Where Do Freestanding Emergency Departments Choose to Locate? A National Inventory and Geographic Analysis in Three States

By Jeremiah D. Schuur, Olesya Baker, Jaclyn Freshman, Michael Wilson, David M. Cutler
Annals of Emergency Medicine, July 12, 2016 (online)

Study objective

We determine the number and location of freestanding emergency departments (EDs) across the United States and determine the population characteristics of areas where freestanding EDs are located.

Methods

We conducted a systematic inventory of US freestanding EDs. For the 3 states with the highest number of freestanding EDs, we linked demographic, insurance, and health services data, using the 5-digit ZIP code corresponding to the freestanding ED’s location. To create a comparison nonfreestanding ED group, we matched 187 freestanding EDs to 1,048 nonfreestanding ED ZIP codes on land and population within state. We compared differences in demographic, insurance, and health services factors between matched ZIP codes with and without freestanding EDs, using univariate regressions with weights.

Results

We identified 360 freestanding EDs located in 30 states; 54.2% of freestanding EDs were hospital satellites, 36.6% were independent, and 9.2% were not classifiable. The 3 states with the highest number of freestanding EDs accounted for 66% of all freestanding EDs: Texas (181), Ohio (34), and Colorado (24). Across all 3 states, freestanding EDs were located in ZIP codes that had higher incomes and a lower proportion of the population with Medicaid. In Texas and Ohio, freestanding EDs were located in ZIP codes with a higher proportion of the population with private insurance. In Texas, freestanding EDs were located in ZIP codes that had fewer Hispanics, had a greater number of hospital-based EDs and physician offices, and had more physician visits and medical spending per year than ZIP codes without a freestanding ED. In Ohio, freestanding EDs were located in ZIP codes with fewer hospital-based EDs.

Conclusion

In Texas, Ohio, and Colorado, freestanding EDs were located in areas with a better payer mix. The location of freestanding EDs in relation to other health care facilities and use and spending on health care varied between states.

http://www.annemergmed.com/article/S0196-0644(16)30199-8/fulltext

***

Are free-standing emergency rooms helping only the wealthy?

By Sabriya Rice
The Dallas Morning News, August 3, 2016

Business is booming in Texas for free-standing emergency departments. The centers are emerging in wealthier neighborhoods, where patients are privately insured and are less likely to have Medicaid or Medicare, finds a study published in July in the Annals of Emergency Medicine.

That’s concerning for some health policy researchers. Emergency services in the U.S. have historically been provided by hospitals, and therefore must adhere to federal regulations that protect patients from being denied care if they cannot afford it.

“It’s the one part of health care where there is some expectation that everyone can have access,” said Dr. Jeremiah Schuur, lead author of the study. “That might not be the case in a parallel emergency system, one that is not regulated by the same standard that has prevented hospitals from dumping patients.”

They are also worried that the proliferation is not helping improve access to emergency care, for which Texas got an “F” in a 2014 report card from the American College of Emergency Physicians.

In 2009, Texas became the first state to make it legal for emergency services to be provided by private for-profit companies, not just hospitals. The number of stand-alone emergency departments jumped from 19 in 2010 to just over 200 to date, according to Texas Department of State Health Services data.

http://www.dallasnews.com/business/health-care/20160802-are-free-standing-emergency-rooms-helping-only-the-wealthy.ece

Texas is leading the nation in establishing for-profit, freestanding emergency departments. And what has that brought them? An “F” from the American College of Emergency Physicians.

Physicians for a National Health Program not only supports coverage of all essential health benefits for everyone, but we also support regional planning and separate budgeting of capital improvements within a non-profit health care delivery system. Texas shows us why.

Texas entrepreneurs are placing their new, for-profit emergency departments in locations that provide the greatest income potential – areas with higher incomes, greater prevalence of insurance, fewer patients with Medicaid, and lower concentration of Hispanics, even though these areas were already better served by existing hospitals and emergency departments. They go for the buck, but ignore the need.

