Health Care Primer

Having Trouble Understanding All The Talk About Healthcare Reform? No surprise, it’s complicated.

Here’s UPTE’s primer about health care reform strategies, how lawmakers are attempting to enact them, and how you can make your voice heard.

The legislative efforts are evolving, so check back regularly for updated resources and analyses. Read up, get involved, and let’s change the system.

What’s the crisis?

Many people are uninsured

  • In California, an estimated 4.9 to 7.0 million residents (13%-19%) are uninsured.
  • Nationally, some 47 million (16%) are uninsured.

The Newshour with Jim Lehrer, August 28, 2007

Costs are rising dramatically

  • $621 billion increase to $1.9 trillion in net health care spending between 2000 and 2005 – that’s a 49% increase.
  • Premiums for employer-based insurance have risen by 7.7% in 2006 and employee contributions have increased by 143% since 2000.
  • 50% of personal bankruptcies were at least partly the result of medical expenses.

Report Estimates Health Care Cost Increase at $621 Billion Since 2000, Medical News Today, February 10, 2005; 
National Coalition on Health Care
, 2008 Fact Sheet.

Employers are reducing coverage.

  • Only 61% of workers were covered by employers in 2005, and that percentage is steadily declining.
  • Only about 25% of low-wage workers are covered by employer-paid insurance.

Kaiser Commission, Changes in Employees’ Health Insurance Coverage, October 2006; Economic Policy Institute, The Chronic Problem of Declining Health Coverage, Sept. 16, 2004

Retirees have less health insurance.

  • Nearly one-third of large employers offering retiree health benefits are eliminating them for new employees, or are expected to do so in the next few years.
  • 85% of large employers indicated they planned to increase retiree contributions by an average of 20%.

US Employers Cutting Health Care Coverage, Los Angeles Times, December 6, 2002.

Models of health care reform.

National or single-payer health care.

A national single-payer health care system ensures coverage for all regardless of income level, employment or citizenship status. Many industrialized nations, such Britain, France, Japan and Sweden, have national health systems and spend less on health care with better outcomes.

The US spends over twice as much as other industrialized nations on health care ($7,129 per capita), yet rates poorly on indicators such as life expectancy, infant mortality and immunization rates. The US spends more and gets less because it has a patchwork system of for-profit private insurers, who waste money on overhead and marketing, as well as huge profits and exorbitant executive pay. Doctors and hospitals maintain costly staffing to deal with the insurance industry bureaucracy. Administrative costs comprise up to a third of US health care costs.

In a national single-payer system, a single public or quasi-public agency administers all health care financing, replacing private insurance companies and dramatically reducing these costs. Income is invested back into care instead of the profits of private corporations.

  • Everyone is covered, and may choose their own doctors and hospitals. Coverage is comprehensive.
  • Doctors, hospitals and other providers continue to operate privately, but submit bills to one national agency rather than hundreds of private insurers.
  • Costs are controlled through negotiated fees, global budgeting and bulk purchasing. For instance, the state becomes the single purchaser of pharmaceuticals and medical equipment, allowing it to vastly lower costs.
  • Medical decisions are put back in the hands of doctors and patients, unlike the present system where practitioners often have to get permission to treat from an insurance administrator with little or no medical training.
  • Canada’s health care system and the US Medicare system are examples of single-payer plans.

MORE INFORMATION: Physicians for a National Health Program 

California’s single-payer (SB 840)

Sponsored by Senator Sheila Kuehl (D-Los Angeles) and several others, Senate Bill 840 would establish single-payer in California. In 2006, it passed the Assembly and Senate, but was vetoed by the governor. It is scheduled to be heard again in 2008.

