Reference Materials

Oregon House Bill 3510, statewide single payer health care; testimony for the Oregon House Health Care Committee by Dr. Samuel Metz

Author: Samuel Metz

Date: 11/03/2011

My name is Samuel Metz. I am an anesthesiologist living in Portland. I work in hospitals and surgery centers in Springfield, Corvallis, Oregon City, Beaverton, Gresham, Tigard, and Portland.

I favor single payer health financing for Oregon because it will achieve these goals:

1. It will provide comprehensive health care to every Oregonian for no more than we now spend now in premiums, deductibles, co-pays, and medications.
2. It will reduce the budget deficits of our state government.
3. It will eliminate labor disputes over health care benefits.
4. It will generate 35,000 new jobs.
5. It will provide all Oregonians with comprehensive health care regardless of health, wealth, or employment.
   

Here is how single payer financing can achieve these goals. [References for statements below are found in the endnotes.]

Our reliance on private health insurance companies to finance health care is responsible for American health care being the most expensive in the world with the worst public health among industrialized nations.

Although many believe Americans have the best health care in the world, this cannot be corroborated. Data from the Organization for Economic Cooperation and Development ^[1], the Central Intelligence Agency ^[2], the Commonwealth Fund ^[3], the World Health Organization ^[4], and independent consultants ^[5] unanimously conclude Americans spend twice as much on health care as the average citizen in other industrialized countries and that our public health is at the bottom.

When corrected for obesity, tobacco, homicides, accidents, and race, US life expectancy remains among the lowest of industrialized nations ^[6].

Additionally, Americans are uniquely vulnerable to losing their lives or homes if they get sick. Most American bankruptcies are precipitated by medical crises in families who had health insurance at the time the illness began ^[7]. One study estimates 44,000 Americans lost their lives last year to preventable medical conditions because they lacked money for health care ^[8]. These calamities are unheard of in other industrialized countries.

Other countries achieve better health care results at lower cost by following these rules ^[9-13]:

1. All citizens are in a single pool with the same comprehensive benefits. No one is denied health care because they are sick, poor, or unemployed. There is no fragmentation of the population into the healthy and unhealthy subpopulations.

2. Primary care is emphasized. Multiple studies demonstrate financial barriers to primary care increase total health care costs and reduce public health ^[14-18].

3. Health care financing is provided by not-for-profit agencies. Profit can be made providing health care, but not by financing health care.

Single payer financing applies all these attributes and uses a single not-for-profit agency rather than multiple.

Single payer financing is not experimental. It is used in at least 16 industrialized countries ^[19], all of whom provide health care to their citizens at lower cost with better results than the US. Approximately 80 million Americans already get health care from single payer institutions, some public (Tricare, Indian Health Service, VA, Medicaid, Medicare, and SCHIP) and some private (Taft-Hartley multiemployer health plans). These 80 million Americans achieve better outcomes at lower cost with sicker patients and higher patient satisfaction than those with private health insurance ^[20-26].

In every system in which it is used, both in the US and around the world, single payer financing provides cost-effective health care to all participants for less money and with better results than we have now.

While the US does not yet have a national or state single payer program, 24 studies of single payer financing in the US, eight of them national and 16 of them state, confirm the administrative savings from single payer exceed the added costs of providing comprehensive care for every citizen ^[27].

No national or state study demonstrates single payer health care will cost more than it saves.

How can single payer financing provide more health care for more citizens at less cost than we do now?

By eliminating the administrative inefficiencies and associated costs of private health insurance. Projections from national estimates of $350 billion lost to administration indicate these losses in Oregon are $4 billion per year ^[28-32]. As the $350 billion is lost from the $870 billion given annually to private insurance companies in premiums, this represents an incredible 40% loss to overhead.

Half this loss is the direct overhead cost of the private health insurance industry. The other half is the cost hospitals and providers expend not on health care, but on collecting their owed fees from insurance companies ^[33-34]. Remember this industry rejects 30% of all first claims, not because they are bad people but because rejecting claims is good business ^[35].

Based on national estimates, the $4 billion saved is more than enough to provide comprehensive, no deductible, no co-pay, all medications included health care to every Oregonian, young and old ^[36,37].

How do we redirect money currently spent on premiums, deductibles, and co-pays to the single payer agency?

HB 3510 leaves this task to the legislature. However, we must keep in mind how much money businesses and families in Oregon already spend on health care.

On average, Oregon businesses providing health care benefits spend 14% of payroll on these benefits - 12% on premiums and 2% for personnel to administer the benefits ^[38]. Small businesses pay a greater percentage and our state and local governments pay even more, 19%. Single payer health care requires far less.

The average Oregon family pays 7% of its income on premiums, deductibles, and co-pays. This does not include medications ^[39]. Poorer Oregon families pay a greater percentage. Single payer financing costs far less.

No matter how the legislature funds single payer, it will cost citizens and our government less than it costs now ^{[37, 40]}.

How will single payer health care affect Oregon jobs?

We do not have a study in Oregon, but extrapolating from national and state studies we can expect 35,000 new jobs in Oregon, mostly in health care ^[41]. If as many as 20% of the 23,000 workers in Oregon's insurance industry need retraining because of job loss, these 5,000 workers will be retraining for seven times as many new jobs. And they and their families will have health care while they retrain.

