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Considerations In Evaluation Of Proposals.

Many of the considerations mentioned also apply to a projection of  the benefits to be derived through the public expenditures. These benefits need to be related to the costs if we are to obtain a richer appreciation of the total financing  implications and impact. Since benefits might well differ by residence ( depending on the system of medical care available ) , as well as by the age and sex distribution of the family and by the size of family, the examination of the relationship between benefits and costs becomes most difficult indeed. The difficulties are increased by virtue of the fact that we lack adequate knowledge and data about important aspects of medicals care and consumer behavior as it exists at present. We lack sufficient knowledge about what existing programs ( both public and private  ) accomplish, whom  they serve, who pays for them. We do not know the burden of  taxation under the existing Medicaid program ( involving a mixture of federal and state taxes ) . We do not know as much as we should about their financial impact. Since an examination of the financial impact of a national health insurance program should start from today’s base for comparison, this lack of knowledge is more than regrettable.

If our knowledge of the impact of existing programs and our knowledge of private expenditures on health and utilization of health services is incomplete, so, too, is out knowledge about the price elasticity for  different income groups, and yet this is necessary information if we are to make any detailed projectors involving estimates of financing  and their distributional impact. The purpose of a national health insurance program, if one examines the various proposals, is both amount of medical care received by some parts of the population. Yet, we lack information on relevant elasticities and, thus, on how much expansion might occur. It can be argued that it is difficult to make an accurate projection of the expansion of demand in a system that would look quite different from the existing system and in a situation with heavy emphasis on consumer education. Tastes would change and demand curves would shift. Nonetheless, it surely can be agreed that knowledge of the present elasticity of demand would be helpful.

1.    Considerations In Evaluation Of Proposals.

It should be clear from the previous discussion that a detailed analysis providing refined estimates of the financial impact of a national health insurance program would require more information than is available about the present distribution of medical programs, and medical care costs. It would also require that the model be dynamic. The fact that we are unable to construct such refined estimates should, however, as I have already indicated, not be viewed as a great tragedy. Our concern at this conference is with basic principles and with an  understanding of the directions that the various alternative plans would take. Even when the times come for intensive debate on national health insurance in the legislative branch of refinement, this will remain the proper concern, though the degree of refinement of estimates will, we  would hope, increase. At that time it will be useful to have a model that is, in so far as possible, tied to data, a model in which the various assumptions concerning costs, total expenditures, types of coverage, etc. could be varied. The three issues discussed in the other papers, I suspect, will be far more critical to the adoption of a particular program than will financing impacts. Yet, such a model would alert us to inequities  and would permit the details of a particular plan’s funding mechanism to be adjusted within the limits of political and other constraints.

For this conference, and at this stage in the debate concerning national health insurance ( a debate which at the national level is still addressed to the development of a  consensus about the need for such a program rather than  to the review of alternative mechanisms to achieve desired ends ) , we have been asked to assess, in so far as possible, the alternative plans along various axes. I have already referred to some of the variables that we should be cognizant of as we consider financing implications and which should be incorporated into any evaluation of the alternative plans. Let us examine these and other variables in greater detail and attempt to discuss them in the specifics setting of the alternative plans. We can then contrast the plans in qualitative terms in accordance with the criteria that are developed.

The summary of the various plans under review, prepared foe us by Mrs. Sue Moyerman of the Leonard Davis Institute of Health Economics, provides us with information on a number of the plans’ characteristics, including those which are of most direct interest for this paper on financing implications.

The proposed methods of financing the national health insurance program vary widely among the different proposals. It is useful to remind ourselves how great the differences are. Three plans ( Griffiths, Javits, CNHI-Kennedy ) call for employer and employee contributions based on taxable wages, as well as for contributions from general revenues

Posted 25 August 2009 † admin § Nationals Health Insurance ‡ Comments (0) ° Tagged:

3. Problems In Estimating Financing And Distributional Impact

There are two major difficulties in the preparation of estimates of the financing and distributional impact of a national health insurance proposal. The discussion of these two difficulties, I believe, will help point up some of the considerations that we should be aware of. The first difficulty relates to the estimates that are required to consider the future total costs of the program and, thus, to the relationship between these costs and the financing of the program. The second relates tour lack of knowledge, even our ignorance, about a number of characteristics of the health care system, utilization, and financing as these exist today.

