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What is National Health Insurance?
April 14, 2003
Who is Eligible
Every person living in the United States and the U.S.
Territories would receive a United States National
Health Insurance Card and i.d number once they enroll at the
appropriate location. Social Security numbers may not be used
when assigning i.d cards. No co-pays or deductibles are
permissible under this act.
Benefits/Portability
This program will cover all medically necessary services,
including primary care, inpatient care, outpatient care,
emergency care, prescription drugs, durable medical equipment,
long term care, mental health services, dentistry, eye care,
chiropractic, and substance abuse treatment. Patients have
their choice of physicians, providers, hospitals, clinics, and
practices.
Conversion to a Non-Profit Health Care System
Private health insurers shall be prohibited under this act
from selling coverage that duplicates the benefits of the USNHI
program. They shall not be prohibited from selling coverage
for any additional benefits not covered by this Act; examples
include cosmetic surgery, and other medically unnecessary
treatments.
Cost Containment Provisions/ Reimbursement
The National USNHI program will
annually set reimbursement rates for physicians, health care
providers, and negotiate prescription drug prices. The
national office will provide an annual lump sum allotment to
each existing Medicare region, which will then administer the
program. Payment to health care providers include fee for
service, and global budgets.
The conversion to a not-for- profit health care system will
take place over a 15 year period, through the sale of U.S.
treasury bonds; payment will not be made for loss of business
profits, but only for real estate, buildings, and equipment.
Funding & Administration
The United States Congress will establish annual funding
outlays for the USNHI Program
through an annual entitlement. The USNHI
program will operate under the auspices of the Dept of Health
& Human Services, and be administered in the former
Medicare offices. All current expenditures for public health
insurance programs such as S-CHIP, Medicaid, and Medicare will
be placed into the USNHI program.
A United States
National Health Insurance Advisory Board will be
established, comprised primarily of health care professionals
and representatives of health advocacy groups.
Proposed Funding For USNHI Program
$1.86 Trillion Per Year
An equitable way to raise a budget of $1.861 trillion ($56.7
billion less than without reform) is the following:
- A payroll tax on all employers
of 3.3%
- Maintain employee and employer
Medicare payroll tax of 1.45%
- Implement a variety of
mechanisms so that low and middle income families pay a
smaller share of their incomes for health care than
wealthiest 5% of Americans
- A small tax on stock and bond
transfers
- Cose corporate tax shelters
- Repeal of the Bush tax cut of
2001
Using data from the Lewin Groups recent study of
single-payer in California, along with a package of
progressive financing developed under the direction of the
late Tony Mazzochi, a life-long advocate for economic justice,
it is estimated that the NHI would
reduce health spending in 2005 from $1,918 billion to $1,861.3
billion (a savings of over $56 billion) while covering all the
uninsured. Ninety-five percent of families would pay less for
health care than they do today.
Sources of Revenue (2005)
Government
$852.5 billion
Keep existing federal, state and local revenues that currently
pay for Medicare (employer and employee payroll taxes of 1.45%
each or $194 billion) and other federal and state programs
(with the exception of revenues that now pay government
workers health premiums).
Employers
$220.8 billion
Implement a modest payroll tax of 3.3% on all public and
private employers, while eliminating employer premiums for
private health plans. Employers that currently pay all or part
of their employees health premiums will face much lower health
costs than they do today (employers who provide coverage
currently pay an average of 8.5% of payroll for much less
comprehensive coverage). A 3.3%
payroll tax is low enough so that all employers (including
those that do not provide coverage today) should be able to
contribute without undue hardship.
In 2005, without reform, the average employer that offers
coverage will contribute $2,600 to health care per employee
(for much skimpier benefits). Under this proposal, the average
cost to employers for an employee earning $35,000 a year will
be reduced to $1,155, less than $100 per month.
Heath tax on the wealthiest 5% of Americans
$221.8 billion
The wealthiest Americans, who accumulated nearly all the gains
from economic growth in the past two decades, should pay their
fair share for health care. Today, poor and middle-income
Americans pay a higher percentage of their incomes for health
care than the very wealthiest Americans. This budget includes
an additional 5% income tax on the top 5 to 1% of the
population, the group that in 2002 had declared incomes of
$140,000 to $250,000. This tax exempts the first $140,000 in
income, and does not include unrealized capital gains in
stocks, bonds, home sales, etc. The budget also includes a 10%
income tax on the richest 1% of Americans, those with average
incomes of $1,100,000 (exempting the first $250,000 in income,
and not counting capital gains on stocks, bonds, property).
The most well-off Americans also are the most dependent on a
healthy labor force for employees and services. Thus, they
will benefit greatly from their modest additional investment
in universal health care.
Tax on stock and bond transactions
$144.6 billionAnyone who buys or sells a stock will pay a
transaction tax equal to one quarter of one percent of the
purchase price. For example, a $100 stock purchase will be
taxed a total of 50 cents. For those who invest and hold on to
stocks, the tax is minimal. Other financial transactions will
also be taxed minimally. This will provide another progressive
revenue stream for health care. The wealthiest 10% of
households own over 80% of all stocks, including those in
mutual funds or pension plans. Over 40% of all stock is owned
by the richest 1 percent of households. About half of all
households own no stocks, not even in mutual funds or pension
plans such as IRAs, 401(k), 403(b)
or Keogh plans.
