WHO NEEDS INSURANCE COMPANIES ANYWAY or Get the insurance companies out of my health care

1
WHO NEEDS INSURANCE COMPANIES ANYWAY?orGet the
insurance companies out of my health care

• Leonard Rodberg, PhD
• Physicians for a National Health Program
• New York Metro Chapter
• Comments pnhpnyc_at_igc.org

2
BEFORE HEALTH INSURANCE BEGAN
Before 1936

• 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
1936 - 1965

• 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
1965 - 1990

• 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

• 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
The Outlier Nation Our Public System Covers
Fewer
United States
Source F. Colombo and N. Tapay, Private Health
Insurance in OECD Countries, OECD 2004
8
While Private Insurance Dominates
United States
Source F. Colombo and N. Tapay, Private Health
Insurance in OECD Countries, OECD 2004
9
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.

10
Hospital Inpatient Days Per Capita
11
Physician Visits Per Capita
12
Bone Marrow Transplants
13
MRI Units/Population
14
CT Scanners per million population 2002
15
US Life Expectancy is Less than Many Other
Countries
United States
Source OECD 2005
16
and its Infant Mortality is Higher
17
The US spends more, but our system doesnt work
well, and we arent happy with it.
18
Rising Number of uninsured
Number of Uninsured Americans (Millions)
45
40
35
30
25
20
1980
1985
1990
1995
2000
Source U.S. Census Bureau
19
Playing Doctor? (cartoon)
20
U.S. Health Costs are 70 Greater than the Median
of Other Countries
United States
21
Our Public Sector Alone Spends More than Other
Countries Americans Pay for National Health
Insurance but Dont Receive It
OECD and Paying for National Health
InsuranceAnd Not Getting It Health Affairs
July / August 2002  
22
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

23
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

24
CONNECTING THE DOTS

• So why do we spend so much and have so many
  uninsured?
• Its 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.

25
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
26
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
27
A PUZZLE

• Private insurance pays only a small portion of
  the cost, but it is responsible for the high cost
  of our system. How can this be?

THE ANSWER

• Reliance on private insurance companies accounts
  for up to 30 of total health care spending due
  to
• Insurance company marketing, overhead, profits
• Wasteful billing and administrative burdens it
  imposes on physicians, hospitals, and others.
• And it provides no way to control rising costs.

28
CEOS COMPENSATION 2004
Note Total PaySalaryStock 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 AdministrationUnited States
Canada
31
Physicians' Billing Office ExpensesUnited
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
23
21
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
53
52
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 InsuranceCosts to Workers
43
A Declining Number of Firms Are Offering
Insurance
44
And Small Businesses Especially Cant 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 Choice42 Are Offered
Only 1 Plan
49
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 Dont Really Matter!
51
The Choice that People Really Want

• Choice of doctor
• Choice of treatment and location of treatment
• NOT
• Choice of health plan
• Todays managed care plans limit the patients
  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
And Profits Climb, as the Number of Firms Declines
Source Testimony of the Greater New York
Hospital Association before the NY State Assembly
Standing Committees on Health, Insurance, and
Labor. Dec. 8, 2006
55
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

56
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

57
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

58
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.)
59
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.

60
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

61
WHATS 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.

62
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
• Its called Medicare.

63
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.

64
Medicare Coverage is Better than Private
65
SO HERES 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 --

66
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

67
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

68
How Would It Be Paid For?One Example
69
Covering Everyone and Saving Money through
Medicare for All

• Additional costs
• Covering the uninsured and poorly-insured
  6.4
• 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
70
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 cant afford it.
• Every other industrialized country has done it.

71
Would you prefer the current system or Universal
Health Insurancelike Medicarerun by
Governmentfinanced by Taxpayers
Dont know
Current
Universal Health
Insurance
Source Washington Post/ABC News Poll, 10/20/03
72
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
• Lets do it!

73
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