The state’s single-payer activists made their annual descent on Salem on Thursday April 20, 2017, championing their perennial legislation to implement publicly financed, privately delivered healthcare — this time accompanied by new research from the Rand Corporation, showing that the state could give everyone better care for the same amount of money currently spent in Oregon.

“The question is not whether we can afford the single-payer system but how can we afford the current system,” said Chunhuei Chi, an expert in healthcare financing and professor at Oregon State University’s College of Public Health and Human Sciences.

Oregon consumers, employers, along with the state and federal governments currently spend about $36.2 billion on healthcare in the Beaver State. According to Rand, the single-payer plan outlined in its study would roll up Medicare and the Oregon Health Plan as well as the uninsured and those with private insurance; it would save money by reducing administrative costs and would extract 10 percent lower rates from healthcare providers, especially hospitals.

“The state could always leave primary care rates where they are, or even increase them, while lowering rates for hospitals and other expenses,” said Chapin White, the lead researcher on the study from the Rand Corp. in Washington, D.C.

Sen. Michael Dembrow, D-Portland, this year introduced Senate Bill 1046, which now has 34 Democratic co-sponsors and implements single-payer healthcare in Oregon. The bill was heard alongside the presentation of the Rand study on Thursday, but since it was scheduled after the filing deadline for new legislation, it has no chance of passage.

In perhaps a show of even-handedness, the Rand study did anticipate one possible downside of single-payer: diminished access to care in the short-term. Rand predicted that providers would struggle to keep up with demand if the state’s remaining 200,000 uninsured people suddenly got access to healthcare, and the drastic reduction in costs to patients would simultaneously encourage people to seek more care.

The Rand study was completed after the Legislature approved $300,000 two years ago to look into four different healthcare financing systems — the status quo, the public option, single-payer, and a multi-payer system financed through a sales tax instead of insurance premiums.

“The good news is that it’s validated that either one of the universal health plans is better than the status quo. The status quo is deteriorating at the moment,” said Dr. Sam Metz, a member of the single-payer advocacy group Physicians for a National Health Program.

But Metz said no other single-payer study assumed driving down rates to paid providers, and he complained that the study didn’t do enough to factor in a reduction in administrative waste, both on the insurance side and for medical providers.

Colorado Failure

But the ability for a single-payer system to negotiate better rates from hospitals than private insurers could obtain is likely what led hospitals to join up with health insurers to trounce a single-payer health plan in Colorado last year; the health industry outspent supporters five to one and on a measure that was defeated 80 to 20.

The hospitals and insurers conducted a misleading campaign arguing that single-payer would disadvantage employers in Colorado because of its payroll tax. They were aided with scary ads from the right-wing oil magnates, the Koch Bros. The Rand study makes the opposite argument: freed from the heavy burden of providing health insurance to employees, it would be easier for businesses, especially small businesses, to operate with either of two universal healthcare systems studied by Rand.

One system Rand studied would charge a payroll tax on businesses with more than 20 employees as well as an additional income tax, while the other would enact a state sales tax. Both of those funding mechanisms would still be politically dicey to enact — Oregon voters have rejected a sales tax multiple times and the state already has one of the highest income taxes in the country.

But consumers and employers would save $13.1 billion in insurance and out-of-pocket medical costs under single-payer, Rand found. Under a market-based system in which the state financed the system through taxes but allowed consumers multiple third-party insurance options, consumers and employers would save $7 billion a year.

All of the models based their coverage on the “Essential Health Benefits” package in the Affordable Care Act — omitting adult dental care, optometric care and long-term care for seniors and people with disabilities.

The model offering multiple options was borne of an idea from business lobbyist John DiLorenzo, and that enabled the bill funding the study at times to attract multiple Republican backers, including Sen. Jeff Kruse, R-Roseburg. DiLorenzo backs universal healthcare because it relieves business from the burden of managing health benefits.

Public Option

Rand also studied a much more feasible public option, which the state could actually begin work on in the next two years, and which the Department of Consumer & Business Services has already proposed for rural areas that are poorly served by private insurance companies.

A public option wouldn’t fully elimination the remaining uninsured population — mainly because it couldn’t cover immigrants without legal U.S. residence — but it would still save consumers $800 million a year by allowing the state to piggyback onto Medicare payment structures and administration process, said researcher Chapin White.

“A lot of private health plans would have trouble competing with the public option,” White told The Lund Report.

The study didn’t show a dramatic reduction in employer-sponsored health insurance if workers could jump to a public option. But the study also didn’t look into whether Oregon would benefit if it migrated its public employees and teachers over to the public option.

While public employees enjoy a rich healthcare plan currently, the public option might be particularly enticing to school districts and teachers, since most of the plans sold through the Oregon Educators Benefit Board are no better, and often are worse, than what’s sold on the exchange. OEBB has been plagued by accelerating costs and a gravitation to high-deductible plans, just as other employer plans have increasingly put the burden on the patient to eat the costs at time of service.

Reach Chris Gray at chris@thelundreport.org.

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