  • 100% coverage – no one left out. All residents pay an affordable means-based premium and receive comprehensive health insurance, including prescription drugs, dental and vision care, mental health services, long term care, and alternative and complementary care.
  • Guarantees everyone the right to choose their own doctors, providers and hospitals, which remain privately-run. No exclusions for “pre-existing conditions” or other health problems.
  • Funded by federal and state money currently being spent on health care, plus employer and employee contributions redirected from private insurers.
  • A new health care tax would replace all private insurance premiums, deductibles and most other out-of-pocket health expenses, such as co-pays.
  • The health care tax would be less than current health insurance costs for most individuals and for all employers who currently provide health coverage. On average, it would save employers an average of 16% on employee health benefits.

MORE INFORMATION: Text and legislative votes on SB 840 Sen. Kuehl’s page on SB 840

National single-payer (US House Resolution 676)

A national single-payer plan sponsored by John Conyers (D-Michigan) and co-sponsored by 87 other representatives, HR 676 is currently in committee.

  • Creates a publicly-financed, privately-delivered comprehensive health care system modeled on the existing Medicare program, including full drug coverage.
  • Patients have their choice of physicians, hospitals, clinics and practices. 14,000 doctors have endorsed the plan, which could save over $286 billion dollars a year in health care costs.
  • Funded with current federal and state health care money, plus tax changes, including a payroll tax on employers and employees of 3.3% each.

MORE INFORMATION: Text and endorsers of HR 676 Citizens Alliance for National Health Insurance

Pay-or-play (mandatory insurance)

Legally mandates that citizens purchase health care insurance. Plans are paid for through a combination of employer, health provider and citizen contributions. Proposals vary greatly as to who pays how much.

  • Covers more people than the existing system, but not universal.
  • Unaffordable if it requires large contributions, and (like auto insurance mandates) difficult to enforce.
  • Limited cost controls for care providers or insurers.

MORE INFORMATION: National Conference of State Legislatures

California’s Health Care Security and Cost Reduction Act (ABX1 1)

mandatory insurance proposal passed by the Assembly, then defeated in the Senate. Co-authored by Gov. Schwarzenegger and some state Democrats.

  • Estimated to cover about 70% of the uninsured by requiring them to buy coverage from HMOs and other insurers, unless they qualify for a hardship exemption.
  • Basic benefit plan with limited coverage (no dental, vision, etc.) and high deductibles and co-pays. Does not guarantee choice of providers, and does not prevent HMOs or other insurers from denying care.
  • Insurance companies decide how much policies will cost and what they will cover. For families earning less than 300% of the federal poverty level, the state will negotiate a contribution not to exceed 5% of income.
  • Creates a state purchasing pool, provides limited individual tax credits, and requires employer contributions of 1% to 6.5% of wages if firm has 10 or more employees.
  • If the total cost for the minimum mandated policy exceeds 6.5% of family income, then the individual is not required to buy insurance. Mandated insurance enforced through garnishment of wages.
  • Funded by individuals, federal and county governments, employers, a tobacco tax and a fee on hospitals.

MORE INFORMATION: Text and votes on AB 1×1 Legislative fact sheet

What is UPTE-CWA doing?
UPTE-CWA has negotiated a joint health care benefits committee for University of California employees – the UC Union Coalition/Joint Committee. Together with other unions, we meet regularly with UC to obtain information about plans and advocate for our members. While this committee has not been able to change the general trend of increases to our health care costs, in 2008 it was successful in pressuring UC to lower premiums by an average of 4%.

UPTE-CWA supports single-payer health care at the state and federal level. The current mandatory insurance plan being debated in California’s legislature is unaffordable for many, and does not deal with the underlying problems of increasing costs and quality of care.

The UC Union Coalition belongs to the California Health Care Coalition which organizes group purchasers to engage health plans, hospitals and physician organizations in efforts to improve the safety, effectiveness and price of health care services.

UPTE-CWA is also researching creative ways to restructure UC health benefits that would provide higher quality and lower cost health care for employees. 

Want to learn more? 

UPTE-CWA members are working on this issue of critical importance to all Californians. Please contact your local union to learn more about legislative and bargaining activities you can 
participate in.