This is the final article in this series comparing U.S.
healthcare reforms and focuses on basic value at the consumer household level.
Discussion will include how much people are paying for their health care and
their health insurance in relation to actual value. Value is determined based
on affordability and access to appropriate care for all residents. This
article, like the others review healthcare from an individual consumer
perspective not an insurance company or medical institution one.
Cost of Health Insurance
According to the 2019 Kaiser Employer Health Survey, the average
cost sharing for a single employee is 18% of the cost of their group insurance,
so using the $6,896 national cost per employee, this necessitates a $1,241 contribution.
(Kaiser Family Foundation.org, 2019) Even though you have
no family members you would still have to pay $100 per month just for the
medical insurance plan. The cost sharing for employees with family members is
MUCH steeper at 30% of family premiums for group medical insurance, which could
be as much as $20,000 so their share is $6,000 on average. As a former insurance
broker, I can tell you many employers don’t provide any premium payment
assistance for family coverage, which means those workers could be on the hook
for the full 20 K. This is $1,667 per month, which is the equivalent of a
mortgage, except lots of people would not be able to afford a house payment
after coughing up money for their medical insurance. In a generous spirit, the
US government does allow employees to pay for these eye-popping costs with
pre-tax dollars, which mean that wage earners with higher incomes are actually
getting more of a subsidy for their medical insurance cost.
In 2018, 11.8 million people were enrolled in the insurance
exchanges through the Accountability and Affordable Care Act (ACA-aka
Obamacare). (CMS’ final report shows 11.8 million consumers
enroll in 2018 Exchange coverage nationwide, 2018) These programs are
for people who don’t have access to employer provided medical insurance or
whose employer plans do not meet the minimum standards for cost and coverage
under the ACA. The average out of pocket cost for an enrolled individual with
family members was $1,415 after tax credits subsidies. The ACA was designed to
provide affordable medical insurance for low-income and middle-class residents
by paying them to obtain insurance, using federal tax credits. Essentially,
this is deeply discounted insurance, because insurance companies which
participate agree to accept the tax credit as a premium contribution. The main
difference here is the cost sharing for family coverage is not as great under
the ACA exchanges as under private sector insurance plans. However, there is a
wide variety of prices in the insurance exchanges, based on the state, age of
the enrollee, family status, and coverage selected. This figure was used to identify the most
affordable ACA offering, which was the bronze plan. If a family wants the
silver plan, the cost would increase by approximately 20%. Silver plans have
lower cost sharing for services than bronze plans for participants.
Out of Pocket Costs Hitting US Consumers
Premiums or upfront contributions for the cost of medical
insurance are only one aspect of healthcare costs born at the household level. Upfront
expenses include co-payments for treatments, which can be quite steep, costing
thousands of dollars for a single surgery.
Finally, the number one costly item for US healthcare consumers
are prescription drugs, which many residents must pay completely out of pocket,
while others have co-payments for generic drugs and name brand drugs. US consumers
are currently spending $10,045 per capita for prescription medications, again
an amount almost equal to a mortgage. According to AARP, the average retail
cost for prescription medications for seniors was $30,519 in 2017. And this picture gets bleaker, 500,000 people
in the US spend over $50,000 a year on their medications, which is the average
annual income of an employee! Adjusted for inflation, drug costs are nine times
higher than they were in 1960.
Medicare for All Analysis
Medicare for all is on the lips of half the population
today, but it is important to note that Medicare is in fact not a free
healthcare program. The Medicare program
requires a substantial payment from the government to stay solvent, which is
paid for by payroll taxes, of which 1.45% comes from employer’s payroll taxes and
employees pay. This isn’t enough money to pay for all program expenses, so the
federal government also allocates other funds as required. Medicare is the
second largest expenditure for the US government at 14% of total budget. Personally,
I don’t have a problem with the government spending the bulk of its funds on programs
benefiting the people, but we do have an obligation to make sure these programs
are reasonably sustainable. Only Social Security expenditures exceed Medicare
consuming a whopping 38% of the federal budget. Medicare costs are increasing
and the taxes to pay for them will also. It is difficult to see how it can
remain solvent without a payroll tax increase in the near future.
