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The Great Cost Shift: Why Middle-Class Workers Do Not Feel the Health Care Spending Slowdown

By Topher Spiro, Maura Calsyn, Meghan O’Toole
Center for American Progress, March 3, 2015

In recent years, the growth in overall health care costs has slowed dramatically. But for millions of Americans with employer-sponsored insurance, or ESI, this slowdown is illusory. From 2008 through 2013, the average annual growth rate of employees’ monthly premium contributions and out-of-pocket expenses, adjusted for inflation, was more than double that of average annual growth in real per-capita national health care spending, which was less than 2 percent per year. This growth has also outpaced employers’ costs of offering these benefits by more than 40 percent.

Employees experiencing higher health care costs tend to blame the Affordable Care Act, or ACA, even though the law largely leaves the employer-based system alone. In fact, many employers report that the ACA has had only a negligible influence on their health care costs.

The actual reason why employee and employer costs are increasing at different rates is because employers have, over time, shifted greater responsibility for health care expenses to their employees through higher deductibles, higher copayments, and higher coinsurance — a practice that began long before the passage of the ACA. Other employers pay smaller shares of their employees’ health care premiums.

To some degree, this long-term cost shifting has contributed to the overall health care slowdown. Increased cost sharing discourages the use of health care — individuals tend to spend less on their health care when they are subjected to higher fees or deductibles — which has lowered overall health care spending. Employees with higher cost sharing are more likely to avoid or delay even beneficial and cost-effective care. Employers, insurers, and public health care programs benefit from these savings, while individual employees with significant health care needs face greater out-of-pocket costs. Employees have increasingly reported that their health care costs are unaffordable. In other words, almost everyone in the health care system is realizing savings, but employees’ costs are rising.

Unlike changes to wages, which are straightforward and transparent, these types of changes to employees’ health benefits can be hard to understand, making cost-shifting efforts difficult for employees to detect.

The Great Cost Shift (full 31 page report can be downloaded at this page): https://www.americanprogress.org/issues/healthcare/report/2015/03/03/105777/the-great-cost-shift/

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Comment:

By Don McCanne, MD

One of the most important goals of the Affordable Care Act was to preserve the part of our health care financing system that supposedly was working quite well: employer-sponsored insurance. However, in a process that had already begun and has further intensified since the beginning of ACA implementation, the coverage for employees has deteriorated, with costs being shifted from the employer to the employee without a commensurate increase in wages, leaving employees considerably worse off – especially those employees with greater health care needs.

This report from the Center for American Progress provides an excellent explanation of the mechanisms of this shift in spending from the employer to the employee. Unfortunately, their neoliberal recommendations for correcting this problem are grossly inadequate. Not only would they leave in place the otherwise highly flawed model of financing health care through a multitude of private health plans, they would merely increase transparency of this shift that has been taking place, while increasing administrative complexity by requiring employers to return half of the savings to the employee, and, yes, they would throw in three free primary care visits per year – big deal!

This problem is serious and requires truly transformative change. Instead of allowing employers to continue to implement their current agenda of introducing further relatively opaque changes that will compound the deterioration of the effectiveness of their health plans, we should terminate these plans and replace them with a far more efficient, equitable, and effective single payer national health program.

A single payer system would end employers’ concerns about excessive increases in health care costs, not to mention relieving them altogether from the need to maintain a health benefit program. Much more importantly, it would ensure truly affordable, reasonably comprehensive health care benefits not only for all of their employees, but for everyone else in the nation as well.

Reflections On The 20th Anniversary Of Taiwan’s Single-Payer National Health Insurance System

By Tsung-Mei Cheng
Health Affairs, March 2015

Abstract

On its twentieth anniversary, Taiwan’s National Health Insurance (NHI) stands out as a high-performing single-payer national health insurance system that provides universal health coverage to Taiwan’s 23.4 million residents based on egalitarian ethical principles. The system has encountered myriad challenges over the years, including serious financial deficits. Taiwan’s government managed those crises through successive policy adjustments and reforms. Taiwan’s NHI continues to enjoy high public satisfaction and delivers affordable modern health care to all Taiwanese without the waiting times in single-payer systems such as those in England and Canada. It faces challenges, including balancing the system’s budget, improving the quality of health care, and achieving greater cost-effectiveness. However, Taiwan’s experience with the NHI shows that a single-payer approach can work and control health care costs effectively. There are lessons for the United States in how to expand coverage rapidly, manage incremental adjustments to the health system, and achieve freedom of choice.

