Health Care in Connecticut:
Sounding the Alarm
(A Policy Brief released June 22, 2006)
Economic and Social Research Institute (ERSI) (Jonathan Gruber, a health economist at the Massachusetts Institute of Technology developed the cost and coverage estimates used in the full report and this brief. The Urban Institute contributed to macroeconomic analysis to the report.)
This brief outlines three health care policies for Connecticut to consider as alternatives over its current helter-skelter system of health care and coverage. The implementation of each strategy would result in a range of benefits over the existing system. However, only one of the three strategies fully meets the criteria of universal health care established by the Institute of Medicine (IOM).
Policy I
One Health Plan Serving All State Residents
With all state residents under 65 in a single health plan sponsored by the state government, Connecticut would achieve 100 percent coverage while reducing total health care costs. By directly purchasing services from health care providers, the plan would provide benefits like those offered by typical private employers today. A standard benefits package would be available to all and would include the services covered by a typical benefits plan offered by the Connecticut employer now.
A new state commission would administer the plan either directly or through a private insurer. The commission would control costs by defining covered benefits and out-of-pocket sharing rules, setting a statewide budget for health spending, negotiating reimbursement levels with providers and setting standards for quality of care. Individuals and employers could purchase additional health care services or coverage.
…while all residents would be insured, total health care spending on the nonelderly would fall by 5 percent. Average health costs per insured would decline by 16 percent, from $4,121 to $3,447, in part because of reduced administrative costs incurred by insurers, health care providers and employers.
Total employer payments for health insurance would fall by $590 million or
11 percent.
Because of lower health insurance and health care costs, this approach would give Connecticut households $1 billion in new, net annual income available for purposes other than health care and health insurance.
This policy alternative could fully meet the criteria articulated by the Institute of Medicine:
- Universal coverage can be achieved – 100 percent of residents would be covered.
- Health care coverage would be more continuous, with all nonelderly residents enrolled in the state plan.
- Coverage would be affordable to state residents.
- The health insurance strategy would be affordable and sustainable for society, although some firms not offering coverage today would experience new costs.
- The one state plan would have the capacity to implement measures that dramatically improve quality and efficiency, and eliminate disparities in access to and the quality of care among ethnic and racial minorities.
(Endnote 6: Estimates are limited to the nonelderly. However, the reduction in health care prices… would probably affect costs for the elderly as well. If either such “ripple effects” or a federal waiver allowed Medicare beneficiaries to benefit fully from the cost savings achieved by the one state plan alternative, the average Medicare beneficiary could realize annual savings of up to $410 in out-of- pocket costs.)
Policy II
A State Pool with Competing Private Plans for Residents Lacking Employer-Sponsored Coverage
This second policy alternative would satisfy some, but not all, of the Institute of Medicine’s principles.
Policy III
Expanding the Health Coverage Safety Net for Low- and Moderate- Income Adults and Insuring All Children
While this approach would cover a significant number of the uninsured at modest cost, it would not satisfy the criteria of the Institute of Medicine.
http://www.universalhealthct.org/pdf/policybrief_web.pdf
Comment:
By Don McCanne, M.D.
Who’s surprised? We now have yet one more highly credible study from other independent sources demonstrating that single payer is the only model of the three which meets the reform criteria of the Institute of Medicine, while also being the most effective in reducing health care spending. An FEHBP-type program for the uninsured, or expanding the safety net for lower-income individuals and all children, both are more expensive and fall short of reform goals.
Although PNHP would tweak the single payer model studied, our changes would not alter the fundamental findings of this report. Single payer would provide continuous, comprehensive, high quality care for everyone, reduce disparities in access and quality, while being the most effective model in finally making health care affordable.
We really don’t need more studies. The policy science could not be more solid. What we need now is politics.