HEALTHCARE GROUP POSITION PAPER
Submitted by Marilyn Kern
Planned Parenthood is, again, being threatened with massive losses of revenue by conservative legislators in both the U S Congress and state legislatures across the country who are calling for a total and permanent “defunding” of Planned Parenthood.
Planned Parenthood is the oldest, largest, most trusted, non-profit comprehensive family planning and reproductive healthcare service provider in our nation. Its long-stated mission is to ensure the right of all individuals to manage their reproductive health by providing accessible, affordable medical and contraception services, sexuality education and advocacy.
We stand with Planned Parenthood and its mission.
EXPANDED EXPLANATION OF THE ISSUE AND OUR POSITION
Planned Parenthood receives funding from the federal government ONLY through Medicaid, Title X and Medicare insurance reimbursements for medical services related to contraception, STI/STD treatment and funding and cancer screening. Calls for “defunding” of Planned Parenthood in any federal budget discussion are a gross misrepresentation of the truth. There is not now, nor has there ever been a “Planned Parenthood Funds” line item in any federal budget. (Through an awarded RFP grant process, Planned Parenthood also receives some federal funds for programming that focuses on reproductive healthcare education, human sexuality and research.)
Medicaid provides funding for 25% of the 42.5 million women of childbearing age (15 – 49) in this country.[i] If federal funding to Planned Parenthood was prohibited, it is estimated that 2.5 million of these clients would lose access to reproductive healthcare because 75% of Planned Parenthood’s clients are low income, young, under educated, racial/ethnic minorities dependent federal dollars for their healthcare. Seventy-two percent (72%) of Planned Parenthood clients seen in rural, underserved areas fit into these categories.[ii]
There are about 14,000 federally funded/qualified health care centers that do the same services that Planned Parenthood’s 650 clinics do. Both types fo clinics receive the same funding.[iii] Unlike Planned Parenthood, however, none of these other health centers do abortions. Planned Parenthood does medical and surgical abortions at nearly one half of its clinics.[iv]
Many of the federal health clinics do more services such as more extensive primary care, dental and behavioral healthcare. However, 4,100 centers funded through the Rural Health Centers program are not required to do family planning services, nor are they required to serve low income patients or even offer a sliding fee scale for payment of services. A 2014 CBO report shows that even the federal health centers that do provide contraceptive services fall short in those services compared to Planned Parenthood: RHC 1.3 million; PP 3.6 million.
Nearly one half of Planned Parenthood’s 650 clinics are in rural, isolated, underserved communities where they are the “safety net” for family planning. Seventy-two percent of these rural Planned Parenthood clients fall into the category of low income, under educated, young, racial/ethnic minorities.
According to the Congressional Budget Office, “defunding” Planned Parenthood would put an unsustainable strain on the other federally funded health centers that would not actually balance out for nearly 10 years.[v] In the meantime many people would go underserved or un-served, as there would not be an affordable, accessible health center available to them. In some areas Planned Parenthood has become the only facility providing any medical care through Medicaid reimbursement.
There is a high degree of conservative political maneuvering, religious belief and personal emotions that has supported the anti-Planned Parenthood movement for decades across our country and in the United States Congress. The anti-movement’s major focus has been to deny women in America a basic constitutional right of choice/control over their own reproductive life and well being. Also,the anti-movement has diligently worked to limit access to affordable reproductive healthcare services by targeting and negatively impacting our most vulnerable citizens through legislative barriers and changes to Medicaid.
Since Margaret Sanger and her friends opened our nation’s first family planning clinic in New York City the Catholic Church has been a vocal and powerful opponent. Its opposition is based on the theological position of opposing the use of or dissemination of any and all family planning/contraception information. The only exception to their opposition is the natural rhythm method or abstinence. Also, the Church is opposed to the establishment of any family planning clinics such as Planned Parenthood.
Roe v Wade became the law of the land on January 22, 1973. Since that time abortion has become an immensely divisive culture war issue in our country. This war-like division has consistently been led by the Christian Right/Evangelicals who have become especially influential against support for Planned Parenthood which they mainly see as only an abortion provider – period.
