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

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.

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.

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 2002 21(4)88

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Can the Affordable Care Act work?

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

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!

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

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

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

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

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

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

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

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

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