1. Physicians for a National Health Program Comments: pnhpnyc@igc.org
WHO NEEDS INSURANCE COMPANIES ANYWAY? or “Get the insurance companies out of my health care”
Leonard Rodberg, PhD
Physicians for a National Health Program
New York Metro Chapter
Comments:

2. BEFORE HEALTH INSURANCE BEGAN…
Health care 1% or less of GNP
Out-of-pocket payment for physician care
Charity and public hospital care

3. BEGINNINGS OF PRIVATE EMPLOYMENT-BASED HEALTH INSURANCE
Blue Cross is formed in 1936; Blue Shield in 1946
WW II: health benefits linked to employment
IRS rules employer contributions tax deductible
Commercial life insurance companies begin selling health insurance to employers

4. LIMITED GOVERNMENT HEALTH INSURANCE
Rising cost of medical care due in part to
innovations in medical technology and drugs
Medicare for those over 65 years
Medicaid for the poor
U.S. remains the only industrialized nation without universal access to health care

5. DOMINANCE OF FOR-PROFIT HEALTH INSURANCE
1990 – present
Experience-rated premiums (where the sick pay more) dominate the market
Expansion of for-profit managed care companies
Managed care restricts access and maintains profits
Non-profit Blue Cross plans convert to for-profit companies

6. EXPANSION OF UNIVERSAL HEALTH INSURANCE
Germany
1911 – Switzerland
1935 – United States*
New Zealand
1945 – Belgium
France
1946 – United Kingdom
1947 – Sweden
1948 – United States*
1961 – Greece
1961 – Japan
1966 – Canada
1973 – Denmark
1974 – Australia
1978 – Italy
1979 – Portugal
1986 – Spain
1994 – United States*
1996 – South Africa
2002 – Taiwan
* Proposed by the President. Strong public support for the principle. Failed in Congress.
None of these countries rely on private, for-profit insurance companies.

7. Our Public System Covers Fewer, and Private Insurance Dominates
United States
Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004

8. How Does the U.S. Compare with Other Countries?
We provide the same medical care
We use the same medical technology
But…
We have large numbers of uninsured
We spend much more
We remain the only major country that builds its health care system around private for-profit insurance companies.

9. Hospital Inpatient Days Per Capita

10. Physician Visits Per Capita

11. Bone Marrow Transplants

12. MRI Units/Population

13. CT Scanners per million population 2002

14. US Life Expectancy is Less than Many Other Countries
United States
Source: OECD 2005

15. …and its Infant Mortality is Higher

16. The US spends more, but our system doesn’t work well, and we aren’t happy with it.

17. Rising Number of uninsured
Number of Uninsured Americans (Millions) 45
Rising Number of uninsured 40 35 30 25 20
1980
1985
1990
1995
2000
Source: U.S. Census Bureau

18. Playing Doctor? (cartoon)

19. U.S. Health Costs are 70% Greater than the Median of Other Countries
United States

20. Our Public Sector Alone Spends More than Other Countries: Americans Pay for National Health Insurance but Don’t Receive It
OECD and “Paying for National Health Insurance—And Not Getting It”
Health Affairs: July / August 2002

21. THE COST OF CARE CREATES HEALTH PROBLEMS AS WELL AS FINANCIAL PROBLEMS
In nearly 3 in 10 (29%) households, someone skips a medical treatment, cuts pills, or does not fill a prescription because of cost
Nearly 1 out of 4 (23%) Americans have problems paying medical bills
More than 1 in 5 (21%) Americans had an overdue medical bill at the time of a 2004 survey
1 million people experience medical bankruptcy each year Health Care Costs Survey, USA Today/Kaiser Family Foundation/Harvard School of Public Health, August 2005; D. Himmelstein et al, Health Affairs, 2005
Many people still believe that people without health insurance get the care they need. Its just not true.

