Having been advised recently of some horrible truths about the condition of our healthcare system (by those that paid good money to see Sicko), I decided to see if anyone else was as discombobulated as I.
Lo and behold, the legislature in our wonderful state of California is in fact trying to push through a bill to address virtually all of the current problems (SB 840 proposed by Senator Kuehl). Naturally, the governor is opposing it, pero quiza si suficiente muchos hombres saven la verdad, actual progress may happen.
This is not the post to convince you of inadequacies of the current system (particularly in California). There are enough sources out there for that, not least Michael Moore's opus mentioned above. Start with the fact that 16% of the population is completely uninsured. For the libertarian in all of us, there's also danger of being denied payment by the insurance companies (which happens all the time for expensive procedures), denial of coverage for pre-existing conditions, loss of coverage with loss of employment, etc.
No, this post merely analyzes the said bill, as its ramifications are difficult to understate. I'm going to try go beyond the standard "think of the children vs. commie socialized medicine" bullshit and hopefully convince you this is something worth supporting. And support it actually needs, because despite an upcoming rally in LA
(http://upcoming.yahoo.com/event/226563/) the governator still seems opposed to it. So here goes.
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Note: (PP) below marks issues that are not resolved to my knowledge. Numbers like 140xxx refer to section number in the bill text.
A short summary is available here. Basically, "the bill creates one plan and one public trust fund which pays all health care bills and collects all the monies already being spent on health care and insurance plans, which is called a "single payer" system." (onecarenow.org) It replaces all insurance companies and creates a single insurance provider run by the state headed by the Commissioner ('the Comish'). It is funded by an employer/employee tax that replaces current premiums.
Select substantive provisions of the bill
Structure
The bill provides for a state-wide commissioner to head an agency and office that supervises a dozen regional directors who implement his policies. This does raise the specter of central planning. It is unclear if this is worse than the present insurance market in any meaningful way (where the plurality of insurance companies hold all the power - not the providers). The problem is particularly acute, however, in regard to capital investment - which would be directed from the center. (PP)
Healthcare delivery/covered benefits
"Covered benefits will be defined under the bill to include all medical care determined to be medically appropriate by the patient's health care provider," (Senate analysis) This includes dental care, acupuncture, chiropractors, vision. The bill excludes cosmetic medicine and providers not licensed by the state. It provides for the Commissioner to extend benefits not currently described/covered as funding allows. Primary care providers may apparently be changed at will (no stated limitations on this) - unless they are in "integrated healthcare provider" systems (like Kaiser?) in which case it is more difficult.
Those few service that are not covered (like elective cosmetic insurance) may still be covered by private companies (onecarenow.org)
Referrals are necessary to see specialists without co-pays/deductibles, unless that specialist is your primary care provider. It may be annoying, but this reduces costs and lowers fraud based on experience of other countries. It is also a standard practice in many current insurance plans.
The system will provide insurance for those who are temporarily out of state (unlike many current plans). For periods of greater than 90 days the Commissioner will determine eligibility.
All eligible residents (those physically present with intent to reside) will be enrolled – provided with identification that can be presented to healthcare providers.
"In the event of an influx of people into the state for the purposes of receiving medical care, the commissioner shall establish an eligibility waiting period and other criteria needed to ensure the fiscal stability of the system."(Bill Text). While nothing is really said about how eligibility will be checked, the question is really how effective could a verification system possibly be? (PP)
The bill itself does not specifically mention illegal immigrants. However, onecarenow.org writes
"[They will be covered]. It costs
More directly, this simply transfers and lowers the already hefty bill we're paying for the uninsured when they are treated by state hospitals and their emergency rooms. "Emergency rooms will no longer be crowded with uninsured patients who should be with primary care doctors, at a much lower cost. Rural and inner-city hospitals and trauma centers will no longer be closing because of high proportions of non-paying patients." This really happens, state hospitals run enormous debts because of having to treat the uninsured - which then fall on the tax payers of the state. "There will be no need to resort to collection agencies to collect bills. Patients will not be forced into bankruptcy by medical bills, at a loss to hospitals." (onecarenow.org)
One could say - why should we pay for the illegals and reward them, etc - but rationally, economically - it is simply the case that everyone would be better off.
