WHO NEEDS INSURANCE COMPANIES ANYWAY? or “Get the insurance companies out of my health care”

1. WHO NEEDS INSURANCE COMPANIES ANYWAY?or“Get the insurance companies out of my health care” Leonard Rodberg, PhD Physicians for a National Health Program New York Metro Chapter Comments: pnhpnyc@igc.org

2. BEFORE HEALTH INSURANCE BEGAN… • Health care 1% or less of GNP • Out-of-pocket payment for physician care • Charity and public hospital care Before 1936

3. BEGINNINGS OF PRIVATE EMPLOYMENT-BASED HEALTH INSURANCE • Blue Cross is formed in 1936; Blue Shield in 1946 • WW II: health benefits linked to employment • IRS rules employer contributions tax deductible • Commercial life insurance companies begin selling health insurance to employers 1936 - 1965

4. LIMITED GOVERNMENT HEALTH INSURANCE • Rising cost of medical care due in part to innovations in medical technology and drugs • Medicare for those over 65 years • Medicaid for the poor • U.S. remains the only industrialized nation without universal access to health care 1965 - 1990

5. DOMINANCE OF FOR-PROFIT HEALTH INSURANCE 1990 – present • Experience-rated premiums (where the sick pay more) dominate the market • Expansion of for-profit managed care companies • Managed care restricts access and maintains profits • Non-profit Blue Cross plans convert to for-profit companies

6. EXPANSION OF UNIVERSAL HEALTH INSURANCE • 1883 - Germany • 1911 – Switzerland • 1935 – United States* • 1938 -- New Zealand • 1945 – Belgium • 1945 -- France • 1946 – United Kingdom • 1947 – Sweden • 1948 – United States* • 1961 – Greece • 1961 – Japan • 1966 – Canada • 1973 – Denmark • 1974 – Australia • 1978 – Italy • 1979 – Portugal • 1986 – Spain • 1994 – United States* • 1996 – South Africa • 2002 – Taiwan * Proposed by the President. Strong public support for the principle. Failed in Congress. None of these countries rely on private, for-profit insurance companies.

7. Our Public System Covers Fewer, and Private Insurance Dominates United States Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004

8. How Does the U.S. Compare with Other Countries? • We provide the same medical care • We use the same medical technology But… • We have large numbers of uninsured • We spend much more • We remain the only major country that builds its health care system around private for-profit insurance companies.

9. Hospital Inpatient Days Per Capita

10. Physician Visits Per Capita

11. Bone Marrow Transplants

12. MRI Units/Population

13. CT Scanners per million population2002

14. US Life Expectancy is Less than Many Other Countries United States Source: OECD 2005

15. …and its Infant Mortality is Higher

16. The US spends more, but our system doesn’t work well, and we aren’t happy with it.

17. Number of Uninsured Americans (Millions) Rising Number of uninsured 45 40 35 30 25 20 1980 1985 1990 1995 2000 Source: U.S. Census Bureau

18. Playing Doctor? (cartoon)

19. U.S. Health Costs are 70% Greater than the Median of Other Countries United States

20. Our Public Sector Alone Spends More than Other Countries: Americans Pay for National Health Insurance but Don’t Receive It OECD and “Paying for National Health Insurance—And Not Getting It” Health Affairs: July / August 2002

21. THE COST OF CARE CREATES HEALTH PROBLEMS AS WELL AS FINANCIAL PROBLEMS • In nearly 3 in 10 (29%) households, someone skips a medical treatment, cuts pills, or does not fill a prescription because of cost • Nearly 1 out of 4 (23%) Americans have problems paying medical bills • More than 1 in 5 (21%) Americans had an overdue medical bill at the time of a 2004 survey • 1 million people experience medical bankruptcy each year Health Care Costs Survey, USA Today/Kaiser Family Foundation/Harvard School of Public Health, August 2005; D. Himmelstein et al, Health Affairs, 2005

22. HIGH COST OF HEALTH INSURANCE PREMIUMS National Average for Employer-provided Insurance Single Coverage $4,024 per year Family Coverage $10,880 per year Note: Annual income at minimum wage = $10,300 Annual income of average Wal-Mart worker = $17,114 Source: Kaiser Family Foundation/HRET Survey, 2005

23. CONNECTING THE DOTS: So why do we spend so much and have so many uninsured? It’s the insurance companies! Only the U.S. relies on private for-profit insurance companies, the most inefficient, ineffective, inequitable way to pay for health care.