Even a cursory reading of the various proposals suggests that in many cases the proponents hope to advance changes in the structure and  the organization of the medical care delivery system. Many of these structural changes are, in part, defended on grounds of efficiency, and, therefore, have implications for the price of medical care services, for total expenditures on medical care, and for the distribution of these expenditures as between different kinds of medical care services, for example, in-hospital and out-of-hospital care. It is difficult to determine the likelihood of implementation of the various changes and even more difficult to assess their possible impact on the efficiency and economy of the system over a defined time period. For this and other reasons, it is also difficult to project their impact on prices. But if it is difficult to project the impact on prices, it becomes difficult to determine the total cost of the program and the distribution of costs of the various services. Yet, that determination would be required in order to assess the tax burden on families and to compare that tax burden with the  income of the individual families in order to achieve a detailed understanding of the progressivity or regressivity of the tax payment mechanism and of the overall tax system.

Nor would the analytical difficulties disappear, even if expenditures under a national health insurance program were controlled to equal the revenues derived exist or that there would be co-payments and deductibles involving  additional expenditure by individuals, we would have to analyze the totality of medicals care expenses by family including both public tax payments and private expenditures in order to arrive at a complete understanding. Only if our perspective is very limited should we be interested in the tax burden alone, In any broad perspectives, we must be interested in the total of public and private expenditures and in their mix.

Once the private market and private dollars are introduced, our difficulties are magnified. The problem extends beyond measuring the relationship between the total of public and private  expenditures and the percent of income going to medicals care for various income groups. If we assume successive prices increases over time-out an unreasonable assumption even if the systems envisioned in the various plans that call for structural change brought a one-time saving due to efficiency –then we would have to answer a number of questions concerning prices impact ( particularly on private expenditures ) and the distributional effects that would follow.

Price increases, to be sure , would affect both public and private expenditures. It is likely, however, that the impact would be different since different rates of increase are likely to prevail in the two sectors. One can easily envision a situation in which private prices moved up more rapidly than public as a quasi blackmarket developed.  Alternatively, under some of the programs, one could imagine private sector expenditures remaining relatively stable with stable deductibles while the increase in prices affected the number of public dollars required. In either event the proportion that private or public expenditure are of totals costs would change, and with the change the incidence of health expenditures would shift. Furthermore, prices for various services are likely to exhibit different rated of increase ; for example, hospital prices might move up more rapidly than drug prices, long-term care at a different rate than hospital care, psychiatric care at a different rate than other care, surgery at s different rate than physician visits. All of these differences in rate of inflation would also after the distributional impact. They would affect public and private expenditures differently, as different medical procedures would have less or more coverage. They would affect different families differently depending on the families’ age-sex distribution and on medical conditions. Prices might also exhibit different rates of increase for different socioeconomic groups as a function of place of residence ( region and degree  of urbanization ) , of income, of educate, and so forth. All of this reminds us that the burden of private costs as a proportion of total costs might change significantly over time for different groups.

Posted 24 August 2009 † admin § Nationals Health Insurance ‡ Comments (0) ° Tagged:

important as it is in every government expenditure or tax program

I hasten to note that I do not mean to suggest that financing considerations are ignored by those who have offered the alternative NHI plans that are the subject of this conference. The plans, after all, do differ, and to suggest that the difference is accidental is unfair. Even so, I rather suspect that a good deal less attention was paid to the equity considerations involved in the tax ( and other financing mechanisms for the purchase of medical care ) than is warranted by the impact of the large sums involved.

It may, of course, be the economist’s bias to consider financing issues as of great importance. If that is the case, however, I should like to think that it is a bias that all of us will come to share. For, though it may be true that death and taxes are inevitable, it is certainly not true that the kind of death or type of taxation are not amenable to change.

The need for a rational discussion of financing issues and for the development of criteria, important as it is in every government expenditure or tax program, is perhaps even more important in the case of NHI. National health insurance calls for the substitution of a government program for the purchase of services that many persons are now financing themselves. Political realism suggests that if the tax plan chosen raises funds that are explicitly labeled as going for national health insurance, the public’s view of the benefits of the program may, in some measure, be based upon the comparison of their tax costs for NHI with their present expenditures for the same services.

