Subsidizing private health insurance doesn't work

The following is a press release from the Rand Corporation. At his excellent "Quote of the Day" Don McCanne made this comment: "Amazing. Using government subsidies to cut health insurance premiums in half would reduce the numbers of uninsured by only 3 percent if participation were voluntary. The initial experience in Massachusetts also indicates that mandating participation, even with government subsidies and penalties for non-compliance, also fails to achieve universal health insurance coverage."

News Release
OFFICE OF MEDIA RELATIONS
703-413-1100 x5117
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FOR RELEASE
Monday
July 16, 2007

RAND STUDY FINDS HEALTH INSURANCE SUBSIDIES WON'T SIGNFIICANTLY CUT NUMBER OF THE UNINSURED

Government subsidies that cut health insurance premium prices in half for people without insurance would reduce the number of uninsured Americans by just 3 percent, according to a RAND Corporation study issued today.

The study by the nonprofit research organization contradicts suggestions by some that large numbers of people without health insurance would sign up for coverage if government provided subsidies or tax credits to reduce the cost of health insurance.

An estimated 45 million Americans don't have health insurance. Most of these people are in low- and moderate-income families where no one gets the insurance from his or her job, but family income is too high to qualify for Medicaid, the health insurance program for the poor.

Insurance policy prices aren't going to be the tool that solves the problem of the uninsured,” said M. Susan Marquis, senior economist with RAND and one of the study's authors. “Price is not the only barrier people face in deciding whether to purchase insurance. A lot of people who don't have insurance are young and healthy and would rather spend their money on something else.

People surveyed for the RAND Health study cited numerous other factors that influenced whether they purchased individual health insurance policies, including personal attitudes toward risk, whether they believe they can get good health care without insurance, perceived difficulty in selecting a health care plan, and even a concern that insurance companies require too much personal information for individual plans compared with group insurance plans.

One implication of our findings is that if you really do want to get to universal health insurance coverage, voluntary solutions that rely on financial incentives aren't going to get you there,” Marquis said. “Government is probably going to have to mandate it

The study found that among people who decide to buy non-group health insurance, price is an important factor in their decision to choose one policy over another.

Researchers found that people who buy health insurance prefer policies with more benefits and lower deductibles, even if they have to pay higher premiums. Those in poor health are particularly willing to pay a higher price for a low deductible, and are more likely to prefer insurance plans that feature mental health and prescription drug benefits.

People prefer better benefits, even if they have to pay a little bit more,” Marquis said. “It's evidence of risk aversion. People would rather pay a little more now and reduce their risk of having a bigger loss in the future. If that weren't true, you probably wouldn't buy insurance.

Researchers concluded that newer types of individual plans with very high deductibles may be attractive to healthy people, but are unlikely to help reduce the total number of people without health insurance.

The study is titled "The Role of Product Design in Consumers' Choices in the Individual Insurance Market." It will be published in a future issue of Health Services Research and has been posed online by the journal.

Marquis and her RAND colleagues looked at nearly 19,500 new individual health care policy subscribers from January 1997 through the fall of 2001. The new subscribers enrolled with the three largest non-group insurers in California, which provide approximately 80 percent of the individual policies in the state.

Researchers also examined U.S. Census Bureau survey data on the uninsured and purchasers of individual health plans in California. In addition, researchers conducted telephone surveys in California with nearly 4,000 individual health plan subscribers and 400 families with an uninsured adult in 2002 and 2003.

The data is currently relevant – even though the types of individual health insurance plans available today have changed – because the underlying behavior of consumers has remained consistent, Marquis said.

In addition to Marquis, the other authors of the study include Melinda Beeuwkes Buntin, of RAND; Jose J. Escarce, of the David Geffen School of Medicine at UCLA; and Kanika Kapur, of the School of Economics, University College, Dublin. Both Escarce and Kapur also are affiliated with RAND. The study was funded by a grant from the California HealthCare Foundation.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on health care quality, costs and delivery, among other topics.

