This first-ever review of leading Congressional bills and the administration’s proposal concludes that elements of many of the plans proposed in Congress are feasible and would reduce health care costs over time. Representative Stark’s AmeriCare proposal, which would open the Medicare program to everyone, would cover nearly all of the uninsured as would Senator Wyden’s Healthy Americans Act, which would help people purchase coverage through large regional insurance exchanges. President Bush’s plan would cover 1 in 5 uninsured Americans.
The Stark proposal would cost the federal government $154.5 billion in 2007 but reduce overall health spending by $60.7 billion because of savings in insurance administration and prescription drugs. The Wyden proposal would increase federal spending by less, $24.3 billion in 2007, because of offsetting tax revenue effects of requiring employers to “cash-out” their health benefits as wages to employees. It would reduce overall health spending by $4.5 billion, partly through insurance administration savings. President Bush’s plan would cost the federal government $70.4 billion in 2007 and reduce health system spending by $11.7 billion, as people would reduce their use of health services. Insurance administration costs would increase under his plan.
Building on the current momentum at the state level to expand health insurance, two currently introduced bills propose state demonstrations to expand health insurance. These bills do not provide enough details to estimate their cost. However, the analysis assumed a model where 15 states (Arizona, California, Georgia, Illinois, Iowa, Kansas, Louisiana, Massachusetts, Montana, New Mexico, New York, North Carolina, Ohio, Texas, and Wisconsin) would implement a blended version of Massachusetts’s Commonwealth Care and Governor Schwarzenegger’s health proposal for California, with federal matching funds provided for Medicaid and State Children’s Health Insurance Program (SCHIP) expansions. Based on this model, about 20 million people are estimated to gain coverage out of 23.6 million currently uninsured in those 15 states.
“The Institute of Medicine estimates that the poor health and shorter life spans of the uninsured cost between $65 billion and $130 billion a year,” said Sara Collins, assistant vice president for the Future of Health Insurance at the Commonwealth Fund and lead author of the report. “That provides a stark benchmark against which we can compare the cost of inaction versus the costs and savings of investing in a more rational and equitable system of health care in the United States.”
The analysis looked at 10 health care plans introduced in the 109th and 110th Congresses (see attached list of plans reviewed). In addition to reviewing President Bush’s and other sweeping proposals, researchers looked at more modest ideas such as expanding existing public health insurance programs like Medicare and the State Children’s Health Insurance Program, and strengthening employer-based health insurance. The researchers found that these proposals also hold promise for reducing the number of uninsured, projected to reach nearly 48 million in 2007, and could serve as a first step toward universal coverage.
According to the report, premium subsidies and new tax provisions in the bills greatly affect family health spending. Under Representative Stark’s AmeriCare proposal, families would see a drop in out-of-pocket health care expenditures of $142.6 billion, with the largest savings for families with low and moderate incomes; however these savings might be offset if taxes are increased to finance the increased federal government spending. Under Senator Wyden’s bill, family health spending would decline by $78.8 billion--spending would decline the most for lower and moderate income households and rise for the highest income earners. Under President Bush’s proposal, family spending on health care is estimated to fall by a net $31 billion in 2007 due to income tax savings. But tax savings disproportionately accrue to people in higher income brackets. For example, families with annual incomes of less than $10,000 would save an average of $23 in 2007 and families earning $150,000 or more per year would save an average of $1,263.
Proposals that pool health risk by covering people in large groups are the most efficient, saving anywhere between $57 and $74 billion in insurance administrative costs. The Stark AmeriCare proposal and the Wyden Healthy Americans Act would do this and, additionally, the AmeriCare proposal would require the federal government to negotiate prescription drug prices, adding an additional $33.9 billion to health system savings. President Bush’s proposal will achieve savings by reducing the comprehensiveness of coverage and inducing lower health service use rather than reducing insurance administrative costs. In fact, because more people are expected to buy coverage through the individual insurance market under President Bush’s proposal, the costs of insurance administration nationally would increase by $5.5 billion.
“If we don’t move to make changes to our failing health care system, the number of uninsured in this country is projected to rise to 56 million by 2013,” said Commonwealth Fund President Karen Davis. “Many of these proposals demonstrate that it is possible to move toward the high performance health care system Americans want and deserve while assuring access to health care for everyone.”
Researchers found that quality improvement provisions were embedded in many of the proposals. However, the proposals that will organize health care coverage through centralized mechanisms and allow health care quality improvement tools like standardized data collection, electronic claims and medical records, and rewarding providers for providing high quality care to be implemented systematically will go the furthest to improve quality, according to the analysis.
To create the analysis, researchers, assessed the economic and human impact different proposals would have in 2007 in three broad categories: fundamental reforms to the nation’s health insurance system, expansions of existing public health insurance, and strengthening employer-based health insurance. Specifically, researchers looked at each proposal’s potential to improve America’s health care system by providing universal access to health care, equality of care and health care spending, efficiency in financing and delivery of care, higher quality care and ultimately, longer, healthier and more productive lives.
Proposals selected for inclusion in the report either had the potential to significantly impact the problem, reflected ideas proposed in the Administration’s budget, had bipartisan support or were unique or innovative. The ten-page executive summary and full report are available on the Commonwealth Fund’s Web site, www.cmwf.org. This report, the first of a two-part series, analyzes and compares leading congressional bills to expand health insurance coverage. Part II of the series will analyze and compare congressional bills that seek to improve health care quality and efficiency.
