Universal Single Payer Health Care Coverage: An Economic
Stimulus Plan
18 November 2009
By Stephen Lendman
The Institute for Health & Socio-Economic Policy (IHSP)
is "non-profit policy and research group and is the
exclusive research arm of the California Nurses
Association/National Nurses Organizing Committee,
(focusing on) current political/economic policy
analysis in health care and other Industries....to
enhance, promote and defend the quality of life for
all."
In January, it released a "First-of-Its Kind Study"
titled, "Single Payer/Medicare for All: An Economic
Stimulus Plan for the Nation" to reform the system by
providing universal care, adding productive new jobs,
billions in public and private revenues, billions more
in employee compensation, and added tax revenues. More
on that below.
IHSP calls its study an "econometric," not an
"arithmetical" health care system analysis, covering
both their costs and economic benefits to the nation.
Its methodology drew on:
"widely-used and accessible data bases and econometric
models which are capable of showing how changes in one
economic variable (such as health demand, pricing of
services, or taxation of consumers and employers) will
affect not only the health care sectors directly, but
also their suppliers....their employees and their
households, and the generation of federal, state, and
local taxes."
Elements of its comprehensive coverage include:
-- universal eligibility; everybody in, no one
excluded;
-- everyone under a uniform single standard similar to
Medicare Parts A, B, and D; and
-- all enrollees having "the same health services,
costs, eligibility requirements, and administrative
cost burden.
Indirect Transactions/Activity
These occur when providers buy services or supplies to
deliver care:
-- in America, $2.1 trillion in expenditures generates
an additional $1.37 trillion in indirect transactions;
-- manufacturing with $307.6 billion benefits most;
and
-- in 2006, health care totaled 9.2% of GDP.
Induced Transactions
These are health care worker household consumption
transactions, and the indirect sector spending their
income:
-- they total an estimated $2.3 trillion; and
-- again, manufacturing benefits most with another
$442.8 billion, for an indirect $750.4 billion total.
Total Revenue Generation
IHSP "calculated the economic multiplier to be 2.78,
nearly three times the revenues generated within the
industry proper." Total direct and indirect health
care revenue is $5.856 trillion.
Tax Revenues Generated
-- federal: $538.3 in 2006; and
-- state and local: $826 billion.
Employment
-- 18 million health care workers;
-- another 26 million jobs in other industries for a
45 million total; and
-- nationwide, "health care value added generated
12.1% of employee compensation, and 10.5% of total
employment."
Occupations
Health service industries include 511 occupations, 43%
in management, administration, finance, physical plant
operations, and many other non-health related fields.
Registered nurses number about 2.1 million, about 25%
of health care professionals. Nursing aides,
orderlies, attendants and home health aides comprise
another 25%. Doctors are 3% of the total.
Initial Findings
Medicare for all, including Part D will generate:
-- $317 billion in increased public and private
revenues;
-- 2.6 million new permanent jobs at an average income
of $38,262 annually;
-- $100 billion in worker compensation;
-- $44 billion in new tax revenue - "exclusive of the
funding changes to replace employer insurance
contributions;"
-- Medicare Part B coverage for 2.6 million Medicare
enrollees;
-- Part D coverage for 15 million more;
-- full coverage for the 50 million or more uninsured
and millions more underinsured;
-- elimination of the uninsured's uncompensated
demands on providers;
-- 27.7 million Medicaid recipients will get the same
coverage as others, not the inconsistent kind now
offered;
-- elimination of $134.9 billion in state and local
expenditures and $175.7 billion for the federal
government;
-- for the privately insured, ending problems of
eligibility, exclusions, family coverage, premium
costs, high out-of-pocket ones, and likelihood to be
uninsured if lose employment;
-- for employers, replacing their administrative and
financial burden under a shared universal approach;
-- for taxpayers, a reduction of $56 billion in
unnecessary, unproductive insurance costs; and
-- for the nation, joining the rest of the
industrialized world that provides universal coverage.
Enhanced Medicare for All
-- adding 2.6 million Part A only enrollees and 15
million without Part D will cost about $59 billion,
62% publicly borne;
-- the added expense will generate an additional
$154.7 billion in total economic activity, about one
million new jobs earning $43.2 billion, and new tax
revenues of about $21.2 billion.
Covering the Uninsured
For a net total spending increase (net of the
eliminated costs for the uninsured) of $44 billion "in
2006 values," a $120 billion in economic impact will
be generated, 945,600 new jobs will be created earning
$36.5 billion, and $16.5 billion in taxes will be
raised. In addition, the formerly uninsured will pay a
small premium above their current expense, but will
get greatly enhanced care. Providers will also reduce
losses because of non-payments, and emergency rooms
will function as intended.
