Comparison of John Conyers’ “U.S. National Health Care Act” (H.R. 676), John Dingell’s “National Health Insurance Act” (H.R. 15), and Jim McDermott’s “American Health Security Act.” (H.R. 1200)
By Nicholas Skala, June 2009
In the following short article, I evaluate and provide PNHP’s position on the “National Health Insurance Act” (H.R. 15), introduced by Rep. John Dingell and the “American Health Security Act” (H.R. 1200), introduced by Rep. Jim McDermott; particularly in comparison the “U.S. National Health Care Act” (H.R. 676), introduced by Rep. John Conyers. I also provide our thoughts on the politics of the various proposals.
SUMMARY
These points summarize our main thoughts on the pieces of legislation under consideration.
1) Both H.R. 15 and H.R. 1200 are defective and will fail to remedy the U.S. health care crisis. We strongly feel that both the Dingell bill and the McDermott bill are structurally defective and fail to contain fundamental provisions required to implement a comprehensive, sustainable, universal health care system. PNHP hence cannot support H.R. 15 or H.R. 1200. Specific defects of the bills include:
a) H.R. 15 and H.R. 1200 fail to proscribe duplicative private insurance: The cornerstone of a workable single-payer system is a ban on private insurance that duplicates the coverage provided by the single-payer entity. Without specific proscription, private insurance companies will continue to attempt skim healthy, profitable patients and leave the sick and costly to the public plan. In the process they will generate billions of dollars in administrative waste, diverting funds from care. (Appears as Sec. 104 of H.R. 676).
b) H.R. 15 and H.R. 1200 fail to proscribe investor ownership of health delivery facilities: For-profit investor ownership of hospitals, clinics and other delivery facilities have been shown to provide worse care at a higher cost than their non-profit counterparts. Their presence has a parasitic effect upon the parallel public system, and they prevent the implementation cost-saving measures such a global budgeting and capital planning. (Appears as Sec. 103 of H.R. 676).
2) Both H.R. 15 and H.R. 1200 will require massive new taxes and will fail to control costs. H.R. 676 is self-financing and implements effective cost controls: Because they fail to proscribe competing private insurance, H.R. 15 and H.R. 1200 are structurally unable to realize the $400 billion in administrative savings that H.R. 676 achieves by eliminating private insurers. Without this built-in financing, expanded coverage can only be achieved by raising taxes. This makes H.R. 15 and H.R. 1200 much more vulnerable to political attack than H.R. 676.
3) The national single payer movement will not support H.R. 15 or H.R. 1200: The national movement for single payer has been built around principles of equity and universality, principles which – by their failure to ban private insurance and investor ownership – H.R. 15 and H.R. 1200 fall short of achieving. Should one of these bills become the basis for the amendment to H.R. 3200, the support of a millions-strong movement would be lost.
4) While PNHP only supports true single payer or “Medicare for /All/” legislation, we are open to proposals for more progressive financing than H.R. 676. H.R. 15 and H.R. 1200 can be more accurately described as “Medicare for Some” or “Medicare for the Poor.” While the single payer movement cannot accept retention of the private insurance industry or investor-owned delivery systems, we are not wedded to the financing provisions of H.R. 676, but seek the
most progressive financing of health care possible.
OVERVIEW OF THE LEGISLATIVE PROPOSALS
“The U.S. National Health Care Act” (H.R. 676 – Rep. John Conyers)
H.R. 676 establishes a federal universal, comprehensive health care program which would provide coverage for everyone in the United States. A full range of benefits is provided, including doctor, hospital, long-term care, mental health, prescription drugs and durable medical supplies. Beneficiaries are enrolled at birth and coverage is continued throughout their lives. Patients are afforded free choice of doctor and hospital. Private insurance which duplicates that provided by the national health insurance program is prohibited to ensure universality, equitability, and sustainability of the system. Investor-ownership of health delivery facilities is likewise proscribed to minimize wasteful duplication and allow for rational health planning.
H.R. 676 is self-financing and for all practical purposes budget neutral. Roughly $400 billion in administrative savings are recovered by eliminating private insurers. This money is redirected back into the health system for care, requiring no net increase in health spending. The portion of health spending currently paid in the form of premiums and out-of-pocket costs by individuals and businesses is replaced by a modest progressive tax structure. The bill suggests increased taxes on the top 5 percent of income earners and a modest payroll tax. H.R. 676 provides an array of effective cost control mechanisms, including a negotiated fee schedule with physicians, global budgeting of hospitals, wholesale purchasing of prescription drugs, and planned capital expenditures.