If Planned Parenthood ceased offering abortions at any of its clinics, there would still be opposition groups calling for its “defunding” over issues of contraception. Currently, there are 22 different methods of contraception available. Some of them fall into the category of LARCs (long acting reversible contraception)[vi]. Many construe these methods to be tantamount to abortion – not surgical, but medical.
Bowing to anti-abortion protests, in 1976 the United States Congress passed the Hyde Amendment which prohibited any federal tax dollars from being used for abortion. Eventually, three (3) exceptions were allowed: cases of rape, incest or endangerment to the life of the mother. State discretion was left intact. To date 32 states follow Hyde, 4 states do not, but pay for abortions by using their own monies from other state funds, 13 states only abide by Hyde because they are ubder court orders to do so and 1 state only allows the Hyde exceptions for rape and incest. (Probably unconstitutional, but never, yet, successfully challenged.)[vii]
Over these last 40+ years, the anti-movements have combined religious contraception objections with the politics of federal funding and accessibility and have morphed into a large, powerful, polarizing anti-choice movement. Although there are more than 600 official abortion providers in this country, Planned Parenthood is the primary target for the anti-abortion movement.
The major objection to Planned Parenthood is totally enmeshed in all of the religious objections to contraception/abortion/human sexuality education and to federal funding issues around Medicaid, Title X and Medicare reimbursements. Since 75% of Planned Parenthood’s clients use one or the other of these federally funded programs, any government policies designed to reduce reimbursements to any of these programs will have a direct and negative affect on the services that are offered by Planned Parenthood to these, our country’s most vulnerable citizens.
We will stand in solid support of Planned Parenthood because:
1.) Only Planned Parenthood has a mission and commitment to provide affordable, accessible services to everyone regardless of ability to pay.
2.) One half of Planned Parenthood clinics are situated in rural areas often where no one else provides.
3.) Planned Parenthood supports the ACA’s provision to include a mandate for preventive and contraception services offered under ACA guidelines without additional costs or co-pays.[viii]
4.) If Planned Parenthood lost its federal insurance funding, it would amount to an annual loss of between $5-6 hundred million—40% of its budget[ix] This level of funding support would not be recoverable from donations and other sources.
5.) Planned Parenthood is the largest and oldest family planning provider in our county. Because of it long relationship with the esteemed Guttmacher Institute of Research, it has achieved an international standing as a EXPERT, in the fields of education and research in reproductive health and human sexuality and contraception.
[i] Kaiser Family Foundation, 2014,Women’s Health Policy, “Medicaid’s Role for Women”
Multiple government sources
[ii] Planned Parenthood Action Fund, article, “Medicaid and Reproductive Health”
[iii] CBO stat from Fact Check Report, January, 2017
[iv] Safe Places Project, Maddy Rasmussen, June, 2017
[vi] Medical News Today, “Birth Control . . ., June 26, 2017
PP.org, All About Birth Control
[vii] Washington Post, “Ryan’s Claim . . . ,” Michelle Ye Hee Lee, January 18, 2017
[viii]Planned Parenthood Action Fund, “Taxpayers Do Not For “Free” Birth Control,” 2017
[ix] NPR Fact Check, August, 2015
HEALTH CARE WORKGROUP GROUP POSITION-
Submitted by Jackie Means
The cost of prescription drugs in the United States is too high. Prescription drugs account for more than 10% of the $3.2 billion in overall health care spending outpacing all other health care services.[i] On average, the cost of drugs is increasing at 10% a year. Specialty drugs (drugs that require special handing and monitoring or for uncommon diseases) have seen an unprecedented cost increase the last three years. Costs of drugs to fight cancer, multiple sclerosis, critical heart conditions to name a few, have seen increases from 300% to 5,455%. [ii] Common and generic drugs prices are also on the increase. Those on the market for decades are rising as 4 of the top 10 drugs have increased in price by 100% to 300% in the last 10 years. For the individual, a year’s supply of a prescription has more than doubled since 2006. Many older adults struggling to pay the enormous cost of their drugs are reducing daily doses, delaying or deciding not to fill a prescription.
A pharmaceutical industry- wide price hike business model to drive revenue growth and maximize profits[iii] with no substantial regulation is primarily responsible for this crisis. Manufacturers of both specialty and generic drugs have adopted this model in the last decade. The unsustainable cost of prescription drugs puts pressure on the entire healthcare system and increasingly on patients and insurance providers that are paying prices that are much too high. The decreasing affordability of drugs will lead to poorer health and continual higher health care costs for millions of Americans.
