PNHP-Minnesota Chapter Updates: 2010

Prepared by members of Physicians for a National Health Program-Minnesota, February 2010.

1. With single-payer everybody is forced to "buy" insurance in the form of taxes... how is an insurance mandate like President Obama proposes any different? A mandate to purchase insurance does not change the insurance product being bought. Therefore, the policies that currently exist which fail to supply adequate coverage would still be the offering. Single-payer removes the profit incentive in providing health care services. As it stands now, insurance companies profit when services are denied or those with pre-existing conditions and need for chronic care are dropped from their rolls. Forcing more people to buy a deficient insurance product does not assure improved health care access or quality.

2. Won't this raise my taxes? Opponents will say the MN Health Plan will drive up taxes. Keep in mind that health care is now one-sixth of the entire economy. Funding the MHP isn't like adding taxes to pay for a new government program or service. We are talking about restructuring how we finance one-sixth of our economy, most of which is and would remain in the private sector. We are simply shifting the premiums that people pay to their current health plan to the MN Health Plan. Likewise, employers would pay their share to the MN Health Plan. These premiums (or taxes) would replace all current premiums and out of pocket expenses for health care. Thus for most employers and patients, payments for healthcare would drop dramatically. Unlike regular taxes, these premiums do not go to the state treasury; they go directly to the MN Health Plan. They cannot be taken by the governor or legislature and cannot be used to balance the state budget or pay for anything else.

3. Why should I pay for care for people who don't take care of themselves (i.e. those who are obese or those who smoke)? Shouldn't they pay more? Before answering this question, one might ask about the current way this is handled. For example, should Blue Cross exclude smokers and overweight people from coverage now? (Ie. this problem is not unique to universal coverage.) One then should remember, that our taxes and our health insurance premiums already pay for health care for others. This occurs directly when the government covers federal, state, and municipal employees; funds the VA and military healthcare; and provides Medicare & Medicaid. Indirectly, government funds help support public universities, including medicals schools, and they fund a significant amount of medical research. Plus, a healthier population is cheaper to cover since risk determines premiums, and this risk is spread amongst payers in insurance pools. Therefore, those with poor health already may be priced out of the system given unaffordable premiums. They then obtain care through emergency rooms, which is incredibly expensive and a cost we all incur. All of these costs are higher in our fragmented multi-payer system. The best way to encourage people to take care of their own health is to get them in the system and provide the knowledge and tools to take care of themselves. If we shut them out of the system they will be less able to make positive changes. Single-payer financing is a fairer and more efficient way for us all to contribute.

4) Some fear that administrative savings under single payer will be eaten up by more medical procedures and higher charges for procedures. How do you respond? Physicians and hospitals will negotiate reimbursement rates for procedures and visits with the single health plan. As for MORE medical procedures, there may be more or less depending on what is medically necessary. In Japan they order more MRIs than us, and we could order more MRIs if we needed to. As we have seen by studies from the Lewin Group, complete health care could be extended to all people in a state; it could be improved; and we could still save money. The good thing about costs under single-payer is that they will be transparent and public.

5) Will I get to choose my doctor under the Minnesota Health Plan? Yes you will choose your doctor. You can keep the doctor you have now or choose any other doctor in the state if Minnesota. Under the Minnesota Health Plan there will be more choice of doctor and hospital than there is now.

6) How long would one need to live in Minnesota to qualify for the Minnesota Health Plan? Won't sick people move to our state just to receive health care? This is a good question. The bill states that it would be determined by the health board. They will probably decide on a length of time that is reasonable to live in Minnesota in order to be eligible for the Minnesota Health Plan. It is possible that sick people will move to Minnesota just to get health care, but it is also possible, and very likely, that businesses will move to Minnesota because health costs will be less for them. Right now many businesses move to Canada for this very reason. Minnesota will have a competitive edge.

7) What about ERISA? Doesn't it stand in the way of implementing a universal health care plan? ERISA is the Employee Retirement Income Security Act. Passed in 1974, it stated that state governments could not interfere with benefits offered by large employers. Some say that states will be sued when implementing single payer because large employers will be forced to pay taxes to the Minnesota Health Plan which is a way of interfering with employer benefits. However, every employer will be obligated to pay into the health care system based on income and not based on the number of employees. Therefore health care is no longer a benefit, but a necessity. Employers can offer other benefits to employees to keep them on: vacations, life insurance, and retirement plans will still be benefits and according to ERISA, the government will not be able to interfere.