“The American Health Security Act” (H.R. 1200 – Rep. Jim McDermott)
H.R. 1200 requires states to develop their own individual health care systems based on federal standards administered by a new federal agency. H.R. 1200 requires states to develop a fairly comprehensive benefits package and ensure the portability of coverage. Beneficiaries are automatically enrolled at birth. The bill amends the Employee Retirement Income Security Act to prohibit “employee benefits” duplicative of state health security program benefits, but apparently continues to allow non-employer private coverage. The bill does not proscribe investor ownership of health delivery facilities. On paper, patients are afforded free choice of doctor and hospital, but it is difficult to see how this will be achieved while maintaining the private insurance industry.
H.R. 1200 is financed by a tax increase: an 8.7 percent payroll tax, an 8.7 percent tax on employee representatives, and a 2.2 percent personal income tax. H.R. 1200 includes some, but not all of the cost control measures found in H.R. 676, such as hospital budgeting and wholesale purchasing of pharmaceuticals.
“The National Health Insurance Act” (H.R. 15 – Rep. John Dingell)
H.R. 15 provides for the creation of a federal Medicare-like program for most people in the United States. H.R. 15 provides for a benefits package that is fairly comprehensive, but not nearly as much as H.R. 676 or H.R. 1200 (e.g., only prescription drugs that are “unusually expensive” are covered). The bill does not proscribe private insurance coverage that duplicates that provided by the national system. It also does not proscribe investor-ownership of health delivery facilities.
H.R. 15 is financed by a tax increase: a value-added tax of 5 percent on most taxable transactions. The bill contains virtually no cost-control mechanisms, only calling for “a study analyzing various methods to control the costs of providing personal health benefits under this Act.”
ANALYSIS OF LEGISLATIVE PROPOSALS
Coverage and Equitability
H.R. 676: All persons would be covered in one single-tier system offering the same comprehensive benefits. A ban on duplicative private insurance means that coverage is equitable regardless of ability to pay.
H.R. 1200: All persons would be covered by private insurers or one of 50 state-based health programs required to meet criteria defined by the federal government. While competing private employer-based coverage would be banned, private insurance carriers could continue to offer non-employer coverage. This would provide an incentive for insurance companies to offer services to wealthy and profitable patients to the detriment of the public system. Bad risks would quickly accrue to the public system, rendering it a second-class care system for the poor and sick.
H.R. 15: All persons would be covered by private insurers or a federal Medicare-like program. Private insurance companies would continue to operate. This would provide an incentive for insurance companies to offer services to wealthy and profitable patients to the detriment of the public system. Bad risks would quickly accrue to the public system, rendering it a second-class care system for the poor and sick.
Benefits
H.R. 676: Offers comprehensive coverage for all medically necessary treatments, including doctor, hospital, long-term care, mental health, prescription drugs and durable medical supplies.
H.R. 1200: Offers comprehensive public benefits at the outset of the program, however the participation of private insurers ensures that this will be short-lived. As private insurers enroll the healthy and profitable, bad risks will quickly accrue to the public system. Facing financing shortfalls, the only choice will be to raise taxes or reduce benefits.
H.R. 15: Offers a substantial benefits package at the outset of the program, however the participation of private insurers ensures that this will be short-lived. As private insurers enroll the healthy and profitable, bad risks will quickly accrue to the public system. Facing financing shortfalls, the only choice will be to raise taxes or reduce benefits.
Financing / Savings
H.R. 676: H.R. 676 is self-financing and for all practical purposes budget neutral. Roughly $400 billion in administrative savings are recovered by eliminating private insurers. This money is redirected back into the health system for care, requiring no net increase in health spending. The portion of health spending currently paid in the form of premiums and out-of-pocket costs by individuals and businesses is replaced by a modest progressive tax structure. The bill suggests increased taxes on the top 5 percent of income earners and a modest payroll tax (estimated at 3.3 percent on employers and employees, respectively) and a small tax on stock and bond transactions. H.R. 676 provides an array of effective cost control mechanisms, including a negotiated fee schedule with physicians, global budgeting of hospitals, wholesale purchasing of prescription drugs, and planned capital expenditures.
HR 1200: H.R. 1200 is financed by a tax increase: an 8.7 percent payroll tax, an 8.7 percent tax on employee representatives, and a 2.2 percent personal income tax. H.R. 1200 includes some, but not all of the cost control measures found in H.R. 676, such as hospital budgeting and wholesale purchasing of pharmaceuticals. Because the private health insurance industry is retained, there are no administrative savings, and the cost of expanding coverage is more costly. Higher costs threaten coverage gains and would lead to benefit cuts, tax increases, or both.
H.R. 15: Program will be financed through a National Health Care Trust Fund. The trust fund will be funded with a value-added tax of 5 percent imposed on certain transactions. Because the private health insurance industry is retained, there are no administrative savings and no effective cost-containment. As a result, rising costs threaten any expansion of coverage achieved under the bill, and the health care crisis continues to escalate, threatening American families and the economy.
(This article was adapted by Dr. Ida Hellander and published on-line posthumously)