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                   Briefing: The Cost of Care for the Uninsured:
                         What Do We Spend & Who Pays?
                                   May 10, 2004




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Briefing: The Cost of Care for the Uninsured:                                                                                         2
What Do We Spend & Who Pays?
5/10/04

                 [START RECORDING]

                 MALE SPEAKER:                   Good morning.                  I’m Diane Rowland, the

Executive Vice President of the Kaiser Family Foundation and

I’m pleased to have you with us this morning for one of the

opening events of Cover the Uninsured Week.                                                   And today we’ll

really be trying to focus our discussion on the cost for care

for the uninsured, what do we spend now, who pays and what

would it really cost to provide additional coverage to the

uninsured in terms of our medical care spending.                                                        We begin a

project about 2½ years ago working with the Urban Institute and

Jack Hadley and John Holahan to try and look at what we pay as

a society for leaving 44 million people without health

insurance coverage, why do we continue to only focus about the

cost of a health insurance reform proposal and not focus at all

on why with 44 million people uninsured we spend more on their

hospital care and they get sicker, we pay for the fact that

they delay care and when they arrive at the hospital need more

intensive services.                        We pay because they die prematurely from

the lack of treatment for many of their conditions and so we

began this project to really look at the backside of the

uninsured problem, what we were already paying as a society in

uncompensated care and what we were losing in worker

productivity and in health and long life for our population.

And we’re very pleased that as this project developed, we were

able to work with the Institute of Medicine on their
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Briefing: The Cost of Care for the Uninsured:                                                                                         3
What Do We Spend & Who Pays?
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commendable study of the consequences of uninsurance that was

funded by the Robert Wood Johnson Foundation and we’re very

pleased that today we’re going to be able to link some of our

research on the cost of not covering the uninsured with some of

the findings from the Institute of Medicine report in the

comments of many of our commentators.                                            Our session today is

going to really focus on what we lose as a result of having the

uninsured uncovered and why we all have a stake in the debate

in solving this problem.                              And we’re going to really begin the

discussion today by having Jack Hadley, Principal Research

Associate at the Urban Institute and John Holahan, Director of

Health Policy at the Urban Institute update their study of the

cost consequences of leaving the uninsured uncovered.                                                              And then

I’m going to turn to a panel of discussants that will bring

with a variety of views to the table.                                            Wilhelmine Miller, the

Senior Program Officer of the Institute of Medicine, who was

the principal staff member for the IOM six volume report on the

consequences of uninsurance will kick off our discussion with

some reflections on the findings from that study.                                                         We’re then

going to turn to Dr. Regina Benjamin, Founder and CEO of Bayou

La Batre Rural Health Clinic, a member of our Kaiser commission

on Medicaid and the insured to give us the reality of being a

physician in Bayou La Batre dealing with patients who come in

without insurance and the struggles that they face.                                                           I’m then

going to turn to Jack Meyer, Founder and President of Economic
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Briefing: The Cost of Care for the Uninsured:                                                                                         4
What Do We Spend & Who Pays?
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and Social Research Institute and the principle behind the

Covering America Real Remedies for the Uninsured series of

reports that looked at real solutions to the uninsured to put

some of his perspectives on the table in terms of what we can

do and how we can accomplish that in terms of coverage for the

uninsured.               And then I’m going to turn, as a concluding

speaker, to Dr. James Mongan, President and CEO of Partners

HealthCare System, a member of the Kaiser Commission on

Medicaid and Uninsured and also a member of the IOM Task Force

on the consequences of the uninsured who shared their

subcommittee on the societal cost of an uninsured population to

give us concluding comments and hopefully stimulate a very

broad discussion with you as we conclude.                                                 But before we begin

with any of the presentations, I’d like to introduce Dr. John

Lumpkin, the Senior Vice President and Director of the Health

Policy Group of the Robert Wood Johnson Foundation to give us a

little bit of a Cover the Uninsured Week kickoff.                                                         So Dr.

Lumpkin, without further ado, please, be welcome.

                 DR. JOHN LUMPKIN:                       Thank you Diane.                      It’s a pleasure

and an honor to be here on Cover the Uninsured Week.                                                             I’d like

to both acknowledge and commend the Kaiser Family Foundation

and its Commission on Medicaid and the Uninsured for the

outstanding work that they have done leading up to today and

certainly in the years before.                                     To address this whole issue, it

seems kind of strange to be here inside when we have such a
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Briefing: The Cost of Care for the Uninsured:                                                                                         5
What Do We Spend & Who Pays?
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wonderful, gorgeous weather outside.                                           The old adage goes that

everybody talks about the weather and nobody does anything.

But we’re not here talking about the weather.                                                     We’re talking

about 44 million Americans who are uninsured for all of last

year.         We’re talking about people who die quicker and who are

sicker throughout their lives because of the fact that they

don’t have insurance.                           And we are here talking about doing

something about the problem of the uninsured.                                                     And so the work

that the Kaiser Foundation is doing is helping us in our

initiative of bringing together a broad partnership for the

uninsured.               Over 800 organizations participating in 2,000

events in schools, churches, synagogues, [inaudible], business

group meetings throughout all the 50 states and the District of

Columbia.              This morning, we’re kicking off events in this

community, as well as, throughout the nation to make Cover the

Uninsured Week one of the most incredible events we believe in

the history of health advocacy.                                      Political will is what we

need.         It’s based upon a belief that something can be done

differently.                 It’s based upon a will of the people and

certainly the polling results, much of which Kaiser has done as

indicated that we do have the will of the people, but it also

based upon sound knowledge and understanding of the problem.

And the research you’ve done has led us in that direction.                                                                   Has

helped us move forth.                           And so it’s really with appreciation and

partnership, a very long standing partnership between our two
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Briefing: The Cost of Care for the Uninsured:                                                                                         6
What Do We Spend & Who Pays?
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Foundations that we believe it’s time to make a change.                                                                When

we opened up Cover the Uninsured Week last week, Senator Frist,

Senator Rockefeller were there and the issue was raised that

the status quo, and I can’t remember who the quote was from,

but the status quo is some Latin word that means, doing

nothing.            For too long in our nation we’ve had many plans, but

everyone’s alternative plan has been to do nothing.                                                           With this

knowledge, with this stride, with Cover the Uninsured Week,

we’re going to change that so that we do have a national

agreement, a political will to make a difference.                                                         Thank you.

                 JOHN HOLAHAN:                   Thank you.               So, as Diane said, we are

here to provide updated estimates of the cost of caring for the

uninsured.               We look at what we spend, who pays and what would

full coverage add to medical care spending?                                                   We updated the

numbers and this worked, from those that were presented early

last year, for 2001 and these estimates are estimates are

updated to 2004.                     The study that we’ve done looks at five

questions.               How much uncompensated care do the uninsured

receive?            Who provides uncompensated care?                                        Who pays for it?

Is uncompensated care offset or full make up for the lack of

insurance?               How much more would it cost to cover the uninsured?