The longer we wait to enact an equitable, efficient, and more effective health care financing system, the greater will be the cumulative losses from greed and inefficiency, and the greater will be the cumulative suffering and deaths due to our inaction.

No more “let’s wait and see how the Affordable Care Act is working.” The establishment of these freestanding departments coincided with implementation of the Affordable Care Act. Our health policies are designed to benefit the health care industry, and patients have been included only because they are the necessary coal to stoke their ovens. We need to change that. Now!

Women’s Health Coverage Since the ACA: Improvements for Most, But Insurer Exclusions Put Many at Risk

By Dania Palanker (National Women’s Law Center) and Karen Davenport
The Commonwealth Fund, August 2, 2016

Issue: Since enactment of the Affordable Care Act (ACA), many more women have health insurance than before the law, in part because it prohibits insurer practices that discriminate against women. However, gaps in women’s health coverage persist. Insurers often exclude health services that women are likely to need, leaving women vulnerable to higher costs and denied claims that threaten their economic security and physical health.

Goal: To uncover the types and incidence of insurer exclusions that may disproportionately affect women’s coverage.

Method: The authors examined qualified health plans from 109 insurers across 16 states for 2014, 2015, or both years.

Key findings and conclusions: Six types of services are frequently excluded from insurance coverage: treatment of conditions resulting from noncovered services, maintenance therapy, genetic testing, fetal reduction surgery, treatment of self-inflicted conditions, and preventive services not covered by law. Policy change recommendations include prohibiting variations within states’ “essential health benefits” benchmark plans and requiring transparency and simplified language in plan documents.

Problems from lack of transparency

There is little transparency in plan documents regarding health insurance exclusions. As a result, women may unwittingly enroll in plans containing exclusions that impact their coverage, and remain unaware of the exclusions until they seek services or have a claim denied. The short overview of coverage provided for each plan on the marketplace—called the “Summary of Benefits and Coverage”—includes space for information on exclusions. However, only 13 exclusions are required to be listed, and none of the exclusions described in this brief are in that group. Identifying all exclusions requires reading the underlying plan document, such as the evidence of coverage; yet some plan documents are over 100 pages long and exclusions appear in various sections. Terminology also varies among insurers; for example, some plans exclude “maintenance therapy” and others exclude “maintenance care.” In addition, some exclusions appear among only a small number of insurers, so women cannot know all the exclusions to look for in their plans. For example, six insurers exclude services resulting from an enrollee’s failure to comply with or accept recommended treatment, which is problematic for women who are less likely than men to adhere to prescription protocols. These factors make it difficult for women to identify and compare exclusions across plans.

http://www.commonwealthfund.org/publications/issue-briefs/2016/aug/womens-health-coverage-since-aca

***

Comment:

By Don McCanne, M.D.

The Affordable Care Act included provisions to prohibit discrimination against women in health insurance plans. However it is in the DNA of private insurers to work around regulations in order to serve their own interests, and this is what they have done regarding discriminatory policies against women, as this study shows.

We put our health care financing in charge of individuals who are running a private business. It would be unrealistic for us to expect them to do anything other than to optimize the business opportunity for themselves.

Had we established our own public program – a single payer national health program – our public employees would have been dedicated to service – trying to make the program work in getting us the health care that we need. Further, they would have done it without all of the expense and administrative complexity that characterizes our dysfunctional multi-payer system.

Better service for less money? We can still do it.

Women’s Health Coverage Since the ACA: Improvements for Most, But Insurer Exclusions Put Many at Risk

By Dania Palanker (National Women’s Law Center) and Karen Davenport
The Commonwealth Fund, August 2, 2016

Issue:  Since enactment of the Affordable Care Act (ACA), many more women have health insurance than before the law, in part because it prohibits insurer practices that discriminate against women. However, gaps in women’s health coverage persist. Insurers often exclude health services that women are likely to need, leaving women vulnerable to higher costs and denied claims that threaten their economic security and physical health.

Goal:  To uncover the types and incidence of insurer exclusions that may disproportionately affect women’s coverage.

Method:  The authors examined qualified health plans from 109 insurers across 16 states for 2014, 2015, or both years.