The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world.

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Rescue plan

First published: Sunday, July 1, 2007 in the Albany Times Union

Single-payer system is the answer to health insurance woes
By ANDREW D. COATES

Michael Moore's documentary "Sicko" indicts private health insurance and calls for its abolition. "Sicko" joins an American tradition that includes Lewis Hine's photographs of child laborers (1908) and Harriet Beecher Stowe's antislavery novel "Uncle Tom's Cabin" (1852), two examples among many. But can Moore's theme change our nation in 2007?

Private health insurance, usually obtained if our employers offer it, has dominated access to American medical care for three generations.

Two generations ago, when employer-based private health insurance definitively failed to provide for the elderly and the poor, Medicare and Medicaid were enacted.

As the most recent generation of Americans has grown up, the failures of private health insurance have come to touch each of us in some personal way.

Private health insurance has failed to:

Remain affordable. Premiums, co-pays and deductibles mushroom, and employers pass their costs on to employees. Health care benefits present a sticking point in nearly every union contract.

Cover those who have it. Health care costs related to illness are the main cause of bankruptcies in America, according to a 2005 study by Harvard professors. Astonishingly, of those who were bankrupt because of medical bills, three out of four had health insurance at the outset of their illness.

Protect the patient-physician relationship. Insurance company interference in decisions that should be made between doctor and patient has become routine. Insurance rules delay and deny payment for diagnostic tests as well as treatments and very often control where a patient may seek care.

Contain spending. Health costs soar, both per capita and as a percent of gross domestic product.

Improve quality. The United States lags far behind all other developed nations on a broad index of health outcomes.

Reverse health disparities. Consider appalling data from the Centers for Disease Control that the ratio of black to white mortality among newborn babies has worsened in recent decades. A study by former Surgeon General David Satcher showed not only that blacks continue to die sooner than whites but that the overall ratio of black to white mortality changed very little between 1960 and 2000.

Cover the uninsured. Census Bureau data show that more than one in five Americans lack insurance for part of the year and more than one in six have no health insurance for 12 consecutive months or more.

A few years ago, the Journal of the American Medical Association ran a memorable article about the personal suffering and death of victims of our hodgepodge arrangement of access to medical care. The author, a Texas physician, lamented "the system of no system."

Michael Moore calls it "Sicko."

But mainstream politicians recoil from the suggestion that private health insurance has no legitimate role in society, though they repeat the word universal as if in a delirium. Recent state legislation, with the exception of California's single-payer bill, has aimed to rescue private health insurance from a crisis of its own making.

Look at Massachusetts, which this year required individuals to purchase private health insurance. With confusing, expensive and limited-coverage plans, bloated bureaucracy, thousands remaining uninsured and costs continually rising, the bipartisan-supported "Massachusetts miracle" already stumbles toward failure.

Americans know from personal experience that private health insurance ties up an enormous amount of resources in administrative costs and profits at least $350 billion annually, according to an article in the New England Journal of Medicine. American and Canadian Medicare both have proven for decades that very low overhead costs are feasible in a public health program.

The resources wasted by private health insurance on administration and profit could be used instead to cover all necessary medical care, for everyone -- primary care, specialty care, hospital care, dental care, mental health care, home care, rehabilitation, nursing home care and prescription drugs.

Earlier this year, in a New York Times/CBS News poll, 64 percent of those asked agreed that "the federal government should guarantee health insurance to every American."

To share risks, to control costs, to protect the doctor-patient relationship and to reverse shameful disparities, a single-payer system of public health insurance, with everybody in and nobody out, presents the only proposal that is both practical and just.

This is the idea behind a bill in Congress, H.R. 676: "The United States National Health Insurance Act." Among its 78 co-sponsors are Reps. Michael McNulty of Green Island and Maurice Hinchey of Saugerties.

Michael Moore hopes to convince America that our sick-o system of no system, based upon private health insurance, is a disgrace. Can a film move us to embrace a national health program?

See you at the theater!

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