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Exploring Single-Payer Alternatives for Health Care Reform

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Exploring Single-Payer Alternatives for Health Care Reform Dissertation Exploring Single-Payer Alternatives for Health Care Reform Jodi L. Liu This document was submitted as a dissertation in May 2016 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Robert H. Brook (Chair), Christine Eibner, and Jeffrey Wasserman. PARDEE RAND GRADUATE SCHOOL For more information on this publication, visit http://www.rand.org/pubs/rgs_dissertations/RGSD375.html Published by the RAND Corporation, Santa Monica, Calif. © Copyright 2016 RAND Corporation R® is a registered trademark Limited Print and Electronic Distribution Rights This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions.html. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org Abstract The Affordable Care Act (ACA) has reduced the number of uninsured and established new cost containment initiatives. However, interest in more comprehensive health care reform such as a single-payer system has persisted. Definitions of single-payer systems are heterogeneous, and estimates of the effects on spending vary. The objectives of this dissertation were to understand single-payer proposals and to estimate health care spending under single-payer alternatives in the United States. Single-payer proposals are wide-ranging reform efforts spanning financing and delivery, but vary in the provisions. I modeled two sets of national scenarios – one labeled comprehensive and the other catastrophic – and compared insurance coverage and spending relative to the ACA in 2017. First, I estimated the effects of utilization and financing changes, and then I added the effects of “other savings and costs” relating to administration, drug and provider prices, and implementation. Due to coverage of all legal residents and low cost sharing and prior to adjusting for other savings and costs, the comprehensive scenario increased national health care expenditures by $435 billion and federal expenditures by $1 trillion relative to the ACA. The range of the net effect of the other savings and costs in the literature was $1.5 trillion in savings to $140 billion in costs, with a mean estimate of $556 billion in savings. If this mean estimate was applied to the comprehensive scenario, national expenditures would be $121 billion lower but federal expenditures would still be $446 billion higher relative to the ACA. The catastrophic scenario also covered all legal residents but increased overall cost sharing, resulting in a reduction in national expenditures by $211 billion and federal expenditures by $40 billion even before adjusting for other savings and costs. Average household spending on health care in both sets of scenarios could be more progressive by income than spending under the ACA. I also developed an interactive, web-based cost tool that allows the savings and cost assumptions to be adjusted by any user. As the debate on how to finance health care for all Americans continues, this study provides increased transparency about economic evaluations of health care reform. iii Table of Contents Abstract .................................................................................................................................... iii Figures...................................................................................................................................... vii Tables ........................................................................................................................................ ix Summary ................................................................................................................................... xi Acknowledgments.................................................................................................................... xv Abbreviations ......................................................................................................................... xvii 1. Introduction .......................................................................................................................... 1 Background .................................................................................................................... 3 Types of Health Care Systems ................................................................................. 3 Single-Payer Systems ............................................................................................... 4 Single-Payer Health Care Reform in the U.S. ......................................................... 6 Objectives ...................................................................................................................... 7 2. Single-Payer Definitions and Proposals in the U.S. Context ............................................... 9 Background .................................................................................................................. 11 Conceptual Framework of Health System Functions ............................................ 11 Methods........................................................................................................................ 12 Literature Review................................................................................................... 12 Assessment of Proposals ........................................................................................ 12 Results .......................................................................................................................... 13 Definitions of Single-Payer Systems ..................................................................... 13 Single-Payer Proposals .......................................................................................... 17 Breadth across Health Care System Functions ...................................................... 29 Provisions towards Increased Access, Improved Quality, and Reduced Costs ..... 31 Discussion .................................................................................................................... 40 Summary ...................................................................................................................... 50 3. Health Care Coverage and Spending under National Single-Payer Alternatives .............. 52 Policy Scenarios ........................................................................................................... 54 Methods........................................................................................................................ 57 Population and Data Sources ................................................................................. 59 Behaviors in the Microsimulation .......................................................................... 60 Tax Financing ........................................................................................................ 62 Other Savings and Costs ........................................................................................ 65 Results .......................................................................................................................... 66 Effects of Cost Sharing and Financing on Coverage and Spending ...................... 66 Effects of Other Savings and Costs ....................................................................... 73 Discussion .................................................................................................................... 76 v Summary ...................................................................................................................... 82 4. Cost tool ............................................................................................................................. 83 Tool Development ....................................................................................................... 83 Cost Tool Instructions and Layout ............................................................................... 84 Scenario Tab .......................................................................................................... 84 Savings and Costs Tab ........................................................................................... 86 Output Tabs ............................................................................................................ 87 Discussion .................................................................................................................... 91 5. Conclusion ........................................................................................................................
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