Key findings and conclusions:  Six types of services are frequently excluded from insurance coverage: treatment of conditions resulting from noncovered services, maintenance therapy, genetic testing, fetal reduction surgery, treatment of self-inflicted conditions, and preventive services not covered by law. Policy change recommendations include prohibiting variations within states’ “essential health benefits” benchmark plans and requiring transparency and simplified language in plan documents.

Problems from lack of transparency

There is little transparency in plan documents regarding health insurance exclusions. As a result, women may unwittingly enroll in plans containing exclusions that impact their coverage, and remain unaware of the exclusions until they seek services or have a claim denied. The short overview of coverage provided for each plan on the marketplace—called the “Summary of Benefits and Coverage”—includes space for information on exclusions. However, only 13 exclusions are required to be listed, and none of the exclusions described in this brief are in that group. Identifying all exclusions requires reading the underlying plan document, such as the evidence of coverage; yet some plan documents are over 100 pages long and exclusions appear in various sections. Terminology also varies among insurers; for example, some plans exclude “maintenance therapy” and others exclude “maintenance care.” In addition, some exclusions appear among only a small number of insurers, so women cannot know all the exclusions to look for in their plans. For example, six insurers exclude services resulting from an enrollee’s failure to comply with or accept recommended treatment, which is problematic for women who are less likely than men to adhere to prescription protocols. These factors make it difficult for women to identify and compare exclusions across plans.

http://www.commonwealthfund.org/publications/issue-briefs/2016/aug/womens-health-coverage-since-aca

The Affordable Care Act included provisions to prohibit discrimination against women in health insurance plans. However it is in the DNA of private insurers to work around regulations in order to serve their own interests, and this is what they have done regarding discriminatory policies against women, as this study shows.

We put our health care financing in charge of individuals who are running a private business. It would be unrealistic for us to expect them to do anything other than to optimize the business opportunity for themselves.

Had we established our own public program – a single payer national health program – our public employees would have been dedicated to service – trying to make the program work in getting us the health care that we need. Further, they would have done it without all of the expense and administrative complexity that characterizes our dysfunctional multi-payer system.

Better service for less money? We can still do it.

High Out-of-Pocket Medical Spending among the Poor and Elderly in Nine Developed Countries

By Katherine Baird
HSR, August 2016

Objective:  The design of health insurance, and the role out-of-pocket (OOP) payments play in it, is a key policy issue as rising health costs have encouraged greater cost-sharing measures. This paper compares the percentage of Americans spending large amounts OOP to meet their health needs with percentages in eight other developed countries. By disaggregating by age and income, the paper focuses on the poor and elderly populations within each.

Principal Findings:  The United States is not alone in exposing large numbers of citizens to high OOP expenses. In six of the other eight countries, one-quarter or more of low-income citizens devoted at least 5 percent of their income to OOP expenses, and in all but two countries, more than 1 in 10 elderly citizens had high medical expenses.

Conclusions:  For some populations in the sample nations, health insurance does not provide adequate financial protection and likely contributes to inequities in health care delivery and outcomes.

From the Results

In five nations, more than ten percent of individuals lived in households with high medical spending (United States, Poland, Israel, Switzerland, and Russia), and only in France (2.9 percent) did less than five percent of the population incur high OOP expenses.

From the Discussion

This study provides some of the best comparative evidence to date of the variation within and between countries of the percentage of citizens exposed to high OOP medical expenses. The results foremost underscore the very high financial burden that using health care places on many Americans.

But unlike other studies, I also find that high spending among poor and elderly Americans is equally common among their counterparts in many other countries. In seven of the nine countries (United States, Japan, Australia, Poland, Israel, Russia, and Switzerland), one-quarter or more of poor citizens devoted at least 5 percent of their income to OOP expenses; and in all nine countries, at least one-in-ten poor citizens did. Underinsurance rates among the elderly were somewhat lower than among the poor, yet the results show that one-in-four elderly citizens had high OOP expenditures in Switzerland, Russia, Poland, and Israel, while more than 15 percent did in Australia, Slovenia, Japan, and the United States.

