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THE BUSINESS CASE FOR SINGLE-PAYER HEALTH CARE Stephen B. Kemble, MD Clinical Assistant Professor of Medicine John A. Burns School of Medicine The Rotary.

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Presentation on theme: "THE BUSINESS CASE FOR SINGLE-PAYER HEALTH CARE Stephen B. Kemble, MD Clinical Assistant Professor of Medicine John A. Burns School of Medicine The Rotary."— Presentation transcript:

1 THE BUSINESS CASE FOR SINGLE-PAYER HEALTH CARE Stephen B. Kemble, MD Clinical Assistant Professor of Medicine John A. Burns School of Medicine The Rotary Club March 11, 2014

2 Disclosure No financial conflicts of interest to disclose. I receive no money whatsoever for any of my involvement in health care reform and health policy activities.

3 Definition SINGLE-PAYER: Public funding that pays for the health care of the entire population for a geographic/political entity. Private care delivery: Traditional Medicare, FFS Medicaid, Canada Public care delivery: VA, Military health system, Indian Health Service, Great Britain Eliminates private health insurance except for supplemental benefits not covered in single- payer program.

4 US Public Spending for Health Exceeds Total Spending in Other Nations Data are for 2011 Sources: OECD 2013; Health Affairs (4) healthcare spending per capita $8,950

5 Health Costs: USA vs Canada Source: Statistics Canada, Canadian Institute for Health Info, and NCHS/Commerce Dept. Health costs % of GDP 19% 17% 15% 13% 11% 9% 7% 5% USA 2014 Single Payer Implemented Canada “Uniquely American”

6 Are we getting better health care?

7 Note: Data are for 2011 or most recent year available Source: OECD, 2013 Life Expectancy Years

8 Nolte & McKee, Measuring The Health Of Nations, Health Affairs, Jan-Feb 2008 Decline in Preventable Deaths Preventable deaths per 100,000 (males)

9 Note: Data are for 2011 or most recent year available Source: OECD, 2013 Infant Mortality Deaths in First Year of Life Per 1,000 Live Births

10 Note: Data are for 2011 or most recent year available Source: OECD, 2013 Maternal Mortality Deaths per 100,000 Live Births

11 How Many People Don’t Have Health Insurance? USA with the ACA US Census Bureau, 2012 Canada

12 How Many People Go Without Some Medical Care Because of Cost? USA Commonwealth Fund, Schoen 2007 Canada

13 How Many People Die Each Year From Not Having Insurance? CanadaUSA Wilper, et al “Health Insurance and Mortality in U.S. Adults,” American Journal of Public Health; Vol. 99, Issue 12, Dec 2009

14 How Many People Are Involved in Medical Bankruptcies Each Year? CanadaUSA Source: Himmelstein et al. Am J Med: August, 2009

15 What costs us so much more? Are we utilizing too much care?

16 Note: Data are for 2011 or most recent year available Source: OECD, 2013 Hospital Inpatient Days per Capita

17 Note: Data are for 2011 or most recent year available Source: OECD, 2013 Physician Visits per Capita

18 Is it “moral hazard” because patients don’t have enough “skin in the game?”

19 Deductibles Are Rapidly Increasing Kaiser/HRET Survey of Employer-Sponsored Benefits, 2013 Percent of workers with deductibles >$1,000

20 Note: Data are for 2011 or most recent year available Figures adjusted for Purchasing Power Parity Source: OECD, 2013 We Have the Most “Skin in the Game” Out-of-pocket dollars per capita

21 JGIM On-Line, 9/27/2013. Note: Financial barrier = needed to see a doctor in last 12 months but couldn’t Financial Barriers Worsen Diabetes Care and Outcomes

22 Medicare HMO Copayments Drive Fewer Office Visits, More Hospitalizations Source: NEJM 2010;362:320 All figures are per 100 enrollees Difference between plans that did and didn’t raise copays Outpatient Visits Hospital Admissions Hospital Days

23 Restricting Access Increases Costs Restricting care requires bureaucracy that costs more than it saves We already rely heavily on incentives to deliver less care and pushing more costs onto patients. If these worked to control costs, we would not be spending twice as much as other advanced countries!

