There are many plans for health care finance reform floating around lately, most recently the much-ballyhooed Baucus plan, outlined here in his whitepaper, along with Obama's, McCain's, Wyden's, Kennedy's, and others (HR676 is actual legislation). Noticeably absent from these plans is any sort of fiscal analysis. This is understandable, since there is not much meat on those bones (Wyden's has a fairly weak endorsement from the CBO).
Based upon the existing fiscal analysis of SB840 (brief summary pdf), the California Health Insurance Reliability Act (which passed the legislature and was vetoed by governor Schwarzenneger twice) I would like to run some numbers using a real-life situation which illustrates how single-payer is fleshed out in reality, should that day come.
Follow me as we convert Bell-Everman, Inc., a small Californian design and manufacturing firm, from a private insurance benefit plan to single-payer.
First a little background. SB840, now defunct but soon to return with a new bill number, has a companion bill (SB1014) which outlines the means for funding the legislation defined by SB840. As originally envisioned some three years ago, when the bill was first vetoed, the salient numbers were as follows*:
Line 1) Basis = average of employee salaries -$7000, times number of employees
Line 2) Employer Contribution to the single-payer kitty: 8.2% of Basis
Line 3) Employee Contribution to the single-payer kitty: 4% of Basis
These numbers were arrived at using exacting (as much as possible) fiscal analysis with the intent of combining the savings of the single-payer plan and this revenue to achieve the goals of the single-payer system: comprehensive, fully pre-paid access to medical care to every resident of California.
With the passage of just a few years, these numbers have grown, according to a less rigorous analysis by the California Legislative Analyst's Office - instigated by the foes of SB840 - to be around (I'm using the middle of their range):
Line 1) Basis = average employee salary -$7000, times number of employees
Line 2) Employer Contribution to the single-payer kitty: 10% of Basis
Line 3) Employee Contribution to the single-payer kitty: 5% of Basis
Perhaps the foes of SB840 had thought they had killed single-payer with this horrendous increase (over 20%!) in the numbers**.
Now let's look at Bell-Everman. With 17 employees, and an average employee salary of around $37,000, let's do the math:
Line 1) ($37,000 - $7000) x 17 = $510,000
Line 2) $510,000 x %10 = $51,000
Line 3) $510,000 x %5 = $25,500
Total contribution = $76,500
How does this compare with BEI's current benefit? BEI offers every employee a monthly stipend of $435 to be spent on whatever plan they think best fits them and their family. A smorgasbord of plans is offered up by the local Blue Shield insurance broker. The idea is of course to find the plan the best matches your benefit as an employee, since going over costs you and going under is not taking full advantage of the benefit.
So the current cost for BEI is simply $435 x 12 x 17 = $88,740
Right off the bat, just in terms of dollars out the door, we have a savings of 16% from the total contribution to the single-payer kitty compared to the current expense. Not bad. Of course, BEI could elect to just cover it's 10% and leave the other 5% to the employees, in which case the company savings is nearly 43%!
But that's just the dollars. Let's talk about the actual benefit.
Under BEI's current benefit you are entitled to:
HMO or PPO restrictions on providers (this is what if often called "choice")
deductibles (most on the order of $4000 maximum out-of-pocket)
co-pays (for prescriptions and office visits)
and most likely paperwork, certainly a phone call or ten to your insurance "adviser" and re-enrollment every couple of years
Under the single-payer plan you are entitled to:
fully pre-paid (partial list)
inpatient and outpatient services by: health facilities, physicians licensed health care professionals
diagnostic imaging,laboratory services
durable medical equipment including: prosthetics, eyeglasses, hearing aids
rehabilitative care, emergency or necessary transportation, language interpretation, immunizations, preventive care, health education, hospice care, home health care, prescription drugs, mental health care, dentistry, podiatry, chiropractics, acupuncture, religious healing that is protected under federal or state statutes, blood products, emergency care vision care, adult day care, case management, substance abuse treatment, dialysis, up to 100 days in a skilled nursing facility
I don't know what the average health benefit offered by employer's is. I suspect that BEI's, generous as it seems, is somewhere around the median for companies our size. Please note that under single-payer you needn't be employed at BEI or anywhere else to benefit - everyone is covered, no-one is denied coverage, and you are covered for life. Baucus, McCain, Wyden, Kennedy, and yes, Obama, can't touch this with their plans.
Every CEO of every corporation should be demanding single-payer. The only reason they don't is either ideological or has to do with their competence, and recent observations of the current corporate leadership lead me to believe it's more the latter than the former.
Single-payer health care financing would be a good start towards regaining corporate and societal health.
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* the split between employer/employee contribution is arbitrary, the total percentage is the important number
** most of the increase would potentially be temporary as it is used to cover the incidental costs of transitioning into the single-payer system