimately accountable for how the system works. Rationing is carried out covertly through financial pressure, forcing millions of individuals to forego care or to be shunted away by caregivers from services they can’t pay for. Aka, There is no democracy.

Won’t this just be another bureaucracy?
The United States currently has the most bureaucratic health care system in the world with 15% to 25% overhead at a typical HMO. Provincial single-payer plans in Canada have an overhead of about 1%.
It is not necessary to have a huge bureaucracy to decide who gets care and who doesn’t when everyone is covered and has the same comprehensive benefits. With a universal health care system we would be able to cut our bureaucratic burden in half and save over $300 billion annually.

Won’t This put some bureaucrat between me and my doctor?
We already have a few dozen of them there. The bill collectors, administrators and agents of the private for-profit insurance companies.

How will we keep drug prices under control?
When all patients are under one system, the payer wields a lot of clout. The VA gets a 40% discount on drugs because of its buying power. This “monopsony” buying power is the main reason why other countries’ drug prices are lower than ours. This also explains the drug industry’s staunch opposition to single-payer national health insurance.

What will happen to malpractice costs under national health insurance?
They will fall dramatically, for several reasons. First, about half of all malpractice awards go to pay present and future medical costs (e.g. for infants born with serious disabilities). Single payer national health insurance will eliminate the need for these awards.

Walter Reed Army Medical Center has been in the news lately for poor care and treatment of returning soldiers from Iraq. Won’t national health insurance have similar problems?
1. Walter Reed Army Medical Center is an Army hospital and is run by the Department of Defense. The VA hospitals are run by the Veterans Administration (Veterans Health Administration), a separate organization. The VA health system continues to receive the best quality scores of any segment of the U.S. health system, with the most satisfied patients. It beats the best HMOs in quality ratings,
2. There is a lot we can learn from the Walter Reed disgrace. Its operation was outsourced to a Halliburton-connected company in 2002, over the objections of some Army medical personnel and leadership, with a subsequent drastic reduction in staff and loss of government employees with institutional experience.

Won’t competition be impeded by a universal health care system?
Advocates of the “free market” approach to health care claim that competition will streamline the costs of health care and make it more efficient. What is overlooked is that past competitive activities in health care under a free market system have been wasteful and expensive, and are the major cause of rising costs.
There are two main areas where competition exists in health care: among the providers and among the payers. When, for example, hospitals compete they often duplicate expensive equipment in order to corner more of the market for lucrative procedure-oriented care. This drives up overall medical costs to pay for the equipment and encourages overtreatment. They also waste money on advertising and marketing.
Competition among insurers (the payers) is not effective in containing costs either. Rather, it results in competitive practices such as avoiding the sick, cherry-picking, denial of payment for expensive procedures, etc. An insurance firm that engages in these practices may reduce its own outlays, but at the expense of other payers and patients.

-The preferred scenario has hospitals coordinating services and cooperating to meet the needs of their communities.

-Health care should be organized as a public service, like a fire department. A health system organized as a business is discriminatory and accountable to no one. At some point in our lives all of us will predictably need health care. Hence health insurance is unlike any other form of insurance; we are all involved.

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Some data and excerpts were taken from: CIA’s Book of Facts, House Bill 676 ( www.hr676.org), Physicians for a National Health Plan (www.pnhp.org), Employer Health Benefits 2006 Annual Survey, Kaiser Family Foundation and Health Research and Educational Trust; Consumer Expenditure Survey, U.S. Department of Labor, Bureau of Labor Statistics; and the Center for Economic Research and Policy.