Medicaid
The current system is fragmented, inconsistent,
expensive, and fails to provide the full range of
preventive and routine care. Discontinuing it at the
federal and state levels will generate a "total net
direct economic impact" of $16.2 billion dollars
breaking down as follows:
-- total new expenditures of $88.9 billion; and
-- discontinuance of $72.7 billion in costs.
Total economic activity will increase by $43 billion.
About 336,900 new jobs will be created generating
$14.3 billion annually, and tax revenue increases of
$6.3 billion.
Medicare Coverage for the Privately Insured
It will bring 196.1 million new enrollees into the new
program, standardize their coverage, replace the above
enumerated problems, and eliminate an onerous burden
on employers that paid (in 2006) 71% of insurance
premiums, or $510 billion annually. Burdensome
administrative costs will also be eliminated, an
estimated $56 billion.
The net effect will shift an employer obligation to
public funding and not increase national health costs.
It will require more public administrative capacity,
and possibly a new or revised tax structure to replace
the current privately-financed system.
An Overview of the Health Care Industry
Providers include hospitals, physicians and other
health care professionals, nursing care, home health
care, ambulatory health services, laboratories and
testing facilities, and others. They're closely linked
to pharmaceutical, medical equipment, and other
producers and suppliers.
Employer-provided coverage is the largest funding
source. Privately insured households pay deductibles,
or co-pays, and often part of the insurance premium.
Taxpayers are the second largest funding source,
through federal, state, and local health care
programs, including Medicare, Medicaid, and others.
IHSP's report includes a detailed analysis of US
health care in 2006, including the composition of the
industry, its share of the economy, and the full,
direct and indirect, impact that health care
activities have on other economic sectors.
Conclusion
IHSP's study concludes that:
"a comprehensive Medicare based Single Payer system
can make significant contributions to access of
quality care for all US residents and in the process
generate a much needed and very substantial economic
stimulus in the form of jobs, enhanced business and
public revenues and increased wages for the population
at large." All this for a small net $63 billion
increase yielding much more in benefits.
According to Geri Jenkins, co-president of the
National Nurses Organizing Committee/California Nurses
Association (NNOC/CNA):
IHSP's analysis shows "for the first time that a
single-payer system could not only solve our
healthcare crisis, but also substantially contribute
to putting America back to work and assisting the
economic recovery."
The study's lead author and director of the Institute
for Health and Socio-Economic Policy (the NNOC/CNA
research arm), Don DeMoro, added:
"If we were to expand our present Medicare system to
cover all Americans, the economic stimulus alone would
create an immense engine that would help drive our
national economy for decades to come."
All for a tiny fraction of the Wall Street bailouts
that looted the federal Treasury, gravely harmed the
country, and delayed for a future time a far more
serious day of reckoning.
Physicians for a National Health Program (PNHP)
Support for Universal Single-Payer Coverage
PNHP calls the current system "outrageously expensive,
yet inadequate" because of the 50 million or more
uninsured and another 30 million or more underinsured.
It spends more and delivers less through:
"a patchwork system of for-profit payers. Private
insurers necessarily waste health dollars on things
(unrelated to care): overhead, underwriting, billing,
sales and marketing (plus) huge profits and exorbitant
executive pay. Doctors and hospitals must maintain
costly administrative staffs to deal with the
bureaucracy (consuming nearly one-third) of Americans'
health dollars." The potential savings from
single-payer financing is "more than $350 billion per
year....enough to" cover everyone at no more than the
current cost and perhaps less depending on services
provided and if government negotiates lower drug
prices the way other countries do.
Consider the benefits - single-payer will cover "all
medically necessary services, including: doctor,
hospital, preventive, long-term care, mental health,
reproductive health care, dental, vision, prescription
drug and medical supply costs. Patients" will have
free choice of providers, and doctors will "regain
autonomy over patient care," no longer restricted by
insurance company gatekeepers. Overall, health care in
America will achieve a quantum leap improvement
compared to the dysfuntional state it's now in, worse
still if Obamacare passes.
"HR 3962: Affordable Health Care for America Act" -
The Public Betrayal Act to Enrich the Insurance, Drug,
and Large Hospital Chain Cartels
On November 7, by a narrow 51 - 49% majority, the
House passed legislation former CIGNA executive, now
critic, Wendall Potter calls "the Insurance Company
Profit Protection and Enhancement Act." Add the drug
and hospital chain cartels that will profit hugely if
it's enacted.
