Robin Catania Robert Mckinney School of Law 3L Note-in-Progress Candidate IHLR Symposium October 15-16, 2020 Accidentally Unhealthy: America’s unintentional relationship with employers in an inefficient market IUPUI
Thesos Thesis 1. The inefficiencies of the multi-payer system in the U.S are too great to be sustainable; the economic costs of administering such a system are ultimately falling onto the patients and providers, resulting in a lesser value of services, and to continue with the status quo would be contrary to the entire goal of a healthcare system. IUPUI
Assumptions 1. The current Healthcare system in the U.S. is unsatisfactory and on a trajectory which requires reform. 2. Economic cost to the patient and the taxpayer are the primary measures of efficiency as used in this note. IUPUI
Background Info • 11.4 Million Americans are on exchange plans. 70% of which were from families making less than 250% of the federal poverty level. That is an income between $26,200 and $65,500 for a family of 4 in the continental united states • 87% of enrollees received the APTC tax credit in 2019. The tax credit covered about 86% of the total premium for the plans. • Healthcare expenditures for individuals and families is increasing in the form of premiums shared by the consumer and their employer and as a result, contribute directly to wage stagnation. • Household expenditures in 2007 were 13% per capita income, 24% of family income. By 2017 it had increased to 15% per capita, and 31% of family income. IUPUI
Background Information (cont.) 1. This issue is not limited to just private plans but is a detriment to the taxpayer as well. The Medicare Trustees estimate that Premiums and cost sharing will consume 30 percent of the average Social Security benefit by 2035. As these costs are increasing, they are being passed directly onto either the patient or the taxpayer. – The largest category of private business health care costs are employer-sponsored premiums, which increased 4.6 percent in 2017. The private business share of overall health spending remained fairly steady since 2010, at about 20 percent.” Out-of-Pocket expenses have increased to 28 percent of overall health expenditures. IUPUI
SECTION TITLE GOES HERE IF NECESSARY Analysis – Incremental Approach • Two paths forward often vie for traction forward in policymaker discussions: A public option and a single-payer system. These represent opposing philosophies of healthcare • First priority is to address competitiveness in market. Do we incorporate single payer and remove competition, or do we “free” up the market with a public option? • Largely policymakers tend to fall on one side or the other depending on how they view healthcare: in terms of a for-profit good, or a right or entitlement. Either route would be acceptable to improve conditions and ultimately transparency in the market. 1. An incremental approach to any change is imperative – Many view the public option as a stepping-stone toward single-payer, but this argument has valid criticisms about perpetuating the administrative cost issue. IUPUI
Analysis- Single Payer 1. “In its ‘purest’ form, in a single-payer system, health care services are paid for only by the government; in the case of Medicare, beneficiaries also contribute to payments through premiums.” 8 2. Example proposed in the Medicare-for-All Act – Incorporates approach that healthcare is an entitlement. – prohibits providers from billing a participant directly for services covered under the act. – covered benefits are extensive, including hospital care, preventative and chronic disease management, home health services, long-term care, dental and vision benefits, as well as mental health care. IUPUI
Analysis – Public Option • Development of the option to buy into the governmental program available to every resident regardless of demographic. This would be a compromise between an entitlement of coverage and the opportunity to be given the same coverage as other Americans, as offered by the State/Fed. • Subsidy Reduction Effect – Expenditures for the taxpayers would be offset by the resulting reduction of subsidies paid out in tax credits as more people opt for the public program. • Tax Base Increase Effect - Employers that opted to use the public option rather than facilitate a private plan would be able to pay their employees more directly, rather than through premiums, which would increase taxable income. IUPUI
Conclusions With the cost of chaos measured in failure to care for human lives, an incremental approach that allows for the least amount of fatal error is paramount. There are many paths forward and no single step is key, rather each step must be deliberate toward a pre-determined goal. We must decide as a society whether we view healthcare as a for-profit industry subject to price/value transparency, or a right/entitlement. If we continue to allow a simultaneously segmented and opaque market, we set ourselves up for failure as a person’s ability to be healthy societal contributor is doled out not by need, but by who can continue to pay more or wait the longest. As the American consumer increasingly spends their income on healthcare, the healthcare market will increasingly eat up a larger market share than they would be allowed in an actual free-market. IUPUI
References 1. Health Insurance Exchanges 2019 Open Enrollment Report , U.S. C ENTERS FOR M EDICARE & M EDICAID S ERVICES (March 25, 2019), https://www.cms.gov/newsroom/fact-sheets/health-insurance-exchanges-2019-open-enrollment-report. 2. 2020 Percentage Poverty Tool , O FFICE OF THE ASSISTANT S ECRETARY FOR P LANNING AND E VALUATION (January 21, 2020), https://aspe.hhs.gov/system/files/aspe-files/107166/2020-percentage-poverty-tool.pdf 3. Crosson, Francis et al., Report to the Congress: Medicare Payment Policy , M EDICARE P AYMENT A DVISORY C OMMISSION (March 15, 2019), at 25, http://www.medpac.gov/docs/default-source/reports/mar19_medpac_entirereport_sec.pdf. 4. National Health Expenditures 2018 Highlights , C ENTERS FOR M EDICARE AND M EDICAID S ERVICES , https://www.cms.gov/files/document/highlights.pdf ( Last modified 12/17/2019 02:19 PM). IUPUI
References (cont.) 5. National Health Expenditures 2018 Highlights , C ENTERS FOR M EDICARE AND M EDICAID S ERVICES , at 27, https://www.cms.gov/files/document/highlights.pdf ( Last modified 12/17/2019 02:19 PM). 6. National Health Expenditure Data 2017 Highlights , C ENTERS FOR M EDICARE AND M EDICAID S ERVICES , at 3, https://wayback.archive-it.org/2744/20190327162525/https://www.cms.gov/Research-Statistics-Data-and- Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/highlights.pdf (last modified Jun 27, 2019). 7. Eleesha Lockett, Medicare for All vs. Public Option: How Do They Compare? , HEALTHLINE (April 22, 2020), https://www.healthline.com/health/medicare/medicare-for-all-vs-public-option. 8. Donnelly, P. D., Erwin, P. C., Fox, D. M., & Grogan, C., Single-Payer, Multiple-Payer, and State-Based Financing of Health Care: Introduction to the Special Section , A MERICAN JOURNAL OF PUBLIC HEALTH , 109(11), 1482–1483 (November 2019), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6775924/. IUPUI
References (cont.) 9. Medicare for All Act of 2019 , S. 1129, 116th Cong. (2019) https://www.congress.gov/bill/116th- congress/senate-bill/1129/text. 10. Subsidy Reduction effect Ethan Kaplan & Melissa Rogers, The Cost and Benefits of a Public option in Healthcare Reform: An Economic Analysis , Berkeley Center on Health, Economic & Family Security (October 2009) https://www.law.berkeley.edu/files/chefs/Public_Option_Economic_Analysis.pdf. 10. Ethan Kaplan & Melissa Rogers, The Cost and Benefits of a Public option in Healthcare Reform: An Economic Analysis , Berkeley Center on Health, Economic & Family Security (October 2009) https://www.law.berkeley.edu/files/chefs/Public_Option_Economic_Analysis.pdf. IUPUI
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