And finally, how do the cost of the expanding coverage compare

to the benefit?                      In this work we use the Medical Expenditure

Panel Survey in 1998 and 2000 or MEPS.                                             The previous work had

used ’96 to ’98 data from MEPS inflated to 2001.                                                        These
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Briefing: The Cost of Care for the Uninsured:                                                                                         7
What Do We Spend & Who Pays?
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estimates from the ’98 and 2000 surveys are projected forward

to 2004 to reflect current health care costs, which does not

reflect any change in the uninsured because we don’t have data

after 2002.                We know the uninsured did go up between 2001 and

2002, but we want to emphasize that, while this could be an

underestimate, just because the uninsured went up, does not

imply, necessarily, that the amount that’s spent on the

uninsured went up commensurately, so, it’s not completely

obvious that it’s an underestimate, but it could be.                                                               We’re

fine on estimates of the amount of government spending in the

system and this is taken from the CBO baseline budget reports

regarding federal agencies and state agencies.                                                      We’re fine on

compensated care as the medical care received by the uninsured,

but not paid for by either out of pocket by themselves or by

insurance for those people who’ve had coverage for part of the

year.         In this study, we have people who are full year

uninsured and part year uninsured.                                         And we make estimates the

uncompensated care for both groups.                                          Uncompensated care

includes charity care, reduced fee care and bad debts.                                                               The

estimates of the cost of uncompensated care is the amount that

would have been paid if the person had private health

insurance.               So, for the uninsured, we know the charges for the

services that they received and make an estimate based on the

insured people to the ratio of the charges and apply that to

charges for the uninsured and derive an estimate and how much
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Briefing: The Cost of Care for the Uninsured:                                                                                         8
What Do We Spend & Who Pays?
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would have been paid had those people been covered and that’s

what determines all the costs of the uninsured.                                                       So, the first

results are that if we look at all the care that’s received by

those who are full year uninsured and part year uninsured

amounts to $124.5 billion.                                We move up to the right hand side

the amount that’s uncompensated care is about a third of that

40.7 billion.                  Moving, again, counterclockwise, the amount

that’s spend out of pocket, was 26%, 32.6 billion.                                                          And what’s

not on the slide is the amount paid by those who were uninsured

full year, those who were uninsured all year paid 35% of the

care themselves out of pocket, the part year 20%.                                                         The balance

is paid for by the private or public insurance for part of the

year that there is a part year uninsured had coverage.                                                               So the

next slide breaks down the data on the 40.7 billion uninsured

as you can see, line share, this goes to adults of the 40.7,

35.1 billion is for adults, 5.4 for children.                                                     Full year, part

year break is about three quarters for those uninsured all of

the year and rest for those uninsured part year.                                                        So much more

is spent on adults than children because, for two different

reasons, one is there are far more adults than there are

children, they have a higher uninsured rate and they’re more

[inaudible], so you put that all together and it’s not

surprising that the bulk of this goes to uninsured adults.                                                                   The

next thing that we did was to look at the total government

spending that is available for the uninsured.                                                     That the notion
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Briefing: The Cost of Care for the Uninsured:                                                                                         9
What Do We Spend & Who Pays?
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that the broad coverage expansion, perhaps some of these

dollars could be tapped to pay for insurance.                                                     Our estimate is

that the total amount of government spending that’s there in

the name for caring for the uninsured is 34.6 billion and if we

go to the top, we got this from many, many different sources

and it’s a bit complicated so I’m not going to go into all of

it, but a brief overview is that for the Medicare and Medicaid

payments, we took the CBO estimates from the 2004 baseline and

then we netted out of the disproportionate share payments the

amount of dollars that go to mental hospitals and from the

supplemental payments of the upper payment limit dollars, the

amount that goes to nursing homes.                                         From the state’s share we

took the part that’s intergovernmental transfers so that we

really only have the amount that’s true.                                               General revenue

spending from the state level.                                     These shares are based on 2003

Urban Institute survey of the states on this.                                                     When that is

done, we estimate that federal payments through

disproportionate share of upper payment limit programs is 6.9

billion, the state share is 1.8.                                       The federal payments through

disproportionate share payments and a share of the indirect

medical education payments amounted to 10.5 billion.                                                             Direct

service programs are programs operated by the Veterans

Administration, Indian Health Service, community health

centers, adult and child health clinics, Ryan White programs, a

few other things and what we did there was to take their
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Briefing: The Cost of Care for the Uninsured:                                                                                    10
What Do We Spend & Who Pays?
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budgets, inflate them to 2004, estimate the share of their

spending that goes to acute care services and then the share of

that that goes to people who lack health insurance.                                                           With that,

then derived an estimate of 7.5 billion of which 6.1 is federal

and 1.4 is state.                      And the final component is the amount that

is paid for through state and local direct appropriations that

go to hospitals or payments to hospitals that come from

[inaudible] care programs that are operated at the state and

local level.                 That adds another 7.9 billion.                                     You add that

together and you get to 34.6 billion that’s there.                                                          It’s

possible that not all of that really goes where the uninsured

are, but most of it likely does.                                       The balance is paid for

through surplus on private payments, the amount of private

payments and excessive costs for those patients and [inaudible]

group.          And finally, for my part of this, we have estimates of

per capita spending for the full year, part year uninsured and

the full year insured and there you can see that the full year

uninsured average $1,629, the full year insured $2,975.                                                                And

what this means is that even with the uncompensated care, that

is the care that the uninsured do get, either paying for it

themselves or through clinics, public hospitals, other

components of the safety net, that the amount that they get is

still substantially less than those who have insurance.                                                                The

part year uninsured fall in the middle, but the key point is,

even with all the dollars that are there that are paying in
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Briefing: The Cost of Care for the Uninsured:                                                                                    11
What Do We Spend & Who Pays?
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various ways to pay for uncompensated care don’t come close to

reaching the amounts that are available to people when they

have either public or private coverage.                                              With that I’m going to

turn the balance of this to Jack.

                 JACK HADLEY:                  Thank you.               Good morning everybody.                             So

picking up from this slide, if uncompensated care is

inadequate, to close the spending gap between the insured and

the uninsured, then the next questions are, well how will

spending change if the uninsured had full year coverage and

what would that coverage cost?                                     Now before giving you those

estimates let me try to be as clear as possible on what we mean

by the cost of covering the uninsured.                                             Specifically, what we

measure is the cost of the additional medical care that the

uninsured would use if they had coverage.                                                 In other words, this

is the cost to society of additional resources that would shift

into the medical care system.                                   What I want to emphasize and

underline, that this is not the same as the cost to the

government of any particular program or legislative proposal to

expand insurance and the reason it’s not the same is that our

estimate does not include two major kinds of transfer payments

that are a part of almost any legislative proposal.                                                           One type

of transfer cost is when people move from private coverage to

public coverage.                     In other words, if an individual or family

gives up its private coverage and becomes enrolled in this

public plan, then what happens is that payments through private
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Briefing: The Cost of Care for the Uninsured:                                                                                    12
What Do We Spend & Who Pays?
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premiums go down and payments through public sources go up.

But the total amount of payment presumably stays the same.                                                                   So

that represents a transfer of costs from the private sector to

the public sector, but not an increase in resources.                                                             The other

type of transfer occurs when a proposal, for example, President

Bush’s proposal to provide tax credits for individual insurance

purchases, subsidizes the cost of private insurance.                                                             Again,

the amount that individuals or families pay out of pocket for

premiums goes down, the amount the government spends in the

form of these subsidies goes up, but the total stays

essentially the same, so those are transfer costs.                                                          And they’re

part of what one typically sees as the cost of a particular

proposal.              The last point I want to make as a preface to our

estimate is that it’s not based on any specific proposal in a

sense that we have a plan that has a list of covered benefits,

a schedule of co-insurance and deductibles and co-payments, a

set of provider payment rates that we somehow put into our

actuarial machine and come up with a cost estimate at the end,

rather what we do is base our estimate on the average behavior

of people in lower/middle income families who have full year

insurance coverage.                        Our data source is the Medical Expenditure

