Universal Coverage – A Call for Action

Henry E. Simmons, M.D., M.P.H., F.A.C.P.
President, National Coalition on Health Care
Opening Presentation
“Universal Coverage – A Call for Action”
National Coalition on Health Care Leadership Summit
The Carter Center, Atlanta, Georgia
January 26, 2000

Good morning and thank you for joining us. Our purposes at this conference today are three fold.

• The first purpose is to describe and quantify the problem of the uninsured and underinsured. Who are they, what are the trends we can expect in the near future and why are more and more Americans losing health coverage?
• The second purpose is to describe how the uninsured as well as the insured are affected, and why ALL Americans, insured or not, rich or poor, should be concerned with this rapidly growing problem. In doing so we will also expose a number of myths that impede our understanding of, and our efforts to deal with, the issue of the uninsured.
• Our third purpose is to describe the steps we believe our nation must take to resolve this problem and to explain why it is now critical that our nation finally adopt and achieve the goal of universal coverage.

We recognize that advancing such an ambitious agenda at this time will not be easy, because the political dynamic for major reform is timid and stalled. Many are advancing partial reform proposals, because the conventional wisdom is that this is all that is now possible. As a result, band-aids are being applied where major surgery is needed, and none of the presidential candidates has as yet advanced a proposal powerful enough to deal with the problems we face.

In light of this, there is a compelling need for national bi-partisan leadership. Our Coalition and all the organizations represented here today are stepping forward to call for, and to help provide, such leadership.

Today we will make the case for universal coverage. We have structured this session to serve as a national call to achieve universal coverage and the structural reforms necessary to sustain such an effort.

Today’s leadership summit takes place as the nation begins a new round of debate on the serious fault lines in our health care system and as we begin the electoral campaign to decide the makeup of the new administration and Congress that will lead us into the next millennium. With this confluence of events, it seems to us that we have – again – a window of opportunity, and, indeed, a responsibility to address problems that have grown significantly worse since the failed attempt at health care reform in 1993 and 1994. You will remember that attempt at reform focused on the problem of the uninsured. Only one thing has changed since then. All the problems that then existed, and that were even then considered to be of crisis proportion, are not only still with us-they have all grown worse.

WHAT ARE THE PROBLEMS?

Over the past year, our Coalition has released eight major studies assessing our health care system. These studies, as well as others, show that our health care system is plagued with three major, and interrelated, problems.

PROBLEM #1 IS DECREASING INSURANCE COVERAGE

Health insurance coverage in America is declining, and the major private sector safety net, i.e. the employer-based health insurance system, is eroding. As this chart shows, there are 10 million more uninsured today than a decade ago, and an average of one million more Americans are being added to the ranks of the uninsured each year. Most of these are from working middle-class families. We need to put aside the myth that most of the uninsured do not deserve our concern because they are non-workers who are not really trying or are otherwise second- class citizens. In fact, the typical uninsured individual today is a young working adult with children who earns a middle-class income and who is either a contingent worker, employed in a small business, or self-employed.

*Projected
Source: Data for 1987-1997 from Employee Benefit Research Institute, Projections by the National Coalition on Health Care, May 1999.

The near elderly and early retirees (ages 55-64) represent another rapidly growing group of uninsured as employers facing rising costs are forced to drop retiree or dependent coverage that they previously provided.

In addition to the 44 million Americans without any health insurance, another 30 million or more are underinsured. Many insured individuals, including many in the Medicare population, face premium charges, co-payments, and out-of-pocket costs that consume 10-20% of their disposable incomes. As costs continue to rise, and as more employers move to a defined contribution approach, it seems likely that these direct costs for middle-class working families will grow far larger, further compromising the ability of such families to afford medical coverage and care.

The number of uninsured is growing in spite of the best economic times in our history – which undercuts another myth — the myth that economic growth will solve this problem. Just imagine what will happen to the number of uninsured and underinsured when we experience the next, and inevitable, economic downturn. In fact, a recent study we commissioned estimated that the number of uninsured would rise over the next decade to almost 60 million even without an economic downturn. That’s one out of every four non-elderly Americans. If government decides to further cut Medicare costs by raising the retirement age, even more Americans are likely to be added to the ranks of the uninsured.

