UCLA study of California insurance a lesson for all
The State of Health Insurance in California: Findings from the 2003 California Health Interview Survey
By E. Richard Brown, PhD, Shana Alex Lavarreda, MPP, Thomas Rice, PhD, Jennifer R. Kincheloe, PhD, MPH and Melissa S. Gatchell, MPH
UCLA Center for Health Policy Research
August 2005
More than one in five nonelderly Californians lacked some form of health insurance coverage for all or part of the year in 2003 - nearly 6.6 million children and adults under age 65, which is more people than the entire population of the state of Massachusetts.
Employment-based insurance coverage
Job-based coverage is still the foundation of California’s health insurance system, albeit a crumbling one. A majority of nonelderly adults get their coverage through their own or a family member’s employment, but the decline in employment-based health insurance in 2003 suggests that the long-term erosion of this foundation will continue.
Growth in the Medi-Cal and Healthy Families Programs from 2001 to 2003
Between 2001 and 2003, the growth in enrollment in Medi-Cal and Healthy Families (SCHIP) offset much of the loss in job-based coverage.
The access and health consequences of coverage
Periods of intermittent or continuous uninsurance have serious consequences for an individual’s access to important health care services. For persons with insurance, access is also affected by the type of coverage they have.
Conclusion
Bold steps are needed to effectively control the growth in health care costs for all income groups, thus avoiding the potential consequence of bare-bones insurance coverage that is likely to increase the burden of medical care costs on moderate- and lower-income families and individuals, and reduce their access to necessary medical care. Most other economically developed nations have more effectively and equitably controlled the growth in their health care spending, most through some combination of “all-payer” or “single-payer” management of paying for health care. Until the United States, as a whole, or California, in a leadership role, adopts effective controls over the health care spending, we can expect to see a continuing, and even accelerating, erosion of employment-based insurance.
There are some valuable immediate and longer-term steps that California can take to cover the uninsured. Expanding coverage for children represents the relatively low-hanging fruit because it is relatively modest and builds on the longstanding commitment of State and Federal policy makers-and the public-to assure health insurance and access to care for all children.
Additional measures that would cover adults are more challenging, both fiscally and politically. Nevertheless, bold leadership will be needed to address this widespread, serious and growing problem. The dialogue created by pay-or-play, the proposal for an individual mandate, and the proposed single-payer system offer an opportunity to engage the public in a fruitful discussion and begin building a political consensus on the direction that California should take to cover all of its residents.
http://www.healthpolicy.ucla.edu/pubs/files/SHIC03_RT_081505.pdf
Comment: Although there is modest variation in demographics and policies amongst the various states, California does represent a microcosm, albeit one with the population size of Canada, of the flawed model of health care funding in the United States. As state and national policymakers consider various options for reform, much can be learned from this important UCLA study of the state of health insurance in California. In this 84 page report, the authors identify the flaws in our fragmented system of health insurance, and they discuss options for reform.
The report mentions modest programs and proposals that could expand coverage, but concedes that “California needs to take some much bolder steps to address this very large and growing uninsured population.” Three major policy strategies are discussed: 1) a “pay or play” requirement imposed on employers and employees; 2) an individual mandate that would require each California resident to demonstrate that he or she has coverage; and 3) legislation to consolidate all health care payment sources into a publicly run single-payer health insurance system that would replace private health insurance as we know it.
Single payer advocates will be interested in their comments on the single payer option, as follows:
“The third alternative is to replace the fragmented private health insurance system with a publicly run “single-payer” health care system that would provide coverage to all Californians. Long a goal of many health advocates, single-payer proposals have been repeatedly introduced in the California Legislature, including proposals by Republican Governor Earl Warren in the 1940s and more recent proposals sponsored by Health Access, a consumer advocacy group. In the last several years, Senator Sheila Kuehl (D, Santa Monica) has been the author of the current single-payer bill, SB 840 (in the previous legislative session: SB 921). Under SB 840, taxes would replace all deductibles and premiums, and the government would become the sole payer of all health insurance benefits. Employers and employees would pay more progressive taxes to a State trust fund rather than premiums to health insurance companies. The bill also shifts reimbursement for hospitals and other providers back to fee-for-service, which would provide relief on the supply side of the health care system. There is considerable evidence that Senator Kuehl’s proposal would dramatically reduce the high administrative costs of the current system and that the enormous purchasing power of such a state program would enable it to reduce the costs of prescription drugs and medical devices.
“There are many features of a single-payer system that are attractive to health policy analysts as well as to the advocates. First, a universal single-payer system would sever the dependence of health insurance on employment. As workers change or lose jobs, their health insurance coverage and that of their family would not be affected. Second, a single-payer system would facilitate more effective cost control. As noted above, a unified single insurance plan would reduce the high administrative costs associated with the current churning and changing of coverage, as well as the myriad payment rates and systems that are expensive to administer for providers of care and for payers alike. By consolidating the purchasing power of all residents in the state, such a plan also could exert greater control over both the prices that health care suppliers charge and the rate of growth in health care costs. Third, having a single source of health care financing would effectively address the problems that patients and health care providers face with currently fragmented sources of coverage. It would reduce the frequent confusion that individuals and families face about what is covered and what is not, what providers they can use and which ones they cannot use.
“Nevertheless, a single-payer system has its critics, and a number of serious criticisms have been leveled against it. Just as markets can fail, so can government. According to Charles Wolf, government faces a number of challenges, including the fact that it is, by nature, monopolistic and does not have to adhere to bottom-line profit and loss signals.
“Government agencies are overseen by politicians who are more likely to look for quick fixes than for long-term solutions. This means that the public policies developed may fail to achieve all of the goals of efficiency and equity associated with single-payer - although such a system would almost certainly be more efficient and equitable than the current market-dominated one. Public control creates the conditions for more accountability to the public’s interests, but the controlling executive and legislative branches of government are subject to political influence that can constrain the efficiency and effectiveness of a public agency, often on behalf of the special interests that deal with the subordinate government agency.
“The political challenges are equally formidable. Even though many researchers have shown that single-payer systems can save money, this is a difficult sell to the public, particularly in the U.S. where interest groups are largely responsible for the funding of political campaigns. Perhaps the main hurdle is the fact that even if total health care expenditures would be lower under a single-payer system, government expenditures - and therefore, taxes - would be higher since the vast majority of health spending would be from the public sector. It has proven difficult to successfully persuade the public that they might spend less overall because their higher taxes could be more than offset by larger take-home wages when employers no longer have to pay the additional fringe benefits associated with employer-based health insurance. Indeed, this was the experience in California in 1994 when Proposition 186, a single-payer initiative, was rejected by nearly three-quarters of the electorate.”
http://www.healthpolicy.ucla.edu/pubs/files/SHIC03_RT_081505.pdf
Beth Capell, PhD, policy consultant for Health Access, has frequently made the point that, once we are fortunate enough to have enacted a single payer system, the political effort required to maintain and improve the system will have only just begun.