How will single payer health care affect Oregon businesses?

Single payer financing will eliminate labor-management disputes over health care benefits ^[42]. Single payer financing will encourage entrepreneurs to start new businesses without concern about health care benefits [43]. Administrative costs for businesses that previously provided health care benefits will go down. In short, the business environment in Oregon will improve.

How will single payer health affect Oregon families?

Workers and their families will have secure access to health care whether they are part-time, full-time, retired, disabled, or unemployed. Health care access will be intact no matter how sick or old any family member becomes. Families can chose their physicians and keep them no matter what their employment status or who employs them.

Single payer health care will nearly eliminate medical bankruptcies in Oregon. Last year 34,000 Oregonians lived through 12,000 medically precipitated bankruptcies; most had some form of health insurance at the time the illness began ^[43a].

The cost of living in Oregon will decrease as the cost of medical liability portions of automobile, homeowners, business, liability, and medical malpractice insurance decreases ^[44].

How will single payer health care affect state and local governments?

By reducing state and local government payroll expenditures for health care, budgets will be reduced while preserving access to comprehensive health care for all government employees ^[45]. Furthermore, projections from a national study suggest the thousands of new jobs will generate $500 million in new tax revenue ^[46].

All the economic effects of HB 3510 and single payer financing of health care suggest a reduction is state spending and an increase in tax revenue.

In summary…

By establishing a single payer health care system in Oregon, HB 3510 will reduce state government deficits, create jobs, improve the business environment, provide health care for everyone, and cost no more than we spend now.

Endnotes:

^[1] Organization for Economic Cooperation and Development (OECD) policy brief. Private health insurance in OECD countries. September 2004. www.oecd.org/health/healthataglance.

^[2] CIA. The World Factbook. www.cia.gov/library/publications/the-world-factbook.

^[3] Schoen C, et al. US health system performance: A national scorecard. Health Affairs Web exclusive, November/December 2006; 25(6): w457-w475), The Commonwealth Fund www.globalhealthfacts.org/bytopic.jsp

^[4] Selected indicators of health expenditure ratios, 1999-2003.World Health Report 2006. www.who.int/whr/2006/annex/06_annex2_en.pdf.

^[5] Nolte E, et al. Measuring the health of nations: updating an earlier analysis. Health Affairs, Jan/Feb 2008, p. 71

^[6] Peter A. et al. What changes in survival rates tell us about US health care. Health Affairs 2010;29(11):1-9). content.healthaffairs.org/cgi/content/abstract/hlthaff.2010.0073v1

^[7] Himmelstein DU, et al. Medical bankruptcy in the United States, 2007: Results of a national study. American Journal of Medicine, 2009;122:741-6, quoted in Los Angeles Times, June 4, 2009

^[8] Wilper AP, et al. Health insurance and mortality in US adults. American Journal of Public Health, December 2009; Vol. 99, No, 12.

^[9] Reid, TR. The Healing of America. Penguin Press, New York, 2009

^[10] Mark Pearson, Head Health Division, OECD, Written statement to Senate Special Committee on Aging, 30 September 2009. Disparities in health expenditures across OECD countries: Why does the United States spend so much more than other countries? www.oecdwash.org/PDFILES/Pearson_Testimony_30Sept2009.pdf.

^[11] Preker AS. The introduction of universal access to health care in the OECD: lessons for developing countries. In: Achieving Universal Coverage of Health Care. Nitagyarumphong ES, Mills A (editors). Ministry of Public Health, Bangkok, 1998, p.103.

^[12] Organisation for Economic Co-operation and Development (link no longer valid)

^[13] Achieving a high-performance health care system with universal access: What the United States can learn from other countries. American College of Physicians. Annals of Internal Medicine January 1, 2008 vol. 148 no. 1 55-75. www.annals.org/content/148/1/55.full

[^14] Davis K. Will consumer directed health care improve system performance? Commonwealth Fund, Washington DC, August 2004,  (link no longer valid)

^[15] Woolhandler S, Himmelstein DU. Consumer directed health care: Except for the healthy and wealthy, it's unwise. Journal of General Internal Medicine 2007;22:881, www.ncbi.nlm.nih.gov/pmc/articles/PMC2071952/.

^[16] Goldman DP, et al. Prescription drug cost sharing: Associations with medication and medical utilization and spending and health. JAMA 2007;298:61-88, jama.ama-assn.org/content/298/1/61.abstract.

^[17a] Newhouse JP. Consumer-directed health plans and the RAND health insurance experiment. Health Affairs 2004;23(6):107-13.

