Why America Does Need Better Health Coverage
In comparison to other well-developed nations the US consistently ranks lowest in terms of the health of our people. US infant mortality and over-all life expectancy rates are among the highest and lowest respectively, and we consistently rank low in terms of patient satisfaction with the availability of health care. Among developed nations, Save the Children’s State of the World’s Mothers report ranked the US 25th of 43 – right between Belarus and the Czech Republic – in terms of the health and well-being of the nation’s mothers. In children’s health the US ranked only 31st. Additionally, the risk of maternity-related death is higher in only three other industrialized nations in the report – Albania, Moldova, and the Russian Federation.
A National Health Survey by the Center for Disease Control estimated that in 2010 approximately 22.3% of our nation’s population aged 18-64 years was uninsured, 15% was covered by public insurance plans, and 64.1% held private insurance. Surprisingly, the US spends almost twice as much on health care per capita and as a percentage of our gross domestic product (GDP) than every other industrialized nation – and this is without covering all of our people. Even at this level of expenditure, a 2001 study found that medical debt contributed to 46.1% of US bankruptcy cases.
America’s current health care system is based on private for-profit health insurance providers in conjunction with federally-funded health programs. On March 23, 2010 President Barack Obama signed into law the highly controversial Patient Protection and Affordable Care Act (PPACA), along with the Health Care and Education Reconciliation Act. The Congressional Budgets Office estimates that these bills will reduce federal deficits by $143 billion dollars over the 2010-2019 period, including $124 billion from health care provisions and $19 billion from education provisions. Thus far there have been 33 (expensive) attempts by the GOP to repeal the PPACA. Additionally, because state penalties for not expanding Medicaid were removed from the PPACA, some states are still attempting to cut Medicaid expenditures. As America’s new health care system is ironed out, the PPACA will certainly undergo additional modifications.
President Obama’s PPACA health coverage system is universal, but not single-payer, given that many types of private and public insurers will still exist. In single-payer systems, a single public health care insurer (generally under a national, state, or regional government) is financed from a pool to which many parties contribute, including the individual, the state or nation, and employers. This single public insurer also handles all insurance pay-outs to health care providers. This generally results in decreased overhead costs, since all health care providers bill, and are paid by, a single entity. Universal health care means coverage for 100% of a nation’s citizens – in most cases, single-payer systems and universal health care go hand-in-hand.
President Obama stated in 2008 that he supports the idea of a single-payer system, but that it currently presents difficulties in the US – including the millions of jobs supplied by the private insurance industry. “Given that a lot of people work for insurance companies, a lot of people work for HMOs. You’ve got a whole system of institutions that have been set up.”
Provisions of the PPACA
While the PPACA, unofficially termed “Obamacare”, is certainly complex, there are several main points to consider:
- Small businesses will be eligible for tax credits worth up to 35% of the employer’s contribution to employees’ health care programs.
- Retirees aged 55-64 who are not eligible for Medicare will be assisted financially by a Reinsurance Program that will help such retirees maintain their employer-based insurance coverage through 2014 when more affordable insurance will be available through Affordable Insurance Exchanges.
- Individuals under the age of 26 are eligible to remain on their parents’ health plans.
- Insurance coverage cannot be denied to children under the age of 19 based on pre-existing conditions.
- Preventative care procedures, including mammograms and colonoscopies, will be covered without the need to pay a co-pay or deductible.
- Insurance companies will no longer be allowed to use technical errors or honest mistakes on an insurance application to rescind coverage when an individual requires medical care.
- Insurance companies will no longer be allowed to impose life time dollar limits on essential health care benefits including hospital stays, and annual dollar limits will be restricted.
- The Fair Labor Standards Act is amended to require employers to provide a non-bathroom private location and a “reasonable break time” for nursing mothers to express breast milk for up to one year after childbirth. Small companies will not be required to do this if they can establish undue hardship.
- The bill will help to increase the number of doctors and nurses in underserved and rural areas of the nation by providing financial assistance and loan forgiveness programs to such medical professionals, and support for construction and the expansion of services at community medical centers.
- Individuals covered by Medicare who have reached their prescription drug coverage gap (also known as the “doughnut hole”) who don’t already receive additional assistance will be eligible for a 50% discount on brand-name prescription drugs, and a 14% discount on some generic drugs. Savings will increase through 2020 when costs for both prescription and generic prescription drugs will be covered at 75% within the coverage gap.