We advocate for pushback against these high prices by working to change the fundamentals that are responsible for creating this crisis.
1. Change the government’s position of non -intervention in drug pricing and regulation and push for laws that bring down the cost of medicines. This includes the ability for Medicare to negotiate drug prices, as it does with Medicaid (to some extent) and Veterans Affairs.
Although the public outrage and anxiety over escalating cost of drugs is growing, pharmaceutical manufacturers continually increase the price of drugs because there is nothing stopping them. In contrast to other countries, where universal health care systems allow government agencies to regulate the prices of medicines and set a limit on reimbursement the US has limited bargaining power.[iv] Only drug prices for Medicaid and Veterans Affairs are negotiated. Negotiated prices would lower costs for brand name drugs. Following the process of pricing for the VA generics would be the first choice in government -sponsored programs. Such a move could produce as much as $16 billion in annual cost savings[v] and provide lower cost prescription drugs to the consumer.
· Changes in policies would greatly reduce drug costs for 57 million older Americans and prevent the frequent price increases for protected drugs based solely on market forces.
2. Create transparency in drug pricing. Provide consumers with information on the complex pricing of drugs to better understand if higher costs are justified.
No longer can the pharmaceutical industry claim research and development as the primary reason for increasing drug list prices. Companies raise prices often not to fund research to discover new drugs, but to boost profits[vi]. Some companies are buying smaller research companies with promising products as opposed to doing development in house. Global Data research revealed that 9 out of the 10 big pharmaceutical companies spend more on marketing than research[vii].
The complex system of pricing drugs includes three major players:
· Pharmaceutical companies manufacture and establish list prices of drugs.
· Pharmacy benefit managers manage prescription drug services for insurers (ex. Express Scripts, OptumRX, CVS Caremark).
o These groups negotiate with the pharmaceutical companies for lower prices, discounts, and rebates on all prescriptions in exchange for the right to be included in their list of preferred drugs.
· Insurance company health plans provide coverage for the consumer.
o Discounts negotiated by the PBMs are to be passed on to the health plans that administer prescription drugs to the consumer.
Unfortunately, none of this information is available to the public. Nothing about this practice is regulated, so the consumer is caught in the middle of a complicated world of drug price negotiation with no control. Increasing public understanding of the current process and providing a system for consumers to negotiate at their pharmacy for a different price would benefit all consumers.
3. Develop policies that provide consumer access to easy drug comparisons. Eliminate the drug manufacturers’ strategies at circumventing competition regarding generic and specialty drugs. The public needs to know if a new medicine is any better than one currently on the market.
Patent laws related to drugs have created “government-protected monopolies” which most often stifle competition. Although this was designed to promote innovation, drug manufacturers have developed strategies to prolong the protection and prevent generics which will reduce cost, from coming to the market. According to one study, when two generics are on the market the cost of the brand name drug drops 55%. When five generics are on the market the cost can drop to 66% of the original. [viii]
The practice of “evergreening” or modifying a newly expired patented drug ever so slightly (ex. changing its color ) to extend the patent must be eliminated. An example of this is Nexium . Nearing its patent expiration additional color was added to the drug to extend its patent privileges and protect its market share. This allowed the drug to be promoted as the latest and greatest without any information on its comparative value to the generic.
Requiring public information on changes in specialty and common drugs will allow consumers to make more informed choices.
4. Create laws that allow for more drugs to be imported.
Prescription drugs in this country cost on average 6 times more than in other developed countries. Currently, there are strict limits on when and how consumers can buy drugs from other countries. Developing a system that allows for safe and legal importation of less expensive prescription drugs could put pressure on manufacturers to reduce prices. Allowing imported drugs to be fast -tracked for distribution would curb drug manufacturers egregiously raising the price on a comparative drug.
5. Promote the development of generic drugs by reducing time needed for approval by the FDA. Limit the control of the number of generics to the market by patent holding drug manufacturers.
Application backlogs at the FDA have led to delays of three to four years in bringing generic drugs to the market. Fully resourcing the FDA by Congress to appropriate the necessary funds would help speed the process.