22. HIGH COST OF HEALTH INSURANCE PREMIUMS
National Average for Employer-provided Insurance
Single Coverage $4,024 per year
Family Coverage $10,880 per year
Note: Annual income at minimum wage = $10,300
Annual income of average Wal-Mart worker = $17,114
Source: Kaiser Family Foundation/HRET Survey, 2005

23. CONNECTING THE DOTS:
So why do we spend so much and have so many uninsured?
It’s the insurance companies!
Only the U.S. relies on private for-profit
insurance companies, the most inefficient, ineffective, inequitable way to pay for health care.

24. THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE …
Total Population
Private health insurance
- Employer-provided
- Individual
Public health insurance
Medicare
Medicaid
Uninsured
Million % % % % % % % % %
Source: National Center for Health Statistics, 2003

25. …BUT IT PAYS MUCH LESS THAN HALF THE COST
2004
Personal Health Expenditures
Private Funds
Private health insurance
- Self-funded plans
- Insurance company plans
Out-of-pockets payments
Other private funds
Public Funds*
Medicare
Medicaid
Other public expenditures
$ Billion %
$ 1, %
$ %
$ %
$ %
$ %
$ %
$ %
$ %
$ %
$ %
$ %
* Does not include tax subsidy for private insurance. See Woolhandler & Himmelstein, HealthAffairs 2002
Source: Centers for Medicare and Medicaid Services, 2006

26. A PUZZLE:
If private insurance pays for such a small portion of the total, how can it be responsible for the high cost of our system?

27. THE ANSWER:
Reliance on private insurance companies accounts for 20% or more of total health care spending due to:
Insurance company profits, marketing, and overhead costs, and
Wasteful billing and administrative burdens imposed on the entire system.

28. CEO’S COMPENSATION 2004 Note: Total Pay=Salary+Stock Options
Source: Modern Healthcare, Aug. 1, 2005; NYTimes, Apr. 3, 2005

29. Private Insurers’ High Overhead
International Journal of Health Services 2005; 35(1): 64-90

30. Hospital Billing & Administration United States & Canada

31. Physicians' Billing & Office Expenses United States & Canada

32. Billing and Insurance Costs Account For More Than 20% of All Health Care Costs
BIR = Billing- and insurance-related costs; profit and marketing costs not included
Source: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005

33. Half of Middle- and Lower-Income Adults Experience Serious Problems Paying Medical Bills or Insurance Premiums
Percent
Percent 50 50 48 48 38 38 33 35 21 23
Medical bills
Health insurance
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.

34. Worries About Affordability and Access to High-Quality Care Spreading to Middle-Income Families
Percent worried they will not be able to pay medical bills in event of serious illness
Percent worried they will not get high-quality care when needed 66 52 53 50 50 48 47 47 38 34
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.

35. Insurance Complexity: Two of Five Adults Report Having to Spend Time on Paperwork or Disputes Related to Medical Bills and Health Insurance in the Past Two Years
Percent 46 39 39 38 33
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.

36. The US Health Care System! – Uwe Reinhardt

37. PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE #1
High cost
Excessive administrative costs
System complexity
And, as a direct consequence of high cost,
Large numbers of uninsured and under-insured who cannot afford adequate coverage

38. And Health Insurance Costs Keep Rising

39. Health insurance premiums have risen faster than health care costs
Wall Street Journal, July 31, 2006

40. US Health Costs Rise Faster than Other Countries’ Costs
Source: Health United States 2005, Natl. Center for Health Statistics

41. Health Insurance is a Rising Share of Employment Benefits

42. Firms Shift Health Insurance Costs to Workers

43. A Declining Number of Firms Are Offering Insurance…

44. And Small Businesses Especially Can’t Afford to Offer Insurance

45. PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE #2
Failure to control costs
Continuing double-digit annual cost increases
Costs cannot be controlled in a for-profit multi-payer system that resists coordination, budgeting, and planning.