Lessons Learned

The most important lesson of Taiwan’s experience is that the single-payer approach can offer all citizens timely and affordable access to needed health care on equal terms, regardless of the patient’s social, economic, and health status; sex; age; place of residence; and employment status.

A second lesson is that a single-payer model such as Taiwan’s can control costs effectively. It is administratively simple and inexpensive and is the ideal platform for a powerful health IT system. It also facilitates global budgeting, if that is the only way to keep health spending in line with the growth of GDP.

A third lesson is the importance of investing heavily, up front, in a modern IT infrastructure. A modern IT system such as Taiwan’s allows the government to have information about health utilization and spending in almost real time.

Fourth, Taiwan’s case illustrates that health policy makers should not miss windows of opportunity for major health reform. Enabling factors include rapid economic growth, which makes it easier to redistribute resources; strong popular demand for reform; strong political leadership; a broad social and political consensus on the ethical principles that guide the health system; and the availability of a cadre of competent civil servants motivated and able to implement reform.

Lessons For The United States

Taiwan’s experience demonstrates that with competence and goodwill, the challenge of adding a large influx of newly insured citizens can be met. Health systems appear to be adaptive, and the case of Taiwan illustrates that incremental improvements on reform are possible.

Taiwan’s experience also might induce Americans to think more deeply about the term freedom of choice. In health care, freedom of choice could mean choice among health insurance carriers and health insurance contracts, choice among health care providers, or both. For Taiwan’s citizens, freedom of choice among providers of health care trumped freedom of choice among insurance carriers and contracts. These citizens’ high satisfaction with their health system suggests that they still endorse that choice. By contrast, in the United States freedom of choice among insurance carriers and products ranks above freedom of choice among health care providers, which often is limited to narrow networks of providers.

A growing body of literature has shown that by international standards, enormous human resources are used in the United States to facilitate choice among insurers and insurance products, process claims, and annually negotiate a payment system that results in rampant and bewildering price discrimination. Relative to the less complex health systems elsewhere in the industrialized world, the US system is a poor platform for the effective use of modern health IT.

According to a recent report by the Institute of Medicine, the US system has excessive administrative costs that in 2009 amounted to $190 billion. That is more than it would cost to attain true universal health care in the United States.

It is not this author’s role to prescribe what Americans should or should not do in regard to freedom of choice. But it is appropriate to invite readers to think more deeply about the relative benefits and costs of their choices. It is remarkable that in cross-national surveys, Americans have consistently given their health care delivery system relatively high marks, but their health system relatively poor ones.

Tsung-Mei Cheng is a health policy research analyst at the Woodrow Wilson School of Public and International Affairs, Princeton University, in Princeton, New Jersey.

http://content.healthaffairs.org/content/34/3/502.abstract

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Comment:

By Don McCanne, MD

The people of the United States have continued to watch our health care spending increase far beyond that of all other nations. We have watched the quality of our insurance coverage deteriorate as insurers take away our choices of physicians and hospitals and shift more costs to those with health care needs, often causing the very financial hardships that health insurance should be preventing. And we have continued to tolerate leaving tens of millions uninsured.

For the past generation we also have been observing the natural experiment in single payer healthcare financing taking place in Taiwan – Taiwan serving as the experimental subject and the United States as the control. As Tsung-Mei Cheng explains in this Health Affairs article, it has been a spectacular success for Taiwan. Had we adopted a similar program twenty years ago, today everyone would be covered, no one would face financial hardship because of medical bills, we would have freedom of choice of our physicians and hospitals, we would have eliminated much of our profound administrative waste, and our total national health expenditures would have followed a lower trajectory and thus would be much less than they are today.

What is it about American exceptionalism? In our stubbornness, we are going to continue our feeble search for policy solutions to our intolerable deficiencies and inequities in health care, when we have before us one of the nearest to perfect natural experiments ever completed – in precisely the reform that we need. By the definition, “much better than average,” exceptional we are not. Or by the definition, “deviating from the norm,” we should have no pride in either our health care system or in our obstinate refusal to apply proven health policies that would inject much needed remedies into our sick system.