As with many tax matters, the amount of detail ( as contrasted with general principles ) that can enter discussion is limited. The quantitative analysis of the burden and of tax incidence, by  income group, is difficult to undertake. In part this is the case because there already exist various government programs for payment of health services. Also, the preparation of detailed tables of incidence would require adjustment for the elimination of some, if not all, of these programs as well as a full comparison with the rest of the tax structure at the city, state, and national levels. The comparison is necessary because existing programs that might be eliminated involve taxes at all levels, and it is the change in the distributional equity of the total tax structure that should be our concern. Even if such tables could be created, we would then have to project additional possible changes in taxes in future years ( and impose the same requirement for detailed taxes analysis on any possible future tax changes. ) The fact that stringent detailed analysis requirements are not likely to be imposed on other programs, and the fact that the debate cannot get down to the fine degree of detail, only emphasize the need for general criteria concerning the implications of alternative methods of  financing the government revenues. The fact as we shall see later that we lack the data to create pages of computer runs’ of health cost burdens ( including tax burdens for the purchase of health care ) by family size and income simply means the general criteria are that much more important.

Posted 22 August 2009 † admin § Nationals Health Insurance ‡ Comments (0) ° Tagged: ,

System change

All of us have, in the last few years, become more acutely aware than ever of the large sums that are being poured into the American health industry. For employees the costs of coverage have become critical elements in the bargaining process. But it is Medicare and more Particularly Medicaid and the different reactions to the two programs tell us a lot about the politics of althernative funding mechanisms that have sensitized us all. Medicaid costs have expanded well beyond expectations, and there has been a significant underestimating of expenditures. Furthermore, the public’s perception of Medicaid has, I believe, been one of failure. Perhaps the public’s image is colored, by the fact that the Medicaid system is part and parcel of a welfare system which is itself  unpopular. But whether Medicaid failed or not, and if it failed, why it did is somewhat irrelevant. The fact is that the program has led many to the view that there must be a better way to finance health care.

This feeling is also present perhaps to an even greater extent in the  legislative and executive branches of government. Medicaid and Part B of Medicare ( which involves government matching out of general tax funds ) have both grown rapidly even in a time of tight budgets. Thus, both programs have created difficulties for those who have tried to restrain budget growth, and who have attempted to save dollars in competing social programs in order to finance Medicare-Medicaid increases.

If I am correct that these are among the reasons that the consideration of national health insurance has moved so far so quickly, it  suggests that there are three goals involves increasing the accessibility and availability of medical care services. Some would call this goal “system change,” and it may be that they are right in arguing that the goal can be attained only with a change in the medical care system . In any case, however, the point is clear : the public’s irritation is with more than just the level of financing : it involves the actual delivery of medical care.

A Second goal involves the financing of care. The financing goals include regularizing medical care costs to make them more predictable, to make them as painless as possible,  and to distribute them more in such a way that income is not a barrier to the receipt of care. Thus, the public may be saying that it would like the costs spread differently over time and over the population.

The third goal, as indicated, involves prediction and control of health expenditures in government budgets. Prediction and control are, of course, closely interrelated since, in part, the lack of control and the open-endedness of the system, it blank check aspects, has made budget projection very tenuous in recent years.

Accessibility, system change, and control and predictability of costs are topics reserved for the other papers at this conference. The topic of this paper, “Impact…on Financing,” has up to this point not generated the amount of discussion that has begun on system changes, protection against financial stress for individuals, or prices and costs. Perhaps this lack of discussion is due to the fact that Americans fail to recognize the equity considerations involved in the choice between alternative funding mechanisms, say between income and payroll taxes, view these issues as matters for technicians, and believe that the number of ways tax revenues can be derived are limited and that fewer options exist than is the case. If so, this is regrettable. How funds are raised and the burden that thus falls upon various income groups is something that should be debated by the general public and its representatives. It should not be left to technicians.

Posted 21 August 2009 † admin § Nationals Health Insurance ‡ Comments (0) ° Tagged:

Impact of National Health Insurance Plans on Financing (Cont.)

It should first be clear that in discussing the frustration of the public at large, we are not referring exclusively to difficulties encountered by the poor or the near-poor. It is probably fair to say that most, if not all, Americans share the difficulties ( or feel they do ) to a greater or lesser extent but by lesser we do not mean trivial. These difficulties, furthermore, are shared by various organized groups, such as unions and employers. Some evidence on this score is provided by the articles on the subject of the health delivery system and the financing of medical care in the New Republic, the Saturday Review, Business Week, Fortune , and other such journals, by television documentaries, and by the accounts of local problems in the daily press.