Panel Survey and what we do is estimate a statistical

relationship between medical care spending, the extent of

insurance coverage and then a long list of characteristics,

demographic and health characteristics of the different
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Briefing: The Cost of Care for the Uninsured:                                                                                    13
What Do We Spend & Who Pays?
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populations that are involved.                                     We then use this statistical

model to kind of flip the switch if you will to assign

uninsured people to full year coverage and take into account

their characteristics to predict what their spending would be

if they had full year coverage.                                        Let’s look first at what

happens to per capita spending.                                      And what this slide shows is

that, in fact, with full year coverage, the uninsured will come

much, much closer to the full year insured in terms of their

total spending.                    If you think back a couple of slides, the

estimate we had for spending by the full year uninsured was

$2,975, all uninsured under full coverage would spend about

$2,836.           The biggest increase, not surprisingly was for the

full year insured whose spending would go up about 70%.                                                                And

whatever remaining difference that you see here is a difference

that’s due to characteristics of the population.                                                        In

particular, the uninsured tend to be younger, the less well-

educated, they’re more likely to be single and those factors

also affect spending, obviously.                                       But the basic conclusion is

that you get much closer to a level playing field with the

assumption of full year coverage.                                        So, if we aggregate over all

of the people who are full year uninsured, part year uninsured

and ask what is the total spending that would correspond to

these increases?                     The estimate that we developed is that total

spending would go up to $172.7 billion.                                              An increase of 48.2

billion over the baseline of 124.5.                                          That increment, $48.2
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Briefing: The Cost of Care for the Uninsured:                                                                                    14
What Do We Spend & Who Pays?
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billion is what we call the additional costs of care that would

be used by the uninsured if they had coverage.                                                      And so again,

it’s the cost of the additional resources, it’s not the cost to

the government, it does not reflect transfer payments.                                                               It’s

really how much additional, how many additional people, how

much additional capital, whatever, we need to be, become part

of the health care system.                                So let me just recap for a second

before moving on to the benefit side.                                            $48.2 billion is the

cost of the additional care of covering the uninsured.                                                               We

estimated in the beginning that about 125 billion in medical

care is received by the uninsured.                                         In 2004 of that amount

about one third, 40.7 billion is uncompensated care and the

bulk of that, potentially as much as 85% comes from government

sources.            But even with the uncompensated care, the uninsured,

especially the full year uninsured are still at considerable

disadvantage in terms of their level of spending relative to

the full year insured.                            Let me just point out very quickly

there is an error on this slide, 2975 is for all uninsured, not

just the properly uninsured.                                  So, now let me turn to the

benefit side of the story.                                A considerable amount of research

is demonstrated, as several of the power speakers have said,

that the uninsured have poorer health outcomes than the

insured, poorer health outcome comes in the form of higher

mortality rates, higher morbidity, greater disability and the

logical chain is that because of lack of insurance, they
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Briefing: The Cost of Care for the Uninsured:                                                                                    15
What Do We Spend & Who Pays?
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receive less preventive care, fewer screening services, if they

have chronic illnesses, less maintenance care.                                                      Because of not

having insurance they are more likely to delay seeking care.

And a result of all those factors, they are likely to be sicker

when they are diagnosed and enter the medical care system and

in spite of that, still receive fewer resources.                                                        And the

consequence is poorer health and because of poorer health, less

ability to work, lower earnings and so forth.                                                     Now, these

results come from a broad range of studies.                                                   The Institute of

Medicine in its report last year, Hidden Costs, Value Lost,

which was recently summarized in a Health Affairs article co-

authored by Wilhelmine Miller, Elizabeth Vigdor and Will

Manning, sort of took all that research and sort of, tried to

boil it down and come up with a single number that reflects the

value of the health that’s lost due to a lack of insurance.

And the value of this lost health is what you’d think of as

being the cost for not covering the uninsured or at least a

major part of that cost.                              And I want go on to any of the

details as to how they did this, but basically it was applying

standard methods for valuing health into the future and then

discounting for the present and they made a variety of

assumptions, but the midrange estimated annualized economic

value of the foregone health associated with 40 million

uninsured people in 2001 was about $97.5 billion.                                                         Just

trending that forward to 2004 by the consumer price index,
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Briefing: The Cost of Care for the Uninsured:                                                                                    16
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gives us a number of about $103 billion.                                               So this is the

estimate of the value of the health that’s lost due to lack of

insurance coverage.                        So keeping that number in mind.                                       Let me

again try to give you some perspective on the estimate of the

cost of expanding insurance coverage to the uninsured.                                                               $48.2

billion.            Compared to what the government will spend in the

Medicare and Medicaid programs in 2004, that $48.2 billion is

about 9% of that total.                             A recent estimate of the tax subsidy

for private insurance is 188.5 billion and what’s interesting

about that number is that about $50 billion of that amount goes

to families with earnings of $100,000 or more.                                                      So, again, $50

billion in tax subsidies to families with income of over

$100,000 compared to 48 billion for the cost of expanding

coverage to the uninsured.                                If total medical care spending did

increase by that amount, it amounts to a 3% increase in total

personal health care spending.                                     The base for that is about $1.4

trillion in 2004.                      As a share of GDP, the increased spending on

the uninsured amounts to a shift into the health care sector of

0.4%.         Less than ½ of 1% increase in the share of GDP going to

health care spending.                           And finally, that 48.2 billion compares

really very favorably with the estimated value of lost health,

$103 billion and I should mention that’s only one component of

the cost of not covering the uninsured.                                              It does not include

extra resources that are due to avoidable hospitalizations by

uninsured people, due to the inappropriate use of emergency
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Briefing: The Cost of Care for the Uninsured:                                                                                    17
What Do We Spend & Who Pays?
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rooms by the uninsured or potentially higher costs to the

Medicare/Medicaid programs due to poorer health of people as

they enter those programs.                                  So in conclusion, we believe that

the economic case for covering the uninsured is, in fact, very

strong.           And as Dr. Lumpkin said in his introduction, the main

issue is one of political will.                                      By presenting these data, we

hope to settle at least one part of the political debate by

demonstrating that expanding insurance coverage is clearly

worth it from society’s point of view.                                             Thank you.

                 DIANE ROWLAND:                    Thank you Jack.                    Now we’ll turn to our

panelist.              Wilhelmine, you want to kick it off?

                 WILHELMINE MILLER:                        Well, thank you Diane for inviting

me to come and comment on the ongoing important work that the

Kaiser Commission has funded to look into the costs of the

uninsured and it has over the past 3½ years dovetailed very

nicely and reinforced the work of the Institute of Medicine’s

Committee on the Consequences of Uninsurance, which was charged

by its sponsor, the Robert Wood Johnson Foundation to detail

and consolidate the evidence that exists in the academic and

scientific literature about just what happens in terms of the

health of people who are uninsured, their family well being,

community and health system effects and the implications for

the national economy.                           As John and Jack’s analysis shows, one

quarter of Americans under the age of 65, about 60 million can

be expected to be uninsured for part or all of year, every year
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Briefing: The Cost of Care for the Uninsured:                                                                                    18
What Do We Spend & Who Pays?
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and these numbers continue to go up modestly, so this is a

relatively stable presence in the American economy and a fact

of life for all of us and particularly those families that have

an uninsured family member.                                 So as a nation we spend $1.5

trillion on health care services.                                        And uncompensated care to

the uninsured represents about $40 billion, less than 3% of

this total, although in fact it is about a third of the cost of

all the care going to those who lack coverage.                                                      As their

analysis showed much of it comes out of pocket and a remarkably

large amount of it is provided by private insurance for people

who spend at least part of the year uninsured.                                                      Similar to this

3% number, if people who now lack coverage were to receive the

same kind of care that those who are continuously insured

receive, the increase in total resource to that care would

amount to about 50 billion, also just about 3% of what we now

spend as a nation on health care.                                        So the basic issue for

policymakers is what this investment of roughly $50 billion in

new economic resources.                             A Jack said, setting aside the

question of where that money comes from and what additional,

you know, shifts in financing would be brought by any program

of universal coverage.                            What does that buy our nation, in terms

of improved population health?                                     So, this analysis points out

just how little care children and adults who are chronically

uninsured receive.                       That is those who are uninsured for the

full year, receive just about half the amount and value of care
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that their insured counterparts get.                                           And at the same time it

shows how inadequate and ineffective the considerable

expenditures for care on behalf of the intermittently uninsured

appear to be given their relatively poor health comes when

they’re compared with the health outcomes of people who are

continuously insured.                           And those costs appear to approach about

80% of the costs of the continuously insured.                                                     So covering

people once they become ill offers limited opportunities for

health improvements as compared with providing the regular

screening preventive care and early diagnosis and treatment for

emerging health conditions that people with insurance can avail

themselves of.                   Now in my work with the Institute of Medicine’s

Committee on the Consequences of Uninsurance, we conducted a

comprehensive and up to date review of research investigating

the kind of care received by the uninsured and their health

outcomes compared to children and adults who were insured.

