Who needs insurance in Usa health care a

Health care usa

1. 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: [email protected]

2. BEFORE HEALTH
INSURANCE BEGAN…
•Health care 1% or less of GNP
•Out-of-pocket payment for physician care
•Charity and public hospital care
Before 1936

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
1936 -1965

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
1965 -1990

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
•1883 -Germany
•1911 –Switzerland
•1935 –United States*
•1938 --New Zealand
•1945 –Belgium
•1945 --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
Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 20040
10
20
30
40
50
60
70
80
90
100
United S tat es
Aus tralia
Aus tria
Belgium Canada
Cz ech Republic
Denmar k
Finland France
Germany
Greece
Hungary I celand I reland
I taly
Japan Korea
Luxembourg
Mexico
Nether lands
New Z ealand
Norw ay P ortugal
S lovak Republic
S pain
S weden
S witz erland
T urkey
United Kingdom
Percent
Population Covered by Public System
Private Health Insurance Percent of Total Cost

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 population2002

14. US Life Expectancy is Less than
Many Other Countries65
70
75
80
85
United States
Japan
Iceland
Spain
Switzerland
Australia
Sweden
Italy
Canada Norway
France
New Zealand
Austria
Netherlands
Finland
United Kingdom
Germany
Luxembourg
Belgium
Greece Ireland OECD
Portugal
Denmark
Korea
Czech Republic
Mexico
Poland
Slovak Republic
Hungary
Turkey
Years
Source: OECD 2005
United States

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.
Per Capita
Spending
Overall
System
Performance*
Public
Satisfaction
United States 1 17 14
Austria 5 4 3
Belgium 11 11 7
Canada 9 14 12
Denmark 7 16 1
Finland 12 15 2
France 3 1 6
Germany 2 13 9
Greece 17 6 17
Ireland 14 10 8
Italy 10 2 15
Luxembourg 4 7 5
Netherlands 8 8 4
Portugal 16 5 16
Spain 13 3 13
Sweden 6 12 10
United Kingdom 15 9 11
* World Health Organization, The World Health Report 2000
Source: R.J.Blendon et al, Health Affairs, 2001
Ranking by:

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

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$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
UK SwedenGermanyCanadaNorway U.S.
Public ExpendituresPrivate Expenditures
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

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 %
288 100.0%
174 60.5 %
160 55.6%
14 4.9%
72 25.0%
41 14.2%
31 10.8%
42 14.6%
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 %
$ 1,753 100%
$ 965 54%
$ 658 37%
$340 19%
$318 18%
$ 236 13%
$ 70 4%
$ 789 46%
$ 309 18%
$ 293 17%
$ 187 11%
* 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 Overhead16.3%
19.9%
26.5%
3.1%
0%
10%
20%
30%
Medicare Non-Profit BluesCommercial
Carriers
Investor-Owned
Blues
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 Premiums19
28 30
11
6
19
22 18
23
16
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat serious
Very serious 21
27
31
19
10
17
20
19
15
13
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat serious
Very serious
38
50
48
33
21
38
48
50
35
23
Percent Percent
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 Families23
34
30
16
11
25
32
20
31
23
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat worried
Very worried 19
27
23
16
9
28
26
27
38
28
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000
or more
Somewhat worried
Very worried
48
66
50
47
34
47
52
50
53
38
Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.
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

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 Years16
23
18
15
7
23
23
21
22
26
0
25
50
75
Total Less than
$35,000
$35,000–
$49,999
$50,000–
$74,999
$75,000 or
more
Somewhat serious
Very serious
Percent
39
46
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 ReinhardtThe U.S. Health Care System!The U.S. Health Care System!
Source: Uwe Reinhardt, Ph.D., Princeton University

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

40. US Health Costs Rise Faster than
Other Countries’ Costs
Source: Health United States 2005, Natl. Center for Health Statistics0
2
4
6
8
10
12
14
16
18
1960 1970 1980 1990 1995 2000 2004
Health Costs as Percent of GNP
US
Canada
France
Germany
Japan
UK

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. Less expensive
17%
Better care
9%
Employer
changed*
74% Employers Control their Choice:
Reasons for Changing Health Plans
*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 limitthe 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$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Un i te d He al t h
W e ll p oi n t
Ka is e r Pe rm an e nt e
Ae t na
Hu ma n a
Am eri ca n Fa m il y
He a lt h Net
Ci g na
Hi g hm ark
I n de p en d en c e BC
Annual Revenue 2004 ($Billion)

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.
Employer-Based Health Insurance System ‘Collapsing’
(Wall Street Journal, 7/17/06)

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.

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

67. How Would It Be Paid For?
One Example:Revenue Sources for
Single Payer Program
Employer Payroll
Tax (8.17%)
33%
Federal
Government
(existing)
34%
Other
8%
State and Local
Govt (existing)
10%
Employee Payroll
Tax (3.78%)
15%
Note: Payroll tax on incomes above $7,000 and below $200,000 only.
Source: Health Care for All Californians Act: Cost and Economic Impacts Analysis, The Lewis Group, January 19, 2005

68. Covering Everyone and Saving Money
through Medicare for All
Additional costs
Covering the uninsured and poorly-insured +7.2%
Elimination of cost-sharing and co-pays +5.1%
Savings
Bulk purchasing of drugs & equipment -2.8%
Reduced hospital administrative costs -1.9%
Reduced physician office costs -3.6%
Reduced insurance administrative costs -5.3%
Primary care emphasis & reduce fraud -2.2%
Net Savings -4.3%
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
insecurelyinsured.
•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”62%
32%
6%
Source: Washington Post/ABC News Poll, 10/20/03
Current
Don’t know
Universal
Health
Insurance

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
www.pnhpnyc.org.
•Rekindling Reform
www.rekindlingreform.org
•HealthCare-NOW www.healthcare-
NOW.org
•Citizens Health Care Working Group (US
govt) www.citizenshealthcare.gov