At our PNHP meetings and in the health policy literature, Tsung-Mei Cheng has provided us with an abundance of observations and data that should illuminate for us a clear path forward for reform. We just have to make good use of her contributions. We can begin by sharing this Health Affairs article with others who care about the future of our health care system.

Health law’s complexity invites attack, even as it fails to cure ailment: doctors group

Physicians for a National Health Program (PNHP), March 3, 2015

King v. Burwell shows how Affordable Care Act’s corporate-inspired, convoluted structure makes it an easy target for opponents

Latest legal challenge threatens to add more than 8 million people to the ranks of the tens of millions who are currently uninsured, leading to an additional 8,000 ‘excess deaths’ annually linked to lack of insurance

‘This case is yet another reason to swiftly move beyond the failing ACA to a simpler, publicly financed, improved-Medicare-for-All system that would cover everyone, make care affordable, and control costs,’ says president of single-payer physicians’ group

FOR IMMEDIATE RELEASE
March 3, 2015

Contact:
Mark Almberg, PNHP communications director, (312) 782-6006, mark@pnhp.org

The following statement was released today by leaders of Physicians for a National Health Program, a research and educational organization of 19,000 doctors who support single-payer national health insurance, or “an improved Medicare for all.”

This week’s arguments before the Supreme Court in the case of King v. Burwell demonstrate once again how the Affordable Care Act’s administrative complexity and flaws – largely reflecting its accommodation to the private health insurance industry and other corporate, profit-oriented interests in U.S. health care – make it vulnerable to legal attacks by its opponents.

The ACA clearly lacks the simplicity and legal robustness that a single-payer plan would have. Single payer would be simple: everyone in the U.S. would be covered for all medically necessary care in a single program financed by equitable taxes.

If the court upholds King and his fellow plaintiffs’ challenge to premium subsidies in over 30 states, the health and financial harms to our patients will be considerable. By some estimates, more than 8 million people will quickly lose insurance coverage, increasing the intolerable suffering we already see today.

One consequence of this loss of coverage would be an additional 8,000 “excess deaths” each year – deaths linked to lack of insurance. That figure is over and above the estimated 30,000 annual preventable deaths that are currently occurring under the ACA due to its having left 30 million people uninsured. This is completely unacceptable.

Regardless of how the court rules, the unfortunate reality is that the ACA won’t be able achieve universal coverage. It won’t make care affordable or protect people from medical bankruptcy. Nor will it be able to control costs.

The ACA is fundamentally flawed in these respects because, by design, it perpetuates the central role of the private insurance industry and other corporate and for-profit interests (e.g. Big Pharma) in U.S. health care.

In contrast, a single-payer system – an improved Medicare for All – would achieve truly universal care, affordability, and effective cost control. It would be simple to administer, saving approximately $400 billion annually by slashing the administrative bloat in our private-insurance-based system. That money would be redirected to clinical care. Copays and deductibles would be eliminated.

A growing section of the insured population is already facing very high copays, deductibles and coinsurance, deterring them from seeking needed care. This trend is toxic and unsustainable.

Physicians can’t wait for an effective remedy any longer, nor can our patients. The stakes are too high.

Dr. Robert Zarr, a Washington, D.C.-based pediatrician who will be in front of the Supreme Court building on Wednesday at 10 a.m. Eastern, is president of Physicians for a National Health Program.

Zarr said today: “The King v. Burwell case is yet another reason to swiftly move beyond the failing ACA to a simpler, publicly financed, improved-Medicare-for-All system. Such a system would cover everyone, make care affordable, and control costs. Based on our experience with the Medicare program and the experience of other nations, we know it will work. It’s the only moral and fiscally responsible thing to do.”

https://www.pnhp.org/news/2015/march/health-law’s-complexity-invites-attack-even-as-it-fails-to-cure-ailment-doctors-grou

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Comment:

By Don McCanne, MD

The Supreme Court case of King v. Burwell is appropriately receiving extensive coverage in the media since the decision of the Court has the potential to cause perhaps 8 million individuals to lose their health insurance, plus it would adversely impact health insurance markets through spiraling premiums due to adverse selection.