24 We’re spending twice as much We’re under-utilizing, not over-utilizing care Our health outcomes are worse So, the reality is:

25 Then what is costing us so much more than other countries?

26 Growth of Physicians vs Administrators Data updated through 2013 Source: Bureau of Labor Statistics; NCHS; Himmelstein/Woolhandler analysis of CPS Growth Since 1970 PhysiciansAdministrators 3000% 2500% 2000% 1500% 1000% 500%

27 Source: Woolhandler/Himmelstein/Campbell NEJM 2003;349:769 (updated 2013) Hospital Billing and Administration Dollars per capita, 2014

28 Source: Woolhandler/Himmelstein/Campbell NEJM 2003;349:769 (updated 2013) Physicians’ Billing and Office Expenses Dollars per capita, 2014

29 Source: Woolhandler/Himmelstein/Campbell NEJM 2003;349:769 (updated 2013) Overall Administrative Costs Dollars per capita, 2014

30 Competitive Private Health Insurance Administrative costs: 5-6 times that of public systems Incentive is to avoid risk (caring for sick people) “Race to the bottom” among plans Misguided and costly efforts to centrally manage health care providers

31 Can the Affordable Care Act work?

32 ACA Fails for Sick People Website rollout complications Low value plans (bronze, silver) Deter needed care For individual making only $25,000 (max subsidies), > $7,500/yr in premiums, deductibles, & co-pays !!! Access problems: MD shortage, narrow & ghost networks, dysfunctional Medicaid

33 Ineffective ACA “Cost Controls” Preserves private, competitive insurance model Leaves obstacles to access in place “Cost control” aimed at further restricting care Pushes more cost onto patients Shifts insurance risk to doctors and hospitals Increases administrative complexity and cost All counter to evidence for achieving “Triple Aims” - better quality, better health, lower cost!

34 Can the Affordable Care Act work? Doesn’t work for sick people Relies on strategies shown to increase costs

35 The Single-Payer Alternative – HR 676 Everyone covered, all medically necessary care Minimal or no deductibles & co-pays Access to care based on need, not means Insurance risk is managed by risk pooling alone, pooled across entire population – not shifted onto doctors, hospitals, and patients. Vastly simplified administration Minimizes centralized management of care & bureaucracy

36 Single-Payer Cost Control 1. Assure access to cost-effective care for all 2. Simplify, streamline administration 3. Use admin savings to reduce prices Hospitals - global budgeting Doctors – negotiated fees, simplified billing, support quality improvement Drugs and medical equipment - negotiated prices, bulk purchasing

37 Single-Payer Savings Hospitals (~7%): global operating budgets – no itemized billing Doctors (~5%): Reduced admin and malpractice cost, incentive-neutral pay – FFS based on time, or salary Patients (~5%): better access to cost-effective outpatient care reduced complications reduced ER and hospital use (Savings as % of total health spending) Sources include Price Waterhouse Coopers, Blanchfield et al, “Saving Billions of Dollars—and Physicians’ Time— by Streamlining Billing Practices,” Health Affairs, Apr. 29, 2010, Lewin Group and Friedman economic analyses for California, Maryland, Colorado

38 Single-Payer Savings Drugs and Medical Equipment (~6%): bulk purchasing, negotiated prices, less fraud Business (~1%): no health insurance administration much lower worker’s comp, liability, and vehicle insurance No COBRA or retiree health benefits

39 Single-Payer Savings Administration (~16%): focused on assuring care and payment, not avoiding “risk” For entire health care system: ~ 30-40% savings Insurance AdministrationManaged Care Administration No: Exorbitant exec salaries, marketing, lobbying, profit Underwriting, insurance reserves, broker fees, exchange fees Eligibility determination, narrow networks Care managed by doctors & hospitals, not health plans No complex financial incentives and risk adjustment Simplified data for QI No distortion of data due to “pay- for-documentation” Much less fraud and abuse

40 Friedman, G. Dollars & Sense. March/April 2012 $ Billions Medicaid Rate Adjustment Covering the uninsured Increased utilization (especially home health and dental) Government administration ($23B) Health insurance administration Increased market power (pharma and devices) Admin costs to providers New CostsSavings $74 $110 $142 $153 $178 $215 $ $200 -$400 -$600 HR 676 “Medicare for All” Covers Everyone and Spends Less

41 Friedman, G. Dollars & Sense. March/April 2012 New Costs: $326 B Net savings: $243 Billion Cover everyone with better benefits and spend less. New Savings: $569 B HR 676 “Medicare for All” Covers Everyone and Spends Less

42 What Do You Spend on Health Care Benefits? Single Payer ModelUSA Employers Today Bureau of Labor Statistics Business Health Coalition for Single Payer

43 8 Ways that Single Payer Strengthens American Businesses Reductions in Direct Costs Cost of health care benefit Health care benefit management costs Worker Comp, auto and liability insurance Retiree health benefits Reduced Employer Risk More predictable future costs Eliminate risk of employees with high medical costs Eliminates contentious item in labor negotiations Level the global playing field for business


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