Thread: Study Shows National Health Insurance Could Save $286 Billion

It's a startling thought that we could save more than a quarter of a trillion dollars nationwide and provide better health care for everyone by eliminating the U.S. health insurance industry. That's among the findings of a study by researchers at Harvard Medical School and Public Citizen to be published in this Friday’s International Journal of Health Services.

Excerpted from “What premiums pay for” by David Lazarus, “LAZARUS AT LARGE”, San Francisco Chronicle, Friday, January 16, 2004
The United States squanders more money every year on health care bureaucracy than it would cost to provide medical coverage for the 43 million Americans now lacking insurance.

That's the finding of two respected Harvard Medical School researchers, David Himmelstein and Steffie Woolhandler, in a study appearing this week in the International Journal of Health Services.

They determined that of $1.6 trillion in total health care spending last year, at least $399 billion was eaten up by administrative costs such as clerical work in hospitals and processing a vast array of insurance forms.

But if a national health care plan like Canada's were implemented in this country, the researchers found, administrative overhead would be slashed by about $286 billion.

This amount, in turn, would be sufficient to not only provide health coverage for every uninsured American nationwide but also allow millions of underinsured people to improve their quality of care.

Himmelstein, who is also a physician, said in an interview that 10 percent of revenue at his Cambridge practice now goes to an outside billing firm that handles much of his insurance work.

"That amount could be used instead to care for more patients," he observed. "It could be used to hire additional people and fund a huge expansion of care."

Similarly, Himmelstein estimated that at least 15 percent of his time every day is spent dealing with paperwork.

"That's 15 percent of my time that I'd much rather spend on patients or learning more about medicine," he said.

Private health insurers, who would be decimated by taxpayer-funded universal coverage, oppose creation of a Canadian-style system in the United States. Instead, they prefer adjusting the existing system to expand the number of people covered.

But Himmelstein and Woolhandler argue that the existing system is grossly inefficient and needs to be completely overhauled. The findings of their research may be speculative, but they say it points the way toward legitimate cost reductions.

In California, they found, nearly $163 billion was spent last year on health care. Of that total, $45 billion, or about 28 percent, went to administrative costs.

With Canadian-style universal coverage, the researchers concluded, Californians would save almost $34 billion annually on administrative overhead. This would provide more than $5,000 for each of the state's nearly 7 million uninsured.

"As it stands," Himmelstein said, "you could insure all uninsured people for about $1,500 per person. The administrative savings would thus leave plenty of money to upgrade coverage for others."

... Experts say a U.S. universal health care system probably would require strong regulatory oversight to ensure cost controls and quality (and such oversight likely would cut into at least some of the projected savings).

Government authorities might also need more say over distribution of medical resources. Just as few communities would want or need two fire stations within a block of each other, regulators would help decide where hospitals are built to avoid wasteful duplication of expensive technologies.

"Health care shares many of the same characteristics of fire departments and police departments," Himmelstein said. "Hospitals should be treated the same way."

Right diagnosis, wrong cure. Eliminate health insurance and leave it at that, don't replace it with another form of insurance.

Originally Posted by adaher

Right diagnosis, wrong cure. Eliminate health insurance and leave it at that, don't replace it with another form of insurance.

What would happen? Who would pay for what and how?

Helene

Consumers would pay directly, just like they do for any other product. Third party payment always leads to higher costs.

Do you think the nursing homes would boot the 95% of patients that can't afford to stay? Do you think the hospitals would empty the beds? Would the doctors stop seeing patients?

No. Prices would come down to market values. Ever wonder why it costs thousands to fix a broken leg, but only a fraction of that price to fix a pet's broken leg? Because most vet services are paid in cash. Why are abortions so cheap? Becuase most abortions are paid for in cash. Why are dental services so cheap? Why are glasses so cheap?

Notice also how in the traditional medical industry, no one lists their prices, there are never any special offers. But in dentistry, there are always offers for free cleanings, for glasses there are always "Free frames! Free examination!" signs. Prices are clearly listed. You can shop around. It's still that way for OTC drugs. It used to be that way for the entire medical industry, but since few people pay cash anymore there is no incentive for anyone to compete on price, offer deals, or do anything else to attract customers.

Originally Posted by adaher

Consumers would pay directly, just like they do for any other product. Third party payment always leads to higher costs.

Do you think the nursing homes would boot the 95% of patients that can't afford to stay? Do you think the hospitals would empty the beds? Would the doctors stop seeing patients?

No. Prices would come down to market values. Ever wonder why it costs thousands to fix a broken leg, but only a fraction of that price to fix a pet's broken leg? Because most vet services are paid in cash. Why are abortions so cheap? Becuase most abortions are paid for in cash. Why are dental services so cheap? Why are glasses so cheap?

Notice also how in the traditional medical industry, no one lists their prices, there are never any special offers. But in dentistry, there are always offers for free cleanings, for glasses there are always "Free frames! Free examination!" signs. Prices are clearly listed. You can shop around. It's still that way for OTC drugs. It used to be that way for the entire medical industry, but since few people pay cash anymore there is no incentive for anyone to compete on price, offer deals, or do anything else to attract customers.

That still doesn't help the poor! If they can't afford health insurance they can't afford to pay cash directly for treatment.

That still doesn't help the poor! If they can't afford health insurance they can't afford to pay cash directly for treatment.


Increase welfare spending then. The poor also don't REALLY pay for even their own food if they are on welfare, but they are conscious of the costs because their welfare check and food stamps are finite and they want to get the best deals they can.

I think a better answer for universal health care is universal catastrophic coverage, a concept even conservatives support, although the idea tends to get lost in the overall argument about government and health care. For those people that incure major health costs, the government would pay for that. Such a program would not be that expensive.

Originally Posted by adaher

That still doesn't help the poor! If they can't afford health insurance they can't afford to pay cash directly for treatment.


Increase welfare spending then. The poor also don't REALLY pay for even their own food if they are on welfare, but they are conscious of the costs because their welfare check and food stamps are finite and they want to get the best deals they can.

I think a better answer for universal health care is universal catastrophic coverage, a concept even conservatives support, although the idea tends to get lost in the overall argument about government and health care. For those people that incure major health costs, the government would pay for that. Such a program would not be that expensive.

How will the 'haves' feel about possible tax increases to increase welfare spending for the 'have nots'?
Health is not and shouldn't be a commodity, it is a necessity.

What about doing away with health insurance but increase taxes so there can be free health care for all..
Those who prefer the privilege of private healthcare can still do so and their payments can help fund the hospitals.
With a 2% increase in taxes people would be paying a whole lot less.Healthcare wouldn't be any less successful.

Funny how the Harvard researchers didn't suggest the “let'em eat cake” theory from the start. Oh, that's right, the Harvard researchers actually know something about what they're talking about instead of making it all up.

“(The) influential Institute of Medicine in Washington estimates that 18,000 adults die each year because they don't have insurance.” (source)

However, for those who are interested in a sound national health plan, read on!

Excerpted from “State must lead the way” by David Lazarus, “LAZARUS AT LARGE,” San Francisco Chronicle, Sunday, January 18, 2004
More than 43 million Americans may now be uninsured, but no one expects a national health care system similar to Canada's to be adopted any time soon. The obstacles, not least the fierce opposition of the $300 billion insurance industry, make such an enormous change politically untenable.

If universal coverage is to come to the United States, most experts agree, it will be introduced gradually, state by state. And California is positioning itself to be among the first out of the gate with a workable plan.

A statewide universal health care bill, introduced by Sen. Sheila Kuehl, D-Santa Monica, was approved by the Senate last summer. It will be taken up by the Assembly this year.

No one, not even Kuehl herself, expects such groundbreaking legislation to become law in the near future. But a few years down the road, as California businesses increasingly plead for help in coping with runaway health care costs, the bill's chances could improve significantly.

"The more employers are burdened with providing health care for society, the more they'll be looking at this kind of system," Kuehl predicted.

"Chances are slim the bill will get passed this year. But maybe four years from now, with a five-year transition period -- that's very possible."

Businesses, pension funds and other insurance providers have grappled with annual double-digit increases in insurance premiums for the past four years.

About 70,000 supermarket workers are on strike in Southern California because their employers want to raise health care costs. Nearly 100,000 workers at the telecom giant SBC, to cite just one other example, say they'll walk off the job if medical costs are increased when their contract expires in April. ...

In Canada, a so-called single-payer system has been in place nationally since 1971. Taxpayer funds are allocated in lump-sum payments to hospitals, which have wide discretion as to how resources are used. Any citizen can receive treatment from any doctor at any hospital.

"It took one Canadian province, Saskatchewan, to show it could be done in the 1940s," noted Kevin Grumbach, chairman of UCSF Medical School's Department of Family and Community Medicine and a long-time backer of universal health care. "Then it caught on province by province."

Kuehl's bill, SB921, would create a single-payer system in California. It probably would be funded by a payroll tax that would replace current employer medical contributions and an income tax that would replace employee premiums, co-pays and other out-of-pocket expenses.

Kuehl said she's also exploring having a statewide single-payer insurance system embrace a portion of workers' compensation as well -- an issue of particular interest to California businesses long accustomed to some of the highest workers' comp costs in the nation.

