1. Whole Washington Better healthcare for less
Gerald Friedman
Professor of Economics
University of Massachusetts at Amherst
March 2, 2018
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3. Where we are going America’s health care: too expensive for too little
How we got into this mess: the market turn in health policy
A better way: Whole Washington
How we will win: people power over money power

4. America’s health care: too expensive for too little
Note: healthcare spending associated with longer life expectancy. Except, for US
Life expectancy short 6 years.
Or spending $7000 per person too much compared with Chile (with about equal life expectancy).

5. Getting worse since 1970
We spent more than other countries in 1971 but nearly four-times as much now. Between 1971 and 2008, we gained less life expectancy, at over three times the cost!
Other countries became more efficient, we became less.

6. Cost of health care is a problem for Washington
Cost of health care is a problem for Washington. And it is expected to get worse
CMS projected spending

7. Washington’s workers pay for the rising price of healthcare
Average cost per employee in Washington of healthcare costs rising beyond CPI

8. Problem is the prices. We do not use too much health care.

9. The market turn in health policy Reduced access, but without financial savings

10. Soaring deductibles

11. Exhibit 6
Adults Who Cited Cost as a Reason for Skipping Prescriptions or Doses, 2016
Percent
Data: 2016 Commonwealth Fund International Health Policy Survey of Adults in 11 Countries.

12. We ration care. And people die. The rich longer, and the gap is growing!
For men, the gain from being rich has grown from 6.4 years to 10.7 (+4.3 years); for women, from 4.2 to 9.5 (+5.3 years).
Life expectancy is declining for the poorest 40% of women!
Bosworth and Burke, “Retirement Benefits in the Health and Retirement Study” at Average for OECD from OECD November 2013 update.

13. Americans die because they can’t afford health care

14. People in Washington die because they can’t afford to see a doctor
Each dot represents a county in Washington. The more people can’t afford to see a doctor, the higher the mortality rate

15. Especially the poor
Each dot represents a county in Washington. The higher the poverty rate, the higher the mortality rate

16. Rationing by income fails to control costs
Rationing by income fails to control costs! Costs rise because of monopoly power and administrative waste
These are quality controlled price indices from the Bureau of Labor Statistics
These are quality controlled price indices from the Bureau of Labor Statistics.

17. US vs. Netherlands

18. A government healthcare system would be a bureaucratic nightmare!
Administrative Bloat Is No Accident Insurers profit by driving away claims and people who file!
Are you crazy?
A government healthcare system would be a bureaucratic nightmare!

19. Selection policies feed bureaucratic bloat
Private insurance is the problem Inherently wasteful because insurers profit from waste
66:10 rule –66% of costs go to 10%
Shoe companies want to sell more shoes. Insurers profit by selling less. Find the 10%; drive them out!
Copays, deductibles, paperwork, hassles to drive away sick
Private insurers who practice adverse selection prosper: Others face insurance death spiral
Selection policies feed bureaucratic bloat
Lemon dropping because 50% of spending for 5%
Cherry picking because only 3% of spending for 50% of people

20. A better way: Whole Washington saves money and provides better access

21. Whole Washington would allow quality improvements

22. We will spend money on health care, not administration and monopoly prices

23. Some benefit more than others

24. Other benefits Avoid 6,121- 7,324 bankruptcies per year
Over 40 years, 9-11% chance Washington adult will go bankrupt because of medical bills.
Net increase in employment of 101,879
Lower premature mortality by as much as 12%, saving 7,500 lives
Economic value of $75 billion, annually.

25. Estimating spending Personal health expenditures $ 72,766
$ ,766
Insurance and government administration
$ ,592
Employer administration $
Total spending
$ ,980
Savings
Provider administration
$ ,527
Market Power (Pharmaceuticals and Hospitals)
$ ,536
Insurance Administration
$ ,282
Fraud reduction
$ ,455
Total Savings
$ ,423
Program improvements
Universal coverage
$ ,336
Utilization (removal of copays and deductibles)
$ ,249
Medicaid rate $
Assumption of Medicare premiums
$ ,878
Public administration of program improvements $
Transition costs for UI and retraining $
Cost of program improvements
$ ,327
Net spending, single payer, 2019
$ ,885

26. Revenue sources Net spending, single payer, 2019 $ 70,885 $ 13,793
$ ,885
Medicare
$ ,793
Medicaid
$ ,205
SCHIP $ VA
$ ,609
Fed share of Medicaid rate adjustment $
New Federal Medicaid for utilization $
Other third party (TRICARE, IHS, charity, etc.)
$ ,825
Remaining out-of-pocket (actuarial value of 96%)
$ ,835
Current state spending (other than public health) $
ACA subsidies $
Available revenue
$ ,660
Needed revenue
$ ,225
8.5% payroll premium on wages, salaries, business net income with $15,000 exempt on sliding scale
$ ,019
8.5% payroll premium on partnership income, with $15,000 exempt on sliding scale
$ ,102
8.5% premium on capital income, with $15000 exempt on sliding scale
$ ,915
1% income tax with $15,000 exemption
$ ,839
Premiums with low income exemption and sliding scale for lower-middle income
$ ,375
Total new revenue:
$ ,250
Surplus (shortfall)
$ ,025

27. Sustainable and savings grow over time

28. Sustainable

29. How we will win: people power over money power
FDR to Sidney Hillman (leader of the CIO): “I agree with you, I want to do it, now make me do it.” Politicians will not take the lead; they are too cautious about antagonizing the insurance industry, big pharma, big hospitals. We must lead so they can follow.

30. All Of Us Have the Right to Health Care. We Can Make It Happen.