Summary: Four thousand individuals reporting current healthcare spending and income reveal that … nearly 9 in 10 will save money, more than $5000 per year on average, with single payer.

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At a time of inflation, California should take a bold step to tame rising health care costs, Viewpoints, Sacramento Bee, January 11, 2023, by James G. Kahn and Michael Lighty

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The word of the year for 2022 could have been “inflation.” Air travel prices rose nearly 40% from a year earlier. Grocery, housing, energy and other prices are also up. And once again, the cost of health care, which makes up nearly a fifth of our economy, is rising sharply.

Most health insurers in the individual market are expecting premium increases between 5% and 14% this year, according to Axios, and family out-of-pocket health care costs have jumped 10%.

But health care is different from other elements of the consumer price index. There is a way to control health care inflation while providing everyone with high-quality coverage.

Universal public financing of health care — often called single-payer coverage or “Medicare for all” — can cure what ails us both medically and financially.

Single-payer coverage would control health care inflation by eliminating the excessive profits and charges, outrageous drug prices and bureaucratic waste inherent in our current system of private health insurance.

Want proof? We have it.

The single-payer advocacy coalition Healthy California Now and the National Union of Healthcare Workers recently developed a household health care cost calculator for use by individuals and families who live in California. It’s designed to compare the costs associated with a single-payer program to current health care expenses.

So far, 4,000 households have tried it. Users enter their premium payments for the prior year, employer premium contributions, out-of-pocket expenses and annual income. The calculator then compares their costs under the current system to projected single-payer taxes at their income level.

Eighty-seven percent of those who used the calculator found average annual savings of more than $6,000 per household. Medicare beneficiaries were more likely to achieve net savings at a slightly lower average, $5,150 per household. The 13% of households that wouldn’t enjoy net savings generally had very low current premium and out-of-pocket expenses due to extremely generous health plans or annual incomes exceeding $350,000.

Take five minutes and try this exercise for yourself at Healthy California Now’s website. …

Our leaders in Sacramento … have the power to make single-payer a reality for the state.

The Healthy California for All Commission, formed by Gov. Gavin Newsom and the Legislature last year, defined a “unified financing” plan offering universal coverage and comprehensive benefits for everyone. Under this plan, out-of-pocket costs and cost-sharing would be eliminated. Rather than payments to private insurers, the funding would come from a progressive tax that can easily generate the necessary funds.

The tax plan used in the calculator includes a 2% sales tax on nonessential items plus a payroll tax that starts at incomes of at least $75,000 and a personal income tax that starts at $300,000 a year. Additional taxes would be levied on the state’s wealthiest individuals and corporate profits.

It’s true that some well-paid professionals would be at risk of paying more for single-payer coverage, and the super-wealthy would have to share some of the burden. But in exchange, all Californians would get a system that guarantees excellent coverage, including for long-term care, and a health plan that efficiently and equitably covers health care costs for everyone.

We can fight health care inflation while providing quality care for all, and California can show the way. The words on everyone’s lips this year should be “Medicare for all.”

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Comment:

By Jim Kahn, M.D., M.P.H.

Developing and deploying this online cost calculator was very gratifying. We knew from past research that single payer saves money for the health system (see here). We also knew that funding single payer – collecting the revenue needed to cover all costs via the public budget – could be done with progressive taxes, i.e., a heavier burden on the rich.

What we didn’t know was how diverse households would fare. That is, how savings (ending current premiums and out-of-pocket costs) would compare with new taxes based on income. So we decided to ask. To estimate taxes, we designed a progressive mix of sales, payroll, income, wealth, and corporate profit taxes that yield the $223 billion needed in California for a no cost-sharing version of single payer (per the Health California for All Commission).

We found that nearly 9 out of 10 individuals who used the calculator would save money with single payer. That is, new taxes would be less than current spending on premiums (including wage effects of the employer portion) and out-of-pocket such as deductibles, copays, and uncovered services. The average savings are more than $5000 per year.