There will be no deductibles or co-payments in most situations for the first 2 years of operation – after which these may be instituted. However, these combined, may not exceed $250 per year (!). In any event these may not be established for preventive care (the bill is touted as pushing preventive care - unlike the present system - as fiscally wise). I think lack of any co-pays is a serious problem, but hopefully this will be changed during implementation. (PP)
A number of exemptions are spread throughout the bill that diminish the monetary impact on individuals (i.e. waivers for collective bargaining agreements, etc).
Financing
Financing for SB 840 is explicitly provided by a separate bill (SB 1014 (Kuehl)) that will fund the healthcare system primarily via "a health care coverage tax on the wages of an employee that would be paid by both the employee and the employer" (Senate analysis) – which would be transparent to the employees as the tax would stand in place of current payments to insurance providers.
The plan is that NO NEW SPENDING (taxes) are created by the bill. The premium/funding structure is to remain roughly the same as now (with respect to gov't/employers/employees shares). The current expenditures should cover universal healthcare. In fact, a single statewide plan – instead of the current selection of 6000 plans - would actually cost $8 Billion less than the current expenditure of
“ 1. Reducing Insurer Administration by about 69%- saves $9.686 billion in 2006
2. Reducing Hospital Administration by about 22%- saves $3.56 billion in 2006
3. Reducing Physician Administration by about 30%- saves $6.614 billion in 2006
4. Bulk Purchasing of Prescription Drugs - saves $4.418 billion in 2006
5. Bulk Purchasing of Medical Equipment - saves $786 million in 2006
6. Increasing Primary Care - saves $3.408 billion in 2006
7. Reducing Provider Fraud - saves $783 million in 2006”
(onecarenow.org)
More details (mainly from the Lewin report) here.
They argue that the increase in utilization of the system would be offset by "$20 billion in administrative savings and $5.2 billion in bulk purchasing savings." (Assembly Committee analysis). Kuehl in fact claims that 30-50% of the money in the system is currently wasted or misspent (Assembly Committee analysis?)
It would be nice to find an evaluation of the Lewin group (PP). It has done many such studies across the country, but its accuracy is unclear, though it is regularly used by congress and other states, so presumably they're as good as it gets.
But the claim is fairly plausible on its own. True, normally we don't think of government agencies as being efficient, but when it comes to insurance, this is not necessarily true. Medicare actually has far lower administrative cost (the measure of efficiency) than private insurance companies. Even a critical study has found this to be true -- at most 8% for Medicare and at least 9% for the private insurance (Matthews 2006). Plus, the system will have the benefit of the insurance companies' profits. The last several years have been lucrative for the insurance companies, the five major HMOs have earned over $11BILLION in profit a year, spending over a Billion just on marketing in 2006 and donating over $3 Billion to politicians since 2001 (emaxhealth.com). The California Blue Shield by itself earned almost almost $400 million in profit in 2006 (blueshield.ca). Not to mention the spending on litigation. All of this money will now go directly to the health providers and consumers, instead of their share holders. Finally there are considerable gains to be made from the introduction of state-wide electronic infrastructure that will streamline the operation
Potential problems
(In addition to those marked throughout this post with ‘PP’)
Fraud detection
Any entitlement service provider must deal with the possibility of fraud. This is one of the weaknesses of the proposal (TBOMK). The bill does provide for the Inspector General (of the system) to investigate fraud, abuse/misuse of the system and its benefits. While this mitigates the threat of denial of coverage we face with the present for-profit system, it likely errs on the other side, creating the potential for extensive misuse, since the checks on it are so distant (performed by a separate branch of the service).
This is particularly problematic as the bill prevents co-pays outright in the first two years of operation.
Conflicts with federal regulations
The bill acknowledges there may be conflicts with federal regulations and the Commissioner is charged with resolving these. What are the potential conflicts and their impact?