“Pay for delay” practices which allow manufacturers facing expiration of a patent to pay generic drug makers to delay putting their drug on the market must be eliminated. This practice crushes competition and further manipulates the market by restricting the availability of lower cost drugs.
6. Eliminate pharmaceutical industry practices that ultimately cost the consumer more for all prescription drugs. These include direct- to -consumer advertising and the offering of coupons and discount co-pay drug cards to offset high drug costs.
As stated above, as pharmaceutical industry profits increase more dollars go to marketing and less dollars to research. Drug companies spent $5.4 billion dollars on advertising and marketing in 2015. Since the FDA relaxed the rules regarding pharmaceutical advertising in 1999, Americans have been assaulted and coerced with television and print drug ads.
Most of the consumer advertising targets expensive drugs with high course of treatment costs. The American Medical Association and American Society of Health System Pharmacists have endorsed banning direct -to- consumer advertising because it leads to the over prescribing of expensive drugs when more cost effective treatments exist.[ix] The regulations on drug advertising because of the extreme cost impact advertising has created must be reinstated.
Coupons and discount cards are offered by drug manufacturers to offset the cost of many higher priced, well advertised drugs. Although the use of coupons or discount cards differ, these options increase the sales of brand-name drugs by 60% or more thus reducing generic sales. This information was reported in a National Bureau of Economic Research article published in October 2016. The impact of these options is an increase in drug spending by $30 million to $120 million per drug. This in turn increases insurers cost and therefore consumer premiums. [x]
Discount cards and coupon options are not available to recipients of Medicare, Medicaid (some exceptions) and most other government sponsored programs. Even though the system is set up to promote lower cost drugs, the ultimate cost of these options is borne by the entire health care system including government programs .They negate cost -sharing tools such as co-payments, deductibles and co -insurance.
Over a decade, eliminating these options would save as much as $32 billion.[xi] These options provide only a short term benefit for the consumer as they are often both dollar and time limited. By eliminating these options, additional transparency in drug pricing and refocus on the primary use of generic drugs as a first alternative could become standard practice.
The pharmaceutical industry has tremendous power in influencing any changes in the complex system of drug pricing. Lobbyists for drug companies outnumber those for any other industry and many legislators look to them for continued support in election campaigns. They command control over a system where negotiations and discounts are stratified across a decentralized mix of private insurers, government health programs and drug benefit managers.[xii] The price hike business model of the industry continues to threaten the entire health care system. Unfortunately, without significant legislation to restrict this model, the gouging of the consumer will continue.
The specific positions listed in this paper demand advocacy by all of us to bring down artificially high drug prices by working with our legislators and policy makers. We need to demand policies that provide more effective transparency in the current pricing system, allow foreign drugs into our market and tighten rules and strengthen oversight in patent drug protections.
[i] Money Watch, June 26, 2017
[ii] Time, September 7, 2016, “How to Stop Immoral Drug Price Increases”.
[iii] L A Times, September 1, 2016, “Here’s Why Drug Prices Rise ...When There’s Plenty of Competition”.
[iv] Empower, Volume 8, Issue 4, Fall 2016
[v] AARP Magazine, May 2017, “Why Drugs Cost So Much”.
[vi] US Senate Investigative Committee Findings, December 2016
[vii] AARP Magazine, May 2017, “Why Drugs Costs so Much “.
[viii] Kaiser Health News August 23, 2016
[ix] Time, September 7, 2016, “How to Stop Immoral Drug Price Increases.”
[x] Market Watch, Jan 3, 2017, “The Real Reason Drug Makers Offer Discount Cards (You’ll Pay Eventually)”.
[xi] Forbes, March 30, 2017, “5 Ways to Stop Rising Drug Prices” .
[xii] Fortune, July 14, 2016, “Drug Companies Really Don’t Care About The Price Hike Backlash”.