This is very encouraging in terms of public support for single payer. It’s not the last word on the topic – out-of-pocket burden is rising, so savings may grow over time, and different tax proposals will alter the exact numbers.

Still, the fundamental message is powerful: a progressively financed single payer proposal will financially benefit the vast majority of households. And (need I say?) do so while providing access to care with any provider.

http://healthjusticemonitor.org…

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Summary: $18 million for a pre-owned Rolex watch vs. tax rates that redress our astounding, historically high economic inequality, in pursuit of social cohesion and equality. Which message do we believe in?

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Rolex Now Has a Resale Program. The Watch World Quakes. New York Times, January 18, 2023, by Victoria Gomelsky

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There is a saying in the high-end watch trade that there are only two kinds of watchmakers: Rolex and everyone else.

Rolex is an even bigger juggernaut in secondary channels, where its pre-owned watches often fetch twice their retail value, and sometimes far more. (Many watch insiders cite the 2017 auction of Paul Newman’s Rolex Daytona for $17.8 million as the start of the current mania for collectible timepieces.)

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Joseph Stieglitz: tax high earners at 70% to tackle widening inequality, The Guardian, January 22, 2023, by Rupert Neate

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Joseph Stiglitz, the Nobel prize-winning Keynesian economist, has called for … a special worldwide income tax rate of 70% on the highest earners …

“People at the top might work a little bit less if you tax them more. But on the other hand, our society gains in having a more egalitarian, cohesive society,” the former World Bank chief economist, 79, told Oxfam’s Equals podcast.

Stiglitz said that while an increase in the top rate on income would help lead to a more equal society, introducing wealth taxes on the fortunes accumulated by the world’s wealthiest over many generations would have an even bigger impact.

He described proposals by the US senator Elizabeth Warren for a 2% tax on people with assets of more than $50m and 3% on those with more than $1bn as “very reasonable” and said they “would really go a long way to raising revenues that could alleviate some of our country’s problems”.

Research published by Oxfam last week showed almost two-thirds of the new wealth amassed since the start of the pandemic has gone to the richest 1%. The charity found the best-off had pocketed $26tn (£21tn) in new wealth up to the end of 2021. That represented 63% of the total new wealth, with the rest going to the remaining 99% of people.

Oxfam said for the first time in a quarter of a century the rise in extreme wealth was being accompanied by an increase in extreme poverty. [See also: Oxfam 5 ways billionaires are bad for the economy]

More than 200 members of the super-rich elite last week called on governments around the world to “tax us, the ultra rich, now” to help address the inequality crisis.

The group of 205 millionaires and billionaires called on world leaders and business executives meeting in Davos for the World Economic Forum to urgently introduce wealth taxes to help tackle “extreme inequality.”

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Comment:

By Don McCanne, M.D.

Let’s see now. Would we rather have a society in which a privileged few could accumulate much of the monetary work product of the rest of us in order to be able to satisfy personal whims such as being able to pay $17.8 million for a used wristwatch? Or would we rather have an egalitarian society in which people are rewarded appropriately for their work while being assured that their basic needs, such as health care, would be automatically met without having to face financial hardship? (As a reminder, post-WWII, a period of rapid economic growth, the US taxed top income brackets at 90%. High taxes and rising prosperity are mutually compatible.)

No contest: egalitarian values. So let’s get on with it. We all already have access to the time of day; let’s now achieve access to comprehensive health care for everyone in a system that’s affordable for all: single payer!

Editor: Preview of related forthcoming HJM post: Our online cost calculator finds that single payer financed via taxes focused on higher earners, the wealthiest, and corporate profits lowers healthcare spending for 9 out of 10 households.

http://healthjusticemonitor.org…

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Summary: An appealing-sounding proposal for universal health insurance envisions a “social floor” “basic bundle” of medical care, to be supplemented by those that can afford more. It thus needlessly sacrifices the efficiency, equity, and unity available with single payer.