46. CLAIMS BY HEALTH INSURANCE COMPANY SUPPORTERS
Private health insurance gives consumers:
Greater choice
Efficiency through competition

47. Most Employers Offer Only One Plan

48. Many With Insurance Lack Choice 42% Are Offered Only 1 Plan

49. Employers Control their Choice: Reasons for Changing Health Plans
Reason for Changing Health Plans
About 17% of privately insured Americans change plans each year, often disrupting the continuity of care. Those switching insurance are twice as likely as others to change their usual source of care. Only 9% switched plans to get better care. Three-quarters were forced to switch because they changed jobs or because their employer changed plan offerings. An additional 17% switched in search of a cheaper plan. Thus, choice remains a prerogative of employers, not patients, assuring that quality plays little role in driving plan selection.
According to data from another survey, among those forced to change plans in the past 5 years, 50% were offered only a single option for new coverage.
*Changed job, or employer changed plan offerings
Source: Health Affairs 2000; 19(3):158

50. Some Choices Don’t Really Matter!

51. The Choice that People Really Want:
Choice of doctor
Choice of treatment and location of treatment
NOT
Choice of health plan
Today’s managed care plans limit the patient’s choice of doctor, treatment, and location.
The only choice they offer is:
How much freedom from our limits are you willing to pay for?

52. The Health Insurance Industry is Highly Concentrated
Source: Modern Healthcare, Aug. 1, 2005; PacifiCare was bought by UnitedHealth in December 2005

53. …And the Concentration is Growing
Between 1995 and 2005, there were more than 400 mergers involving health insurers and managed care organizations.
In 95% of metropolitan areas, a single insurer had 30% or more of the market
In 56% of the areas, a single insurer had 50% or more of the market.
Source: Competition in Health Insurance: A Comprehensive Study of US Markets, American Medical Association, 2005.

54. THE TRUTH ABOUT HEALTH INSURANCE COMPANY CLAIMS
They fail to provide real choice or competition
Many employees have no choice of plan
Many employers change plans
People want choice of provider, not plan
Competition is declining through mergers

55. OTHER PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE
Financing by income-independent (and often unaffordable) premiums is highly regressive
Millions have inadequate coverage and high
out-of-pocket expenses
One million households each year face health-
related bankruptcy
The “hassle factor: Filing of claims by
consumers is confusing, costly, stressful
Claims are often denied or delayed

56. STILL MORE PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE
Insurers avoid covering those who are sick
(underwriting or risk selection)
Insurance companies interfere in physician
decision-making
Trust in the doctor-patient relationship erodes
Money is spent on treatment, not prevention
Health care is treated as a commodity to be purchased rather than a service to be provided

57. THE ULTIMATE PROBLEM
“Physicians have a professional and ethical obligation to their patients; health insurers’ primary legal obligation is to their shareholders.”
Competition in Health Insurance: A Comprehensive Study
of US Markets, American Medical Association, 2005
(Note: Perhaps now the AMA will reconsider its support for private for-profit insurance over publicly-provided insurance plans.)

58. This Familiar Headline is Wrong!
It is not the employer-based system that is
collapsing -- it is the unaffordable and
inefficient private insurance system.
U.S. employers should contribute their fair share,
but not through private insurance.
Many countries use employer-supported non-profit
industry-based sickness funds – and they
achieve universal coverage with lower cost.

59. SOME PROPOSALS BASED ON PRIVATE INSURANCE
Employer mandate to provide insurance
Individual mandate to purchase insurance
Tax credits for the purchase of insurance
Health savings accounts and high-deductible insurance (“Consumer-directed health care”)
ALL OF THESE WILL FAIL
They are more of the same:
They all rely on private health insurance

60. WHAT’S WRONG WITH THE ME/MA/VT PLANS
What is really wrong with these plans is not their details. The problem with them is:
They continue to rely on private insurance.
Covering the uninsured with private insurance will increase the cost of health care.
Costs will continue to rise as long as there are multiple private payers with no coordination, no budgeting, and no planning.

61. SO WHO NEEDS INSURANCE COMPANIES ANYWAY?
The U.S. today runs a very successful program that
Pays for comprehensive health services
Covers more than forty million people
Gives patients free choice of doctors and hospitals
Is funded by a public agency, not by private
insurance companies
It’s called Medicare.
Some of you may know that Medicare uses so-called “fiscal intermediaries”, often insurance companies, to process claims it receives. These organizations are acting simply as bill processors; they assume no risk and are simply paid a fee for providing this service. Under a true single payer system, where Medicare was the only payer, there would be no need for these intermediaries; physicians and other providers could simply submit a single monthly bill to CMS (which runs Medicare), as is done in Canada, and hospitals could be placed on annual global budgets.