Arguments against
One of the most telling arguments in favor of the bill is that the list of supporting organizations runs for 5 pages – but there are only about 2 dozen opponents, most of them insurance industry related and a few chambers of commerce. But let's consider some of the arguments made against the bill.
A. CMA makes two cogent arguments:
1. The bill allows a decrease in benefits (compared to current plans) to cover revenue shortfalls.
This is true - when a significant revenue shortfall is evident, a number of 'cost control' options are available to the commissioner, including - among many other less drastic measures - (sec 140203c):
"temporary decrease in benefits"
"postponement of planned capital expenditures"
"imposition of copayments or deductible payments"
If these are not sufficient in the longer run, premium payments may be increased.
While this is not surprising, given the present uncertainty of the future fiscal situation, no one wants to see "decrease in benefits" as an option.
However,that option requires approval of the legislature - and clearly will not be granted lightly (140203).
2. The bill concentrates all decisions about plans and policies in a single commission.
However, it does however establish several boards and advocacy groups for oversight. It provides for impeachment and removal of executive officers.
B. Opponents cite the following statistics about
"More than 1.3 million Canadians (out of a total population of 26 million) are waiting for medical services, including 212,990 who are waiting for surgical procedures; 45% of Canadians who are waiting for services describe themselves as being in pain; Canadian patients wait an average of six weeks after referral from a primary care physician to see a specialist, and then wait another 7.3 weeks on average before they receive treatment; and 63% of
Their system also tends to delay introduction of new techniques (thus it has a 1/10 of per-capita MRi machines of the
While some of this data is questionable, it is in fact common to have multi-month waiting periods for elective procedures (but everyone truly has access for urgent procedures).
However,
C. Verity of fiscal claims
Opponents also claim that administration costs will not be slashed and large taxes will be required.
However,
Arguments pro
- All
- This bill provides excellent coverage of high quality. Benefits covered are equal or better than virtually any plan on the market. There are multiple provisions for oversight of policies and care delivered, including the creation of a Chief Medical Officer who would head the Office of Health Care Quality. Everyone will have the chance to choose any primary provider they wish.
- Greater access to emergency rooms as the uninsured and under-insured are diverted to ordinary care providers.
- There are good reasons to believe the plan will actually save money for the consumers and employers over the current system.
In Sum
This is not a perfect solution. It brings challenges, from ensuring proper policies and sound investment by a central agency, to preventing an influx of out of state immigrants. While the financial outlook is good, economic predictions are inherently uncertain.
However, the bill goes to a great length to build incentives and checks within the system to combat the inherent problems of bureaucracy, and is flexible enough to deal with the inevitable unforeseen. It has been supported by an extensive financial analysis. It carries the support of most of the legislature and virtually everyone organization that is not tied to the insurance industry. It addresses a major and urgent social problem without increasing taxes - and it actually has a shot. Give it a chance. If nothing else, think of the children won't you?
References
Onecarenow.org. http://www.onecarenow.org/sb840.htm
Bill Text. http://info.sen.ca.gov/pub/07-08/bill/sen/sb_0801-0850/sb_840_bill_20070710_amended_asm_v96.pdf
Senate analysis. http://info.sen.ca.gov/pub/07-08/bill/sen/sb_0801-0850/sb_840_cfa_20070604_103241_sen_floor.html
Assembly committee analysis. http://info.sen.ca.gov/pub/07-08/bill/sen/sb_0801-0850/sb_840_cfa_20070702_100653_asm_comm.html
Matthews, Merill, Ph.D. 2006. Medicare's Hidden Administrative Costs. http://www.cahi.org/cahi_contents/resources/pdf/CAHI_Medicare_Admin_Final_Publication.pdf
Emaxhealth.com. http://www.emaxhealth.com/124/13925.html
Blueshieldca.com. https://www.blueshieldca.com/bsc/aboutbsc/download/A18066-OL_4-7AROnline2006.pdf
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I will attempt to resolve some of the questions marked above and post an update shortly. Until then, bad spellers of the world, untie!(Update 8/08/07)