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Achieving Universal Health Insurance Coverage In The United States: Addressing Market Failures Or Providing A Social Floor?, National Bureau Of Economic Research, January 2023, by Katherine Baicker, Amitabh Chandra, Mark Shepard

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Abstract:

The United States spends substantially more on health care than most developed countries, yet leaves a greater share of the population uninsured. We suggest that incremental insurance expansions focused on addressing market failures will propagate inefficiencies and are not likely to facilitate active policy decisions that align with societal coverage goals. By instead defining a basic bundle of services that is publicly financed for all, while allowing individuals to purchase additional coverage, policymakers could both expand coverage and maintain incentives for innovation, fostering universal access to innovative care in an affordable system.

Approaches grounded in addressing market failures in the current system are perhaps the path of least resistance in the short run, minimizing disruptions to care while marginally increasing coverage. But it’s worth noting both the limited effectiveness of such approaches over the last 50 years and the shortcomings that such patches would perpetuate.

Rather than beginning with the presumption that the main need is addressing market failures, an alternative approach to expanding coverage begins with the explicit presumption that covering everyone with some form of insurance is a social goal.

We discuss three key policy decisions in a system of guaranteed universal basic coverage: 1) What health care does the basic bundle cover, and how generous is that coverage? 2) What mechanisms are used to limit spending, and who decides? 3) Are people permitted to purchase top-up or supplementary coverage beyond the basic bundle? One goal of this article is to provide a framework that may help guide future research to help inform answers to these questions.

Few would argue that the current US health care system is serving everyone well. We are surely spending too much on the provision of health care that is delivering too little benefit to too few people. Reconceptualizing what we mean by universal coverage to ensure that public resources are devoted to care with high health benefit offers the opportunity to ensure universal access to innovative care in an affordable system.

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Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

Off hand, it seems that the question addressed by this paper has an obvious answer.  We have been attempting to expand health insurance coverage for everyone by addressing market failures, and it has, in itself, been a failure. Providing a social floor in health care coverage for everyone should lead to just the results we have been seeking. So where have these academics missed the target in describing the much needed pathway to health care justice for all?

Their first step in recommending abandoning those approaches that have led to market failures is certainly correct. Then establishing a social floor for coverage for everyone is also correct. That basically is what the PNHP single payer proposal is. The problem is that they define the social floor as covering the “basic bundle” for everyone,  and, then, “Once the parameters of a basic, guaranteed plan are established, a policy decision needs to be made about the allowability of supplemental plans for private purchase.” There could be a wide variety of benefits that could be “topped up” including patient cost sharing, add-on services such as dental or vision, private providers beyond those in narrow networks included in the basic bundle, or other important products or services considered to be beyond basic. That is, the basic bundle should not have to be topped up to reach the level of routine health care.

The idea of a “basic bundle” fails. First, how do you decide what to exclude? Is dental care really optional? Are narrow networks satisfactory for those who need a specialist? Second, how do you administer it efficiently? The authors propose capitation or ACOs to control spending. These have a dismal track record, and using for-profit intermediaries (as in Medicare Advantage) substantially increases overall costs while reducing care.

It’s not only inefficient, it’s inequitable. Topping up would allow wealthier individuals to receive the higher level of care to which everyone should be entitled. Instead of receiving greater benefits, they should be receiving the same comprehensive benefits as everyone else, but they should be paying a higher amount through progressive taxes. The extra funds that the wealthy put into the health care system should not be paying for privilege, but they should be funding an egalitarian health care system instead.

We’d all benefit together. Single payer bringing us together. An antidote for current political divisiveness.

http://healthjusticemonitor.org…

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Summary: National polls show that the US is losing ground on two major indicators of health system performance: access to care and perceived quality. Who thought it could get worse? Gallup shows we’re galloping to disaster.

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Record High in U.S. Put Off Medical Care Due to Cost in 2022, Gallup, January 17, 2023, by Megan Brenan

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The percentage of Americans reporting they or a family member postponed medical treatment in 2022 due to cost rose 12 points in one year, to 38%, the highest in Gallup’s 22-year trend.

