Funding for the study to provide health care financing for all Oregonians would come from private sources, and the study would consider several options, including single-payer, a public option and hybrid model to provide care from cradle-to-grave. A Pennsylvania study found a state single-payer government health insurance system would cut health care costs 15 percent
By Christopher David Gray
The Lund Report (Portland, Ore.), April 12, 2013
The Affordable Care Act will roll out next year, and Oregon has instituted its own pioneering health care delivery reforms through coordinated care organizations.
But Rep. Michael Dembrow, D-Portland, believes these reforms will not go nearly far enough to drive down the health care costs and make health care affordable for everyone.
He and other liberal Democrats would like to go beyond the federal health insurance reforms and get rid of private health insurance once and for all, replacing it with a single-payer government health insurance similar to Medicare that would provide coverage to everyone from cradle-to-grave.
But first, Dembrow said, the state needs to find a way to get from here to there.
“We need to do more than back-of-the-napkin figures,” Dembrow said. “We need a high-level study.”
House Bill 3260 would require that the universal health care study take into account 17 different metrics, including cost controls, a fair and sustainable funding stream, a respect for primary-care provider choice, and the ability to provide all health care services — including dental, optical, mental, and long-term care as well as traditional physical health care, hospitalization and ambulance coverage.
“Our health system is one of the most expensive, inequitable, inefficient and unsustainable in the world,” said Chunhei Chi, a health policy scholar at Oregon State University. “I think it is vital that we conduct research so we can run our policy decisions on sound data.”
The ACA’s health care financing reforms will still allow insurers to collect 20 percent of health care costs for administrative purposes, and the ACA requires people in the middle class to pay a higher percentage of their income for health care than those in the upper class. In 2016, even with the reforms, 170,000 Oregonians are still projected to lack health insurance, according to the Oregon Health Authority.
A single-payer health care system seeks to eliminate deductibles and eliminate or reduce copayments. These costs, according to supporters, often leave people reluctant to seek care when they need it, and by delaying going to a physician early on, people may need more expensive care as their health care condition worsens.
The Affordable Care Act prevents states from enacting single-payer health insurance even it’s approved by voters or state legislatures until at least 2017. Dembrow said that preclusion is not a deterrent but is a way of giving Oregon time both to build grassroots support for universal health care and conduct a comprehensive academic study to show the state how to get there.
Such a study would look closely at several options, including a single-payer government insurance system such as the one pushed by Dembrow in House Bill 2922. The Affordable Care Act reforms will be used as the control. Other options include a public option insurance plan and a sales tax driven plan, such as pitched previously by business lobbyist John DiLorenzo.
HB 3260 would call for the Oregon Health Authority to solicit funds for the study, which Dembrow said could be retrieved from private, philanthropic sources.
“I think this is something that can be passed this session, and this will get us ready for 2017,” Dembrow told The Lund Report.
The study bill has won critical support from the Oregon Medical Association, the president of the Oregon Health & Science University and Rep. Jim Thompson of Dallas, the ranking Republican on the House Health Committee.
“I’m probably going to vote in favor. I’m not afraid of a study. It’s a conversation that’s going to move ahead. At the end of the study, at least we’ll have something to evaluate,” Thompson told The Lund Report. “In no way does this mean I support universal health care. I honestly have no idea what we might find.”
Thompson said Oregon lacks enough primary care providers to provide services to everyone, even if all Oregonians had insurance coverage, and has repeatedly expressed this concern with nearly 400,000 Oregonians expected to gain access to coverage next year, according to the Oregon Health Authority.
Rep. Mitch Greenlick, D-Portland, has scheduled a vote in the House Health Committee for Friday on HB 3260, expecting to pass it onto the full House.
Pennsylvania Study Shows 15 Percent Cut in Costs
Pennsylvania just completed a similar study, conducted by health economist Gerald Friedman of the University of Massachusetts, which recommended that Pennsylvania choose a single-payer healthcare plan and estimated it would cut health care spending by 15 percent and save an estimated $17 billion a year in annual health care costs — including $4 billion in state and local government spending, with the rest in savings to employers and individuals.
Chuck Pennacchio, the director of Health Care for All Pennsylvania, said it would be funded by a 3 percent individual income tax and a 10 percent tax on employer payroll. Employers currently spend 20 percent of labor costs on private health insurance, which would no longer be needed.
“We’re actually talking about cutting the cost in half for employees in Pennsylvania,” Pennacchio told The Lund Report.
The savings are a result of drastically reducing the high percentage of health care costs that result from non-medical administrative costs as well as the profits and executive pay of private insurers.
Pennacchio said contrary to making primary care providers scarce, the injection of resources would make the state a magnet for such providers. Single-payer would also cause malpractice rates and claims to drop, increasing the attraction to providers.
“You don’t have to sue for the cost of medical treatment, because that’s already covered,” he said. Reimbursement rates would be set regionally based on the rates in the six bordering states.
The Pennsylvania plan would cover a full spectrum of health care needs, including mental, dental, optical and long-term care — and there would still be enough money to give severance pay to people whose administrative or insurance jobs become obsolete, and provide them with training. Its plan would eliminate 65,000 jobs but create 140,000 new jobs, primarily in health care.
Pennsylvania is unique in America as the only state that has Republican co-sponsors for single-payer legislation. “There’s resistance to the idea of health care as a human right,” Pennacchio said. “[But] Economically, it makes the most sense to cover everybody.”
Unique to Oregon
Dembrow said he couldn’t say for sure that the study would actually recommend a single-payer system which happened in Pennsylvania. Vermont, the
first state to approve a government health insurance system, approved a hybrid model that exempted self-insured companies like IBM as well as federal employees.
Oregon has its own unique elements, such as Kaiser Permanente, which provides an integrated model of care that includes insurance and delivery not found in the East.
Funding the system will also be an uneasy question that the study could help resolve. Oregon already has one of the nation’s highest income taxes, but Dembrow said finding support for a sales tax would be “a long shot” from Oregon voters, which have been reluctant to move in this direction.
“We need this study to figure out what’s right for Oregon,” Dembrow said. Whatever the study ends up showing, Dembrow indicated he’d be supportive as long as the study was done correctly.
Oregon also has a greater challenge than Vermont, which was able to pass its universal health care system through its Legislature with a Democratic governor’s support.
“We have to assume that whatever plan will have to stand up to the scrutiny of the voters,” said Dembrow, who expects a single-payer initiative to require voter approval. Such an initiative is not allowed in Vermont or most eastern states, like Pennsylvania.
Lou Sinninger of Health Care for All Oregon said the Oregon universal health care study will give grassroots organizers who favor universal healthcare a chance to come up with hard data on the advantages of single-payer health insurance.
“The citizens of Oregon, including the Legislature, can make an informed decision to provide health care in Oregon,” Sinninger said. “I would guess that single-payer would come out in the lead.”
Sinninger said single-payer could reform the financial side of health care to complement the delivery reforms that Gov. John Kitzhaber has implemented through coordinated care organizations.
The full Pennsylvania study can be viewed here.