Even though a decision prohibiting subsidies in federally-administered state exchanges would be disastrous, the hype over this case obscures the much more intolerable disaster of perpetuating the inequities and injustices of our current health care financing system. The consequences of continued inaction on single payer reform constitutes proportionately a much greater disaster, regardless of the outcome of King v. Burwell. Over 30 million will still remain uninsured, tens of millions will experience financial hardship in the face of medical need, perhaps even personal bankruptcy, while private insurers will continue to take away our choices of physicians and other health care professionals, take away our choices of hospitals, and take away our choices of pharmaceuticals that our physicians say we should have.

Merriam-Webster includes as two of the definitions of “state”: “a politically organized body of people usually occupying a definite territory; especially one that is sovereign,” and “the operations or concerns of the government of a country.” It would be tragic if the court ruled that this silly argument on the meaning of “state” had enough substance to allow a few ideologically-driven Supreme Court justices to deprive 8 million people of insurance coverage. But it would be a much greater tragedy if we allow this to divert us from accomplishing the imperative: establishing a single payer national health program – an improved Medicare for all.

Open Enrollment 2015 Re-Enrollment Snapshot

Department of Health and Human Services, February 25, 2015

Millions of consumers with coverage in 2014 actively selected a Marketplace plan or were automatically re-enrolled through the HealthCare.gov platform for coverage in 2015.

“These numbers tell a powerful story of a strong open enrollment and of engaged and satisfied consumers,” HHS Secretary Sylvia Burwell said. “More new consumers joined the HealthCare.gov Marketplace for 2015 than were covered through re-enrollment. More consumers actively selected a plan on HealthCare.gov than were automatically re-enrolled.  These are signs of a vibrant Marketplace where customers are actively engaged in choosing their health coverage – and of a product that families want, need and appreciate.”

“More than half of the 4.17 million people who re-enrolled in coverage during Open Enrollment came back and actively selected a plan and more than half of those consumers selected a new plan,” said Andy Slavitt, Principal Deputy Administrator of CMS. “Based on my experience looking at enrollment trends with employer-sponsored coverage and Medicare, it is clear that Marketplace consumers are more active, engaged, and eager to shop for the coverage that’s right for them.”

Of the approximately 2.21 million 2014 consumers who actively returned to select a plan for 2015, about 1.20 million or 54 percent chose a new plan for their 2015 coverage.

These numbers will fluctuate over the course of the year based on consumers changing or canceling plans or having a change in status such as new job or marriage.

http://www.hhs.gov/healthcare/facts/blog/2015/02/open-enrollment-2015-re-enrollment.html

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Comment:

By Don McCanne, MD

So HHS Secretary Sylvia Burwell is celebrating the “powerful story” of “engaged and satisfied consumers” in the “vibrant Marketplace” of federally facilitated ACA exchange plans. Really? Does this unheard of rate of switching plans during an open enrollment period really represent the enthusiasm of of health plan shoppers in finding even better plans than they have, or does it represent dissatisfaction with the plans they have been stuck with during the past year?

What it most likely represents is relatively healthy people – the majority – who are shopping for the lower premiums available for the benchmark silver plans. Because of the clumsy administrative nature of pricing exchange plan premiums, there is a high turnover in the plans classified as benchmark plans. So these are healthier individuals who are more concerned about a better deal on the insurance premiums than they are about the specifics of their plans, since they hope that they won’t need to use them much.

This process of annually switching benchmark plans ensures instability of coverage which is especially problematic when considering that the narrow networks that are essentially universal in the exchange plans will often result in disruption of care whenever there is a change in the plan selected.

Thus the ACA Marketplace perpetuates instability of premiums, instability of plans selected, instability of provider networks, instability of out-of-pocket cost sharing, and instability of the innumerable devious insurer practices such as outrageous coinsurance for expensive drugs – a practice designed to chase chronically ill individuals away, dumping them on the insurer’s competitors.

This is how markets are supposed to work? The deceptive rhetoric of “a vibrant Marketplace where customers are actively engaged” is shameful. It is particularly disgusting when it is our own government that is perpetrating the dishonest and disproved dynamic that markets work well in health care. Nobel laureate Kenneth Arrow disproved that decades ago.

We need the government to take charge by enacting and then implementing a single payer national health program. But it appears that first we will have to replace our legislators and government administrators with more responsible stewards who are dedicated to the health of the people rather than to the medical-industrial complex. Are we up to that task?