The problems discussed, in a sense, encompass all of medical care .There is frustration with a delivery system which has expanded in number of personnel and facilities, and yet which frequently seems to be unavailable and inaccessible. Mythology still refers to the personal relationship between patient and physician. Yet many feel that this relationship has long since disappeared. Many individuals do not have their own physicians, and often they go directly to specialists. Many individual use the emergency room or the outpatient department of the hospital as their private physician. Furthermore, the time devoted by the physician to a patient visit is often so brief as to suggest that personal rapport is seldom achieved. Many consumers feel that the delivery system involves long waits for services, impersonal care unavailabilitity of care, and difficulty in finding entry the system. To compound the difficulty the consumer complains that when care is obtained he is faced, both in and out of hospital by high charges and fees. Those who purchase insurance ( both individuals and groups ) find that insurance rates are rising rapidly. Neither the public nor the unions or the employers ( or the general taxpayer ) are happy with the financial situation the second problem that bears brief discussion.

It is not at all clear that the consumer would be satisfied with the difficult he has in obtaining care and with the quality ( as he perceives it ) of the care that he receives, even if the care were purchasable at low prices and involved low total expenditures. Nor is it clear that he would be satisfied with the prices he now pays even if he received high quality care, readily available and accessible . Perhaps the consumer wants something unattainable : high quality care at low prices and expenditures. In fact, however, what he perceives as the inadequacies of the delivery system are also associated with high prices and costs. Small wonder he complains ! Nor does his health insurance policy provide sufficient protection. There is always the gnawing fear that with deductibles and coinsurance and with the maximums, he will find that his out-of-pocket expenses ( over and above the significant amounts he has paid for insurance ) represent a considerable drain on resources. The problem is compounded by various additional sociological and psychological factors. Thus , there is irritation with a payment mechanism which seems to call for high expenditures on an out- of-pocket basis as well as significant expenditures for insurance.

There is perhaps, yet an additional factor for that has brought the national health insurance discussion to the point that it has reached in recent months.

Posted 20 August 2009 † admin § Nationals Health Insurance ‡ Comments (0) ° Tagged:

1. Impact of National Health Insurance Plans on Financing

It is useful, at the outset, to note the possibility that the various papers presented at this conference will to some extent, duplicate each other. All of us, through the good offices of the individuals at the Leonard Davis Institute of Health Economics, have attempted to keep the amount of repetition to a minimum. Perhaps, however none of us can be fully satisfied with each other’s introduction to the subject of national health insurance. Thus, what appears to be repetition may involve some change in nuance. For this reason, I being with some general introductory remarks.

In the last few years, and particularly in the last few months, national health insurance ( NHI ) has become a live issue . Most of us would probably agree that today some from of national health insurance appear closer to enactment than any of us would have imagined just four or five years ago. I believe it is important to try to distinguish the forces that have brought us to this point in time. If we understand some of the reasons that national health insurance has projected itself into the limelight, then we may better understand some of the objectives of the program and some of the problems which it is hoped NHI would solve. This understanding would, therefore, provide yet another basis for a critical evaluation of the various plans submitted, that is, do they address themselves to the problems that appear to be troubling people or are they the construction of excellent analysts who are desirous of meeting their objectives rather than those of the people ?

The ideas concerning NHI have been around a very long time and there has been sporadie discussion of the issues. But the momentum behind today’s proposals has a certain special quality a quality perhaps best described by the words, “realism,” and “immediacy.” The serious discussion of national health insurance that we witness, I believe, is a response to the pressure coming from below from constituents, from union members, from the general public. If I am correct, this is an important datum. It says that proposals for national health insurance have arisen in response to existing problems. This does not necessarily mean that national health insurance represents the only solution to the problems ; that is a matter that bears discussion. I suggest, however, that if national health insurance is rejected as a solution, other solutions must be offered, since the problems are real and being voiced with increasing frequency. We must, therefore, determine what some of the problems are. What is it that the public is concerned about ?

Posted 19 August 2009 † admin § Nationals Health Insurance ‡ Comments (0) ° Tagged: