Single-Payer & Universal Coverage Health Care Health Systems - - PowerPoint PPT Presentation

John Bauer Washington Universal Health Care Work Group

September 20, 2019

Single-Payer & Universal Coverage Health Systems

WASHINGTON STATE INSTITUTE FOR PUBLIC POLICY

STUDY ASSIGNMENT

September 20, 2019 www.wsipp.wa.gov

The 2018 Legislature directed the Washington state institute for public policy to conduct a study of single payer and universal coverage health care systems. The study shall: a) Summarize the parameters used to define universal coverage, single payer, and

• ther innovative systems;

b) Compare the characteristics of up to ten universal or single payer models available in the United States or elsewhere; and c) Summarize any available research literature that examines the effect of these models

• n outcomes such as overall cost, quality of care, health outcomes, or the

uninsured. Engrossed Substitute Senate Bill 6032, Section 606(15), Chapter 299, Laws of 2018.

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INTERIM AND FINAL REPORT

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Interim Report

✓ Universal coverage ✓ Single-payer health care proposals ✓ Potential effects of single-payer on costs ✓ Challenges to implementation

Final Report

✓ Single-payer and multi-payer universal coverage systems in other countries ✓ Factors driving higher costs in the US ✓ Mechanisms to control costs in other countries ✓ Comparisons of health care access, outcomes and quality of care

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UNIVERSAL COVERAGE

All residents have access to necessary health services without putting themselves through substantial financial hardship.

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Comparison countries: Australia Canada Denmark France Germany Japan Netherlands Sweden Switzerland United Kingdom Among similar countries, the United States alone does not provide universal health coverage. Roughly 400,000 Washington residents (6%) remain uninsured. To promote universal coverage, some states have considered: ✓ Insurance mandates, ✓ Extending Medicaid and Marketplace coverage to undocumented immigrants, ✓ State-funded subsidies to lower the cost of coverage in the individual market, and ✓ A public plan for individuals and small groups.

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SINGLE-PAYER HEALTH CARE

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✓ Individuals with Medicaid, Medicare, employer-sponsored insurance, individual coverage, and those without insurance would automatically be enrolled in a single public plan. ✓ Private insurance would be eliminated or confined to supplemental coverage. ✓ Cost sharing would be reduced or eliminated across the board and enrollee premiums would be eliminated. ✓ There would be a single set of provider payment rates.

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POTENTIAL EFFECTS OF SINGLE-PAYER ON COSTS

Single-payer would increase health expenditures by:

✓ Extending coverage to the previously uninsured, ✓ Reducing or eliminating cost-sharing among enrollees, and ✓ Providing more comprehensive benefits (e.g., dental and vision).

Single-payer system would likely reduce health expenditures through:

✓ Reduced insurer and provider administrative costs, ✓ Negotiated reductions in pharmaceutical prices and medical provider fees, and ✓ Potential promotion of cost-effective medicine.

There is uncertainty over the size and timing of these effects.

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• 16%
• 14%
• 11%
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• 9%
• 7%
• 5%
• 3%
• 2%
• 2%
• 1%

0% 15%

• 20%
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0% 5% 10% 15% 20%

Friedman (2015)—NY Health Act Friedman (2013, 2015)—Medicare for All Friedman (2018)—Single Payer Proposal for Washington State Pollin et al. (2017)—Healthy California Act Shells & Cole (2012)—Minnesota Single Payer Proposal Hsiao et al. (2011)—Vermont Single Payer Proposal Liu (2016)—American Health Security Act Liu et al. (2018)—NY Health Act (2031) Blahous (2018)—Medicare for All U.Mass & Wakely Consulting (2013)—VT Single Payer Proposal White et al. (2018)—Oregon Single Payer Proposal CA Legislative Analysis (2017,2018)—Healthy California Act Holahan et al. (2016)—Medicare for All

Percentage change in health system costs

Single-Payer Effects on Health Care Costs: Percentage Change in Costs

POTENTIAL EFFECTS OF SINGLE-PAYER ON COSTS

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SINGLE-PAYER FINANCING

Roughly $55 billion was spent on medical care in 2018 for Washington residents. About half of the spending is covered by Medicaid and Medicare. Most of the remainder is financed by employer-sponsored insurance. Single-payer funding proposals assume that federal and state health care spending would be pooled to help finance state single-payer plans. Employer and employee premiums, individual premiums, and cost-sharing payments would be replaced by additional tax revenue. Friedman (2018) estimates that $28 billion in additional revenues would be needed to implement single-payer in Washington, and this is after factoring in estimated cost savings which reduce overall system spending by 11%.