Close corporate tax shelter loophole
$105.2 billion
According to the Treasury Department, corporations are very
skilled at avoiding paying their taxes, costing the government
billions annually. An increase in abusive tax shelters -
various accounting methods that have no legitimate business
purpose and are invented solely to lower a companys taxes Š
means that corporations are paying less in taxes (as a
percentage of profits) than they did in the 1960s. Closing
these loopholes and making corporations pay their fair share
of taxes will raise over $100 billion annually for health care
(David Cay Johnston, ‘Corporations Taxes are Falling Even as
Individuals Burden Rises’ New York Times, Feb 20, 2000 and
‘US Takes Aim at Tax Shelters for Companies’ New York
Times, Feb 29, 2000.)
Repeal the Bush tax cut of 2001 and invest the Bush
‘economic stimulus plan’ of 2003 into health care
$206 billion
The 2001 Bush tax cut ($120 billion) benefited the wealthiest
Americans the most. Everyone should pay their fair share for
health care. Bush has also proposed $865 billion in additional
cuts over the next nine years (an average of $86 billion a
year over the next decade), tax cuts that would mostly benefit
those with very high incomes. Redirecting this funding into
health care spending would provide a genuine economic stimulus
while providing an important public service. Health care is a
social good that benefits everyone (e.g. wealthy Americans not
only need secure health coverage for their own families, they
also depend on a healthy labor force for their incomes and
services).
Household
$65.9 billion
National health insurance eliminates all household
contributions to private premiums (including Medi-gap plans),
co-payments, deductibles and all out-of-pocket costs for
services not currently covered like dental, vision, and
prescription drugs. Total household expenditures will drop
from $326.7 billion to $65.9 billion annually. The only
expenses left for individuals will be over-the-counter drugs
such as aspirin, elective cosmetic surgery, etc. This
represents an 80% reduction in current out-of-pocket expenses.
Existing non-patient revenues
$44.5 billion
Existing funds raised from donations from individuals and
foundations and from hospital gift shops will continue to
contribute a small percentage of the total budget.
Total budget: $1.861 trillion
This progressive funding package was developed in 2001 by
Tony Mazzochi (Labor Party),Drs. David Himmelstein and Steffie
Woolhandler (Harvard), with assistance from Dean Baker (Center
for Economic Research and Policy).
Technical Appendix on Financing National Health Insurance
Dean Baker, Center for Economic Research and Policy
February, 2003
1) Overall estimates of spending with and without reform,
2005: Includes savings from administrative simplification
($178.2 billion) and bulk purchasing ($50.5 billion) minus an
increase in utilization ($172 billion) as a result of
universal coverage. The estimate of savings on administration
(9.3 percent) and bulk purchases (2.6 percent) are taken from
the Lewin Groups analysis of the Cal Care single payer
proposal for California, figure 17 The estimates have
been multiplied by the ratio of projected health care spending
in 2005 to 2002 spending. The data on national health care
expenditures and public expenditures for 2005 is taken from
the Centers for Medicare and Medicaid Services, Table 3:
National Health Expenditures Aggregate and per Capita Amounts,
Percent Distribution and Average Annual Percent Change by
Source of Funds: Selected Calendar Years 1980-2010
The estimated cost of a single payer system is taken from the
Lewin Groups analysis of the Cal Care single payer proposal
for California, figure 17
The estimate assumes that the ratio of the cost of a national
single payer system to the cost of the current system will be
the same in 2005 as the ratio Lewin estimated of the Cal Care
plans to base line spending for California in the year 2002.
This estimate includes the cost of home health care. It also
uses the Lewin Groups estimate of a 10.7 percent increase in
utilization resulting from universal coverage and the
elimination of most forms of co-payments.
Future projections are based on data from the Centers for
Medicare and Medicaid Services that show that health spending
will grow 7.3% annually without reform (Table 3: National Care
Health Expenditures Projections: 2002-2011). The growth rate
of expenditures is assumed to be 1.3 percentage points lower
each year in the universal system than with the current
system, following the analysis of the California Cal Care plan
by the Lewin Group (Lewin Appendix page H-18, Figure 9). The
estimate of per capita expenditures divides the 2005
expenditures by population (levels and growth are taken from
the Social Security trustees report, table V.A.2).
2) A 3.3 percent payroll tax will
raise $220.8 billion, based on the Social Security trustees
projection of the revenue yielded in 2005 by the 2.9 percent
Medicare tax (Social Security trustees report, 2002 (table VI.E.10).
9) The savings per worker for firms that already provide
workers with coverage are derived from Lewin Groups estimate
that the average premium per worker in California in 2002 was
$2256. This figure is increased by 15.1 percent to account for
cost increases between 2002 and 2005
3) The tax yields from a 10 percent income tax on the
richest 1% of families and a 5% percent income tax on the top
5 to 1% of families were calculated by taking the share of
these groups income as indicated in Mishel, Bernstein, and
Boushey, 2003, table 1.22
4) The estimates of revenue for the stock/bond transfer tax
are taken from Pollin, Baker, and Schaberg, 2002. The 1997
estimate was multiplied by 1.49 to take account of GDP
growth between 1997 and 2005. Other minimal rates of taxation
used for this estimate are: Government bonds (0.1%), corporate
bonds (0.1%), futures contracts (.02%), currency (0.1%), swaps
(0.02%).
5) Reversing the Bush tax cut would raise an estimated 1
percent of GDP, which would be $120
billion in 2005. Re-directing the ‘economic stimulus’ plan
to health care would contribute $86 billion a year (Families USA,
‘Tax Cuts for the Rich or Solving Major National
Health Problems’ 2/3/03).
6) The estimate of $105.2 billion from closing corporate
loopholes and having corporations pay their fair share of
taxes is estimated by comparing corporate tax rates on profits
from 1960 to 2002.
7) It is estimated that 3.7 percent of medical expenses
will be born directly by households (e.g. purchases of over
the counter drugs) and that 2.5 percent would come from
charitable donations or other non-patient forms of income.
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