POSITION PAPER: MEDICAID
Alliance4Action Healthcare Action Team
November 8, 2017
Prepared by Peggy Hendrickson
Medicaid funding has been threatened repeatedly during the past several months by proposals to repeal and replace the Affordable Care Act (ACA). It continues to be threatened by 2018 federal budgets proposed by the President and Congress. Medicaid is a jointly funded Federal-State health insurance program for low-income and otherwise needy people. In May, 2017, 74.6 million Americans were enrolled in Medicaid[i], making it the largest source of health insurance in the country. In October, 2017, 1.9 million Arizonans were covered by Medicaid through the Arizona Health Care Cost Containment System (AHCCCS)[ii]. The federal government has been a reliable partner for state Medicaid programs since 1965. The federal match rate is from 50% to 75%. For ACA Medicaid expansion recipients it is even higher. Eligible persons include families with children, pregnant women, elderly individuals, persons with disabilities, or income below 138% of the federal poverty level guidelines.
The Medicaid program saves many lives and millions of dollars in uncompensated care cost that otherwise would increase everyone’s cost for health care.
HEALTH CARE WORKGROUP POSITION ON MEDICAID
Health care should be a universal right for every American. Until that becomes a reality, we believe public funding for accessible comprehensive health care for those who cannot afford to pay the increasingly high costs of health insurance or to self-pay is essential. The federally-funded Medicaid Program is a critical component of the current social safety net of the United States. It must be sustained until our nation implements a system of affordable, comprehensive, universal health care coverage for all Americans. We believe Medicaid should be available to all who meet the Affordable Care Act (ACA) eligibility requirements, and that Medicaid expansion options as available through the ACA should be made available in all states.
OUR SPECIFIC POSITIONS
· Our nation must provide access to affordable health care for Americans who cannot afford health care services paid out-of-pocket or through private health insurance plans with their high premiums, deductibles, and co-pays. This burden cannot be borne by our most vulnerable citizens and should not be placed on our health care providers, clinics, and hospitals.
People enrolled in the Medicaid Program cannot afford to purchase health insurance or to pay out-of-pocket for the health care they need. Many have physical or developmental disabilities, are elderly, or are otherwise unable to work. Others are employed in low wage jobs without health care benefits. People who cannot afford preventive or early intervention care seek treatment for disease only after symptoms become severe or life-threatening and require more intensive and expensive treatment. Prevention and early intervention are more effective, reduce human suffering, and are significantly less costly. Under urgent circumstances, children and families must turn to hospital emergency rooms where they cannot be turned away. If the patient requires inpatient care, the hospital must continue to provide uncompensated care until the patient’s condition stabilizes. These unreimbursed costs incurred by hospitals are passed onto patients who have comprehensive health insurance or those who can afford to pay out-of-pocket. This drives up the cost of care for all. Hospitals can be driven out of business.
· The Medicaid Program should be funded adequately to maintain physician participation and a comprehensive array of accessible providers.
Low reimbursement rates have contributed to the fact that about 30% of physicians nationally either refuse to see Medicaid patients or limit the number of Medicaid patients in their practices[iii]. By comparison, in Montana, where reimbursement rates were raised, only 10% of providers have limited access to care for Medicaid patients. Lack of access, due in part to low reimbursement levels, has resulted in less patient access that can contribute to poorer health outcomes.
AHCCCS, which operates under an integrated managed care model, has “proven itself equal to the task of operating efficiently and effectively. It is often upheld as a national role model for other states to emulate[iv]”. Block-grants, under proposed formulas, would actually penalize them for their successful outcomes by basing Arizona’s funding allocation on these historical lower costs. A recent failed health care proposal that included block-grants to states was predicted to have reduced Arizona’s Medicaid funding by $10.4 billion from 2020 through 2026[v].
· Medicaid should continue to be administered by the federal government rather than being block-granted to states.
Capping and block-granting Medicaid to states would have disastrous long-term consequences for many thousands of Arizonans. Under current block-grant proposals, once grant amounts are determined, they will not be increased if state costs are greater than expected. While some claim that block grants will increase state flexibility, in reality this flexibility will be about how to make up for Medicaid funding shortfalls: which services to cut, how to reduce eligibility, which hospitals’ or doctors’ reimbursements to cut, or which taxes to increase.
AHCCCS, which operates under an integrated managed care model, has “proven itself equal to the task of operating efficiently and effectively. It is often upheld as a national role model for other states to emulate[vi]”. Block-grants, under proposed formulas, would actually penalize AHCCCS for its successful outcomes by basing Arizona’s funding allocation on these historically lower costs. A recent failed federal health care proposal, that included block-grants to states, was predicted to have reduced Arizona’s Medicaid funding by $10.4 billion from 2020 through 2026[vii].