- In an attempt to reduce health care premiums, insurance companies will be required to spend no less than 85% of large employer-based premiums on health care alone. This requirement will be 80% for small companies.
- Physicians with patients covered by Medicaid will be reimbursed at 100% of the Medicare rate for an equivalent procedure or service in 2013 and 2014. This means that physicians will be paid a much more reasonable amount by Medicaid for services offered to patients covered by this health plan.
- Businesses with over 50 employees, and in which at least one employee receives federal tax credits to pay for health care, will be required to provide health insurance coverage to those employees
- Health insurance companies will no longer be allowed to deny coverage based on gender or pre-existing conditions.
- All Americans will be required to have health insurance coverage or pay a tax (previously called a penalty). This can be through an employer-based plan or a federal or state-funded program, which most Americans currently already have, or can be purchased independently by the individual. Those with low income or with certain religious beliefs will be exempt from the tax if they do not have coverage. Additionally, individuals can apply for a waiver of the tax.
- If an employer does not offer health insurance, employees will be able to purchase it through an Affordable Insurance Exchange. This Exchange will allow small businesses and individuals to purchase affordable insurance at varying benefit and cost levels. Members of Congress will be getting their insurance coverage through the Exchange.
- Individuals who cannot afford the health plan offered by their employers can take whatever amount their employer would have contributed to a health plan and use it to purchase insurance in the Exchange.
- Americans who earn less than 133% of the poverty level will be eligible for Medicaid coverage, which will significantly increase the number of people eligible for this health plan.
- Beginning in 2015, physicians will be paid based on the quality of care they provide – more for high-quality care and less for low-quality care.
The Individual Mandate
Many Americans focus their PPACA-related concerns around the “individual mandate” – individuals not covered by an employer or government-sponsored health plan will be required to purchase coverage or pay a penalty tax. To increase the number of low-income Americans with health coveraged, Medicaid eligibility will be expanded to include individuals earning up to 133% of the poverty line, although states can choose to opt out of this expansion. Americans earning less than four times the poverty line ($92,200 for a family of four) who can’t obtain coverage through an employer, state, or federal source, will receive tax credits to help pay for health insurance costs. In times of financial hardship, individual penalty taxes can be waived. According to studies using the Urban Institute’s Health Insurance Policy Simulation Model, most Americans, an estimated 93% of the under-65 population, will neither be required to newly purchase health insurance nor pay a penalty tax. Only 3% of the remaining 7% will not be eligible for financial assistance through the PPACA.
The Limitations of the PPACA
Health Care Costs – Some physicians and medical specialists believe that the PPACA does not address some of the major limitations of our current health care system, and increases our dependence on private health insurance. Physician liability, for example, contributes to high health care costs – a survey by the American Medical Association revealed that 42.2% of all doctors surveyed in most disciplines had been sued, and 22.4% had been sued at least twice. Doctors spend huge amounts annually on medical malpractice insurance, the cost of which inevitably filters down to patients. Many physicians also worry that by creating dozens of committees to implement legislation, PPACA will further bog down an already cumbersome system. However, the bill makes efforts to standardize billing procedures, and requires health plans to adopt methods for electronic filing and maintenance of health records.
The PPACA also does not address the problem of hospitals regularly over-charging insurance companies for medical procedures, sometimes up to 45%. While some of this pays for overhead in dealing with insurance companies, over-charging absolutely raises the cost to the patient. But perhaps these high costs will naturally decrease as hospitals under the PPACA are no longer forced to pay large sums for treating the uninsured.
Individuals – The Bronze health plan under PPACA will come with a significant deductible, which means that some, particularly those with low incomes, may still be unable to afford certain medical procedures. Many of these individuals will receive additional financial support through subsidies, but a better balance is needed in terms of cost versus adequate levels of care. This suggests that health “care” is a misnomer and that the “C” of PPACA should instead stand simply for “coverage.”
Businesses and Employees – Many businesses already supply health coverage to employees and will not be significantly affected by the PPACA. However, businesses employing over 50 people without health coverage will have the choice to either pay for employee health care or pay a fine of $2,000 per full-time employee over 30 employees. Financial assistance to these companies will exist in the form of tax credits, but may not be enough to keep some small companies from struggling to pay for employee premiums. Grants will also be provided to companies that establish wellness programs to promote employee health and fitness. Still, it’s anticipated that billions of dollars in revenue will come from employer penalties annually. Some larger companies, including AT&T and Caterpillar may consider dropping employee health insurance coverage because paying penalties will be less costly for the company.