These studies were based on a comparison of people who were

uninsured, really, for any length of time with people who

reported being insured.                             Just as Jack’s and John’s information

about costs was based on the average expenditure and cost

experience of the insured population, virtually all of the

studies in the literature, because they are observational

studies, take the health experience of the insured population

as a given and aggregate and compare the uninsured to what the

insured now get and so whatever the inefficiencies or
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inadequacies of care of the insured population are, nonetheless

when you compare that care that with the care the uninsured

receive and even the intermittently uninsured, there are marked

difference in health outcomes.                                     The studies that the Committee

reviewed and first critiqued and sorted so that what the

Institute of Medicine’s Committee’s conclusions were based on

were only the strongest studies and the best controlled

analyses of insured and uninsured health outcomes.                                                          Reflected a

number of approaches.                           They compared age specific mortality

rates for nation samples of an insured and uninsured adults

over several years.                        They looked at comparative mortality rates

for people diagnosed with cardiovascular disease, HIV and

cancer, specifically, the average stage at which cancer is

diagnosed in insured versus uninsured patients and whether

patients with conditions such as diabetes, heart disease and

severe mental illnesses received appropriate ongoing services.

And notably, also, as Jack pointed out, even when patients are

hospitalized for acute conditions, or traumatic injury, the

differences in both the level of services they receive and

their outcomes in terms of mortality persist.                                                     So looking at

children for who ongoing contact with a regular provider is

well established as the key to high quality care that improves

their health and development outcomes.                                             Children without

coverage fair much worse.                               Once of the strongest kinds of

evidence reviewed IOM Committee and which Jack Hadley also
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analyzed in his similar and independent review, Sicker and

Poorer, is what’s called the natural experiment.                                                        Which allows

for both before and after and across state comparisons of

population health outcomes when an insurance program, like

Medicaid or SCHIP is introduced.                                       These studies of very large

population groups and their patterns of use and outcomes, such

as immunization rates for children received prenatal care and

control of childhood asthma, demonstrate that the introduction

of coverage within a population at the very, you know, most

general level of analysis leads to better health care and

better health in particularly important groups like pregnant

women and children.                        Important in the sense that the health

care and their healthiness will have ramifications long beyond

the immediate time period.                                Taken all together these myriad

studies that have been conducted over the past two decades

provide strong and concrete evidence about the effectiveness

and efficiency of coverage as one approach to improving health

outcomes.              And as Jack said in his concluding remarks, the IOM

Committee, after looking at both the costs and the health

improvements concluded that indeed, extending coverage would be

a very effective way to improve the nation’s health.

                 DIANE ROWLAND:                    Thank you Wilhelmine.                           Regina?

                 REGINA BENJAMIN:                      Hi.       My name is Regina Benjamin and

as stated I have a family practice office in Bayou La Batre,

Alabama.            In 1990 I opened my office and when I got there I
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found a community of working poor.                                         Too poor to afford

insurance and too rich to qualify for Medicaid.                                                         They were

very rich in other ways other than money.                                                 Very proud people,

work very hard, many work on shrimp boats, in the seafood

processing plants and ship building.                                           And yet, they couldn’t

afford insurance.                      They pay what they can and then often

they’ll pay $5, $10 a month and when they get more they’ll pay

more.         And we try to deliver care to them and let them maintain

their dignity.                   When I read through John’s and Jack’s numbers,

every time I looked at a group of people, I could put a face to

every one of those groups and I knew somebody who fit into

those groups.                  And sometimes one of those groups was me.                                                 I

realized that as a physician, I fit into one his groups.                                                                 We’ve

always accepted patients who, no matter what, when they walk in

the door, we never turned anyone away because they didn’t have

insurance or didn’t have the ability to pay.                                                    And we never

will.         But it’s getting harder and harder to maintain and keep

our doors open.                    The electricity bills are going up, we still

have to pay the rent and yet in the past three to five years

I’ve seen more and more people with no insurance and basically,

having their own struggles.                                 And if you look at one of them,

they’re always in worse shape then I.                                            And so we do what we can

to help them.                  Two years ago, after trying to be as lean as

possible.              Cut in anyway we can, don’t misunderstand, I’ve

never taken a salary from my office.                                           I moonlight and do other
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things, but my nurses and things can’t.                                              They have their

children to raise as well.                                And two years ago we converted the

office to a non-profit and after writing a number of grants

asking for donations, we finally got one grant last year that

covers the nurses’ salaries.                                  And if we didn’t get that grant

last year, I’m not sure how we would have survived.                                                           Other

private physicians don’t have that option.                                                  They can’t write

for grants.                They can’t ask for donations.                                    Because under the

regular business model, it’s not allowed.                                                 And they have the

same bills, they have the same things and so they try to do the

best they can as well.                            When you look at a cushion, that

cushion’s no longer there.                                Many of the commercial insurances,

as well as Medicare and Medicaid often pay no margin, they

basically, sometimes pay below cost.                                           And so there is no

cushion.            And there is no government subsidy for private

physicians.                Most of the government subsidies for the uninsured

goes to hospitals, media health centers or VA’s and that sort

of things, but they don’t come to private physicians’ offices.

And so we don’t have access to those government dollars.                                                                 And

much of the public policy has been basically made on the fact

that these private physicians will see patients no matter what.

And so far it’s been true.                                But it’s getting harder and harder

on them and finding it more difficult to get patients referred

to specialists.                    The specialists still see patients but it’s

harder to get past their front office and to get it past their
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scheduling people.                       I have to now pick up the phone, call the

doctor myself and ask, will you see my patient?                                                       They always

do, they haven’t turned it away, but there’s another step.

Many of the issues that we’re talking about today are not about

physician’s problems, they’re basically about those hard

working Americans who really need to have private physicians in

their communities who are qualified and caring doctors to care

for them when they really need it.                                         Thank you.

                 DIANE ROWLAND:                    Jack.

                 DR. JACK MEYER:                     Thank you.               I find the results very

interesting and they remind me of the need to tell people that

we cannot equate comprehensive coverage with a take away or an

effort to blow up the current system.                                            That it needs to be in

the public’s mind, respectable to talk again about

comprehensive coverage and not frightening because we’ve

allowed the debate over the years to be pulverized between

people who are judged to offer sensible, but very small reforsm

and then irresponsible large reforms.                                            Now there’s nothing

wrong with incremental coverage, but I think we have to

understand that a number of responsible comprehensive plans do

build on the current system and it’s not the case in order to

help Jim you have to take something away from me or to help me

to take something away from Jim.                                       And we need to explain that

to people.               To defang the opposition because there is a lot of

opposition and I correspond Jack and John’s results very
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instructive and around that 48 billion, that cost, which is

quite affordable in some sense, are huge gross flows.                                                              And the

political problem we face is that in order to get from here to

there we have to break a lot of eggs to make the omelet.                                                                 By

that I mean, Jack referred to this in his talk, that he warned

us about counting the cost of transfers and that it may be

that, for example, even though taxes under a certain proposal

go way up, household out of pocket spending would go way down,

that’s true, but you got to get through the politics of a big

tax increase.                  And similarly other proposals require employers

who never offered coverage before to offer it.                                                      And even though

the net cost of that may be relatively moderate, there’s still

going to be a lot of employers facing big costs and so the

opposition is out there.                              And it’s well armed.                          And well

informed.              And the constituency for the people that would be

helped by reform, has not been able to make its case about the

long term pay off from covering the uninsured.                                                      So we have a

lot of work to do to build consensus.                                            We have to make it

respectable to talk about comprehensive reforms.                                                        Proposed by

conservatives, moderates and liberals.                                             Our projects involved,

for the Robert Wood Johnson Foundation, over four years

involved developing 17 comprehensive reform plans, they were

done by people with very different philosophies and

persuasions.                 The number of people covered and ten of these

that were modeled under this project ranged from 15 million
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newly covered to 40.                          You couldn’t necessarily infer from the

higher coverage levels that that was necessarily the more

progressive, so to speak, the liberal plans at all.                                                           It didn’t

fall that way.                   So we really need to understand that this issue

will require leadership, it will require demonstrating the

benefits that must be [inaudible] opposed with the costs.                                                                  And

so forth.              And I also wanted to mention that I think we’re

going to have to explain to people the dangers to reforming our

health care system to leaving Medicare unreformed.                                                          And I think

we’ve left it largely unreformed.                                        Despite last year’s

legislation in the sense of the long term.                                                  Because the

continuous cuts in provider payments under Medicare, which

result I believe, in part from the fact that Medicare refuses

to take the steps to assure its long term viability, the date

of reckoning just moved forward seven years this March in one

year from the Trustees’ report, more than the other.                                                             The

refusal to recognize that we’re probably going to have to tell

people who are now 44, not 64, that they might have to wait

until their 67 to get Medicare or 68.                                            The refusal to consider

the payroll tax and whether it’s adequate and other measures.