8) Will the MHP cover abortions? The MHP is not a bill designed to determine what medical procedures will be covered. For example, no where is it listed that colonoscopies are covered. It is a bill designed to build a system to make sure all Minnesotans have access to high-quality health care that is affordable and sustainable. It can be likened to a blueprint for a building, which tells you how to build the structure. The bill does not and should not list individual medical procedures, just as you would not write the wall paper colors or furniture into a building blueprint. The abortion coverage question has to be dealt with under separate legislation. As a point of information, Minnesota does currently have a state statue that requires state medical assistance programs to cover abortion.

9) What about all the people that come here from Canada for care? They don't seem happy with Canadian care! This is actually false. There are, in fact, very few people who come here for care. In bordering cities, like Detroit for example, the number of Canadians admitted to US health care facilities is less than 0.1% of total patients. Also, through a large population-based survey of Canadians it was found only 0.11% (or 20 of the 18,000 residents surveyed) had come to the U.S. specifically for the purpose of receiving medical care (Steven J. Katz et al., Health Affairs, May/June 2002).

10) You say that health care administration is 31% of the health care dollar - but then in the next breath you say insurance administration and profit is 15-20 %. Which is right? The part of administrative cost due to insurance overhead is only half the story on administrative costs. The other piece is the cost to the providers (doctors, hospitals, nursing homes etc) who must deal with the insurance industry. Each and every hospital and doctors' office must hire a large team just to deal with insurance record-keeping demands. In fact, AMA did a study which found that each primary care doctor had an average administrative burden of $68,000 per year directly as a result of the insurance industry.

11) You say you want to use Medicare as a model, but Medicare is going broke. What are you going to do about this? It is important to define what you mean when you say Medicare is “going broke”. Medicare Part A (the part paying for hospital care) is currently underfunded and is financed through a fixed payroll tax, while parts B& D are financed via general revenue. Imminent bankruptcy is not a concern for government programs financed by general revenues (eg. the Pentagon). As the US population ages, there will be an increase in demand for Medicare services and thus an increased funding need. This is not a crisis but a predictable occurrence that needs to be addressed by policy makers and health care planners. Adjustments in payroll taxes or funding from general revenues could address the projected shortfall. It is important to remember that Medicare covers the sickest and oldest of our population, and this percentage of the population is getting larger. Every insurance company has had to deal with rising medical costs, and Medicare is no exception. However, they do so with a 2% overhead. If the Medicare model was expanded to cover everyone, it would include younger and healthier individuals. Covering people when they are healthy, and keeping them that way, is much better care than treating them once they get sick (whether they have insurance or not). Certainly Medicare is not a perfect system and a Minnesota Health Plan would build on the parts of Medicare that work.

12)Would the Minnesota Health Plan cause companies and businesses to move to other states? Unlikely. In fact, companies and business would be relieved of the burden to provide healthcare to their employees, which is a major cost, especially to smaller companies. Minnesota would be a good place to start a business because health insurance would not be a concern.

13) Why not use tax subsides to help the uninsured buy insurance? This does not address the crux of the problem, which is the inefficiency of our fragmented, multipayer system in which 31% of spending is lost to administrative waste. Tax subsidies are a band-aid remedy and are a poorly disguised way for the government to pay money to the private insurance industry, while doing nothing to control costs or address the true problem. Moreover, even with tax subsidies, moderate- and lower-income individuals would be unable to afford good coverage, leaving them with modest benefits and high cost-sharing that would often make health care unaffordable. Instead of perpetuating our current inequities, tax policies should be used to create equity in contributions to a system in which everyone is assured access to comprehensive services. Distributing health resources according to human needs is possible only if we eliminate the private health plans and establish a publicly administered system.

14) Is the Minnesota Health Plan Socialized Medicine? No. Socialized medicine is a system in which doctors and hospitals work for and draw salaries from the government. Doctors in the Veterans Administration and the Armed Services are paid this way. The health systems in Great Britain and Spain are other examples. In most European countries, Canada, Australia and Japan they have socialized health insurance, not socialized medicine. The government pays for care that is delivered in the private (mostly not-for-profit) sector. This is similar to how Medicare works in this country. Doctors are in private practice and are paid on a fee-for-service basis from government funds. The government does not own or manage medical practices or hospitals. The term socialized medicine is often used to conjure up images of government bureaucratic interference in medical care. That does not describe what happens in countries with national health insurance where doctors and patients often have more clinical autonomy than in theU.S., where insurance bureaucrats attempt to direct care.

