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NAVIGATION PNHP RESOURCES
Posted on October 30, 2007

Health care money pits

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Janet K. Seeley, M.D., Ph.D
The Coloradoan
October 30, 2007

Thirty percent of your health care dollars does not go to health care. Instead, they pour into the money pits of multiple risk pools and high administrative costs. That’s $30 of every $100 you think you are spending on health care! An affordable solution sought by the Colorado Blue Ribbon Commission for Health Care Reform (208 Commission) is impossible unless these cost drivers are controlled (www.colorado.gov/208commission).

Fortunately, the publicly funded, privately delivered (single-payer) proposal shrinks these cost drivers; the other four proposals ignore them.

The concept of risk pool is a key principal of insuring any population. The larger and healthier the group (pool), the lower the cost. Right now, the Colorado population is fractured into hundreds of risk pools. Insurance companies evaluate the risk by looking at the health history and past claims made by individuals in the group. So, the smaller the group and the higher the possibility that members will get sick, the higher each member’s premium. This is why smaller companies and individuals are faced with higher premiums. On the other hand, when a large group, such as the population of Colorado, is covered by the same financing plan, the risks are shared by healthy and sick alike, the cost is lower and health care is there when needed. This is single payer financing.

The second cost driver is administrative costs. Today’s complex mixture of private and government plans requires multiple, confusing and often duplicative levels of administration and paperwork. Imagine the crazy quilt of administrative costs for employers, individuals, insurance companies, doctors, hospitals and public programs. This extremely expensive, wasteful maze robs health care services. “Choice,” so often cited as an important feature of the U.S. system, amounts to a choice only among wasteful plans!

The patchwork of insurance and government plans in four of the 208 proposals is at least as complex as our current system and does little to curb future costs. We will all pay more with those four proposals. The single payer proposal dramatically reduces administrative costs with a public financing system to cover all Colorado residents with comprehensive, privately delivered health care. The independent Lewin Group cost analysis estimates that the single-payer plan actually saves Coloradans $1.4 billion/year in health care costs.

The single-payer proposal for Colorado health care reform solves the problem of multiple risk pools and reduces administrative costs by setting up a publicly financed trust fund. Yes, public financing means state health care taxes, but they are more than offset by the savings in current state and federal taxes for public programs, insurance premiums, high copays, deductibles and many out-of-pocket health expenses. For most of us, that would be less expensive than what we spend today. The comprehensive benefit package, including long term care, covers all Colorado residents and may be supplemented with private plans if desired. Health care delivery remains private, with your choice of provider and hospital.

So, do I think that the Single Payer 208 proposal is the only way to help Colorado meet the goals of the 208 Commission of reducing costs and covering Coloradans? It is the best one I see. Will it need improvement as it goes? Certainly.

Janet K. Seeley, M.D., Ph.D, is a Fort Collins physician and a speaker for Health Care For All Colorado. Reach her at jkseeley@webaccess.net or www.healthcareforallcolorado.org/?p33speakersbureau.