Of asking Bill Gates to pay a little bit more for his Part B

coverage than somebody else.                                  The refusal to do these things

means that we will continue to cut payments.                                                    physicians are

angry about this.                      DISH programs, UPL, Upper Payment Limit

programs, intergovernmental transfers, these are the theory of
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the second or third best things that we do because we don’t

have a plan to cover the uninsured.                                          They are inefficient, the

payments are large, they are not necessarily allocated in a

good way, they sometimes promote inefficiency.                                                      They’re well

intended, I’m not suggesting we pull them, but we really have

to, I find the results very sobering about the cost of

inaction.              The results that Jack and John have presented and

I’m afraid I’m surrounded by physicians here, I’m the least

qualified person to make the observation, but I’m afraid we’re

in danger of losing family practice physicians in this country.

We’re incenting them to shun indigent people.                                                     The wonderful

work that Regina and her colleagues is doing is not typical of

what goes on around the country.                                       Many office based physicians

and even some in community health centers just aren’t able to

survive and worse yet, we’re incenting them to serve only the

affluent, a new and even more disturbing trend in our country

with boutique shops and platinum and gold level care for people

that make big up front payments.                                       This is a frightening trend.

So we need a social contract that moves in a respectable way

toward universal coverage and an affordable way.                                                        We need to

work on the politics of that, a small fee, building consensus,

so that each side doesn’t try to get more fun out of

embarrassing the opposition than pushing its own plan.                                                               We need

a little more spirit of compromise between Republicans and

Democrats, leadership on this issue.                                           We know what to do, we
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have lots of models and we know that the cost isn’t as

frightening as some people think.                                        But we haven’t made the sell

and we haven’t reached across the divide to build the political

will.         The American people are ready for it.

                 JAMES MONGAN:                   I’m Jim Mongan from Boston and it struck

me as I reviewed Hadley and Holahan’s paper yesterday that I

should toss out my original commentary and go right to the

question of why we can’t do anything beyond declaring a week

for the uninsured.                       Why we can’t, as a nation, do anything

about the problem of the uninsured?                                          After all, Hadley and

Holahan conclude their paper with some seemingly compelling

numbers that we could begin to address this problem for $48

billion a year.                    A mere 3% of our total health spending, which

would increase the share of GDP going to health, by only .4%.

So why have we seen 30 years of national huffing and puffing on

this issue?                Serious huffing and puffing that somewhat argue

cause the change of party control in the Congress which has now

lasted for a decade.                          All of this political exertion might seem

a little out of context for a 3% increase in health spending

for less than the average annual increases of recent years.                                                                    So

I think it might be useful to spend the next week really

thinking about why we can’t move this issue, in the hopes that

this might lead to some new dialogue.                                            Let me start by saying

that though I believe the 48 billion is an accurate number, as

the authors themselves told you, it’s not the cost of
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legislation, which I believe would be closer to $75 billion,

because as they said, people aim to achieve other purposes in

legislations such as local tax relief or employer cost relief

or other things in their bills.                                      Now you might say that’s swill

not an insurmountable number in an economy of our size.                                                                But

basically that 75 billion or 750 billion over ten years needs

to compete with other things and it loses.                                                  Remember three

years ago we passed a $1.6 trillion tax cut and the uninsured

lost.         Last year we passed 500 billion for drugs under Medicare

and the uninsured lost again.                                   So why do the uninsured keep

losing?           First, they’re voiceless politically.                                             Certainly with

less of a voice than the wealthy who cannot enough tax cuts and

lesser voice than the elderly who did need and did get some

drug coverage.                   The competition with tax cuts, I think tells

you the most about our nation at this time.                                                   After all we could

have had a trillion dollar tax cut, the largest in our nation’s

history and still covered the uninsured, but that did not

happen.           What else is going on other than a constant grasping

for tax cuts?                  I believe there are three related concerns or

beliefs that people use to justify their opposition to

universal coverage.                        First is a concern that universal coverage

will imply a large role for government, which might adversely

affect health care.                        In spite of the fact that people like

Medicare, a government program that drives nearly 40% of our

health system.                   Second is a primal fear that if everybody else
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gets coverage, your own must suffer in some way.                                                        Despite the

fact that if we can argue the community’s health would be

enhanced under broaden coverage.                                       And third is the willful

unwillingness to accept the fact that the uninsured don’t get

all the care they need.                             So this is the political landscape of

this issue.                And something we should all reflect upon as we try

to move forward.                     Triggered by Hadley and Holahan’s work on

these numbers, we need to do some national soul searching on

our values.                And in an election year we all need to press

candidates on their reason why we can’t do what all other

advanced nations have done and cover the uninsured.                                                           They need

more than a week, they need a lifetime of coverage.                                                           Thank you.

                                   DIANE ROWLAND:                   Thank you Jim.                    Thank you to

all our panelists and presenters and we’re not going to open it

up to questions and comments from the audience and if you would

raise your hand I think we can get a mic to you.                                                        And please

identify yourself as you make your comments.                                                    We’ll start in

front.          And the mic is in route.

                 JOEL FINKLESTEIN:                       Hi, I’m Joel Finklestein [spelling?]

with American Medical News.                                 My question is, in terms of the

estimates that you presented in this paper, is it based, would

it be save to assume it’s based on the assumption that we build

on the current system since there, probably if we did move to a

universal health care there would be different administrative

costs, different oversight costs, things like that.
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                 JACK HADLEY:                  Yes, in fact, that’s exactly right.                                          Our

assumption is based on taking the average behavior of people

who have full year insurance and that average includes the

range of coverage that they have ranging from 5% or 6% of that

population with Medicaid coverage, up to relatively more

generous private insurance plans.                                        So to the extent that a

proposal, a specific proposal offered a very different package

of benefits, a very different set of coverage rules, then the

estimate could vary.

                 DIANE ROWLAND:                    Thank you.               I’m Bill Cultrener

[spelling?] I’m President of Center for Alcohol and Drug

Research and Education.                             The analysis was really quite elegant

and it’s important work and it’s good that we talk about it.

However, without the next steps, the analysis is not complete.

One can easily imagine a care model and an underwriting model

wherein your estimate would quintuple.                                             For example, just as

the original estimates of Medicare costs quintupled based on

the underwriting model and care management model that was put

into place as opposed to some of the ones that were originally

proposed.              I’m also constrained to note that the GAO reports a

fraud and abuse in the Medicaid program between 15% and 20%

would cover this cost without any new revenue.                                                      So my

suggestion is that you look at the next step and my suggestion

is that three things have to obtain.                                           Number one, we need to

really look at the question of adverse selection because if you
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create some new underwriting entity to underwrite the currently

uninsured, one can easily suspect that adverse selection will

be an enormous problem.                             Secondly, there has to be some

recognition that there will then be a change in behavior in

those who are currently insured.                                       Currently paying substantial

premiums, faced with the potential of becoming uninsured but

now insured by this new program, their behavior may in turn

drive up the cost.                       And third is I think that any care model

that is not a strict HMO model would be a recipe for disaster.

I think this is all important work I think the panel that has

been assembled is exemplary, but I think that without the next

step, without modeling what the real world application would

look like, we’re just still talking, talking is good, but I

think action would be required.