15) Aren’t malpractice lawsuits and defensive medicine the real problem? There are many factors that contribute to the excessive cost of health care in the U.S. It has been determined that cost associated with malpractice lawsuits, or litigation, contributes about 2-3% of total costs. So I don’t think we would call this “the real problem”. In some instances defensive medicine is a reality. For example, doctors may order tests or lab work in excess of what is really needed. This would be an example of what is labeled as "overuse" of medical and healthcare services. However, numerous studies show that “underuse” is much more of a problem and much more expensive. That is to say, compared to "overuse" it is much more of a problem that too many people do not receive the treatments and services they need. This causes minor illnesses to turn into much more complicated and costly serious illnesses. It is also important to remember that many malpractice suits today are motivated by patients' fear of getting no help or insufficient help with their medical bills in the future. Universal coverage will eliminate that incentive.

16) How many MN jobs will be lost if the MHP is enacted? If the Minnesota Health Plan is enacted there will unquestionably be some displacement of employees who currently work in the private health insurance industry. However, there will also be a number of opportunities created. Many of the current workers in the health insurance industry possess the skills and knowledge that will be required to operate a public program of health care administration. So for some, they will continue to perform the same or very similar job duties. Some displaced employees may end up working in other, similar insurance industry settings – such as automobile insurance, home owners insurance, etc. Many health insurance industry employees are qualified health care providers. This includes doctors and nurses. Hopefully some of these skilled and qualified providers will return to practice, especially in the many areas where we currently experience shortages such as in primary care. The Health Plan Board will have authority to offer incentives to encourage qualified providers to address areas of critical shortage. This will make a positive contribution. Finally, the MHP includes provisions for retraining and for other forms of assistance for displaced workers. At least for anyone who does lose his or her job and is not able to obtain new employment immediately, they won’t lose their access to comprehensive needed health care services. Everybody will have that, regardless of employment status.

17) Don’t medical advances require high costs in medicine? Certainly. As medical science advances and as we get better and better at meeting the health care needs within the population, some costs increase. But that is not the type of cost that the Minnesota Health Plan is focused on. The savings realized by the MHP will come from administrative streamlining and greatly reducing administrative waste and duplication. Currently almost one of every three dollars spent on health care goes to administrative costs. This is unaffordable and unnecessary. A number of health care delivery systems in the U.S. and in other countries show that quality comprehensive health care can be administered for much less. For example, the very popular Medicare program in the U.S. operates with administrative costs of 3% or less. In contrast, administrative costs associated with private health insurance vary, but are generally considered to average around 20%. In an overall health care system that consumes $2.5 trillion, the difference in these rates of administrative costs is in the hundreds of billions of dollars. Just by streamlining the administration of health care in a manner such as that proposed in the MHP we can recover enough wasted money to cover 100% of the population with 100% of their needed health care services. The Minnesota Health Plan doesn’t save by denying needed services, even though they might be costly. The plan saves by dramatically reducing the unnecessary but very expensive costs of inefficient administration.

18) The market is what promotes innovation. How can you promote innovation and technology advancement without the market? With a SP, the market is not taken out of health care. New medicines and technologies will be developed. When these new products are ready for the market, payment for them will happen through the state payment, not insurance companies. Many good medical inventions have come from countries that have a single national health plan.

19) Efficiency and cost reduction come from competition. How will a single payer system improve efficiency and improve itself if it has no competitiors? Currently, competition is aimed at trying to attract the healthiest people to a health plan. This competition leads to excluding people with health problems, and selling low cost plans that have high deductable and copays. This is very un-patient friendly competition. Also, under the current fee-for-service reimbursement, the incentive is for providers to do more services and thus be less efficient. And each hospital, wants to have the latest equipment so that it can "compete" with other hospitals. Under SP, since every person will have a health card, competition will be for the best care and best run clinic that can attract the most patients. This is patient-friendly competition. Furthermore, if competition really produced efficiency and cost reduction, our current system should be very efficient and low cost. However, we have just the opposite. Despite having multiple, competing payers, our system is the most expensive and least efficient in the world.

20) All insurers in Minnesota are already non-profit. Why should we change anything here? Only the HMOs in Minnesota are not-for-profit. For-profit insurance companies can sell policies in Minnesota. Both types of insurance spend much administrative money to design plans that have many levels of benefits and prices. With a SP, all this administrative money could be spent providing better care. And Minnesota medical groups could focus on providing better care, not better insurance.