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SINGLE-PAYER PROS AND CONS

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Advantages

• More equal and universal access to

care;

• Centralized administration; and
• Potential cost savings.

Disadvantages

• Public concerns—higher taxes,

government control, excessive rationing of care;

• Possible underfunding;
• Disruption to employment; and
• Implementation challenges.

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IMPLEMENTATION CHALLENGES

Single-payer funding proposals rely on pooling federal health care spending to help pay for state plans. Gaining federal approval to do so would be a major challenge. State single-payer initiatives are limited by the federal law regulating employee benefits, the Employee Retirement Income Security Act of 1974 (ERISA).

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Washington Residents by Source of Healthcare Coverage (in millions)

1.8 1.1 3.8 0.4 0.3

Uninsured 6% 15% Medicaid 24% Medicare Employer 51% Individual 4% September 20, 2019 Slide 9 of 27

HEALTH CARE SYSTEMS IN COMPARISON COUNTRIES

Single-Payer Countries

✓ Some have national health services—many hospitals and clinics are government-owned and many physicians are government employees (e.g., United Kingdom, Scandinavian countries) ✓ Others have national health insurance systems—providers are typically private and are reimbursed through a tax-financed government plan (e.g., Canada, Australia)

Multi-Payer Countries

✓ Mandatory health insurance systems (e.g., Germany, France, the Netherlands, Switzerland) ✓ Coverage administered through multiple, mostly nonprofit, insurers ✓ People are free to choose among insurers and can change plans – but, required to have coverage ✓ Insurers are required to accept all applicants ✓ Financing varies across countries (payroll taxes, premiums, out-of-pocket spending)

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GOVERNMENT ROLES IN HEALTH CARE MARKETS

How governments intervene in health care markets varies across these countries. However, in both the single-payer and multi-payer countries we reviewed governments play active roles in health care markets. Governments: ✓ Regulate insurers (control margins) ✓ Subsidize coverage for residents with low incomes ✓ Determine standardized benefit packages ✓ Control (to varying degrees) prices of medical services and pharmaceuticals

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HEALTH CARE COST COMPARISONS

High-income comparison countries—Japan, Germany, the United Kingdom (UK), France, Canada, Australia, the Netherlands, Sweden, Switzerland, and Denmark. ✓ US spends about 18% of GDP on health care; the other countries 11% ✓ US spends $9,400 per person on health care; the other countries, on average, $5,000

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$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 GDP per capita (US$)

Health Expenditures Per Capita (2016)

US CHE NLD CDN DE

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MAJOR FACTORS DRIVING COST DIFFERENCES

Higher costs in the US are largely due to:

✓ Higher prices of medical services and goods (with pharmaceutical costs playing an especially important role) ✓ Higher utilization of high-margin procedures and advanced imaging (CTs, MRIs) ✓ Higher administrative costs, and in the long-term ✓ More extensive diffusion of newer medical technologies and drugs with modest or uncertain effectiveness

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PHARMACEUTICALS

US spends $1,440 per person per year on pharmaceuticals versus an average of $670 for the comparison countries. The comparison countries have achieved lower spending through: ✓ Centralized price negotiations with pharmaceutical companies ✓ National drug formularies (i.e. a list of drugs covered by insurance) ✓ Cost-effectiveness research to set price ceilings for new and existing drugs ✓ Use of reference pricing for pharmaceuticals Rx spending could account for roughly 21% of the total health expenditure differential.

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PROVIDER FEES AND BUDGETS

Fee setting and cost control measures vary across countries. ✓ Some governments set fees for physician services and hospitals (through negotiations) ✓ Some set global budgets to control health expenditures ✓ Some broker collective agreements with insurers and providers on cost growth targets ✓ Negotiations are often conducted between insurer and provider associations at the national or regional level (rather than individual insurers and providers)

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HIGH-MARGIN PROCEDURES

US has relatively high utilization of some costly procedures and tests—knee replacements, hysterectomies, cesarean deliveries, cataract surgery, coronary artery bypass, coronary angioplasty, and advanced imaging (MRIs and CTs). Emanuel (2018)—pricing and volume of 25 high-margin procedures could explain approximately 20% of the difference in costs between the US and other high-income countries. Advanced imaging could account for roughly 7%.

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ADMINISTRATIVE COSTS

Insurer Administrative Costs (% of health expenditures)

✓ Single-payer countries (UK, Canada, Sweden) – 2% to 3% ✓ Multi-payer countries (Germany, Netherlands, Switzerland) – 4% to 5% ✓ US – 8% Insurer administrative costs could explain about 15% of the expenditure differential. (This does not take into account provider administrative costs.)