                 JACK HADLEY:                  Let me comment, respond to two of your

comments.              The first one is, I think that suggesting that the

estimate could be five times larger is probably an

exaggeration.                  I think we’ve learned a lot since those first

estimates about the Medicare program came out and in effect

what we’re suggesting is that for the full year uninsured,

there differential is maybe two fold.                                            And that estimate goes

back probably fifteen years through a variety of studies.                                                                  So I

think that’s actually pretty solid.                                          And again, this is only

looking at the resource cost.                                   It’s very important not to get

those mixed up with all the other kinds of transfers that might
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go on.          The second point is while you’re right, that there

could be adverse selection into one program, the flip side of

that means that there’s positive selection somewhere else.                                                                   So

it still comes out to an issue of redistribution and how you

balance those shifts of people into different programs.                                                                And I

think that’s not a trivial problem by any means, it’s a very

complex problem.                     But adverse selection per se is not kind of

the end of the story.

                 JOHN HOLAHAN:                   The one thing about it, I would say

about the adverse selection is, well, we were assuming you’d go

universal coverage, so there’s not, there can’t be any adverse

selection, you’ve got everybody.                                       The other thing, in terms of

the cost pressures, I mean, it’s such a small increment to the

amount of resources that you’re putting into the health sector

that it’s hard to imagine that we’re adding a lot to the

inflationary pressures that are already there and those will

remain.           I mean the pressure to, you know, to adopt new

technologies which is probably the biggest driver of the cost

in the health care system is going to be a factor and you’re

absolutely right, you know, sort of how you deal with that

major issue, in terms of allocating resources either through

price mechanisms or more directly is something the nation

really eventually has to face, there’s no question about that.

But I don’t think, I think what this is saying is that the

amount of resources we’re sucking from, the rest of the economy
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into the health care sector is not going to add a lot to that.

                 DIANE ROWLAND:                    Thank you.               Next question.

                 TOM MILLER:                Tom Miller, Joint Economic Committee.

Just a follow up from what John was saying and then two other

data questions.                    In coming up with the numbers on what the full

cost of aiding the uninsured would be, did you take into

account either the extraction cost, the dead weight cost of

additional demand for health care not only by the uninsured,

but the ripple effect of the insured?                                            You’ve got a greater

demand for those resources, you need more doctors, you need

more services, it’s not going to just be an increase by the

uninsured, but also the insured population will tend to go up

as well.            That’s a little different than the technology effect.

My other two questions are, another offset on the table for the

revenues, I don’t know whether you had this in there, some of

the folks that might be insured would have private coverage.                                                                     I

assume there is a tax cost on that assuming that in effect

those people are accessing tax advantages.                                                  Is that number

accounted for and whether you’ve got privately insured covered,

whether it’s self-employed or employer covered under a new

regime.           Isn’t there an offsetting revenue effect in that

regard that in effect needed to be put on the table?                                                             Final

question is, if I understand your differential of uncompensated

care of about 40 billion, roughly and 34 billion in public

funds, we don’t hear about cost shifting from the uninsured to
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the privately insured.                            Does that mean in effect that the total

magnitude of the cost shift is only about $6 billion in all of

the entire health care industry?                                       Which doesn’t seem

particularly large, aside from the inefficiencies of sorting it

out.

                 JOHN HOLAHAN:                   Let me go in reverse order.                                 I think the

answer to the last question is yes, I think the amount of

private cost shifting that goes on is relatively small and, I

mean, I think sort of another issue as to why it has such a

prominent role in the discussion.                                        My guess is that it’s often

very convenient if you’re negotiating                                                   with an insured to

say, well my costs are high because I treat so many uninsured

people.           A second, your other two points, the answers there are

no, we did not take account of possible increase demand by the,

empowering the insured.                             Nor do we do anything trying to adjust

for behavioral difference that might occur if somebody moves

from private to public insurance.                                        In part, I think those are

very difficult things to do, but another consequence,

obviously, that could occur here that we haven’t addressed at

all, is with expanded coverage, with universal coverage, the

demand for cost controls could also change.                                                   So it’s very hard

to say which will dominate, so we kind of drew the line, let’s

just extrapolate from current experience.

                 JOHN MCDONALD:                    John McDonald with the Hartford

Current.            I wonder if the authors of the study would comment on
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Briefing: The Cost of Care for the Uninsured:                                                                                    36
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Dr. Mongan’s testament that the true cost in terms of

legislative proposal of covering all the uninsured would be 75

billion, not 48 billion or 750 billion over ten years.

                 JOHN HOLAHAN:                   Well, I think Jim is right, that the

total cost would be higher than 48, whether it’s 75 or a higher

number is really hard to know outside, you know, knowing

details of exactly what we’re talking about, but I think that

under any real legislative proposal, and you set primers about

who is eligible is very difficult to wall off those people

currently being insured in some fashion from the new

arrangement and there will be a lot of spiller tax costs and

that’s what Jack had referred to as transfers.                                                      In other words,

your taxes will go up higher than 48, but somebody’s payments,

either direct out of pocket payments or their payments for

health insurance premiums, individuals or employers are going

to go down.                And it is impossible to make headway on this

problem without understanding that very fundamental thing.

That, yes, the government cost will be higher than 48, but

somebody is saving money, potentially an awful lot of money

somewhere else in the system.                                   And it’s just by definition.

                 DIANE ROWLAND:                    I think it’s important to put into

context the current spending both part time uninsured and full

time uninsured was 124.5 billion and the net increase to bring

the uninsured up to equal use levels with the insured was an

additional 42.8 billion.                              But some of what we’re saying here is
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Briefing: The Cost of Care for the Uninsured:                                                                                    37
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that that’s the increase that would be spent on medical care,

but you’re not sure in any health reform proposal that you can

pick up that full 124.5 billion to apply to the cost of

extending coverage.                        So to some extent that’s out of pocket

payments by the individuals and some of that may need to be

replaced by additional government subsidies or government

spending.              So that’s why we’re emphasizing that the cost of a

health reform proposal is different than the net cost of

increased spending because you’re bringing medical care use for

the uninsured on a par of that with the insured.                                                        They’re two

really different numbers.                               Additional.

                 JIM CANTWELL:                   Hi.       I’m Jim Cantwell with the House

Budget Committee.                      I have a question for Diane, for Jack and

John.         I wonder if you’ve thought about possibly running a

demonstration project where you would cover either some

services, not necessarily all or all services in a certain

geographic area.                     For example, Utah or Colorado, or whatever.

Run it for two years and see what happens.

                 JACK HADLEY:                  I haven’t thought about that example

specifically, but I think there is a legitimate experiment that

one could do in terms of the uninsured and that is we have big

ethical problems, obviously, with denying people coverage as

part of an experiment, but if one would start with a population

of uninsured people and randomly think about giving some of

them insurance and compensating others for being in the study
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Briefing: The Cost of Care for the Uninsured:                                                                                    38
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but not giving them insurance, and following them over time, I

think that would go a long way towards getting much better

estimates of both behavior, how people cope, how they respond,

what happens when you get insurance as well as health outcomes.

But, I, well, I’d hate to make that the alternative to re-

election on coverage.

                 DIANE ROWLAND:                    I guess from a Foundation perspective,

I’d say that mounting such a demonstration is not within the

resources, especially at the Kaiser Family Foundation, but

probably really does point out that this is a role where

government has to play an important step because the finances

to bring uninsured people their coverage, we know most of them

are low income, most of them don’t have any ability now to

afford their health insurance coverage so such an experiment

really would require, I think, a substantial federal dollar

investment.

                 SHELLY SNAPE:                   Hi, I’m Shelly Snape [spelling?] with

the National World Health Association and I just wanted to

raise the point that’s been sort of expressed a lot in the

political system lately about the rural safety net programs can

play in addressing some of the issues of the uninsured and I’m

wondering if specifically you could address the potential for

that in dealing with some of the problems you’ve outlined or

how those programs would need to be changed in order to meet

the needs.
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Briefing: The Cost of Care for the Uninsured:                                                                                    39
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                 JACK HADLEY:                  Well I think the, well two comments, one

is that the safety net as we know it now is clearly inadequate

ad I think the main reason its inadequate is because its really

grossly under funded.                           And if you were to talk about a safety

net that was 15 or 20 times larger, which would kind of it into

this $48 billion ballpark in terms of total costs, then I think

you could say, well, you know, that kind of a safety net might,

in fact, be a real alternative, the difficulties though are

questions of inefficiency in a sense that there, it has been

shown that people will delay seeking care if they don’t have

insurance and it’s not clear that, in terms of the system as

it’s set up now that people feel they can go anytime or

whenever they need to get care and the other is linkages

between community health centers as sort of a central point of

the safety net and specialty care, hospital care.                                                         And a third

point, the safety net could in fact be financed by an insurance

system.           It doesn’t have to be a grant system.                                             So, you could

have a network of community health centers that provide care to

specific populations, either because of cultural differences,

educational differences, whatever.                                         But that system could

easily be financed by an insurance system as opposed to a grant

system.