From the Conclusions

The finding that the United States is not an outlier when it comes to the financial burden resulting from health care consumption in the sample of countries here highlights the fact that health insurance in many countries is commonly porous: high levels of OOP spending frequently occur in many countries despite universal insurance and the existence of policies that supposedly limit citizens’ financial exposure. The complicated nature of health care and health insurance benefits; the complex ways in which consumers respond to insurance benefits and their limits; and finally the often significant health risks not covered by insurance policies: all of these combine to leave large numbers of people across many countries devoting considerable resources to meeting their health care needs. Considering the evidence, then, solving the problem of the uninsured in the United States will most likely leave standing the separate one of underinsurance, unless policy seeks to tackle them both.

http://www.hsr.org/hsr/abstract.jsp?aid=54961134754

***

Comment:

By Don McCanne, M.D.

Underinsurance – excessive out-of-pocket expenses for health care – results in financial hardship not only in the United States but also in other developed nations as well. Of the nine nations in this study, only France has insurance that is adequate to prevent financial burdens from out-of-pocket spending.

During reform processes, there is always a struggle on how to make insurance affordable. When the Affordable Care Act was crafted, to keep insurance premiums down it was decided that the benchmark plan would have an actuarial value of only 70 percent – the patient would be responsible for covering an average of 30 percent of the bill. It was obvious that this was too much of a burden for most individuals so they provided subsidies for out-of-pocket expenses for low-income individuals and placed a cap on out-of-pocket spending for covered benefits, but not for out-of-network care. This has left too many exposed to the very high deductibles that were required to keep the actuarial value down to 70 percent.

Yet France, with a per capita spending on health care near the OECD average, has shown us that patient cost sharing is not necessary to slow health care spending. Other studies have shown that, not only does cost sharing frequently create financial hardship, it also causes patients to forgo beneficial health care services. Both are bad, and they are avoidable.

The lesson is that getting everyone insured is not enough. We also need to eliminate underinsurance. We need to keep that in mind when we enact a single payer national health program – the improved in an Improved Medicare for All. There are too many in the policy community who accept, as blind faith, the necessity of high deductibles, so it will be a battle.

High Out-of-Pocket Medical Spending among the Poor and Elderly in Nine Developed Countries

By Katherine Baird
HSR, August 2016

Objective:  The design of health insurance, and the role out-of-pocket (OOP) payments play in it, is a key policy issue as rising health costs have encouraged greater cost-sharing measures. This paper compares the percentage of Americans spending large amounts OOP to meet their health needs with percentages in eight other developed countries. By disaggregating by age and income, the paper focuses on the poor and elderly populations within each.

Principal Findings:  The United States is not alone in exposing large numbers of citizens to high OOP expenses. In six of the other eight countries, one-quarter or more of low-income citizens devoted at least 5 percent of their income to OOP expenses, and in all but two countries, more than 1 in 10 elderly citizens had high medical expenses.

Conclusions:  For some populations in the sample nations, health insurance does not provide adequate financial protection and likely contributes to inequities in health care delivery and outcomes.

From the Results

In five nations, more than ten percent of individuals lived in households with high medical spending (United States, Poland, Israel, Switzerland, and Russia), and only in France (2.9 percent) did less than five percent of the population incur high OOP expenses.

From the Discussion

This study provides some of the best comparative evidence to date of the variation within and between countries of the percentage of citizens exposed to high OOP medical expenses. The results foremost underscore the very high financial burden that using health care places on many Americans.

But unlike other studies, I also find that high spending among poor and elderly Americans is equally common among their counterparts in many other countries. In seven of the nine countries (United States, Japan, Australia, Poland, Israel, Russia, and Switzerland), one-quarter or more of poor citizens devoted at least 5 percent of their income to OOP expenses; and in all nine countries, at least one-in-ten poor citizens did. Underinsurance rates among the elderly were somewhat lower than among the poor, yet the results show that one-in-four elderly citizens had high OOP expenditures in Switzerland, Russia, Poland, and Israel, while more than 15 percent did in Australia, Slovenia, Japan, and the United States.

From the Conclusions

The finding that the United States is not an outlier when it comes to the financial burden resulting from health care consumption in the sample of countries here highlights the fact that health insurance in many countries is commonly porous: high levels of OOP spending frequently occur in many countries despite universal insurance and the existence of policies that supposedly limit citizens’ financial exposure. The complicated nature of health care and health insurance benefits; the complex ways in which consumers respond to insurance benefits and their limits; and finally the often significant health risks not covered by insurance policies: all of these combine to leave large numbers of people across many countries devoting considerable resources to meeting their health care needs. Considering the evidence, then, solving the problem of the uninsured in the United States will most likely leave standing the separate one of underinsurance, unless policy seeks to tackle them both.

http://www.hsr.org/hsr/abstract.jsp?aid=54961134754

Underinsurance – excessive out-of-pocket expenses for health care – results in financial hardship not only in the United States but also in other developed nations as well. Of the nine nations in this study, only France has insurance that is adequate to prevent financial burdens from out-of-pocket spending.

During reform processes, there is always a struggle on how to make insurance affordable. When the Affordable Care Act was crafted, to keep insurance premiums down it was decided that the benchmark plan would have an actuarial value of only 70 percent – the patient would be responsible for covering an average of 30 percent of the bill. It was obvious that this was too much of a burden for most individuals so they provided subsidies for out-of-pocket expenses for low-income individuals and placed a cap on out-of-pocket spending for covered benefits, but not for out-of-network care. This has left too many exposed to the very high deductibles that were required to keep the actuarial value down to 70 percent.

Yet France, with a per capita spending on health care near the OECD average, has shown us that patient cost sharing is not necessary to slow health care spending. Other studies have shown that, not only does cost sharing frequently create financial hardship, it also causes patients to forgo beneficial health care services. Both are bad, and they are avoidable.

The lesson is that getting everyone insured is not enough. We also need to eliminate underinsurance. We need to keep that in mind when we enact a single payer national health program – the improved in an Improved Medicare for All. There are too many in the policy community who accept, as blind faith, the necessity of high deductibles, so it will be a battle.

NBER Working Paper 22440
Demand Heterogeneity in Insurance Markets: Implications for Equity and Efficiency

By Michael Geruso
National Bureau of Economic Research, July 2016

Abstract

In many markets insurers are barred from price discrimination on consumer characteristics like age, gender, and medical history. By themselves, such restrictions are known to exacerbate adverse selection problems. But the conventional wisdom — widely reflected in policy — is that with regulatory tools like premium subsidies, it is possible to address selection and induce efficient plan choices without price-discriminating. In this paper, I show why this conventional wisdom is wrong: As long as different sets of consumers (men and women, rich and poor, young and old) differ in their willingness-to-pay for insurance conditional on the losses they generate, then price discrimination across such groups is welfare-improving. The conventional wisdom is wrong because it implicitly assumes a one-to-one mapping from insurable risk to insurance valuation. I show that demand heterogeneity that breaks this one-to-one relationship is empirically relevant in a consumer health plan setting. Younger and older consumers and men and women reveal strikingly different demand for health insurance, conditional on their objective medical spending risk. This implies that these groups must face different prices in order to sort themselves efficiently across insurance contracts. The theoretical and empirical analysis highlights a previously unexplored, but fundamental, tradeoff between equity and efficiency that is unique to selection markets.

http://www.nber.org/papers/w22440

***

Comment:

By Don McCanne, M.D.

Individuals vary in their preference for insurance and willingness to pay for it. Michael Geruso explains that insurance pricing that takes preference into consideration is welfare-improving and thus efficient. Yet efforts to improve equity by compensating for price discrimination result in a tradeoff between equity and efficiency. Do we care?

What the majority of us want is a health care system that is accessible to all and funded equitably based on ability to pay. Using the analogy of the tradeoff between equity and efficiency, a system funded by progressive taxes would be highly equitable but might be terribly inefficient because wealthier individuals might not have a preference to pay higher taxes.

The efficiency that we actually want to see is greater value in our health care purchasing through eliminating much of the administrative waste that occurs in our dysfunctional financing system. The economist’s construct of efficiency as representing a measure of individual preference should be a negligible consideration when we have the ability to create a health care financing system that is equitable – fair – for everyone regardless of ideological preference.

NBER Working Paper 22440
Demand Heterogeneity in Insurance Markets: Implications for Equity and Efficiency

By Michael Geruso
National Bureau of Economic Research, July 2016

Abstract

In many markets insurers are barred from price discrimination on consumer characteristics like age, gender, and medical history. By themselves, such restrictions are known to exacerbate adverse selection problems. But the conventional wisdom — widely reflected in policy — is that with regulatory tools like premium subsidies, it is possible to address selection and induce efficient plan choices without price-discriminating. In this paper, I show why this conventional wisdom is wrong: As long as different sets of consumers (men and women, rich and poor, young and old) differ in their willingness-to-pay for insurance conditional on the losses they generate, then price discrimination across such groups is welfare-improving. The conventional wisdom is wrong because it implicitly assumes a one-to-one mapping from insurable risk to insurance valuation. I show that demand heterogeneity that breaks this one-to-one relationship is empirically relevant in a consumer health plan setting. Younger and older consumers and men and women reveal strikingly different demand for health insurance, conditional on their objective medical spending risk. This implies that these groups must face different prices in order to sort themselves efficiently across insurance contracts. The theoretical and empirical analysis highlights a previously unexplored, but fundamental, tradeoff between equity and efficiency that is unique to selection markets.

http://www.nber.org/papers/w22440

Individuals vary in their preference for insurance and willingness to pay for it. Michael Geruso explains that insurance pricing that takes preference into consideration is welfare-improving and thus efficient. Yet efforts to improve equity by compensating for price discrimination result in a tradeoff between equity and efficiency. Do we care?

What the majority of us want is a health care system that is accessible to all and funded equitably based on ability to pay. Using the analogy of the tradeoff between equity and efficiency, a system funded by progressive taxes would be highly equitable but might be terribly inefficient because wealthier individuals might not have a preference to pay higher taxes.

The efficiency that we actually want to see is greater value in our health care purchasing through eliminating much of the administrative waste that occurs in our dysfunctional financing system. The economist’s construct of efficiency as representing a measure of individual preference should be a negligible consideration when we have the ability to create a health care financing system that is equitable – fair – for everyone regardless of ideological preference.

Exploring Single-Payer Alternatives for Health Care Reform

By Jodi L. Liu
Pardee RAND Graduate School Dissertation, May 2016

Abstract

The Affordable Care Act (ACA) has reduced the number of uninsured and established new cost containment initiatives. However, interest in more comprehensive health care reform such as a single-payer system has persisted. Definitions of single-payer systems are heterogeneous, and estimates of the effects on spending vary. The objectives of this dissertation were to understand single-payer proposals and to estimate health care spending under single-payer alternatives in the United States.

Single-payer proposals are wide-ranging reform efforts spanning financing and delivery, but vary in the provisions. I modeled two sets of national scenarios – one labeled comprehensive and the other catastrophic – and compared insurance coverage and spending relative to the ACA in 2017. First, I estimated the effects of utilization and financing changes, and then I added the effects of “other savings and costs” relating to administration, drug and provider prices, and implementation.

Due to coverage of all legal residents and low cost sharing and prior to adjusting for other savings and costs, the comprehensive scenario increased national health care expenditures by $435 billion and federal expenditures by $1 trillion relative to the ACA. The range of the net effect of the other savings and costs in the literature was $1.5 trillion in savings to $140 billion in costs, with a mean estimate of $556 billion in savings. If this mean estimate was applied to the comprehensive scenario, national expenditures would be $121 billion lower but federal expenditures would still be $446 billion higher relative to the ACA. The catastrophic scenario also covered all legal residents but increased overall cost sharing, resulting in a reduction in national expenditures by $211 billion and federal expenditures by $40 billion even before adjusting for other savings and costs. Average household spending on health care in both sets of scenarios could be more progressive by income than spending under the ACA.

I also developed an interactive, web-based cost tool that allows the savings and cost assumptions to be adjusted by any user. As the debate on how to finance health care for all Americans continues, this study provides increased transparency about economic evaluations of health care reform.

http://www.rand.org/pubs/rgs_dissertations/RGSD375.html

Full Dissertation (Free download – 157 pages):
http://www.rand.org/content/dam/rand/pubs/rgs_dissertations/RGSD300/RGSD375/RAND_RGSD375.pdf

***

Comment:

By Don McCanne, M.D.

For her doctorate dissertation at Pardee RAND Graduate School, Jodi Liu has produced a superb paper on single payer reform. Single payer supporters will want to download this paper, and I’ll explain why.

There remains some confusion as to the precise definition of single payer, and she shows us why by presenting the variations in twenty-five specific proposals, including, of course, the Proposal of the Physicians’ Working Group for Single-Payer National Health Insurance – the 2003 version by Woolhandler, Himmelstein, et.al. Since PNHP supports a relatively precise, comprehensive model of single payer, many of the models she discusses we would not label as single payer, though we can see why others would (Vermont H 202 as an example). Because of this variation in design, it is difficult to state precisely what impact a generic single payer program would have. Each one is different.

She selects two sharply contrasting versions for specific analyses of health care spending: a comprehensive single payer proposal, the American Health Security Act (S 1782) of Sen Bernie Sanders and Rep Jim McDermott, and the Health-Insurance Solution, a “single payer” plan of catastrophic health insurance as proposed by Kip Hagopian and Dana Goldman. Although you can learn much on how not to design a single payer system from her analysis of the Hagopian/Goldman model, here we’ll mention only her findings on the Sanders/McDermott model since it is fairly similar to the PNHP proposal.

She first determines the increased spending that would occur by covering everyone with comprehensive benefits (actuarial value 98 percent). She then determines the effect of other savings and costs that are supported by published policy studies, such as the reduction in administrative waste and the greater value obtained through monopsonistic health care purchasing.

It will come as no surprise that her estimate of the mean net savings in national health expenditures would be about $121 billion under this proposal. The federal portion of spending would be about $446 billion higher than under ACA, but that is actually desirable because the proposed federal taxes would be more equitable that the fragmented funding system we have under ACA. She points out that the mean estimate of savings resulting from the other savings and costs according to the policy literature would be about $550 billion, but the range of the estimate would be between a savings of $1.5 trillion to increased costs of $114 billion. The wide variation in the interpretation of the policy literature explains to some extent the reason why various analysts have come up with very different results when analyzing single payer models.

People frequently ask what it would cost them if we had a single payer system, and they want to compare that to their current insurance premium. There are far too many variables to answer that without having a final markup of single payer legislation, plus most people do not realize how much they are paying for health care besides their insurance premiums and cost sharing, especially considering that over 60 percent of health care spending is paid through our tax system.

But people can get a good idea of average percent in personal savings by checking Figure C.2 in the Appendix of this paper. It shows that both the comprehensive base proposal (Sanders/McDermott) and the comprehensive alternative proposal (John Conyers HR 676) would provide significant savings for everyone except those over 1000 percent of the federal poverty level ($253,000 for a family of four).

Another great feature of this study is that the author has created an interactive Cost Tool which is “to improve the transparency of the estimates by disaggregating the effects and allow users to view, in real time, the results of adjusting the assumptions underlying the effects.” Although there still may be differences in opinions about the impact given to the various adjustments, it does bring us closer to understanding the overall financial impact of single payer reform. Although the Tool is not yet up on the Internet, in a personal communication Jodi Liu says that she hopes to have it available soon.

At any rate, this study shows once again that a well designed, comprehensive single payer system really would provide health care for everyone without increasing health care spending over the current level under ACA, based on the mean estimate of the financial impact of single payer.

So, again, download this paper now. It will be very helpful in your future advocacy for single payer.