^[17b] Soumerai SB et al. Effects of Medicaid drug payment limits on admission to hospitals and nursing homes. New England Journal of Medicine 2004;325:1072-7. www.ncbi.nlm.nih.gov/pubmed/1891009

^[18] Trivedi AN, et al. Increased ambulatory care copayments and hospitalizations among the elderly. N Engl J Med 2010;362:320-8. content.nejm.org/cgi/reprint/362/4/320.pdf

^[19] TrueCostBlog: List of Countries with Universal Healthcare

^[20] Jha AK, et al. Effect of the transformation of the Veterans Affairs health care system on the quality of care. New England Journal of Medicine 2003;348:2218-27 content.nejm.org/cgi/content/abstract/348/22/2218

^[21] Kerr E, et al. A comparison of diabetes care quality in the Veterans health care system and commercial managed care. Annals of Internal Medicine 2004;141(4):272-81 [Link no longer valid]

^[22] Asch SM, et al. Comparison of quality of care for patients Veterans Health Administration and patients in a national sample. Annals of Internal Medicine 2004;141(12):938-45. www.annals.org/content/141/12/938.abstract

^[23] Selim AJ, et al. Risk-adjusted mortality as an indicator of outcomes: comparison of the Medicare Advantage Program with the Veterans Health Administration. Medical Care 2006;44(4);359-65. www.ncbi.nlm.nih.gov/pubmed/16565637

^[24a] The State of Health Care Quality 2004. Washington DC: National Committee for Quality Assurance.  (link no longer valid)

^[24b] Perlin JB. The Veterans Health Administration: quality, value, accountability, and information as transforming strategies for patient-centered care. American Journal of Managed Care, November 2004, Table 2. www.ajmc.com/Article.cfm?ID=2767.

^[25] ACSI Scores for the U. S. Federal Government, American Customer Satisfaction Index I, December 15, 2005 www.theasci.org/government/govt-05.html

^[26] Asch SM, et al. Who is at greatest risk for receiving poor-quality health care? NEJM 2006;354:1147-56. content.nejm.org/cgi/citmgr?gca+nejn;354/11/1147

^[27] www.pnhp.org/print/facts/single-payer-system-cost

^[28] pnhp.org/facts/single-payer-resources

^[29] Woolhandler S, Himmelstein DU. Costs of health care administration in the United States and Canada, NEJM 2003;349:768-772. www.nejm.org/doi/full/10.1056/NEJMsa022033

^[30] Kahn JG et al. The cost of health insurance administration in California: Estimate for insurers, physicians, and hospitals. Health Affairs 2005;24:6. content.healthaffairs.org/content/24/6/1629.full

^[31] JD Kleinke. Oxymorons: The myths of the US health care system. Jossey-Bass, San Francisco, 2001, p.192

^[32] Health insurance for the 21st Century - Upgrading To National Health Insurance (Medicare 2.0). The Case For Eliminating Private Health Insurance. PNHP website, July 17, 2009m by L. Rodberg & Don McCanne, www.pnhp.org/news/2007/july/_health_insurance_fo.php

^[33] Casalino LP, et al. What does it cost physician practices to interact with health insurance plans? Health Affairs Web Exclusive, May 14, 2009, w533-w543

^[34] Woolhandler S, Himmelstein DU. Costs of health care administration in the United States and Canada, NEJM 2003;349:768-772 www.nejm.org/doi/full/10.1056/NEJMsa022033

^[35a] Vanessa Furhmans. Fights over health claims. Wall Street Journal, February 14, 2007, p.A1. https://www.ppocheck.com/fightsOverHealthClaims.htm

^[35b] National Nurses United: California Insurers Deny 26% of All Claims, State's 7 Largest Rejected 67.5 Million Since '02

^[36] pnhp.org/facts/single-payer-resources

^[37] Institute for Health and Socio-Economic Policy. Single Payer/Medicare for All: An economic stimulus plan for the nation. 2009. from the California Nurses Association.  (link no longer valid)

^[38] Private study by Christina N. Daw, PhD. See appendix A.

[^39] Private study by Christina N. Daw, PhD. See appendix A.

^[40] Private study by Christina N. Daw, PhD. See appendix B.

^[41] Institute for Health and Socio-Economic Policy. Single Payer/Medicare for All: An economic stimulus plan for the nation. 2009. from the California Nurses Association.  (link no longer valid)

^[42] www.signonsandiego.com/uniontrib/20070626/news_lz1e26jacobs.html

^[43] Locke, G. Fixing health care is good for business - How many aspiring entrepreneurs are stuck in dead-end jobs because of health concerns? Wall Street Journal Opinion, August 28, 2009
http://online.wsj.com/search/search_center.html?keywords=gary+locke&articlesearchquery_parser=bylineand

^[43a] Multiplied by the proportion of medical bankruptcies (62.1%) and average bankrupt family size (2.79 members) from "Medical bankruptcy in the United States, 2007: Results of a national study," Himmelstein DU, et al. American Journal of Medicine, June 4, 2009.

^[44] Paying More, Getting Less - How much is the sick U.S. health care system costing you? By Joel A. Harrison from the May/June 2008 issue of Dollars & Sense magazine. dollarsandsense.org/archives/2008/0508harrison.html

^[45] www.qualityinfo.org/olmisj/CES?areacode=41010000001&action=rs54&submit=Continue

^[46] Institute for Health and Socio-Economic Policy. Single Payer/Medicare for All: An economic stimulus plan for the nation. 2009. from the California Nurses Association. www.calnurses.org/research/pdfs/ihsp_sp_economic_study_2009.pdf