                 DIANE ROWLAND:                    Regina?

                 REGINA BENJAMIN:                      I spent my first two years in a

community health center and they certainly do very good work
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Briefing: The Cost of Care for the Uninsured:                                                                                    40
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and certainly provide a lot of coverage, however, if we’re

going to expand it, it needs to be expanded to include, I

think, private physicians and clinics like me to have access to

that too because the patients really need the services where,

in their communities.                           And it needs to be opened up and

broadened.               Right now it’s not.                         So if you were to expand it,

it needs to be broadened beyond just the community health

center.

                 SAM SEAMAN:                Sam Seaman [spelling?] with the

Metropolitan Washington Public Health Assessment Center.                                                                 As we

talked about building political will, I wonder what it is we

can say to the currently insured, that we’re paying more

because of the uninsured, our premiums are higher, the

hospitals charge us more because they’re, we pay part of the

uncompensated care.                        What is that gap, how much would currently

insured save or what can we say to them to help build the

movement toward getting coverage?

                 JACK HADLEY:                  Well, I guess I’m sorry to disappoint

you, but I think if the uninsured had coverage, you wouldn’t

notice it in your premiums.                                 I don’t think they would go down

dramatically at all.                          Maybe a few cents at most.                                In large part

because most of that care is being paid for out of government

funds through disproportionate share programs, through

appropriations and so forth.                                  And I think the biggest message

for the currently privately insured is, one that, for lack of a
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Briefing: The Cost of Care for the Uninsured:                                                                                    41
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better way to say it, it could happen to you.                                                     With 25% of the

non-elderly population being uninsured at some point in the

year, that’s one out of four and you can think of all sorts of

scenarios, people between jobs, people lose jobs, a company

closes, a company goes bankrupt, you lose your retiree

benefits, you’re not 65 yet, all of those things contribute to

the possibility of becoming uninsured and so in some sense, I

think what we’re arguing for is that a broader based system

that guarantees coverage in one way or another, is really a

benefit to everybody, including those who are currently

privately insured.

                 DIANE ROWLAND:                    Let me turn to Jim though and ask if

he’d make a comment from the perspective of a hospital and a

set of hospital systems that he’s worked with about the

difference between uncompensated care and insurance and what

that would mean in the provide community.

                 JAMES MONGAN:                   Particularly referring back to the

safety net comment and speaking from the perspective of a

public hospital, which I ran for about 15 years out in Kansas

City, I believe that we did great and good work at that

hospital and it fulfilled a very important need in Kansas City.

But the fact of the matter is, it wasn’t enough.                                                        We estimated

that we provided about a little over a third, about 40% of the

indigent care in Kansas City.                                   The other 60% was provided by

scattered providers throughout the metropolitan area.                                                              The
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Briefing: The Cost of Care for the Uninsured:                                                                                    42
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other thing that I would say, getting back to Regina’s point is

insurance does make a difference in people’s willingness to use

the services.                  Even though our public hospital was there, we

consistently saw cases where people came in with cancers which

were further advanced than you would see in an insured

population and with people who had not had good control of

hypertension and diabetes.                                So the safety net does an important

job and function, but it’s not enough by itself.

                 REGINA BENJAMIN:                      This also gets to the issue of sort

of a grant funded system versus an insurance per person system.

Which is looking down the road a bit too, I think, one of the

issues that the health care system is grappling with is sort of

care coordination, multiple providers are very [inaudible] of

system.           And if you have a grant funded system, it’s very hard

to tell what’s going on inside that system, particularly for

this population.                     With a lot of co-morbidities, a lot of

illness, potentially high utilization.                                             It just takes, it

potentially takes you a step away from also where we want to

be, which is a high level of coordination.

                 BILL WALSH:                I’m Bill Walsh from the New Orleans Times

[inaudible] and I was wondering if someone one the panel could

give us an estimate of the cost of the range of legislative

proposals out there that would arrange toward universal

coverage, everything from tax credits to say an expansion of

Medicaid.              I mean, how much are we really talking about
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Briefing: The Cost of Care for the Uninsured:                                                                                    43
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spending here to achieve this?

                 DIANE ROWLAND:                    Jack?         I think that’s a Jack Meyer

question.

                 JACK MEYER:                Well, interestingly enough, in the

proposals that were assessed as part of our project, the real

resource costs lines up, even though they were done sort of

different way, the real resource costs lines up very nicely

with the estimates made by Jack and John.                                                 We found that that

cost ranged from $23 billion a year to $57 billion a year.                                                                   Of

the net cost of covering the uninsured, under programs, as I

said, would cover between 15 and 40 million of the 43½ million

uninsured.               The problem is, as I noted in my remarks, that net

cost masks the gross costs to either the taxpayers or

employers, which ultimately pass back to the employees.                                                                That

has to be fronted in a way and that’s where the politics get

dicey.          So you would find in some of the proposals that would

move to universal costs, government costs that could be even

considerably higher than Jim mentioned.                                              Well in excess of $100

billion a year.                    Now those costs would reflect, translate into

somebody else’s benefit as the authors of the report note in

their presentation.                        So that these households that are, you

know, people making $6 and $7 an hour and struggling to pay for

half their health care costs, for goodness sake, would get

relief as a result of that tax cost, you have to net that out.

And physicians, like your physicians Regina, who are either
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Briefing: The Cost of Care for the Uninsured:                                                                                    44
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unpaid or low paid, depending on whether the grant comes in,

would get a decent salary, you know, reasonably decent salary

in this world.                   But, nevertheless, I want to emphasize that we

cannot do this on the cheek.                                  And we must deal with the

politics of moving that money around.                                            But I do believe that

from all the modeling that was done as part of our program,

that these results presented by Jack and John are very accurate

and right in the middle of the range, maybe a little bit toward

the upper end of the range of what we found.                                                    The difficulty is

in the current environment, I mean, we have a federal

government that we just found out the other day the good news

was that because the revenues coming in are better than we

thought, maybe the deficit this year will only be $420 billion

instead of $530 billion.                              And Jim indicated, that’s because of

decisions that have been taken and priorities outside the

health care system and a sluggish economy.                                                  Nevertheless, in

that environment, coming up with whether it’s $50 or $75 or

$100 billion, even though we spend far more than that on other

things, it’s going to be very dicey.                                           So, we need to make the

case why in this fiscal climate or the fiscal climate we’ll

have in the next few years, that we still should consider, and

keep this alive, so that when the economy picks up or we find a

way to get out of this deficit, the federal government can pay

its payment toward health reform.                                        Really the two alternatives

are a big increase, a substantial increase in government
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Briefing: The Cost of Care for the Uninsured:                                                                                    45
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spending or a requirement on employers to provide coverage who

are not now doing so.                           And the politics of that are very

difficult.               That’s all off budget.                            So, you know California

passed employer mandate recently, last year, it’s going to be

challenged in the court, for employers with 50 or more

employee, and all of the cost of that, virtually all of the

cost of that, is off budget from the point of view of the

California state government.                                  Obviously since it’s in terrible

fiscal melt down shape.                             But that doesn’t mean there’s no cost,

it means that the difficulty they will have is in, is going to

employers that have never paid this before and say you to, in

this case, pay 80% of the cost of the premium.                                                      So working that

through and answering the question of why, what benefits do we

get that makes it worth that?                                   That’s the real challenge.

                 DIANE ROWLAND:                    Any other question?