Some employees worry that their incomes may be reduced to help cover this new cost, or they may not receive adequate pay increases. While many previously uninsured employees will benefit greatly from new employer-based health insurance, employees already covered by Medicaid may be more directly affected by potentially reduced income. Individuals not covered by an employee-based insurance plan also worry that their employer will choose to move production or services overseas to avoid high insurance premiums, and that smaller companies will now have less incentive to grow beyond 50 employees.
“That’s It, I’m Moving to Canada”
For those who jokingly (or not-so-jokingly) suggest defecting to Canada in response to the PPACA, remember that our northern neighbors have had universal single-payer health care since 1984, much of which is funded through income taxes. And Canada, unlike many other nations, does not have a parallel private health coverage system, although single-payer systems can contract private companies to provide medical services. A 2008 Strategic Counsel poll found that 91% of Canadians preferred their own public health care system over the private for-profit system in place in the US. In the same report, 70% of Canadians rated their public system as working either “well” or “very well.” In contrast, while 51.3% of Americans and 41.5% of Canadians were “very satisfied” with their health care, 44% of Americans but only 17% of Canadians were “very dissatisfied” with “the availability of affordable health care in the nation.” Still, the country-wide Canadian system in some cases seems bogged down by lengthy waiting lists, probably as a result of quality of care differences in each of the 13 Canadian provinces. Waiting lists are currently less of a problem in the US.
Other developed nations also utilize single-payer health care systems or benefit from both public and private insurances and hospitals. While health coverage in the UK is mainly public, about 10% of the population purchases additional private insurance either individually or through employers. Private health insurance in the UK is slightly controversial – it generally doesn’t cover primary care, but reduces the sometimes significant wait times associated with specialty medical procedures, allowing those who can afford it to “jump the lines.”
The Netherlands uses a system of obligatory private health insurance – think a national system like that of Massachusetts. In this case, private insurance companies can only make profits by selling supplemental insurance, and cannot profit from the mandatory portion. While the Dutch system has its issues – a 2010 Dutch Health Care Performance Report found that care quality varied widely based on location – most citizens are consistently more satisfied with their health care than are Americans. In addition, the report found that only 1% of Dutch citizens (and 3% of those with chronic ailments) avoided medical care for financial reasons, and 90% of citizens stated that they almost always or always get the medical help they need.
In 2000, France’s universal health care system, funded by the government, employers, and personal income taxes, was ranked best overall by the World Health Organization. As a percent of GDP, France spends more on health care than other European countries, but still much less than the US. Approximately 70% of a patient’s medical costs are covered by public insurance while most of the remaining 30% is covered by private insurance, often paid for by an employer. Additionally, for patients who suffer from severe medical problems, including cancer or a mental illness, medical treatments are covered 100%. Cancer patients also have access to all chemotherapeutic drugs, including those that are most expensive and experimental.
Many people fear that universal health coverage means reduced medical choices and availability, but this is not so in France. Patients can choose from either public or private (for-profit) hospitals, and have a wide variety of options when it comes to general and specialty health care providers – and, unlike in Canada and the UK, waiting lists for important medical procedures are short or non-existent. 99% of French citizens are covered by public health care, and 92% have supplementary private insurance to help cover additional costs. Private insurance provides reimbursement for many co-pay costs, aspects of vision care, dental prostheses, and certain physician services. Approximately half of the French population with additional private insurance receives it through employers. Supplementary private insurance contracts are typically age-adjusted, but do not depend on health status.
While Americans pay less in taxes than the French, only about 21% of a French citizen’s income goes toward the nation’s healthcare system; additionally, employers pay a little over half that for each employee. Instead of paying for our health care primarily through taxes (although we do pay for Medicare, Medicaid, and CHIP), Americans pay significant amounts out of pocket and on insurance premiums to cover medical expenses. However, it’s important to note that while the French system successfully provides citizens with inexpensive high-quality health care, due to rising medical costs there will likely be some on-going cost cutting in the form of increasing patient fees.
State-Wide Health Coverage in the US
Some states in the US already have state-run health care programs. In 2006, Governor Mitt Romney enacted a mandated health coverage bill in Massachusetts, which also provided free health coverage to residents earning less than 150% of the poverty level. This bill has been amended several times since its inception in order to better control health care industry prices. Under the Massachusetts system, residents who choose not to purchase insurance pay a penalty tax equal to 50% of the state’s lowest available insurance premium. In 2009, less than 3% of Massachusetts residents were uninsured. President Obama’s PPACA was largely inspired by this health care system.
