The Providence Journal
http://www.projo.com/health/content/projo_20021121_ccjstudy.5bf90.html
Administrative costs alone could be cut in half from their current $1.47 billion by establishing one source of financing, says the report by the Health Reform Program at the Boston University School of Public Health.
11/21/2002
BY FELICE J. FREYER
Journal Medical Writer
PROVIDENCE — Rhode Island’s expensive health-care system has enough money to provide for everyone’s needs — from the elderly who cannot afford medications to the low-paid worker who can’t afford dental care — according to a study released yesterday.
But redistributing the system’s $7.2 billion to care for everyone will require a radical overhaul of financing, eliminating insurance companies and having all money flow to and from a central authority.
Such a “single payer” system, resembling those used in most Western countries, has been talked about for decades as a solution to U.S. health-care ills, but the political will for such vast changes in a long-entrenched system has never been mustered. This month, voters in Oregon overwhelmingly rejected a proposal to establish a taxpayer-financed single-payer system in that state.
The $10,000 study, by the Health Reform Program at the Boston University School of Public Health, was financed with a grant from the General Assembly and commissioned by the Coalition for Consumer Justice.
By coincidence, the study comes two days after Blue Cross & Blue Shield of Rhode Island released a $3-million report showing that Rhode Islanders are heavy users of health care and that the demand for nursing homes, hospitals and nurses will exceed supply by 2006.
And it comes a day after the National Academy of Sciences declared that the U.S. health-care system is in crisis and urged the Bush administration to allow a handful of states to test solutions, including universal coverage.
The Boston University study says that health-care spending in Rhode Island is the fourth highest in the nation, 21.5 percent above the U.S. average. Each year, more than $7,000 per person is spent on health care in this state.
“Isn’t that a staggering sum?” said the report’s chief author, Alan Sager, professor of health services at the Boston University School of Public Health. “It’s four times what we spend on defense.”
Despite all that spending, many people can’t get the care they need, the report asserts, including insured people who can’t afford dental care and elderly people who can’t find adequate home care.
Meanwhile, as much as 20 percent of the health-care dollar is spent on clerical tasks. Sager talked of a hospital administrator in Massachusetts who said he had to fire a nurse to hire two clerks to chase down overdue reimbursements from the various insurers and government agencies.
“We have three choices in health care,” Sager said. “We can suffer and die for lack of needed care. Or we can pay more year after year if we can somehow find the money. Or we can change the way we do things.”
The study estimates that it would cost an additional $1 billion to cover all the people who have no insurance or whose insurance doesn’t pay for all their needed care. But those additional costs can be more than offset by savings in a newly structured system.
Administrative costs could be cut in half from their current $1.47 billion by establishing one source of financing. That source could be the government, which would raise the money through taxes. Or it could be a separate central authority or trust fund. Everyone who now pays for health care — employers, individuals, the government — would funnel that money to this single entity, which would disburse payments to providers.
If there was one source of financing and all people were covered, providers would no longer need to hire staff to determine which patients are eligible for which services and to seek reimbursements from an array of private and governmental payers.
Additionally, the report says, cost savings could be realized if the state negotiated discounts on drugs for all its citizens and if doctors were charged with managing care responsibly. Sager proposes that doctors, as a group, be guaranteed 20 percent of health-care costs, with the understanding that they will direct the appropriate use of the remaining 80 percent, within a prescribed budget.
“These are not numbers we made up,” Sager said of the projected administrative savings. “This is the experience of countries where simplified financing exists and where doctors aren’t on the phone negotiating with managed care. If you speak with any doctor who’s not on salary, who runs a practice — the fury; you watch their blood pressure rise when they talk about this.”
Dr. Jeremiah Schuur, a resident physician in emergency medicine, said that doctors would be amenable to “health-care reform that puts the patient first.”
“The current system is swamping doctors in administrative hassle, preventing them from performing their duty of providing care to the sick,” Schuur said at a news conference held to release the report.
Christine C. Ferguson, the former state director of human services who attended the news conference as a representative of Governor-elect Donald Carcieri, said that the study’s findings about the current situation were correct, but that its proposed solution is unlikely to win a following.
“Are we in the middle of a serious problem? Yes, that is true,” she said. But adopting a single-payer plan? “Not in the foreseeable future,” Ferguson predicted. “People don’t inherently trust the government to do that.”
But Marti Rosenberg, of the Health Care Organizing Project, said that as costs keep rising and alternatives keep failing, people will be ready for fundamental change.