Americans were more than twice as likely to report the delayed treatment in their family was for a serious rather than a nonserious condition in 2022. In all, 27% said the treatment was for a “very” or “somewhat” serious condition or illness, while 11% said it was “not very” or “not at all” serious. [This] 16-point gap in the perceived seriousness of forgone treatment in 2022 is the second largest on record …

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Americans Sour on U.S. Healthcare Quality, Gallup, January 19, 2023, by Lydia Saad

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For the first time in Gallup’s two-decade trend, less than half of Americans are complimentary about the quality of U.S. healthcare, with 48% rating it “excellent” or “good.” The slight majority now rate healthcare quality as subpar, including 31% saying it is “only fair” and 21% — a new high — calling it “poor.”

Americans’ evaluations of the quality of healthcare they personally receive are also at a low ebb — albeit higher than their U.S. rating — with 72% giving it excellent or good marks. This low reading has been two years in the making, with the metric falling six points to 76% in 2021 and another four points in the past year.

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Comment:

By Jim Kahn, M.D., M.P.H.

This pair of national Gallup polls demonstrates our health care is headed in the wrong direction. The care is less affordable and lower quality.

Why less affordable? In brief, under-insurance. As the Kaiser Family Foundation showed in its 2022 annual survey of job-based insurance, deductibles continue increasing (Fig. 7.18), even as employee premium contributions rise or stay flat (Fig. 6.23). Drug prices are extraordinarily high due to the industry’s relentless pursuit of profit, and cost controls in the Inflation Reduction Act are anemic. A commentary from last week noted that drug cost-sharing under the now ubiquitous pharmacy benefit managers (PBMs) can be devastating for patients who depend on expensive brand-name medicines with no generic options. Two main causes: First, a shift from fixed co-payments to percentage-of-cost coinsurance, which is based on inflated list prices. Second, exclusion of manufacturer patient assistance from deductible credit. The difference for patients can be tens of thousands of dollars a year (see sample calculations here). Wendell Potter wrote recently on the painful results for patients.

Financial barriers have clinical consequences. Research by Gaffney et al in late 2022 found rationing of insulin by 17% of patients or 1.3 million US adults. Research by Chandra et al in 2021 found that a 34% ($10) rise in out-of-pocket cost for seniors reduces drug use by 23% and increases mortality by one-third, specifically for statins and antihypertensives.

Why lower quality? It’s multi-factorial. Clearly COVID has burdened health care capacity, leading to worker stress, burnout, and staffing shortages. But I believe patient frustration also carries over from the financial challenges. When people have to pay more – which they can barely afford – they demand and expect more.

When the system is failing in multiple ways, it feels like it’s completely falling apart. Which it is.

Saddle up for single payer.

http://healthjusticemonitor.org…

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Summary: The holiday honoring Martin Luther King is the perfect day to revisit the problems of racism still afflicting our health care system and indeed our health. Today we rely on the thoughtful commentary of our colleague Wendell Potter.

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The health care injustices that Dr. King spoke about are still here. And growing. Wendell Potter NOW, January 16, 2023

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How Long, Oh Lord, How Long?

The top story in yesterday’s Los Angeles Times brought to mind one of the most-cited Martin Luther King, Jr. quotes about health (and health care) in the United States. It is usually this version–slightly but significantly altered by someone who must have thought his exact words might offend some folks–that we see and hear:

Of all the forms of inequality, injustice in health care is the most shocking and inhumane.

[B]ecause California’s Medicaid program (called Medi-Cal) pays doctors and hospitals so little compared to what Medicare and private insurers pay, MLK hospital had a net loss of almost $43 million for care provided in the hospital’s emergency department last year.

[Read the full post. It is informative and compelling.]

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Comment:

By Jim Kahn, M.D., M.P.H.