· Medicaid is an essential support rather than a detriment to a person’s or family’s ability to become financially self-sufficient.
Low-income individuals and families live in “survival mode” because our nation’s minimum wage is not a living wage. Being able to afford food, clothing, shelter, school supplies, and transportation is already a daunting task for minimum wage families. Working parents face even more financial challenges because of the costs of being employed, including having appropriate clothing and good hygiene, dependable transportation, and child care. Many find it necessary to have two or three jobs at one time. Low-income families trying to stretch limited dollars to pay for all of these “basics” have no money left to pay for health care.
All children need immunizations, dental care, developmental assessments and medical care for common childhood maladies. Children with special needs (physical, behavioral, developmental) require a variety of health services. And, of course, parents must have access to health care in order to be healthy enough to raise healthy children. Access to affordable, comprehensive health care is critical for families.
There are serious public health implications for the fact that our nation has a large population of medically uninsured persons. Amongst these are that health insurance not only spreads financial risk, but also promotes appropriate use of preventive and routine health care services that keep people well at the least expense. Their lack of coverage is rarely voluntary and can have negative consequences for all of us. Amongst the ramifications of not being insured are “economic costs (worse health, developmental, and functional outcomes for children and adults) that result from their lack of health insurance; the impact on family economic stability and psychosocial well-being when any member of a family lacks coverage; and the spillover effects within communities of relatively high uninsured rates on health care services and institutions, local economies, and population health.[viii]”
· Work requirements for Medicaid recipients will not increase their rate of employment.
Employment requirements for Temporary Assistance for Needy Families (TANF) demonstrated an initial increase in employment among enrollees. Over time it was found “that the employment gains were ephemeral, inconsistent, and have often been questionably attributed to ‘welfare reform’”[ix]. In fact, employment rates rose for people who were on TANF and not subject to work requirements, even as people with work requirements lost jobs[x]. The conclusion was that there are other economic factors, including a strong job market and investments in Medicaid, Children’s Health Insurance Program, and child care grants that help sustain long-term employment more than work requirements.
Parents, especially those who have children with special needs, have enormous parenting responsibilities. They must coordinate their children’s services and provide or arrange transportation to and appropriate involvement in required health and support services scheduled throughout the business day. Most low wage jobs do not permit workday flexibility. For all parents, the cost of developmentally-appropriate, dependable child care continues to soar, in some cases absorbing the majority of a small paycheck. Proponents of work requirements for Medicaid recipients do not understand that the size of a minimum wage paycheck is not sufficient to fund the costs associated with being employed and having a family.
Single adults, especially those with diagnosed medical conditions or developmental disabilities, may appear to be able to work, but, in reality may not have the capacity to maintain a household, a wardrobe, transportation, and a work schedule over time. To assume that all single adults who are unemployed are “lazy” or that receiving Medicaid allows them to remain jobless, is a shallow conclusion that doesn’t take into consideration numerous underlying issues.
Public funding for Medicaid must continue as currently provided and commensurate with the needs of the eligible target population. Eligible persons should continue to be enrolled using the ACA’s Medicaid expansion criteria. States that did not expand Medicaid under the ACA should expand Medicaid now. To increase access to care, Medicaid reimbursement rates should match Medicare’s. We believe state block grants would result in significant cuts to eligibility, services, and number of participants. Medicaid is an essential support for low-income families and all eligible persons, not a detriment to financial independence. It is an essential component of our nation’s social safety net and a vital component of public health.
[i] Kaiser Family Foundation
[ii] AHCCCS.gov, Oct 2017
[iii] FactCheck.org, March 29, 2017
[iv] Vitalyst Health Foundation
[v] Ken Alltucker, The Republic, azcentral, Sep 22, 2017
[vi] Vitalyst Health Foundation
[vii] Ken Alltucker, The Republic, azcentral, Sep 22, 2017
[viii] Costs, Benefits and Values: Context, Concepts, and Approach, Hidden Costs, Values Lost: Uninsurance in America, NCBI Bookshelf, National Institute of Health.