24. Total Population Private health insurance - Employer-provided - Individual Public health insurance Medicare Medicaid Uninsured Million % 288 100.0% 174 60.5 % 160 55.6% 14 4.9% 72 25.0% 41 14.2% 31 10.8% 42 14.6% THE MAJORITY OF AMERICANS HAVE PRIVATE INSURANCE … Source: National Center for Health Statistics, 2003

25. 2004 Personal Health Expenditures Private Funds Private health insurance - Self-funded plans - Insurance company plans Out-of-pockets payments Other private funds Public Funds* Medicare Medicaid Other public expenditures $ Billion % $ 1,753 100% $ 965 54% $ 658 37% $340 19% $318 18% $ 236 13% $ 70 4% $ 789 46% $ 309 18% $ 293 17% $ 187 11% …BUT IT PAYS MUCH LESS THAN HALF THE COST * Does not include tax subsidy for private insurance. See Woolhandler & Himmelstein, HealthAffairs 2002 Source: Centers for Medicare and Medicaid Services, 2006

26. A PUZZLE: If private insurance pays for such a small portion of the total, how can it be responsible for the high cost of our system?

27. THE ANSWER: Reliance on private insurance companies accounts for 20% or more of total health care spending due to: • Insurance company profits, marketing, and overhead costs, and • Wasteful billing and administrative burdens imposed on the entire system.

28. CEO’S COMPENSATION 2004 Note: Total Pay=Salary+Stock Options Source: Modern Healthcare, Aug. 1, 2005; NYTimes, Apr. 3, 2005

29. Private Insurers’ High Overhead International Journal of Health Services 2005; 35(1): 64-90

30. Hospital Billing & AdministrationUnited States & Canada

31. Physicians' Billing & Office ExpensesUnited States & Canada

32. Billing and Insurance Costs Account For More Than 20% of All Health Care Costs BIR = Billing- and insurance-related costs; profit and marketing costs not included Source: James G. Kahn et al, The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians, and Hospitals, Health Affairs, 2005

33. Half of Middle- and Lower-Income Adults Experience Serious Problems Paying Medical Bills or Insurance Premiums Percent Percent 50 50 48 48 38 38 33 35 23 21 Medical bills Health insurance Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.

34. Worries About Affordability and Access to High-Quality Care Spreading to Middle-Income Families Percent worried they will not be able to pay medical bills in event of serious illness Percent worried they will not get high-quality care when needed 66 53 52 50 50 48 47 47 38 34 Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.

35. Insurance Complexity: Two of Five Adults Report Having to Spend Time on Paperwork or Disputes Related to Medical Bills and Health Insurance in the Past Two Years Percent 46 39 39 38 33 Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2006.

36. The US Health Care System! – Uwe Reinhardt

37. PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE #1 High cost • Excessive administrative costs • System complexity And, as a direct consequence of high cost, • Large numbers of uninsured and under-insured who cannot afford adequate coverage

38. And Health Insurance Costs Keep Rising

39. Health insurance premiums have risen faster than health care costs Wall Street Journal, July 31, 2006

40. US Health Costs Rise Faster than Other Countries’ Costs Source: Health United States 2005, Natl. Center for Health Statistics

41. Health Insurance is a Rising Share of Employment Benefits

42. Firms Shift Health InsuranceCosts to Workers

43. A Declining Number of Firms Are Offering Insurance…

44. And Small Businesses Especially Can’t Afford to Offer Insurance

45. PROBLEMS CREATED BY PRIVATE HEALTH INSURANCE #2 Failure to control costs Continuing double-digit annual cost increases Costs cannot be controlled in a for-profit multi-payer system that resists coordination, budgeting, and planning.

46. CLAIMS BY HEALTH INSURANCE COMPANY SUPPORTERS Private health insurance gives consumers: • Greater choice • Efficiency through competition

47. Most Employers Offer Only One Plan

48. Many With Insurance Lack Choice42% Are Offered Only 1 Plan

49. Employers Control their Choice: Reasons for Changing Health Plans *Changed job, or employer changed plan offerings Source: Health Affairs 2000; 19(3):158

50. Some Choices Don’t Really Matter!