Voting for it - 219 Democrats and one Republican.
Against it were the remaining Republicans and 39
Democrats.
Among its supporters were cosponsors of "HR 676:
United States National Health Care Act or the Expanded
and Improved Medicare for All Act," including
universal single-payer advocates:
-- Anthony Weiner (D. NY);
-- Danny Davis (D. IL), this writer's representative;
-- Jesse Jackson, Jr. (D.
IL);
-- Barney Frank (D. MA); and
-- Barbara Lee (D. CA).
Dennis Kucinich (D. OH) explained "Why I Voted No,"
saying:
The current "for-profit insurance system....makes
money (by denying) health care." HR 3962 strengthens
the source of the problem. "Clearly, the insurance
companies are the problem, not the solution. They are
driving up the cost of health care." They're the
reason why "31 cents of every health care dollar goes
to administrative costs, not toward providing care.
Even those with insurance are at risk. The single
biggest cause of bankruptcies in the US is health
policies that do not cover you when you get sick."
Instead of fixing the problem, HR 3962 "accelerate(s)
the privatization of health care. (It) inevitably will
lead to even more costs, more subsidies, and higher
profits for insurance companies - a bailout under a
blue cross. (The bill) continues the redistribution of
wealth to Wall Street at the expense of" Americans
getting the kind of health care they deserve and badly
need.
Former president of Physicians for a National Health
Program, Dr. John Geyman, cited HR 3962 saying "No
Bill is Better Than a Bad Bill" in enumerating its
negatives, including:
-- enriching providers "on the backs of patients and
their families;"
-- having "no effective cost containment mechanisms;"
-- a public option available only to about six million
people or 2% of the population, and in 2013 will cost
more than private programs for sicker people because
insurers are unrestricted on what they can charge;
-- health care will be more, not less expensive; and
-- will still leave millions uninsured and millions
more underinsured.
"In sum, this (monster won't) fix the major problems
of cost and affordable access. (It) will add new
layers of bureaucracy and complexity, is not fiscally
responsible, and is not sustainable."
Debate now shifts to the Senate where the best outcome
will be killing Obamacare because "no bill is better
than a bad" one.
The California Nurses Association (NSA) said the
following:
"This Bill Fails to Control Costs." While providing
"limited assistance for some, the inconvenient truth
is (it falls) far short in effective controls on
skyrocketing insurance, pharmaceutical and hospital
costs, (does) little to stop insurance companies from
denying needed medical care recommended by doctors,
and (provides) little relief for Americans with
employer-sponsored insurance worried about health
security for themselves and their families." And the
Senate legislation is even worse.
The National Organization for Women said the "Bill
Obliterates Women's Fundamental Right to Choose" that
became law in the landmark 1973 Roe v. Wade decision,
and is still the law of the land. The Court held that
a woman may abort her pregnancy for any reason, up to
when "the fetus becomes viable."
HR 3962 violates that right. Except in cases of rape,
incest, or if a woman faces death, the Stupak (D. MI)
amendment prohibits using federal money for insurance
covering abortion. It prevents women participating in
insurance exchanges from using their own money to buy
abortion coverage. It denies low-income women access
to it entirely.
According to the Congressional Budget Office (CBO),
it:
-- will cost $1.055 trillion over the next decade,
netting out at $894 billion after revenue
enhancements;
-- mandates coverage and penalizes those without it up
to 2.5% of their income;
-- insurance for individuals earning $44,000 pre-tax
will be $5,300, plus another $2,000 in out-of-pocket
expenses for an annual $7,300 total, or 17% of their
annual income; families earning $102,000 pre-tax will
pay $15,000 in premiums plus another $5,300 in
out-of-pocket costs for a total annual $20,300 cost,
or 20% of their annual income; those earning below
these amounts will be eligible for subsidies, based on
a sliding scale, paid directly to insurers;
-- includes a watered-down public option by setting up
insurance exchanges through which low income
households are subsidized to make coverage more
affordable; the plan is so weak, only an estimated 6
million or fewer will qualify; Physicians for a
National Health Program (PNHP) lists myths and facts
about it below;
-- expands eligibility for Medicaid;
-- lowers the federal deficit by $104 billion by 2019
and even more in the following ten years;
-- "substantially reduce(s) the growth of Medicare's
payment rates for most services" by cutting over $400
billion in costs; the true figure is much higher; more
on that below; and
-- leaves 18 million uninsured by 2019, including
about six million undocumented immigrants; the Senate
Finance Committee's bill leaves 25 million uninsured.
