Instead of a free market, the insurance industry is increasingly a monopoly market, now dominated by three national firms: UnitedHealth, WellPoint and Aetna.
Inflationary premium rates have increased more than 70 percent in just the past six years. Even as we pay more for coverage, we experience less access and denial of free choice of providers and hospitals.
Abandoning the principle of shared risk, private insurers maximize profits by insuring the healthy and excluding everyone else with pre-existing conditions, denying or delaying provider reimbursements and peddling high-deductible policies with Health Savings Accounts that shift greater out-of-pocket expenses to individuals.
Such catastrophic insurance often lacks primary preventive health care such as mammograms, prostate screenings and mental health care. Higher deductibles and co-pays tend to discourage early treatment, resulting in higher future costs for chronic or emergency crisis care.
Due in part to increased marketing of catastrophic insurances, individual out-of-pocket health costs soared 59 percent over the decade preceding 2005, reports the American Hospital Association. During the same period, unpaid medical bills rose 60 percent. Medical bills account for an estimated 50 percent of all U.S. personal bankruptcies. Of the 50 percent increase in bankruptcy filings from 2006 to 2007, fully 99 percent were personal bankruptcies.
Commercial insurances carry high overhead costs 20 percent of health care dollars go to administration, marketing and profits compared to 1.8 percent overhead cost for Medicare. Another 12 percent administrative cost is imposed on providers and hospitals, due to different paperwork, medication formularies and requirements of multiple insurers. Add to that the cost of resubmitting denied claims, and the annual ritual of provider re-credentialing by each insurer.
The Colorado Health Services single-payer proposal is the only one of four recently evaluated by the Lewin Group (asked by the state to develop and analyze health-care expansion proposals) projected to save substantial money and insure everyone. Single-payer saves money by eliminating wasteful administrative costs of multiple insurers, and permitting negotiation of bulk rates for pharmaceutical and durable medical goods. Estimated overall net savings is $1.4 billion.
Indeed, single-payer insurance is an antidote to the wasteful corporate bureaucracy of 1,200-plus private health insurers. More than 20 studies since the 1990s, by the Congressional Budget Office, General Accounting Office and others, have demonstrated substantial savings with single-payer insurance enough to insure the uninsured and upgrade coverage for the underinsured.
The single-payer reform proposal is a public-payer, private-provider system permitting free choice of providers and hospitals. Its benefits encompass a broader range than currently available through any single private insurance plan.
CHS would operate as a publicly owned, nonprofit insurance company. Savings would also be achieved by transferring federal (Medicare, Medicaid, etc.), state and local health care monies to a CHS trust, insulated from the general state budget.
The medical-expense portions of liability, workers' compensation and automobile insurance would also be rolled into the program, eliminating related medical administrative and adjudication costs. Universal access to continuous health care would permit cutting costs of malpractice premiums and eliminating awards for future medical expenses.
Employers and employees would pay a progressive tax, at a substantially reduced cost for the vast majority, compared to current out-of-pocket and premium health expenditures (averaging $11,000 per family). Freed from administering health plans, businesses may compete more equally in the global marketplace. All institutions currently providing employee health plans (e.g., public education, state employment) would realize savings when relieved of responsibility for current inflationary health coverage costs.
View results of the current Colorado proposal report and 19 previous federal and state studies of single-payer health insurance at healthcareforallcolorado.org.
Michele Swenson is a board member of Health Care for All Colorado, which co-authored the Colorado Health Services single-payer insurance proposal.