Thanks to Wendell for his excellent piece today. I couldn’t do better, so won’t try. To read HJM’s Juneteenth 2022 review of the many racist elements of US healthcare and health, see here. And see here a subsequent report on how hospitals serving Black patients are paid less, as also described in Wendell’s piece.

For this and other reasons, single payer would substantially (if incompletely) mitigate racial inequalities in health. Imagine that, a system that saves money, assures care for everyone, and eliminates financial inequality in health care. Keep imagining it, and working toward it, until it becomes true.

We’ve been on an impromptu break since January 6th. Back soon in usual form.

http://healthjusticemonitor.org…

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Summary: The Chamber of Commerce uses the results of its online poll to claim overwhelming worker support for job-based health benefits. However, the methods and reporting are biased. Survey findings by the Commonwealth Fund tell a far more worrisome story.

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New Poll of American Workers Reveals Tremendous Value Placed on Workplace Health Benefits, U.S. Chamber of Commerce, December 15, 2022

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Health insurance is the most important benefit an employer can offer workers and their families, according to a new survey on how American workers view employer-sponsored health coverage. Workers report that they overwhelmingly prefer to receive health insurance directly from an employer rather than through other means. The poll found that as high as 96% of Americans believe it is important that a job offer health insurance.

Ninety-three percent of respondents said they were satisfied with their insurance.

Employer-sponsored health insurance remains far more popular than insurance plans available on the individual market:

• 89% of Americans expressed a preference for obtaining their health coverage through an employer than through other means.
• 81% of respondents reported that they would rather receive their insurance from an employer than a government-provided health plan.

“I expected there to be a high level of satisfaction with employer health benefits, but I was stunned by the level of intensity,” said  Matt George of Seven Letter Insight, who ran the survey. “It is not an exaggeration to say Americans love, trust, and rely on their workplace health care coverage.”

The survey was commissioned by the Protecting American’s Coverage Together (PACT) campaign, a coalition including the U.S Chamber of Commerce, Business Roundtable, Vermeer Corporation, The National Association of Manufacturers and Council for Affordable Health Coverage. PACT represents leading employer voices focused on strengthening the ESI system and protecting the coverage and benefits that American families depend on for their health.

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The State of U.S.Health Insurance in 2022, The Commonwealth Fund, September 29, 2022, by Sara R. Collins, Lauren A. Haynes, Relebohile Masitha

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Forty-three percent of working-age adults were inadequately insured in 2022. These individuals were uninsured (9%), had a gap in coverage over the past year (11%), or were insured all year but were underinsured, meaning that their coverage didn’t provide them with affordable access to health care (23%).

Twenty-nine percent of people with employer coverage and 44 percent of those with coverage purchased through the individual market and marketplaces were underinsured.

Among the world’s high-income countries, the U.S. stands alone for the complexity of its health insurance system. Americans are eligible for different types of coverage depending on whether their employer offers it, what their income level is and what their age and health care needs are. There is no national enrollment mechanism for people who don’t have employer coverage; they must know which program they are eligible for and then sign up for coverage. Consequently, people can experience insurance gaps at different points in their lives, like when they lose a job.

The average insurance deductible for employer health plans with single coverage is more then $1,000 ($1,434 for all covered workers in 2021), and out-of-pocket maximums average $4,272 for single coverage in employer plans. Half of survey respondents said they would not have the money to cover an unexpected $1,000 medical bill within 30 days.

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Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

With our inordinately high costs of health care and persistent gaps and inequities in access, many hope that 2023 is going to be the year that we finally start to enact and implement health care justice for all. Remarkably, however, there is still resistance to the tested and proven concept that will get us there: single payer Medicare for All. Some argue that Medicare has too many defects, but we know what they are and can revise the program to meet widely accepted standards of care. Other nations have shown that to achieve the goals of equity, accessibility, and affordability for all, the government must have a central role.

To those who advocate for reliance on a private sector strategy, we point to its clear failings. Our health system failings reflect the shift of health care funds from patient care to wealthy investors, such as through public fund privatization (eg Medicare Advantage and Medicaid managed care) and the massive acquisition of providers by private equity. That’s why we must pay for health care through public insurance on the model of traditional Medicare.