Provider Administrative Costs

✓ Physicians and hospital administrative costs related to billing and insurance-related activities contribute to the higher health care costs in the US.

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ADMINISTRATIVE COSTS

Administrative Burden Reported by Primary Care Physicians across Countries

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0% 10% 20% 30% 40% 50% 60% 70% US UK Canada Sweden Germany Netherlands Switzerland

% reporting time spent on administrative issues related to insurance or claims as a major problem % reporting a lot of time on paperwork or disputes related to medical bills % reporting time spent on administrative issues related to reporting clinical or quality data to government is a major problem September 20, 2019 Slide 18 of 27

TECHNOLOGICAL INNOVATION

Economists attribute much of the long-term growth in health care costs to technological change (new devices, procedures, drugs) Higher cost escalation in the US attributed to more rapid, and less discriminating, diffusion of new medical technologies. Washington State ✓ HCA’s Health Technology Assessment program ✓ BREE Collaborative ✓ Washington Pharmacy and Therapeutics Committee

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0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Health Care Expenditures as a Share of GDP

Canada Germany Netherlands Switzerland United States

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PHYSICIAN COMPENSATION

✓ Physicians and nurses earn substantially more on average in the US ✓ Variation in physician remuneration accounts for roughly 4% of the difference in overall health care spending between the US and these other countries.

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$218,173 $316,000 $74,160 $133,726 $182,657 $51,795 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 Generalist physicians Specialist physicians Nurses

Physician and Nurse Remuneration in High-Income Countries (US$) US Mean September 20, 2019 Slide 20 of 27

ACCESS TO CARE

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0% 5% 10% 15% 20% 25% 30% 35%

Wait Times for Specialist Care and Elective Surgery % Waited two or more months for specialist appointment Waited four or more months for elective surgery

0% 10% 20% 30% 40% US Switzerland France Canada Australia Netherlands Sweden Germany UK

Percent reporting access barrier Access Barriers Because of Cost in Past Year %

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FINANCIAL BARRIERS

✓ Higher financial barriers in US due to out-of-pocket costs and uninsured ✓ Out-Of-Pocket spending is a component of health care financing in other countries ✓ Other countries cap out-of-pocket payments and reduce cost-sharing requirements for low-income persons, children, people with chronic diseases, and older adults

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$0 $500 $1,000 $1,500 $2,000 $2,500 Switzerland US Australia Sweden Canada Germany UK Japan Netherlands France

Average Out-Of-Pocket Health Spending Per Capita (US$)

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HEALTH OUTCOMES

The US performs poorly on measures of population health often cited in rankings. However, the usefulness of these and other crude measures of health is questionable.

77 78 79 80 81 82 Comparison Mean United States Life Expectancy at Birth

5 10 15 20 25 30

Maternal mortality (deaths per 100,000 live births) Infant mortality (deaths per 1,000 live births) Low birthweight (% of live births) Washington United States Comparison Mean Infant and Maternal Health

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QUALITY OF CARE

The US performs well on some measures of the quality of its care and poorly on others.

20 40 60 80 100 120 140 160 180 200

Diabetes Asthma Hypertension United States Comparison country average Hospitalizations per 100,000

1 2 3 4 5 6 7 8 9 10

Stroke mortality Heart attack mortality Acute Care Mortality Avoidable Hospitalizations Deaths per 100 patients

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September 20, 2019 www.wsipp.wa.gov

QUALITY OF CARE

On a often cited summary measure—avoidable mortality—the US ranks below high- income countries with universal health care.

84 86 88 90 92 94 96 98

HAQ Index Score (2016) Country [Rank] Health Access and Quality Index (Avoidable Mortality)

94 HAQ index measures: ✓ Vaccine- preventable diseases, ✓ Infectious diseases, ✓ Non-communicable diseases (e.g., cancers, diabetes), ✓ Maternal and child health, and ✓ Gastrointestinal conditions (e.g., appendicitis) 88.7

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CONCLUSION

Assignment – summarize any available research literature that examines the effect of these models on outcomes such as overall cost, quality of care, health outcomes, or the uninsured. ✓ Higher costs in the US ✓ Quality of care and health outcome comparisons are mixed ✓ Universal coverage achieved in single-payer and other multi-payer countries ✓ Wait times relatively long in single-payer countries ✓ Financial barriers to access greater in US It is not clear to what extent other countries’ single-payer systems and universal coverage policies, governmental controls, and taxation systems are translatable to the US.

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THANK YOU

Questions?

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