Secondly, Medicare participants do contribute to the cost of
their care, through monthly premiums and co-payments for services. For the
fortunate enrollees who can afford good supplemental insurance plans, those
co-payments are paid by private insurance companies. However, 19% of Medicare
enrollees pay all of their co-payments out of pocket and another 33% of
enrollees are enrolled on Medicare Advantage HMO type plans. Low income
Medicare recipients are called dual eligible, meaning they are covered by
Medicaid and Medicare and these represent 22% of all enrollees. That leaves
only 26% of Medicare enrollees who have purchased private supplemental
insurance.
This tables shows the healthcare cost factors for US
households, both private sector and Medicare, and public and government
spending.
Medicare for All Assessment Criteria
US healthcare expenses per person
|
Private
insurance/non-Medicare sector
|
Cost for Medicare
enrollees
|
Net
Impact on non-Medicare household
|
Insurance premiums
|
6,896
|
2,018
|
|
Co-payments for services
|
2,200
|
5,806
|
|
Household totals
|
9,096
|
7,824
|
-1,272
|
Government cost
|
6,748
|
10,986
|
4,238
|
Estimated additional gov cost for non-Medicare enrollees
|
2,966
per capita
|
Notes
All figures are annual calculations, as true to per capita
as possible.
The US government spend for private sector healthcare
includes tax subsidies and comes from the GOA.
Medicare premiums are for Parts B and D as Part A is offered at no charge.
Medicare supplements are not included because the price range was too great and only
about half of Medicare enrollees have them. Instead the cost sharing figure for
all Medicare enrollees was used.
The co-payment number is based on the private sector mean.
In conclusion it is important that we all have realistic
data and expectations regarding the adoption of any national healthcare program.
Based on my calculations, a 3% payroll tax, which would be born by employees
and their employers would be enough to pay for the program. The US could for example adopt a national healthcare model like Australia where only hospital coverage and basic care is provided. Access to specialty care in Australia is subject to supplemental payments. However, there are
many different ways to pay for national healthcare programs and examples
include a VAT tax like Canada uses or a combination of income taxes and fees,
like France uses. France has a tax on pharmaceutical companies to help pay for
its national healthcare program, which could work in the US.
It is also vital to consider unintended consequences of
pouring a lot more government money into a health system that is rife with
abuses. A national healthcare program would have to curb abuses such as overcharging,
eliminating incentives for unnecessary procedures, and focusing on primary
health, not just geared toward making money. Reimbursements for services must
be adequate, but it is to be expected that certain sectors, like insurance,
pharmaceutical, medical suppliers, and some providers would be earning
less. Of concern is the fact Congress
seems unable to control its spending, so this could really blow things up
fiscally. I suggest we appoint citizen
representatives with knowledge of the healthcare industry for 4-year terms,
with blinded voting, to avoid excessive pressures from the lobbying terrorists.
Oh, and let’s overturn Citizens United and get back to the original voice of
democracy in the USA.
And this is the healthpolicymaven signing off encouraging
you NOT to sign blank medical release forms when you agree to procedures, to specify
that for which you consent and that for which you decline.
This article was written by independent healthcare analyst
and journalist, Roberta E. Winter and is not subject to any corporate approval.
She is the author of a guidebook to the US healthcare system which focused on
assessing quality. (Winter, 2013)
Works Cited
CMS’ final report shows 11.8 million consumers enroll
in 2018 Exchange coverage nationwide.
(2018, April 3). Retrieved October 27, 2019, from Centers for Medicare and
Medicaid:
https://www.cms.gov/newsroom/press-releases/cms-final-report-shows-118-million-consumers-enroll-2018-exchange-coverage-nationwide
Kaiser Family Foundation.org. (2019, September 25). Employer
Health Benefits Survey. Retrieved October 27, 2019, from Kaiser Family
Foundation State Health Facts:
https://www.kff.org/report-section/ehbs-2019-summary-of-findings/
Winter, R. E. (2013, July). Unraveling US
Healthcare-A Personal Guide. In R. E. Winter, Unraveling US Healthcare-A
Personal Guide (p. 216). Rowman & Littlefield. Retrieved October 27,
2019, from
https://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972