21) People keep telling me that single payer is politically not feasible, that it is a good idea but not realistic. How do I respond? The best response is that single payer will be politically feasible when it is demanded by the majority. The political infeasibility argument stems in large part from the power and money driving the special interests (ie. insurance companies, who wish to keep health care as a commodity to be sold on the open market for profit and not as a basic human right for all citizens). In terms of feasibility, we firmly believe it is not possible to achieve and maintain universal coverage at the price at which health insurance is currently sold. Since single-payer is the only reform option that combines universal coverage with cost containment, it is the only option that will work. Currently, polls reveal that the majority of physicians (Annals of Internal Medicine survey April 1, 2008) and the majority of the public (multiple polls) favor single-payer. Having this voice speak louder than the special interests is the current challenge.

22) Stockholders are supposed to keep health insurance companies efficient. How could the MHP be efficient without them? Stockholders are interested in keeping costs down for insurance companies in order to obtain a higher return on their investment. Stockholders are not as interested as they should be in keeping the cost of premiums down for patients, as the higher the premium and the lower the payouts made for healthcare, the greater the return for stockholders. Furthermore, stockholder power is limited when it comes to cost control. No insurance company can unilaterally stop advertising or paying a sales force, stop underwriting, stop "managing" care, or stop paying lobbyists. They must do these things to retain market share. It is this type of spending that is grossly inefficient and has nothing to do with better health. All of these costs will completely disappear with a single-payer making it the most efficient system available. Furthormore, the MHP will not need a return on investment for stockholders. This lack of profit will spare even more of the money collected to be allocated for actual healthcare services. Under this scenario the cost of healthcare and the money spent by patients will decrease. Furthermore, care is provided much more efficiently during actual patient visits with physicians by decreasing the number of persons involved in the healthcare transaction. Doctors will no longer have to waste time obtaining “permission” from 100s of different insurers (each with its own onerous paperwork) to provide care they know is medically necessary to their patients.

23) How can we possibly keep costs down if everyone has access to comprehensive care? If you propose to insure the uninsured without a single-payer system, you are correct, costs will go up. But with a single-payer system, costs will actually drop. Before I explain, remember: every other industrialized nation has demonstrated that it's possible to cover all of their citizens and still have per capita health care costs far below ours. Here is what we could expect in the US under single-payer... Currently, our uninsured get somewhere between half and two-thirds of the services the insured get. That means that when the currently uninsured are given health insurance, costs to care for them will indeed rise. Those costs will be offset to some degree by the improved health of the formerly uninsured due to their better coverage. However, at the same time we insure everyone we will reap the savings that come inherently in a transition to single-payer. These are the savings that come from lower administrative costs in both the insurer and provider sector, lower hospital costs due to global budgeting, lower drug prices, and less fraud. These savings are greater than the cost of fully covering the uninsured leading to overall savings, despite everyone having access to comprehensive care.

24) Won’t single-payer just be another large bureaucracy? The US health care system is already a bureaucratic monstrosity when compared with other nations. This is illustrated by the fact that we spend 31 cents of each healthcare dollar administering our system. Other industrial nations with universal systems spend about half this (or less). For example, in the same study revealing our 31% administrative costs, Canada was found to spend 17% on administration. Therefore, single-payer (b/c it involves a single payer rather than multiple payers) is the best means we have of shrinking bureaucracy in our healthcare system. When everyone is covered with the same comprehensive benefits, the job of deciding who gets care and who doesn’t disappears. This administrative simplicity is much less expensive. Looked at from a different angle, consider the Wellpoint Health Insurance Company and the Ontario Health Insurance Plan (Woolhandler, et al, NEJM 2003). Each covered about 10 million enrollees, but Wellpoint employed 13,900 workers while the Ontario Health Plan employed only 1400. Or one could compare Aetna and Medicare in the early part of this decade. Medicare insured > 9,000 people per employee while Aetna insured only 458 (Sullivan, The Health Care Mess, 2006). The private insurance industry provides the best available examples of bloated bureaucracy within our current healthcare system.

25) You say Medicare is the model for single-payer. Aren’t Medicare’s costs increasing at a non-sustainable rate? Certainly, overall costs of the US healthcare system are increasing at a non-sustainable rate. Spending on medical care has been consuming a larger and larger share of the nation's economy for years, jumping from about 5% of the GDP in 1960 to nearly 14% in 2000. In 2009, it was 17.3%. By 2020, the number is expected to be 20%. However, despite covering the sickest and oldest among us, Medicare costs per capita are rising slower than the per capita costs of private insurance (see Boccutti and Moon in Health Affairs, 2003). Or, for a more recent quote, per capita Medicare costs for common benefits grew 4.9 percent between 1998 and 2008, against 7.1 percent for private insurers (NYT, 2/22/10). Much of the explanation for this lies in Medicare’s administrative spending which is a fraction of that of the other payers. While costs are increasing all around, the projected growth in Medicare spending is largely a result of growth in the beneficiary population (ie. more folks are getting older), not due to the failure of Medicare to control costs. And remember, while we watch the increases in Medicare spending, we simultaneously witness egregious increases in health insurance premiums (despite robust profits in the insurance industry). For example, the $13,375 average annual family premium in 2009 is 131% higher than the average family premium in 1999 (Employer Health Benefits 2009 Annual Survey of the Kaiser Family Foundation).

