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
$8,950
2011 healthcare spending per capita
Data are for 2011
Sources: OECD 2013; Health Affairs (4)88

5. Health Costs: USA vs Canada
19%
17%
15%
13%
11% 9% 7% 5%
USA
Health costs % of GDP
“Uniquely American”
Single Payer Implemented
Canada
1960
1970
1980
1990
2000
2014
Source: Statistics Canada, Canadian Institute for Health Info, and NCHS/Commerce Dept.

6. What makes the difference? Are we utilizing too much care?

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

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

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

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

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

12. Financial Barriers Worsen Diabetes Care and Outcomes
Figure 2 Clinics Scheduling Specialty Care Appointments for Children, According to Type of Insurance. Public insurance was reported by callers as the Illinois Medicaid–Children's Health Insurance Program (CHIP) umbrella program; private insurance was reported by callers as Blue Cross Blue Shield. Each of the 273 clinics was called twice (for a total of 546 calls) by the same caller, with only insurance coverage varying between the two calls: once reporting Medicaid–CHIP coverage and once reporting private coverage. Calls were made 1 month apart, and the order of the reported insurance status was randomly assigned. Asthma clinics included 38 allergy–immunology clinics and 6 pulmonary disease clinics.
JGIM On-Line, 9/27/2013.
Note: Financial barrier = needed to see a doctor
in last 12 months but couldn’t 12

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

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

15. Growth of Physicians vs Administrators
3000%
2500%
2000%
1500%
1000%
500%
Growth Since 1970
1970
1980
1990
2000
2010
Physicians
Administrators
Data updated through 2013
Source: Bureau of Labor Statistics; NCHS; Himmelstein/Woolhandler analysis of CPS

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

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

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

19. 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

20. Can the Affordable Care Act work?

21. ACA Fails for Sick People
Website rollout complications
Low value plans (bronze, silver)
Deter needed care
For individual making only $25,000 (max subsidies), up to $12,500/yr in premiums, deductibles, & co-pays !!!
Access problems:
MD shortage, narrow & ghost networks, dysfunctional Medicaid

22. Delusional ACA Cost Controls:
Preserves private, competitive insurance model
“Cost control” aimed at “too much 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!

23. Single-Payer 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

24. Single-Payer Cost Control
Assure access to cost-effective care for all
Simplify, streamline administration
Reduce prices with admin savings
Hospitals - global budgeting
Doctors – negotiated fees, support quality improvement
Drugs and medical equipment - negotiated prices, bulk purchasing

25. Single-Payer Savings
Hospitals (~7%): global operating budgets – no itemized billing
Doctors (~5%): Reduced admin cost and 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

26. 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

27. Single-Payer Savings
Administration (~16%): focused on assuring care and payment, not avoiding “risk”
For entire health care system: ~ 30-40% savings
Insurance Administration
Managed 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

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

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

30. What Do You Spend on Health Care Benefits?
USA Employers Today
Single Payer Model
7 - 12%
of wages
3.3% tax on wages
Bureau of Labor Statistics
Business Health Coalition for Single Payer

31. 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
One less item in labor negotiations
Level the global playing field
for business