1. How to Think About Fiscal Studies of Single Payer Plans
Len Rodberg
Research Director, NY Metro Chapter
Physicians for a National Health Program
January 2017
Contents of this Powerpoint file:
Slides
1 – 27 Sample presentation
Evolution of Health Insurance in the US
Where Americans Get their Insurance Coverage
The Affordable Care Act/Obamacare
Why does US Health Care Cost So Much
International Health Status Comparisons

2. Why are Studies Done?
To show that the country, or a state, can afford a universal single payer system

3. Health Care Spending as a Percentage of GDP, 1980–2013
Every other country covers all their citizens and spends far less than we do
Percent
Health Care Spending as a Percentage of GDP, 1980–2013
Percent GDP
* 2012.
Notes: GDP refers to gross domestic product. Dutch and Swiss data are for current spending only, and exclude spending on capital formation of health care providers.
Source: OECD Health Data 2015.

4. What Makes the Difference?
Unlike in the US -- in these countries government has a central role in:
Funding the system
Overseeing and regulating it
Setting the fees and reimbursements
Our own Medicare program for seniors shows the benefits of a government-funded, regulated system:
Reliable financing
Slower cost growth
Transparent coverage decisions.

5. Medicare Has Grown More Slowly than Private Insurance
Composite
Medicare

6. Single Payer Contains Cost Heading into the Future
17%
15%
13%
11% 9% 7% 5%
Canada’s NHP Enacted
Healthcare as a % of GDP
USA
NHP Fully Implemented
“Uniquely US”
Canada
1960
1970
1980
1990
2000
2010
Source: Statistics Canada, Canadian Institute for Health Info, and NCHS/Commerce Dept.

7. Some of the issues to consider in an economic analysis of a single payer plan
Cost Reductions or Savings
Insurer administration
Provider administration
Drug prices
Employer administration
Additional Costs
Utilization by the formerly uninsured
Additional utilization as a result of no cost-sharing
Enhanced Medicare & Medicaid physician and hospital payments
Worker retraining
Medicare Part B premium payments

8. Private Insurers’ High Overhead and Profits Riase Costs, Waste Money

9. Billing and Private Insurance Overhead Consume Nearly 30 cents of Every Dollar
28%

10. Dollars ($US)
Pharmaceutical Spending per Capita, 2010 Adjusted for Differences in Cost of Living
THE
COMMONWEALTH
FUND
* 2009.
** 2008.
Source: OECD Health Data 2012.

11. US Drug Prices Could be Reduced Substantially

12. Savings are Not Achieved by Cutting Doctors’ Incomes: Canadian Physicians’ Incomes Average FFS billings per FTE physician,
Specialty
Income
Family Medicine
$271,417
Internal Med
$378,468
Pediatrics
$292,242
Psychiatry
$258,697
Dermatology
$368,003
Specialty
Income
OB-GYN
$405,504
General Surgery
$417,773
Thoracic Surgery
$529,829
Ophthalmology
$668,887
Avg All Canada
$337,767
Source: Canadian Institute for Health Information
Figures are in Canadian $

13. Health Care Reform in New York State: New York Health Act A5062/S3525
Passed in 2015 & 2016
A single State fund covers every resident:
Universal coverage — Everybody in, nobody out!
Comprehensive benefits
No financial barriers to care: no deductibles or co-pays
Medicare and Medicaid integrated into NY Health
Funded by progressive State taxes along with existing Federal and State funds
Covers everyone --
Costs less!

14. Covering Everyone while Saving Money!
Additional costs from System Improvement
Covering the uninsured and poorly-insured %
Elimination of cost-sharing and co-pays %
Enhanced Medicare & Medicaid fees
Savings
Reduced physician & hospital admin costs %
Reduced insurance administrative costs %
Bulk purchasing of drugs & devices %
Reduced fraud %
-24.7%
2019 $B
4.0
11.2
10.8
26.0
Total Costs %
-20.7
-28.6
-16.3
Total Savings
Net Savings %
Source: Economic Analysis of the NY Health Act, Gerald Friedman, March 2015 14

15. Who Does the Study Matters!
Location/Year
Researcher
Savings (%)
New York/2015
Gerald Friedman
15.6
US/2013
18.7
Colorado/2007
Lewin Group
4.7
Minnesota/2012
8.8
US/2016
Urban Institute
-14.4
Kenneth Thorpe
-23

16. Problems with “Unfriendly” Studies
Don’t use experience of other countries as data sources
Use inappropriate computer simulation models – especially can’t handle major changes, lack of transparency
Unrealistic increase in utilization
Unrealistic price increases or fee reductions
Omit provider administrative savings
Don’t account for limitations on future growth

17. Focusing on Savings is Easy, but Misleading
The easiest “sound bite” is the savings, either in dollar figures ($45 billion in NY) or percent (15.6%)
However, they are highly uncertain (difference of two large numbers) and, in reality, they’re not what will really affect people’s pocketbooks.
They’re abstract statewide totals that only an economist or budget official understands. No individual sees those actual savings.
What really counts are the taxes that will replace the current premiums, copays, and deductibles.

18. Most Americans Get Their Coverage from the Private Sector…
(49.0 million)
(54.1 million)
(169.0 million)
(14.1 million)
Most Americans get their insurance from their employer or from individual/personal purchase.
A little more than a quarter get their coverage from Medicare, which covers the elderly and disabled, and Medicaid, which covers the poor.
In 2013, just before the ACA went into effect, there were 42 million uninsured. This was 13.6% of the population, about 1 out of every 7 residents.
“Uninsured” means they were uninsured for an entire year; when the Census Bureau conducted its survey in March of 2014, they answered “No” to the question “Were you insured at any time during the previous 12 months?” Many more, of course, perhaps twice as many, were uninsured at some time during those twelve months.
(42.0 million)
(34.5 million)
Source: Health Insurance Coverage in the United States: 2013,
Census Bureau, 2014 18

19. ( Medicare, Medicaid, ACA subsidy, other) State and Local Government
…But Most of the Money Comes from Government: New Funds Replace the Rest
Federal tax subsidy
10%
Private Insurance
19%
Federal Government
( Medicare, Medicaid, ACA subsidy, other)
40%
After the ACA went into effect, government spent additional funds in the expansion of Medicaid and in subsidizing the purchase of private insurance on the ACA “marketplaces”.
Out of pocket
12%
Other private funds
(charity, etc.) 7%
State and Local Government
(Medicaid, other)
12%
Source: CBO and Lewin projections

20. The Taxes Needed to Finance the System are the Rub!
They’re substantial, compared to other state taxes, usually comparable to all other state taxes.
They replace insurance premiums, which are largely hidden from the public.
How to deal with this:
(1) Make them progressive
(2) Make employers pay much of them (e.g., in NY Health, 80% paid by employers)

21. ColoradoCare Referendum
“Shall state taxes be increased $25 billion annually in the first full fiscal year, and by such amounts that are raised thereafter, by an amendment to the Colorado Constitution establishing a healthcare payment system to fund healthcare for all individuals whose primary residence is in Colorado, and, in connection therewith, creating a governmental entity called ColoradoCare to administer the healthcare payment system…”

22. Large Change in Savings  Smaller Change in Spending

23. Marginal Payroll OR UNEARNED-INCOME Tax & Effective Tax as Percent of Income

24. CONCLUSIONS We know how to do these studies
The methodology has to be tailored to the major transformation involved in moving from a market-based insurance system to a universal, single payer system.
Disputes among practitioners are on the margin and don’t affect the basic economics, which is highly favorable to single payer.
Failure to adopt an appropriate methodology can lead to highly misleading results.

25. QUESTIONS?