The statistic about the number of uninsured on an average day actually understate the vulnerability of Americans to losing coverage. Americans move in and out of coverage. Over the next three years, one in three Americans under the age of 65 will experience a period without health insurance. Indeed, the majority of Americans are now at risk of losing their health coverage at least temporarily at some point in the future. The studies found in your briefing books describe the major forces that will further exacerbate the problem of the uninsured and underinsured.

The previously tight link between employment and health insurance is increasingly tenuous. Working middle-class families are now at increasing risk of losing the health insurance they now have and facing the pain, uncertainty, and anxiety that such a loss produces.

Some have suggested that we should not worry about the uninsured because through charity or other means they get appropriate care in a timely fashion when they need it. This represents another long-standing myth that our next speaker, Dr. Whitney Addington, will lay to rest here today.

The bottom line is this: In the absence of a system of universal coverage, none other than the wealthy amongst us can remain assured that health care coverage will be there when they or their families need it.

PROBLEM #2 – A CENTRAL REASON FOR INCREASES IN THE NUMBER OF UNINSURED — IS RISING COST

Six years ago our nation was assured by many that we didn’t need any new government action to secure universal coverage or control cost because managed care and the marketplace would solve our problems. Since then, we have experienced a massive shift from fee-for-service to managed care plans, in which over 80% of the nation’s workforce and many Medicare beneficiaries are now enrolled. Despite that shift, annual health care spending has increased over 300 billion dollars since 1994. Many employers and individuals are seeing health insurance premiums rise at double-digit levels–five times the inflation rate. Prescription drug increases are even higher. As our next chart shows, the Congressional Budget Office estimates that total health care costs will almost double to over two trillion dollars in just eight years.

Because our nation lacks a system of universal coverage, much of this huge increase is cost-shifted to the self-insured, to employers who currently provide insurance coverage, and ultimately to all their employees.

In addition, and again because we lack a system of universal coverage, we have the most administratively complex system in the world. This unnecessarily adds many billions more to our costs.

*Projected
Source: Health Care Financing Administration

The absence of universal coverage also results in major inequities in the way costs are paid. This absence creates an unlevel playing field on which many employers and individuals pay far more than their fair share while others pay little or none. This financial inequity leads to further erosion of our employment-based system of coverage. This phenomenon will continue to grow as various payers attempt to avoid cost increases by passing them on to others, i.e., by cost shifting. In addition, as costs continue to increase, more and more employers, especially small businesses in the rapidly growing service industries, will be forced either to hire only healthy workers, shift costs to their employees or other employers, drop or decrease coverage, hire contingent workers without health insurance or limit salary increases. The speeches to follow will give you graphic examples of all these phenomena. All of these defensive actions will inevitably exacerbate even further the problem of the uninsured.

PROBLEM #3 IS POOR QUALITY

We can understand why government and private sector payers have focused recently on tactics to constrain costs. But that then compounds our third problem, the quality of care.

Even though we have long known how difficult it is to contain costs in any sector if quality is poor, to this point the health care debate has focused almost exclusively on cost. This has led to efforts by government and the private sector to control costs by limiting fees, increasing beneficiary cost-sharing, and increasing the use of managed care.

Unfortunately, a large and growing body of evidence raises questions as to whether any or all of these approaches will, over the long term, contain costs. The major drivers of rapidly rising costs are increasing intensity of care and a sharp increase in our use of technology, especially for care of the growing number of elderly. This raises the critical question: Just how good is the quality of our care?

Many people have at least some understanding of the magnitude of the coverage and cost problems. But very few understand that our third problem, poor quality, is also serious and that unless it is addressed, coverage and the cost problems cannot be fixed. The reason is that these three problems are inextricably linked.