[ix] The Atlantic, Mar 23, 2017
[x] Center on Budget and Policy Priorities
Position Paper: Single Payer Healthcare
Alliance4Action Healthcare Action Team
The United States has a fragmented “system” of healthcare coverage funded by private insurance, governmental programs and individuals’ out of pocket payments. We spend more on healthcare than any other industrialized country yet health outcomes are poorer than those of comparable nations and coverage is not universal.
We support a single payer or single payer hybrid model of healthcare funding.
Why we have this position
We feel quality healthcare is a right and should be affordable and accessible to all. A single payer or hybrid system is the best means to achieve universal coverage because it is the most cost-effective model, the least complex administratively, and offers opportunities for better quality control.
A single payer healthcare system is one where the insurer, usually a government, pays for all covered health care costs. A hybrid system includes private insurance as part of the system.
Three main models of universal healthcare systems, based on single-payer or hybrid systems, have been implemented around the world:1
This system, established in postwar England, Spain, New Zealand, Hong Kong, Cuba, and most Scandinavian countries, is named for the British social reformer, William Beveridge. This model is typically referred to as “socialized medicine”. Healthcare is universal and is funded by taxes. Most clinics and hospitals are owned and run by the government. Physicians and other providers are generally government employees. However, private insurance is still available for purchase by those individuals who can afford it and who prefer non-governmental healthcare providers and facilities.
Prussian Chancellor Otto von Bismarck originated this system in 1883. This model and variations of it are implemented in Germany, France, the Netherlands, Switzerland, Japan and, to some degree, in Latin America. This system is not technically a single payer system because it consists of non-profit insurance companies (called “sickness funds”) which are financed jointly by employer and employee payroll deductions. These monies are deposited with the government which then disburses the funds to insurers. Insurers are required to cover everyone. Funds from governmental general revenues cover the cost of insurance for non-contributors. Coverage and reimbursement is strictly regulated by the government which results in tight cost control. Most facilities and providers are private. Insurance, outside of the system, is available for purchase.
National Health Insurance model:
This model combines elements of both the Beveridge and Bismarck systems. Canada, Taiwan and South Korea have implemented this type of healthcare system. Similar to our traditional Medicare system, all citizens pay into a government run insurance program that deals directly with doctors and hospitals which are privately operated. Fees and coverage are regulated by the government. Individuals can purchase supplemental, private insurance policies to pay for medical and dental care that is not covered by the governmental insurance.
What are the benefits and negatives of a single payer system?2
· Universal coverage.
· Reduced healthcare costs without sacrificing quality outcomes based on other countries’ experiences. For example, Canada’s spending is $2,233 less per person than in the United States yet has a life expectancy rate which is 2 years higher than that of the US and a lower infant mortality rate as well. Some of the reasons that total costs are lower under single-payer systems include lower administrative costs and little need for advertising. Administrative costs are about 2% for a single payer program such as traditional Medicare vs. approximately 12% for many private insurers. Competitive advertising can account for more than 15% of total expenses for private insurers but virtually nothing for single payer.3
· Potential for spending leverage and cost containment. “The most important source of cost savings under single-payer is that large government entities are able to negotiate much more favorable terms with service providers. In 2012, for example, the average cost of coronary bypass surgery was more than $73,000 in the United States but less than $23,000 in France.”3
· Simplified billing for providers and hospitals.
· Private care can still be available. (This can also be a negative, however, as it can create a two-tiered system.)
· The U.S. has several single payer type systems already in place, so transitioning using these structures may be easier.
· Bonuses or incentives, for example, based on outcome, providing care in underserved areas, etc. could be built into the program.
· Health insurance costs for individuals and employers could be significantly reduced or eliminated which could counter-balance possible tax increases.
· Medical providers may opt to serve only private-pay patients unless there is a legal mandate prohibiting this. This could result in a two-tiered healthcare system.
· Does not solve and may exacerbate the doctor shortage.
· Funding sources need to be resolved.
· May reduce healthcare innovation, particularly for pharmaceuticals and equipment, due to lack of monetary incentives.
· Wait times for specialists could be long and not all conditions and treatments may be covered
What type of single payer system would work best in the U.S.?
The U.S. has several systems that incorporate elements of single payer models, although they cover only certain populations.
· The Veterans Administration health care system is a Beveridge model system. Medical facilities are owned and run by the U.S. government and all staff are employees. Some HMOs (Health Maintenance Organizations) are based on a similar model whereby facilities are owned by the HMO and providers are salaried.
· The traditional Medicare system is a National Health Insurance system which is paid for by a combination of taxes and premiums. The government pays private providers and hospitals directly. Costs and coverage are regulated by the government.
· Tricare for military and some retired military personnel contains some elements of the Bismarck model. The government pays private insurance companies to administer plans which are tightly regulated
· Medicaid, which covers low income, elderly and disabled individuals, varies by state, but generally involves government payments to private providers for allowable services.
Any one of the above existing systems could be expanded to provide universal coverage. However, the most discussed possibilities to date have been “Medicare for All”, “Medicaid for More”4 and various other single payer hybrid proposals which include public option plans.
Medicare for All
“Medicare for All” has been proposed most notably by Senator Bernie Sanders.5 This label resonates well with many individuals because Medicare is a well-known, popular and successful program with low administrative costs. However, Sanders’ plan would actually expand Medicare by increasing covered services and eliminating deductibles, copays and premiums. Private insurance companies, which are currently part of the system (Medicare Advantage) would be eliminated.6
His proposals for paying for such a system include: a 6.2 percent payroll tax on employers, an additional 2.2 percent tax on individual incomes, and several taxes on wealthier Americans and corporations. In addition, the elimination of employer tax deductions for insurance premiums would save trillions of dollars.6
Sanders estimates the cost to be a little over $1.6 trillion per year and his funding mechanisms would generate sufficient revenue—about $16 trillion over ten years. Coincidently, (or not), $1.6 trillion per year is nearly identical to what the U.S. government is currently spending on healthcare. However, the Urban Institute estimates that this plan would cost closer to $32 trillion over 10 years.7
Medicaid for More
Hawaii senator Brian Schatz has proposed “Medicaid for All (who wish it)” as a public option plan.8 His proposal allows states to offer Medicaid to anyone who wishes to purchase coverage. Current low-income enrollees would keep their coverage and those receiving ACA subsidies would continue to do so. Reimbursement rates to doctors and hospitals would be increased to match Medicare rates to encourage service providers to accept enrollees. Since premiums would cover the cost of this plan, no increased taxes are anticipated. Because Medicaid varies by state, some federal standards would need to be developed and legislated to avoid 50 different “Medicaid for More” plans.
Public Option Alternative for Employers
Some plans propose offering a public option to employers rather than solely to individuals. 9 To be attractive to employers and individuals, these public option plans would need to offer coverage competitive with the private insurance marketplace at a lower price. To avoid creation of a two-tiered healthcare system, the plans would need to reimburse service providers at rates comparable to those of private insurers.
Arguments for a Single Payer Hybrid Plan
Although hybrid plans are not pure single payer systems, given the current political climate and the near impossibility of abolishing private insurance carriers, a hybrid plan which includes a public option is potentially the first step toward universal healthcare.
An analysis by Jacob S. Hacker, a professor of political science and director of the Institution for Social and Policy Studies at Yale, contends that a public option is politically feasible because it is not a threat to private healthcare plans. He cites the following advantages of a public option plan: 10
· A public option is crucial to making a system of broad coverage work. He notes that in many sections of the country, there is already only a single payer, albeit a private plan as the payer. Such lack of competition makes regulation difficult and hurts consumers who face higher costs. A public plan would provide a competitive benchmark both for coverage and premium rates.
· More people covered results in a larger pool for all plans. A public plan provides everyone with a choice. The result will be greater numbers of covered individuals and a broader pool for all plans, public and private.
· A public plan can offer a broader network of providers, thus making it attractive to more consumers.
· Cost containment may be the biggest advantage of a public option plan. A public plan may be able to set reimbursement rates, just as Medicare has done, resulting in slower cost growth than that of private insurance. However, reimbursement rates must not be so low that providers refuse to take those individuals insured by a public plan.
Single payer and hybrid systems in other industrialized nations have resulted in lower healthcare costs and better health outcomes as compared to healthcare in the United States. The U.S. already has several structures in place that could be used as a foundation for a universal single payer or hybrid system. The major obstacles are identification of funding and opposition by private insurance companies. A transitional approach which offers a quality, lower cost public option to employers and individuals, while retaining private insurance options, may be the most realistic mechanism at this time.