Working With Small Businesses

Date and Time:
Friday August 22, 8:30PM-9:30PM, California Nurses Association HQ

Presenters: Dr. Stephen Kemble, Hawaii, and Dr. Deb Richter, Vermont Health Care for All.

Description: Dr Richter will discuss the framing of the health care issue in terms that are familiar to the business community. She will present a persuasive discussion to lead a rational thoughtful business person to the conclusion that a publicly financed universal health care system is the most fiscally conservative way to cover all Americans AND solve the costs crisis. Dr. Kemble will show a short business-oriented presentation, including evidence that the conventional wisdom on the reason for excessive US health care cost is not valid, and that the strategies in the ACA intended to improve health care efficiency and reduce cost will backfire. He will compare these to cost-control strategy under a single-payer system, and show why this is a far better deal for US businesses.

Notes from Conference Participants:

Business and SP
Dr. Steve Kemble and Lindy Heard from Hawaii spoke. Dr. Kemble shared his excellent powerpoint for businesses. As an aside, he is very excited that the Democratic nominee for Governor has picked Dr. Kemble to be his health policy guru and is encouraging him to speak about SP.

Business case for single payer. Let’s start with a definition – we are talking about public funding and private delivery. We are already paying enough with public dollars to fund a national health insurance program. On the world scale, our health care costs are uniquely American and way out of line. Worst in mortality, What costs us so much more? Not hospital admissions and physician visits! Contrary to conventional wisdom, restricting care actually costs more than it saves. What costs more? Administration!!

Competitive private insurance raises costs 5-6 times (enormous paperwork). The incentive is to avoid risk and get rid of the sick by having a worse plan. Very misguided. In conclusion, we spend twice as much for less care and worse outcomes.

The ACA fails on several levels. First, sick people have high copays and deductibles.
Second, bad website rollout.
Third, low value plans (bronze) are still costly. If you make $25K, you still must pay $7,500 in premiums. There is a MD shortage and narrow provider network which means we have a dysfunctional system, esp. for Medicaid.

The ACA preserves the private model. Cost control is through narrow networks and increased administration.

In contrast, under SP everyone is covered. No copays or deductibles. Health care is based on need, not means.
Risk pooling across the entire population which cuts costs and saves on administration.

Saving money under SP
Use administrative savings to reduce prices. Hospitals are paid under global budgeting, doctors have negotiated fees and simplified billing. Drugs and durable medical equipment prices are negotiated with savings through bulk purchasing.

Hospitals are paid on global operating budgets so no itemized billing. Doctors reduce their administration and malpractice cost. Their incentive pay is FFS based on time or paid on salary.

Patients have better access to cost effective care which should reduce complications.

Business save on insurance, lower workers compensations and NO COBRA or retiree costs. Administration savings come by assuring care and payment, not avoiding risk.

It is much easier to detect fraud under single payer. 30-40% saving with SP.

Increased costs will come with Medicaid rate adjustment, more uninsured covered, increased utilization, but this is more than offset by savings on administration, billing, and bulk purchasing.

Slides are on the PNHP website.

Rotary club is a good vehicle for getting businesses and we should accept all invitations to speak.

Update on Single Payer in Vermont
Via Skype, Dr. Deb Richter talked about her work in Vermont. They passed Act 48 in Vermont which was a road map to a state single payer. The Act 48 established a 5 member Green Mountain Care board which currently oversees insurance rates and hospital capital expenses. Vermont implemented the private Marketplace as part of the ACA, but it is a failure and the opponents are falsely blaming it on single payer. It is really a failure of private insurance.

A financing package for the Vermont SP is slated for January 2015. They have to raise $2 billion which is more than doubling the current state budget.

In order to pass SP at the state level, you need the business community and Rotary clubs. Deb explained how she speaks to businesses. Businesses need to change their perception: Health care is a public good, not a market commodity. She points out that 75-87% of a hospital is fixed costs (building, staffing, etc.) that is there whether it is used or not. We need to pay for these fixed costs in the most cost effective way. That is, since it is a public good, we should fund it like other public goods through public financing. Businesses will use a health care system that is efficient, accountable as a fundamental principle. We are already paying for health care through these fixed costs and cost shifting. We don’t have to raise new money since we are already funding it.

Businesses believe that 1) the reason health care is so expensive is because we are using too much health care (blame the patient), 2) that the uninsured is not their responsibility, and 3) that govt is not to be trusted. They understand budgets and fixed costs and the need to be efficient. In reality, 20% of the people consume 80% of the health care dollars. Most health care costs are fixed in place. To try to keep people out of beds doesn’t really save costs any more than keeping students out of schools for a day reduces school costs. It doesn’t save money. The majority is fixed and that highly salaried workers is a fixed cost and you can’t send them home. If you are an insurance exec., it is about avoiding sick people and avoiding paying fixed costs. This leads to a huge increase in administrative costs. 31% of health care costs is administrative. We have to be more efficient in health care. In the end each taxpayer pays for the inefficient health care non system.

Vermont Gov. Shumlin is very serious about the details of financing, but a January 2015 deadline will be difficult to make. There are so many details about veterans, federal employees, etc. and there are a lot of details that cannot held to a timeline. People asked if a state single payer would violate ERISA. This was carefully studied before the passage of Act 48. ERISA lawyers said that since they are not regulating self insured businesses, it is not a violation of ERISA. An employer mandate would be a violation of ERISA. Nevertheless Vermont expects an ERISA challenge. How likely are they in getting the federal waiver for 2017? They realize that it would be hard to get waivers under a Republican administration which is why they want permission while Obama is in office.

Businesses have been remarkably receptive to the business arguments for SP. The one exception is insurance agents. It is hard to be inclusive of them. Although there can be room for private insurance that covers that which is not covered by the public plan. After Deb speaks, many insurers come up to her and privately admit that single payer is right. There are other insurance lines outside of health.

What will Vermont do about undocumented people? It is a grey area. Most VTers believe everyone should be included and there is a great need for migrant farmers, many who are undocumented. The SP legislation has a residency requirement.

Slideshows, Photos, and Video:

Full slideshow of Dr. Stephen Kemble's presentation on "The Business Case for Single-Payer":