                 DAVID ARBACK:                   Thank you.               David Arback [spelling?]

from the Congressional Budget Office and I have a question for

Jack and John.                   I wonder if you think the 48 billion might

actually be a little high if uninsured people might have lower

spending patterns than insured people.                                             So the experiment of

changing uninsured person into an insured person, you might see

them not spend as much as the insured person who has the same

characteristics because perhaps they chose to be uninsured

because they had less preference for health care spending in

the first place.
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Briefing: The Cost of Care for the Uninsured:                                                                                    46
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                 JOHN HOLAHAN:                   I think you’re right.                           It’s a good point

that doing these kind of extrapolations always makes

assumptions about similarity and behavior and you’re right, we

don’t know for sure the uninsured would in fact behave the same

as the insured.                    We tried to accommodate that by limiting our

insured population to lower and lower, middle income people as

a way of making the two populations more comparable.                                                             But there

is still obviously some underlying uncertainty.                                                       And whether

this estimate is low, I don’t think I’d go that, so far as to

claim that, but, I mean, if anything, I would think sort of

overall demand in cost partiers might push the estimate a

little higher, but even if it were higher, I think the things

to remember, I mean, let’s take an extreme case and say it was

twice as large, it still would amount to only a 5% to 6%

increase in health care spending.                                        It’s still in the same

ballpark as the estimated value of the benefit and in terms of

increase in GDP, it’s less than a 1% increase in health share

of GDP.           So, I think there is a lot of flexibility in what this

underlying cost number is that we could accommodate and I guess

I would just echo other members of the panel, I think the real

issue is a political issue in determining and trying to solve

the problem of negotiating both ideological differences as well

as possibly substantial differences in sources of financing.

                 FEMALE SPEAKER:                     We’ve talked a lot about the cost of

extending coverage, I wonder if some of you would talk a little
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Briefing: The Cost of Care for the Uninsured:                                                                                    47
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more explicitly about the benefits of that and how those

benefits are explained in a political way, in a rhetorical way

to make the cost seem worth it.

                 DIANE ROWLAND:                    Jim?        Got that one?

                 JAMES MONGAN:                   Well I might just pick up on some of

Wilhelmine’s commentary about the IOM report that tried to look

at that issue.                   I think there are very clear health benefits to

begin with.                But the problem here I’ve often said to groups

that, you know, there are a lot of people I’m now calling the

willfully ignorant because many of these are people who have

other reasons for being opposed to expanding coverage.                                                               But it

is easy to assume the uninsured get coverage, because in fact

for acute dramatic things they do, we don’t have women giving

birth in the street anywhere in the United States, nor if you

break your arm, it’s a compound fracture, will you lay there.

We kind of what to move that care indoors.                                                  But there’s an

awful lot of care that’s not delivered and the IOM report just

went right down hypertension, diabetes, cancer, a variety of

circumstances where your health suffers.                                               There were estimates

about 18,000 premature deaths per year, due to a lack of

insurance.               So a clear set of health consequences.                                             The

economic consequences have been a little more complex to sort

through.            But again, I would say that the Institute’s work

showed, again this number that’s been demonstrated of a range

of 65 to 130 billion, midpoint of about $100 billion of
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Briefing: The Cost of Care for the Uninsured:                                                                                    48
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economic consequences of having people uninsured, whether

that’s lost productivity or other impacts on people’s lives.

So I think there’s a clear case that can be made, both in terms

of the health consequences and the economic consequences, but

I’m afraid that it takes an audience that’s interested in

listening and learning.

                 DIANE ROWLAND:                    Jack?

                 JACK MEYER:                Well, picking up on Jim’s comment on the

economic consequences and your good question, I think we have

to make this real to people, as Regina said, put a face to

these uninsured.                     And I think Cover the Uninsured Week helps in

that regard.                 And maybe one way to do that is to begin to say

if you get up every morning and go to a job                                                                 at 8

o’clock and you’re there and you’re lower income, low moderate

income person, you ought to have health coverage.                                                         And a lot of

the people we’re talking about have two and three jobs.

They’re working incredibly hard.                                       I think a lot of the people

and Jim alluded this, who make these decisions, have no idea

what the life of an uninsured person is like.                                                     Who might make

$18,000, $20,000, $25,000 a year, working in a low wage job, no

benefits, if they miss a day of work, their pay is probably

docked.           And I think people can relate to that.                                              A lot of

people are under the misconception that this is a slothful,

idle population.                     Over 80% of the uninsured live in a household

where someone works.                          And related to that is I think we got to
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Briefing: The Cost of Care for the Uninsured:                                                                                    49
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make the case to the business community which likes, and I

happen to favor, an open economy with a relatively free trade

and a global economy, they resonate to that, but that means

that a lot of workers are buffeted about, they lose their job,

this was alluded to very well in one of the previous comments

by Jack Hadley, the company closes, they lose their job, a job

is outsourced and if we want the benefits of an open economy,

we have to find some way to make health coverage portable, so

when a person undergoes these shocks, and these adjustments,

they don’t lose their coverage.                                      I think the American people

can relate to that as opposed to please give us a hundred

billion dollars more in your tax money.                                              It’s only fair to have

these shock absorbers and these assistances.                                                    And I don’t think

we’ve done a good enough job explaining to the companies how

this might affect their absenteeism, the evidence isn’t quite

as strong here.                    Jim was right.                    But we’ve got to make the case

to people who don’t do what we do for a living all day.                                                                And

need to see a little bit more of the business case.

                 WILHELMINE MILLER:                        I just wanted to say a few things.

Other than the clear health benefits for individuals, one thing

that IOM Committee looked at in great depth was the impact on

families and on children’s use of health care where a parent

doesn’t have health insurance or on families when a child may

not be able to get care when they’re sick.                                                  There is a whole

level of family stress and anxiety that goes along with not
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Briefing: The Cost of Care for the Uninsured:                                                                                    50
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knowing what will happen if somebody needs care and in fact

very good evidence that even if you provide health insurance to

children through a program like SCHIP, if parents don’t also

have coverage, they’re less likely to take their insured child

to a provider.                   So these benefits extend far beyond just the

individual health benefits.                                 And as Regina can tell you and as

the IOM Committee looked and tried to measure some of the

impacts of the lack of health insurance in communities where

the uninsured rate was well above the national average rate of

about 15% across the community or up to 17% or 18%, if you just

look at the just under 65 population, communities that have 20

and above uninsured population, that the entire health

infrastructure in those communities suffers because of the

heavy demands on public health departments whose primary role

is in population health interventions and emergency

preparedness.                  All of these facets of our common health

facilities and services suffer when there is a great burden of

uninsured people who need routine and emergency care.

                 REGINA BENJAMIN:                      I’m not a policy person, but it’s

basically subtle [inaudible] numbers that it’s basically the

right thing to do.                       And it’s really hard to face a parent who

has worked really, really hard trying to take care of their

families and for them to fee inadequate or not providing what

they think they should for their family when they can’t pay for

that x-ray or pay for that prescription when you get it.                                                                 And
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Briefing: The Cost of Care for the Uninsured:                                                                                    51
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in our society, we shouldn’t have people who are the engines of

our society working, making this country move, feel that way.

I just think it’s the right thing to do.

                 DIANE ROWLAND:                    And maybe that’s a great point to end

this session on.                     I think we started by trying to show that

there was no real free care in our society that someone pays,

whether it’s the uninsured themselves through delaying care or

through paying out of pocket for the care, whether it’s the

government programs that help subsidize some of the

uncompensated care or the providers who get stretched too thin

and I hope that the numbers and the analysis here helps us

understand a little better that we all pay a price for 44

million people without health insurance coverage and that as

part of the Cover the Uninsured Week, we’d like at least to

raise this issue to be one on the table as people consider the

implications of doing nothing and as we head into an election

in which our latest pole reports show, that the cost of health

coverage as well as the uninsured remain high priorities for

the American public and are likely to continue to be key issues

in the upcoming election.                               Thank you very much for coming and

thank you to our authors of the study and to all of our

panelists.



                 [END RECORDING]


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