Medicaid Acceptance by Healthcare Providers Drops to 1-out-of-3

By Kev Coleman
HealthPocket, February 26, 2015

When HealthPocket first investigated Medicaid acceptance in 2013, it found that only 43% of the healthcare providers examined were formally listed as accepting Medicaid. Since the original 2013 study, Medicaid enrollment has continued to rise as the Affordable Care Act has led many states to increase the income eligibility range for the program. Medicaid, along with the Child Health Insurance Program (CHIP), currently covers approximately 1-in-5 people in the United States. This year, the temporary increase in Medicaid payments to primary care physicians discontinues with only 15 states indicating that they intend to maintain the payment increase (fully or partially). The reduction in Medicaid reimbursement to primary care physicians has brought with it a concern that Medicaid acceptance, already low among healthcare providers, will drop further.

HealthPocket found that in 2015 only 34% of the healthcare providers examined were listed as accepting Medicaid insurance. This represents a 21% decrease from the listings of Medicaid acceptance found in the 2013 data for the same categories of healthcare providers.

Since both the 2013 analysis and 2015 analysis relied upon the same government data source and provider record parameters, the marked decline in Medicaid acceptance is significant. In particular, the data calls into question whether the temporary increase in Medicaid payments to primary care physicians effected any lasting improvements to Medicaid acceptance.

Why Do Some Healthcare Providers Avoid Medicaid?

A common explanation given for Medicaid lower acceptance is the program’s reimbursement rate to healthcare providers. Medicaid typically pays 61% of what Medicare pays for the same outpatient physician services. To make matters worse, the Medicare payment benchmark is already lower than payments for the same services from private insurers. It is estimated that Medicare typically pays 80% of what commercial health insurers pay. Consequently, in comparison to commercial health insurance from private insurance companies, Medicaid payments represent a reduction on a reduction.

One of state governments’ responses to the problem is the use of managed care organizations to serve some portion of a state’s Medicaid population. However, as a 2014 Health & Human Services study noted, state standards regarding the ratio of primary care physicians to Medicaid managed care enrollees can vary widely (1-to-100 to 1-to-2,500) as do their methods for determining compliance with these standards. Consequently, Medicaid enrollees can face the prospect of long distances and/or long waits to access care under the program.

From the Conclusion

HealthPocket’s comparison of Medicaid acceptance listings from 2013 to 2015 illuminates an alarming trend for those dependent on Medicaid for their healthcare: a reduction in Medicaid acceptance occurring during a period of Medicaid enrollee expansion. How federal and state governments will reverse this trend remains to be seen. The temporary increase in Medicaid payments to primary care physicians from 2013 to 2014 does not appear to have produced a lasting increase in Medicaid acceptance and the expiration of this increase may contribute to further healthcare provider attrition from the Medicaid program.

http://www.healthpocket.com/healthcare-research/infostat/medicaid-acceptance-doctors-health-care-providers-2015

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Guest Comment:

By Richard Gottfried, Chair, Committee on Health, New York State Assembly, and sponsor of A05062 (S03525), “The New York Health Act”

If the Medicaid recipient’s doctor were paid the same as my doctor, this wouldn’t be a problem.  And if we were all in the same health plan, the wealthy and well-connected would see to it that their doctors were paid fairly, and the rest of us (and our doctors) would share the benefit.  If we’re all in the same boat, we’ll all do better.

Market Guide for Healthcare Payers’ Core Administrative Processing Systems

By Constance Sjoquist
Gartner, January 28, 2015

Payer CIOs need to enhance, append or replace their existing core administrative systems to more effectively compete in an increasingly complex healthcare environment. Vendors are developing newer or re-engineering existing solutions to meet this demand.

Market Direction

Historically, the vendor options for core claims administrative systems have been somewhat limited. A handful of legacy solutions have dominated the payer space for years. Often highly customized to a payer’s unique business environment or utilized only for a specific line of business (LOB), core administration systems have been expensive and difficult to replace, upgrade, enhance or consolidate without incurring significant risk or downtime.

In the last several years, an enormous amount of change has occurred in the healthcare market and is impacting payers’ requirements of their core administrative solutions. New demands include the need to comply with an increased number of regulatory requirements, manage a growing number of contractual arrangements and support new distribution channels. Payers are finding it necessary to make the shift from a historical group to a largely individual membership base and are seeking new and differentiated capabilities that will help ensure they can remain relevant and competitive.