After the successful application for a federal waiver, Vermont recently became the first state to enact a single-payer health care system, Green Mountain Health care. The system will be managed by the state and will set reimbursement rates for health care providers. Vermont’s single-payer system is estimated to be 25% cheaper for patients, businesses, and the state’s government than private health care, and may save $500 million in the first year. Interestingly, although the concept of single-payer coverage in Vermont has been around for more than a decade, not a single House Republican, and only one Republican in the Senate, supported the bill.
Supporters of the Oregon Single Payer Campaign hope that our state moves in the same direction as Vermont. In 2009-2010, 16.8% of all Oregonians were uninsured, up 0.7% from 2008-2009. However, Governor Kitzhaber seems focused primarily on improving the Oregon Health Plan system (which is still in great need of adjustment), even though Multnomah and Lane Counties and the city of Portland each voted overwhelmingly in support of single-payer coverage. Single-payer bills were vetoed twice in two years by Governor Schwarzenegger in California.
What Can Corvallis Do?
To combat health coverage disparities, counties in some states have set up their own health care systems available to eligible residents – usually those who cannot get health coverage through an employer and who have low incomes. The South Country Health Alliance in Minnesota is a county-based health care system that encompasses 12 counties within the state. Formed in 2001, SCHA offers five programs based on individual need, including seniors, children, disabled individuals, and all others. The program has been incredibly helpful in getting residents off of welfare and into jobs without the loss of health coverage. SCHA is funded by “a state tax on Minnesota hospitals and health care providers, federal Medicaid matching funds and enrollee premiums.”
What about single-payer county-based health coverage – could Benton County residents conceivably vote for the creation of a single-payer system? The Census Bureau’s Annual Community Survey shows that at least 12% of Benton County residents remain uninsured – that’s more than 10,300 people in almost 86,000 in 2011. County-wide single-payer health coverage would undoubtedly reduce costs and increase health care accessibility for many residents, but would also likely increase personal income or land taxes to some degree. In Vermont, increased taxes due to the state’s new single-payer system are expected to be off-set by significantly reduced premiums and low out-of-pocket costs. A tax on health care providers could also aid funding. While local providers may balk at such a tax, the overall savings may be large considering that virtually no county resident would be uninsured. Additionally, physician reimbursement would likely be improved over currently available federal programs.
A county-wide coverage system would make health care more available to all county residents, and neighboring counties could take part in the system together. In fact, an expanded, multi-county system may help to avoid some of the potential issues with a Benton County-only system. Some of these problems may include low-income families and already ill patients moving into a particular county in order to benefit immediately from the health care system. Additionally, some businesses may be tempted to stop providing coverage to employees, although such a coverage system would also likely attract many businesses.
Although it would require a substantial effort to construct such a program, having a county-wide health care system would be of obvious benefit to Benton County residents. How many Corvallis residents, some with children, work two or three jobs, yet are uninsured? Although some of their hospital fees are subsidized (by tax payers), if they become ill or break a bone they still incur extensive medical bills – which they then have trouble paying due to already limited incomes. Even with insurance, the current cost of an emergency room visit can quickly spiral into the hundreds or thousands of dollars. And giving birth without insurance in the US can cost a new family upwards of $10,000.
French citizens pay almost nothing (think around 18 Euros, or $26) to birth a child in the hospital, after which mothers receive months of paid leave and a new-mother stipend. And based on estimates by Harvard economist William Hsiao, Vermont For Single Payer’s John Franco suggests that Vermont’s single-payer system will cost “less than what we are already spending in private insurance premiums. A good benchmark is about 1/3 of our total health spending in any given year.” Sounds a whole lot healthier, right? Governor Kitzhaber is not yet willing to lead the state of Oregon in Vermont’s footsteps; but Benton County residents can take steps of their own by supporting and promoting a county-wide single-payer health care system for the benefit of all.
By Genevieve Weber
– Healcare.gov – Explanation of PPACA
– CDC 2010 National Health Survey results
– The Urban Institute’s “The Individual Mandate in Perspective”
– American Medical Association’s American Medical Association’s 2007-2008 Physician Practice Information (PPI) – Review of medical malpractice case statistics
– Medicare prescription drug changes
– 2010 Dutch Health Care Performance Report
– Oregon Single Payer Campaign
– Vermont For Single Payer – Single Payer 101