A number of experts have estimated that our lack of attention to quality results in waste of hundreds of billions of dollars each year. Poor quality of care is a major contributor to unnecessary cost escalation. As already noted, cost escalation leads to an increase in the number of uninsured. In the absence of insurance coverage, needed care is becoming increasingly difficult to get. When you can’t get the care you need, health is adversely affected. In fact, studies show that, other than aging, the biggest risk factor associated with a poor outcome or death is the lack of health insurance. Whether or not you receive timely care (which is increasingly determined by your insurance status) can determine whether you live or die.

But lack of coverage is only a part of our quality problem. An equally significant problem is that many people with health insurance receive poor quality care. The evidence shows that such care injures millions, and kills several hundred thousand Americans each year. We have, then, a vicious cycle that feeds on itself: Extensive use of technology and poor quality raises costs, rising costs lead to cost-shifting and decreasing coverage, decreasing coverage leads to poor quality, and poor quality in turn increases costs. We have created a perpetual motion machine headed in the wrong direction.

WHAT LESSONS HAVE WE LEARNED

How do we address the three major and interrelated systemic problems we face? We know how not to do it. We know we don’t do it with band-aids or patches. We have forty years of experience attesting to the failures of such a strategy, as our cost and coverage charts so graphically show. At the same time it is now quite clear from our experience and from the many studies we and others have done that a voluntary system will not achieve universal coverage. Liberals and conservatives are now coming to share that view. It is also becoming clear that managed care, the market, medical savings accounts, changes in tax treatment of health insurance benefits, a patient bill of rights, the Kennedy-Kassenbaum legislation or other partial steps will not alone address the problems we face. They can each make a contribution, but more extensive reforms will be necessary. What are those reforms?

STEPS NECESSARY TO ADDRESS OUR PROBLEMS

After a great deal of study and reflection, our Coalition has concluded that solution will ultimately depend on the achievement, through a public/private partnership, of the following goals:

• Making sure every American has health insurance coverage;
• Improving the quality of all care;
• Controlling total system costs and stopping cost shifting;
• Creating a more viable and equitable mechanism of financing, and
• SimplifyingWhy must these goals be achieved?

Because our three problems are inextricably intertwined. You can’t solve one without addressing them all. administration.

As I indicated earlier, it’s a vicious cycle. Without universal coverage, you cannot assure equity or quality, and in the absence of quality, you cannot contain costs. In addition, without universal coverage you can neither make the system less complex administratively, control costs, stop risk selection and cost-shifting, achieve a level playing field of equitable financing, or create a truly competitive market-based system. In fact, those who created the managed competition hypothesis concluded that it could not work without assured universal coverage.

To those who claim that our nation cannot afford a system of universal coverage we would say this: Every other advanced nation is the world has done so while spending one half to two thirds as much per capita as we do and attaining health outcomes at least as good as ours.

Achieving universal coverage is the right thing to do. As two of our next speakers will eloquently demonstrate, this is the only ethically and morally defensible position for a just society to take. With the help of our religious group members, our Coalition is committed to bringing that case to the American people.

In response to this rapidly worsening situation, the Coalition has developed a plan of action to educate and inform the public and our national political leaders about the need for universal coverage. First, the Coalition plans to grow by adding important organizations in important sectors of our society that will add their voices to those represented here today.

Second, the Coalition and its members are undertaking a major communications initiative, in two parts. The first part of this effort will be an augmented program of external communications, including but not limited to newspaper and magazine articles, newspaper op-eds, and appearances by Coalition leaders on TV and radio news programs of all types. The second part of the communications effort is, we believe, tremendously powerful. We are working with our member organizations to help them reach their members and employees and their families with a better understanding of the problems in the health care system. Those communications will emphasize, as we are doing here, the increasing vulnerability every year of millions of people — which means that every American family contains people who are threatened by uninsurance — and the pressing need to accomplish our goals, not just patch the system. We are reaching these people through the trusted communications from their own organizations – in internal newsletters, intranets, and training programs. Working together, our member organizations will be able to educate millions of Americans about the health care system and the importance of achieving universal coverage.

In addition the Coalition is committed to building its membership – and building the support for universal coverage -in every sector of society. We welcome your participation and your ideas.