In response, vendors in the healthcare core administrative space have begun to significantly shift their product strategy or market focus to address new payer challenges. While this has brought about innovation and choice, it has also led to a disparate market, causing confusion over what exactly the essential elements of a core administrative system are. Vendors that once dominated the market have recently merged or have been acquired, causing uncertainty around their future product road maps. Some vendors have completely dropped their product offerings for a particular LOB or have shifted their technology strategy to offer only nonlicensed software solutions.

Gartner receives a steady volume of inquiries and requests for information on core administrative vendors, as these run the business applications that necessitate an enormous amount of a payer’s IT resources and budget. Healthcare payers are looking to modernize their application portfolios, comply with government regulations and lower their cost of doing business. Payers are also seeking functionality that will allow them to support new health models, such as accountable care organizations (ACOs), pay for performance (PFP) and value-based networks (VBNs). Inquiries focus on who can provide new technology approaches to the development, deployment and management of existing core administrative applications, as well as which vendors offer solutions to support future payer needs.

Core administrative vendors are challenged to adapt and develop their solutions to address these disruptive changes in the healthcare industry, as well as to adapt to rapid advancements in technology.

Industry disruptions include:

• * The shift from a wholesale (group) to a retail (consumer) decision maker requiring greater support for user-specific preferences
• * Demand for transparency tools to support member enrollment, care and payment decisions
• * Providers becoming risk-bearing entities requiring real-time information on payment and reconciliation in their provider applications that parallels payers’ application status
• * Establishment of payer/provider contractual arrangements requiring increased coordination of information and workflows and greater accountability of services and payments
• * Ongoing regulation and compliance changes requiring timely updates, audits and reports
• * The expanding number of distribution channels requiring increased support for enrollment and related services

The healthcare market is expected to continue along a path of rapid change and innovation. There is great uncertainty as to where the market is headed and what technologies will be necessary to adapt and succeed. Core administrative vendors are aggressively vying for position and are competing to manage current expectations and address future client demands.

http://www.gartner.com/technology/reprints.do?id=1-28X3CQW&ct=150129&st=sb

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Comment:

By Don McCanne, MD

This report from Gartner is instructive in that it demonstrates the profound increase in administrative complexity in health care, much of which is directly attributable to a dependency on markets as opposed what we would have under a publicly administered single payer system. Administrative functions in health care are essential, but it is the private sector that has created a bureaucratic quagmire. Gartner is just trying to help the private sector make sense of it.

This does not let the government off the hook. By supporting the current fragmented, dysfunctional model of health care financing, the government is placing a greater burden on the private sector. We are all paying the price in higher costs and in bearing the the burden of systemic inefficiencies. By design, a single payer system would reduce this administrative complexity.

Taxpayers Following ACA Rules, Refunds Take a Hit

H&R Block, February 24, 2015

So far in the 2015 tax season, H&R Block (NYSE: HRB), the world’s largest consumer tax services provider, is seeing a majority (52 percent) who enrolled in insurance via the state or federal Marketplaces paying back a portion of the Advance Premium Tax Credit (APTC). The average amount paid back is $530, decreasing the tax refund on average by 17 percent, according to analysis almost six weeks into the 2015 tax season.

The average tax penalty for not having insurance was $172, an indication that most taxpayers are paying more than the flat-fee of $95 per uncovered adult penalty many consumers anticipated.

“The level of payback of the Advance Premium Tax Credit is significant in that it’s costing taxpayers a large percentage of their refund – a refund many of them count on to pay household expenses,” said Mark Ciaramitaro, vice president of H&R Block health care and tax services.

For next tax filing season, it is important to note that the base penalty will increase to the greater of $325 or 2 percent of household income for 2015.

http://newsroom.hrblock.com/hr-block-taxpayers-following-aca-rules-refunds-take-hit/

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Comment:

By Don McCanne, MD

So far, 52 percent of those receiving a tax credit last year to help pay their premiums for the ACA exchange plans are having to pay back an average of $530 – certainly an unpleasant surprise for individuals subsisting on modest budgets.

Fortunately, for most individuals that repayment will be through a reduction in their tax refunds rather than an additional payment to be made from funds on hand. Nevertheless, many people look forward to receiving their tax refunds in order to be able to meet other important expenses.

Under a single payer system, there is no premium to be paid and thus no need for subsidies based on income. It is much simpler and even more equitable to fund the entire system through progressive taxes.