Employers and insurer organizations tout the benefits of employer-sponsored health insurance. Admittedly, these plans provide a welcome financial backstop for expensive medical problems, such as a heart attack or a fracture requiring surgery. Unsurprisingly, workers value getting health benefits with a significant employer contribution. Yet most job-based plans have large deductibles (thousands of dollars) and provider networks are limited. This mixed picture is evident in the Commonwealth poll and reports by the Kaiser Family Foundation and others.

The Chamber of Commerce poll and report grossly exaggerate the level of support for job-based coverage. It’s biased, in four ways (please excuse geek detour):

1. Biased sample of respondents: it’s an online survey, with no sampling frame or response rate specified. This is a red flag for self-selection: the individuals who see and participate in the poll have a special perspective. The report doesn’t indicate the recruitment message, but if it was something like “What do you like about your health insurance?” or “Do you appreciate your health benefits?”, who do you think would click over to the survey?
2. Biased presentation: Statistics are presented in a way that favors the pro-benefits view. E.g., 52% do NOT strongly agree that insurance is affordable, and a similar % do NOT say that it’s high quality. More than 70% do NOT say it’s comprehensive or convenient.
3. Unfair comparison with public insurance like single payer. Respondents are asked if they prefer private work-based coverage or “government insurance”. No hint at what that means – is it Medicaid? The responses would be quite different if phrased fairly, e.g., “an improved Medicare for All, with coverage for all medical needs; no premiums, deductibles, or copays; and increased taxes only if you earn >$250,000”.
4. Omission. They don’t ask if workers are pleased that employer contributions to health benefits come out of wage or salary levels. (They do, to a very large degree.)

Polling as advocacy isn’t real information. Ok geek mode off.

Single payer would enable access to the entire health care system whenever needed. In contrast, employer insurance depends, first of all, on employment status and employer benefit plans. Second, details of the insurance contract matter: there may not be freedom to choose health care providers,  hospitals, pharmacies, or even what care is covered. Workers may fall prey to job lock, required to stay in a job because insurance may not be available if they quit. Voluntary and highly varied job-based insurance guarantees that coverage is inequitable and unreliable, in contrast to the equity and universality of single payer.

It is understandable how, through the years, individuals have liked employer sponsored plans, since they have been among the better options to provider, under the right circumstances, heath care for workers and for their families. (Less true these days due to the skyrocketing deductibles, and obscuring the lower wage effect.)

Also, taking solace in decent job-based insurance undermines a principle that most of us care about: solidarity. Most of us really would like to see health care for everyone.

Not long ago, we experimented on a large scale with trying to fix the private insurance approach. The Affordable Care Act aimed to preserve, improve, and expand employer sponsored insurance as a pillar of our health care coverage, filling in the voids with a regulated market for private insurance and more Medicaid. The ACA seemed to enhance solidarity while preserving employment sponsored plans.

The problem, as reviewed well recently, is that this experiment in health policy was a dismal failure in providing decent coverage for everyone, and thus a failure in the solidarity we seek. Tens of millions remain uninsured, and under-insurance exploded with the rapid growth of high deductible plans. If solidarity is building, it’s of the wrong variety: shared pain.

Other nations provide us with ample highly successful examples of single payer. They are effective in providing affordable care for everyone and thus also fulfill the goal of solidarity. We really can have high performance universal health care, and save money in the process. A single payer system would guarantee better health care choices than in employer sponsored plans, for workers and for everyone.

We have the opportunity to reject the current, fragmented, dysfunctional employer-sponsored system and adopt policies of social solidarity that would bring affordable, comprehensive high quality health care to everyone.

Look around you. This really seems to be the year to fix the health care financing system in the United States. We can use our ingenuity to create a uniquely American system of social and economic justice.

Let’s do it. In solidarity, single payer for all!

http://healthjusticemonitor.org…

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