26) Won't enactment of the MHP lead to major physican shortages? No. There is no reason to think that ensuring universal access to health care would cause physician shortages. Remember that in the present system, people who lack health insurance still come to medical attention, but more often at times of crisis. Physicians currently care for the uninsured, but at later points in the progression of their diseases. Therefore, there are an adequate number of physicians available to take care of everyone under a single payer system. Moreover, by streamlining health care administration, the MHP will allow physicians to devote more time and energy to actual patient care rather than dealing with today's complex and often frustrating insurance infrastructure. In fact, the perverse incentives of today's system are decimating America's primary care workforce. MHP would incentivize physicians to pursue primary care specialties, which are the ones that are now most desperately needed. In response to the claim that physicians would choose to leave Minnesota to practice elsewhere if MHP were enacted, this is dubious. The majority of American physicians favor a single payer system by credible polling data, and Canada (with a single payer national health insurance system) actually is attracting more physicians from the US than vice versa over the last several years.

27) Why not HSAs (Health Savings Accounts)? The better question would be, "Why Health Savings Accounts?" An HSA is a useful tool for a person who has the money and resources to invest in it and who is generally healthy, with low need for medical intervention. If the holder of an HSA becomes ill and spends down their account, then they must fall back on another form of coverage or pay out of pocket. Either of these options is financially crippling, especially considering that an elderly person or someone with preexisting medical conditions would be forced to pay a much higher premium for catastrophic coverage than a healthy person. For low-income Americans, HSAs do not come close to addressing their need for health coverage. At least 17 million Americans do not even have a checking or savings account according to a CNN Money Poll in December, 2009; to believe that a more sophisticated financial instrument such as an HSA would be a viable insurance approach for the vast majority of the current uninsured, underinsured, or unemployed is foolhardy. Our health care system is broken and Health Savings Accounts will not fix it. Also, remember…HSAs will only address the 20% of spending incurred by the healthiest 80% of us. Those patients responsible for 80% of our health care expenditures (ie. patients with chronic illness) blow past their $2,000 deductibles early in the year and therefore have no incentive to "shop" and deny themselves services, which is what the HSA is designed to do.

28) How do we know it will work in Minnesota--isn't it just a theory? It is always legitimate to question how a bold proposal could be implemented. Fortunately, there is ample real-world evidence to reassure us that a single-payer health care system does work extremely well. Canada's system attains at least equivalent and often better health outcomes at a tiny fraction of the administrative overhead. Likewise, Great Britain and many other European nations are living, breathing role models of workable single payer systems. Within the United States, Medicare functions as a single payer system of health care for the elderly, and a popular and politically unassailable one at that. Finally, the Veterans Administration, a single payer health care system for military veterans that hosts a bustling medical complex in Minneapolis, consistently ranks at the top for health quality scores and patient satisfaction and delivers care at a much lower cost than private insurers because of its low overhead and its bargaining power. All of these examples demonstrate that single payer health care can work in Minnesota, certainly much better than our current system.

29) As a physician, how can I be confident that the MHP would reimburse me fairly? How can I be guaranteed to make a good salary? Again, Canada and Western Europe, as well as the socialized Veterans Administration system, are all instructive in this regard. Physicians make a good living in all current single-payer systems, and there is no reason to think the MHP would be the exception. Physicians will be at the table to negotiate reimbursements for office visits and procedures. While the average physician salary would likely remain similar under the MHP, there is potential for more equity in payment between primary care physicians and subspecialists. It is also important to remember that when today's doctors talk about their frustration with the system, they more often site the constant interference from an insurance bureaucrat rather than their inability to make enough money.

PNHP-Minnesota Chapter Updates

Tuesday, October 26, 2010

Fall Meeting this Thursday October 28

Thursday, September 2, 2010

A Fall of Action!

Thursday, August 5, 2010

PNHP Summer Educational Event August 11

Wednesday, April 21, 2010

Lake Elmo House Party

Tuesday, April 20, 2010

April 29 - meet PNHP national president Dr. Oli Fein

Friday, March 12, 2010

Successful Speaker Trainings held January 24 and April 10.

Questions and Answers on Minnesota Health Plan --State Single Payer

Chapter Updates