"I read about all the strikes and labor problems, and I grind my teeth," said Dan Hodges, chairman of Health Care for All-California, an advocacy group. "All this could be solved by SB921."

One key issue for the legislation is how a California single-payer system would accommodate the various federal programs, including Medicare and Medicaid, which are a part of the health care landscape. Federal funding comprised about half of nearly $163 billion spent on health care in the state last year.

"There are a number of steps along the way that would have to be solved," Kuehl acknowledged, adding that it remains unknown whether federal authorities would allow California to serve as a conduit for Medicare funds.

In any case, a Canadian-style single-payer system is not the only approach on the table to bring health coverage to the estimated 7 million Californians now lacking insurance.

Bruce Bodaken, chairman and chief executive of Blue Shield of California, advocates rejiggering the current insurance system so that everyone in the state is covered. Among other things, he proposes requiring anyone who can afford health insurance to buy it, and subsidizing those who can't.

"The most practical way to achieve universal coverage is to build on the existing system but make sure everyone's paying their fair share," Bodaken said.

He added that his plan would have a better shot at passage than the single-payer system advocated by Kuehl, which would all but decimate private health insurers. "The political future of single-payer is no slam dunk," Bodaken said.

The problem with the Blue Shield approach is that, while it guarantees insurers more customers, it doesn't address inefficiencies now pushing health care costs higher.

A pair of Harvard Medical School researchers determined last week that $45 billion of the $163 billion spent on health care in California last year was eaten up by administrative expenses.

With a single-payer system in place, the researchers found, California health care spending would be reduced by almost $34 billion -- enough to cover every uninsured person in the state and improve treatment for others.

In 2002, the California Health and Human Services Agency asked the Lewin Group, a prominent health care consulting firm, to evaluate nine different proposals for expanding coverage in the state. The proposals included reforms similar to Bodaken's plan along with establishment of a single-payer system.

The Lewin Group concluded that only a single-payer system would guarantee universal coverage and control future costs, while also reducing health care spending by as much as $7.6 billion per year through economies of scale.

Other states, including Massachusetts and Maine, are exploring single-payer systems, but California is furthest along in terms of legislative activity and financial analysis. An in-depth analysis of Kuehl's SB921 was begun by health care specialists last week as part of preparations for an Assembly vote.

The question at this point is not whether such a system would work in the state (or nationwide, for that matter). The question now is whether the political will can be found to push ahead with fundamental change that would benefit millions of California residents and thousands of businesses.

UCSF's Grumbach says the time will come when taxpayer-backed universal coverage is seen as the only true solution to the state's health care woes. It won't be tomorrow, though, or the day after.

"It could take 10 years," Grumbach said. "But the current system is so bloody awful and so many people are suffering, something eventually has to happen."

Here's some more on the “no health insurance” option being offered by the ignorant and ill informed.

Excerpted from “Care Without Coverage: Too Little, Too Late,” Institute of Medicine, May 2002
In the United States,too many working-age people lack insurance coverage and when they do get necessary medical care, it is too little and too late. One national study found that, over a 17-year follow-up period, adults who lacked health insurance at the outset had a 25 percent greater chance of dying than did those who had private health insurance. ... The health benefits of insurance are strongest when coverage is continuous rather than sporadic. ...

People without health insurance often go without appropriate care. For example, the uninsured more often

• Go without cancer screening tests, delaying diagnosis and leading to pre-mature death;
• Do not receive care recommended for chronic diseases, like timely eye and foot exams to prevent blindness and amputations in persons with diabetes;
• Lack regular access to medications to manage conditions such as hypertension or HIV infection;
• Receive fewer diagnostic and treatment services after a traumatic injury or a heart attack, resulting in an increased risk of death even when in the hospital.

... The quality and length of life are distinctly different for insured and uninsured populations. Even the most acutely ill or seriously injured adults, when uninsured, cannot always obtain needed care. Having health insurance will not just increase access in times of crisis but will also facilitate use of essential health screening services and chronic disease care.

How will the 'haves' feel about possible tax increases to increase welfare spending for the 'have nots'?
Health is not and shouldn't be a commodity, it is a necessity.


Why not? Food, shelter, water, and clothing are. And the taxes to pay for extra welfare would be a fraction of the taxes required to provide universal health care.

What about doing away with health insurance but increase taxes so there can be free health care for all..


Because when prices fall to zero, demand becomes infinite. Then you have a supply problem, which brings long wait times, shortages of equipment and beds, etc.

Why not expand the thinking about health care to other needs? After all, the poor have less of the food and shelter than they should. Because then you'd have a police state.