62. THE EVIDENCE FROM MEDICARE
Since 1997, the US has conducted a head-to-head comparison between private insurance (“Medicare Choice+”, now called “Medicare Advantage”) and “public” Medicare.
The result:
Private insurance companies require a subsidy of at least 15% just to stay in the business.
Fewer than 1 in 6 Medicare-eligibles choose the private insurance option.

63. Medicare Coverage is Better than Private

64. SO HERE’S OUR SOLUTION:
Expand Medicare to cover everyone
Improve the coverage it offers
Eliminate private insurance
Expanded and Improved Medicare for All
Conyers Bill - HR 676
-- The “single payer” solution --

65. HOW WOULD “MEDICARE FOR ALL” WORK?
Everyone would receive a Medicare card assuring payment for all needed care
Complete free choice of doctor and hospital
Doctors and hospitals remain independent, negotiate fees and budgets with Medicare
Progressive taxes go to Medicare Trust Fund
Public agency processes and pays bills

66. SOME IMPLICATIONS OF MEDICARE FOR ALL
The same coverage for everyone: No means testing; coverage would not depend on
income, employment or age
Medicaid would no be longer needed
Hundreds of billions of dollars in administrative costs would be saved
Costs would be controlled through capital planning and quality reviews conducted through the single insurer
The Medicare-for-All "single payer“ program -- that is, the government, rather than 1500 private insurers – would reimburse doctors, hospitals, laboratories, MRI's, etc. These providers would remain largely private, as they are now. Today we have what could be called a "multi-payer” system, with a central role for private for-profit insurers. Germany and France have "multi payer" systems using sickness funds or "mutuelles" based on employment and rooted in their national labor history, which act as insurers. But this kind of multi-payer system is very different from the multi-payer system we have in the U.S. These European sickness funds are non-profit and are highly regulated by the government in a way that would be inconceivable in this country. They are so regulated that this is actually very much like a single-payer system. The historical basis for such sickness funds in this country is very limited. Moreover, as the international comparison shows, even a non-profit multi-payer system is more expensive than a single payer system. However we do it, though, we need to eliminate for-profit, private insurers and stop letting them play a major role in our American health care.

67. How Would It Be Paid For? One Example:

68. Covering Everyone and Saving Money through Medicare for All
Additional costs
Covering the uninsured and poorly-insured %
Elimination of cost-sharing and co-pays %
Savings
Bulk purchasing of drugs & equipment %
Reduced hospital administrative costs %
Reduced physician office costs %
Reduced insurance administrative costs %
Primary care emphasis & reduce fraud %
Net Savings %
Source: Health Care for All Californians Plan, Lewin Group, 2005

69. WHY IS SUCH A NATIONAL HEALTH PROGRAM POSSIBLE TODAY?
Private insurance is not addressing the fundamental problems of cost, choice, access and quality.
Everyone is affected: the uninsured, the underinsured, and everyone else who is
insecurely insured.
Employers who provide insurance want to be relieved of the burden of rising costs and unfair competition from employers who don't offer insurance.
Small businesses want to offer insurance to their employees but can’t afford it.
Every other industrialized country has done it.

70. “Would you prefer the current system or Universal Health Insurance…like Medicare…run by Government…financed by Taxpayers”
Don’t know
Current
Universal Health
Insurance
Source: Washington Post/ABC News Poll, 10/20/03

71. PHYSICIANS FOR A NATIONAL HEALTH PROGRAM (PNHP) says:
Who needs insurance companies anyway?
Limited reforms that keep private insurance in place have been tried and failed.
If we get rid of the insurance companies, we can have a Medicare for All system that is:
- Simpler
- Less costly
- Better for our health
- Equitable, and
- Covers everyone
Let’s do it!

72. RESOURCES Physicians for a National Health Program (PNHP) www.pnhp.org
PNHP New York Metro Chapter
Rekindling Reform
HealthCare-NOW
Citizens Health Care Working Group (US govt)