Pre-existing condition exclusions will be prohibited,
but insurers may charge what they wish, so effectively
nothing changes. Endorsing the bill:
-- the drug cartel;
-- the American Medical Association;
-- the US Conference of Catholic Bishops because of
the anti-abortion provision; and
-- the AARP, an insurance/financial broker
masquerading as an advocacy group for anyone aged 50
or older.
The Centers for Medicare & Medicaid Services' (CMS)
Assessment of Medicare Cuts Under HR 3962
On November 13, CMS released estimates of the "costs,
savings, and coverage impacts" of HR 3962, showing
Medicare spending will be cut by a draconian $570.6
billion, well above the CBO figure. Enrollees unable
to cover the difference will be devastated. Millions
will get less care when they most need it. In some
cases, hospitals and nursing homes may deny it
altogether.
Medicare will introduce "permanent annual productivity
adjustments to price updates for institutional
providers" to maximize "efficiency" - costing $282
billion, over half the total cuts. They'll affect
acute care hospitals, nursing facilities, and home
health agencies, and be based on economic productivity
overall, but CMS notes that:
"Except in the case of physician services, we are not
aware of any empirical evidence demonstrating the
medical community's ability to achieve productivity
improvements equal to those of (the) overall economy."
As a result, provider costs will rise faster than
Medicare payment increases. They, in turn, will reduce
care or opt out of the program altogether. Many
providers have done it because of low compensation.
CMS states:
"Providers for whom Medicare constitutes a substantive
portion of their business could find it difficult to
remain profitable and might end their participation in
the program (possibly jeopardizing access to care for
beneficiaries)."
Medicaid eligibility will also be impacted,
threatening access for millions of poor people,
dependent on it as their sole source of care. Although
HR 3962 increases spending by $77.5 billion to cover
the cost of new enrollees, CMS says higher demand may
cause providers:
"to accept more patients who have private insurance
(with relatively attractive payment rates) and fewer
Medicaid" ones because it won't be cost effective to
do it.
Physicians for a National Health Program (PNHP) on
Myths and Facts about a Public Option
Myth: More choice.
Fact check:
Provider and location choices will be limited. Seeking
care outside networks will cost more, and
authorization will still be required.
Myth: Patients may keep their doctors regardless of
employment changes or health.
Fact check:
The employer-based system stays intact. If a new plan
is chosen, only doctors in it may be accessed.
Patients retaining their own will incur higher
out-of-network fees. Insurers may also cherry pick the
healthy and avoid the sick. Patients becoming ill risk
losing employer-based coverage or face higher premiums
to keep it.
Myth: Private insurers will have to compete on a level
playing field.
Fact check:
HMO's "undermine fair competition despite
regulations." They "cherry-pick" the healthy and avoid
the high-risk. They also cost up to 19% more than
traditional Medicare despite their lower age category
enrollees.
Myth: Everyone will have quality, affordable care.
Fact check:
The current system is unsustainable. It will worsen if
Obamacare passes. In whatever form, the "international
experience with public option schemes" shows they
don't provide universal coverage - because insurers
pick the best and screen out the rest.
Myth: Patients will get better care because of
"innovation in the quality care physicians provide."
Fact check:
Quality won't improve. Today's dysfunctional system
won't change. It's driven by profits, high costs, and
for insurers denying expensive care or delaying it as
long as possible.
Myth: Cost will be reduced.
Fact Check:
False because no provider bureaucracy savings will be
achieved. "Adding a public option to the array of
private insurance companies....will only exacerbate
the waste and inefficiency inherent in a patchwork
system...."
Final Comments
Health care is a fundamental human right no different
than food, shelter, clothing, clean air and water, and
other essentials to life and well-being, not something
to be bought and sold as a commodity. Universal
single-payer coverage is the solution, not America's
dysfunctional for-profit model.
If Obamacare is enacted, it will cost more, deliver
less, leave millions uninsured, millions more
underinsured and leave a broken system in place. It
will enrich the insurance, drug and large hospital
chain cartels at the expense of universal coverage. It
will solidify a class-based system delivering the best
care money can buy. Others will get sub-standard
treatment, and for millions none at all. The solution
is everybody in, nobody out under a universal,
single-payer system. No one should accept less or
politicians who won't provide it.
Stephen Lendman is a Research Associate of the Centre
for Research on Globalization. He lives in Chicago and
can be reached at lendmanstephen@sbcglobal.net. Also
visit his blog site at sjlendman.blogspot.com and
listen to The Global Research News Hour on
RepublicBroadcasting.org Monday - Friday at 10AM US
Central time for cutting-edge discussions with
distinguished guests on world and national issues. All
programs are archived for easy listening.
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