Chronic disease is on the rise in the United States and it currently accounts for 75% of health care expenses each year. The United States compares poorly with other industrialized nations in chronic disease management, especially when it comes to asthma and diabetes. In 2000, the United States had the 3rd highest diabetes death rate among OECD countries. Among developed nations, the United States has the second-highest hospital admission rates due to asthma, which is a marker of poor asthma management. In addition, 11% of diabetes patients in the United States were uninsured in 2000, and as a result received fewer preventative services.

People with chronic disease have more health care needs than the average patient and therefore are financially punished for their illnesses in private employer-based health insurance plans. Over 90% of insured diabetics spend more than $1,050 annually on their care, and more than 50% spend at least $5,000. Single-payer health insurance systems remove extra financial burden from chronically ill patients by eliminating co-pays and deductibles. This system will help encourage preventative care, which is crucial in managing chronic disease and saves money for everyone in the long run. See below for more information about chronic disease in the United States.

Further Resources:

• “Chronic Disease Overview,” Centers for Disease Control and Prevention, March 20, 2008.
• Financial Burden of Diabetes, “Consumer-Directed Healthcare: Except for the Healthy and Wealthy It’s Unwise,” Steffie Woolhandler and David U. Himmelstein, Journal of General Internal Medicine, June 2007.
• International Comparison of Death Rates Due to Diabetes, OECD Health Data, 2006.
• “The Association between Health Insurance Coverage and Diabetes Care,” Karin M. Nelson et al, Health Services Research, April 2005.
• International Comparison of Asthma Admission Rates, “Health at a Glance 2007,” OECD Health Data.

The financial stability of municipalities in Massachusetts and nationwide is being threatened by rapidly rising health care costs. Cities and towns are being thrown into crisis as they struggle to provide benefits for hard-working city employees such as firefighters, policemen, and teachers. In Massachusetts from 2001 to 2005, employee health care costs as a share of total municipal budgets increased from 7.4% to 11%. Overall, municipal health care costs rose by a total of 99% from 2001 to 2007. At the same time, local budgets increased by only 28%. In Boston, employee health care costs increased by 92% from 2001 to 2007 while all other operational spending increased by only 18%. This drain on budget resources is preventing cities and towns from maintaining other important services.

The dilemma of municipalities in Massachusetts is exacerbated by Proposition 2½, which limits the annual increase in property taxes to 2.5 percent, regardless of how fast municipal costs are rising. In 2007, health cost increases consumed approximately three-fourths of the revenue from the 2.5 percent property tax increase outlined in Proposition 2½. Municipal tax data from 2003 to 2006 saw a marked increase in the percentage of total tax revenue used for health care costs.

One strategy to combat rising costs was used by Springfield, MA when in 2003 they began allowing city employees to buy cheap prescription drugs from Canada. If health care costs continue to increase by 11-13% annually, they are predicted to consume 19-23% of municipal budgets by 2018. Single-payer health care would free municipalities from the burden of insuring their workers, while at the same time creating a healthier workforce. Single-payer is already being recognized as a solution by mayors nationwide. At their 2008 Annual Meeting, the U.S. Conference of Mayors endorsed HR 676, the national single-payer bill.

FURTHER RESOURCES:

• “A Mounting Crisis for Local Budgets: The Crippling Effects of Soaring Municipal Health Costs,” Massachusetts Taxpayers Foundation, July 19, 2005.
• “MA Health Care Costs Continue to Stress Local Finances,” Massachusetts Municipal Association, October 1, 2007.
• “Municipal Health Reform: Seizing the Moment,” Boston Municipal Research Bureau, August 2007.
• “Springfield Institutes a Drug Reimportation Program,” Drug Cost Management Report, August 8, 2003.
• “Proposition 2½ Resource Area,” Massachusetts Municipal Association.

The burden of health care costs on businesses is substantial and rising rapidly. Between January and May 2004 alone, the costs of providing health care for workers increased by 11%. Between 2000 and 2005, premiums for employer-based insurance rose at least 9% each year, a rate of increase 2 to 3 times faster than inflation and workers’ wages. Companies are suffering because of these cost burdens. General Motors, which has historically offered one of the most generous benefits package of any corporation, spent approximately $5.6 billion on employee health benefits in 2005, at a time when they suffered their worst quarterly loss in a decade. Health care costs add about $1500 to the price of each car GM sells.

The significant rise in health insurance premiums within the past five years has led to dramatic increases in the amount Massachusetts employers must spend on employee health care costs annually.

_{Data obtained from theMassachusetts Employer Health Insurance Survey by Massachusetts DHCFP http://www.mass.gov/Eeohhs2/docs/dhcfp/r/survey/er_2005_comp_results.pdf}

Employer-sponsored coverage has traditionally been the main source for health insurance in the US, but this relationship is weakening. In 2005, 77% of employees received benefits from their employer, down from 81% in 2001. Most of the employees that lost coverage during that time remained uninsured. Uninsured individuals are at risk for poorer health and premature death. Universal single-payer coverage offers several advantages to businesses. It will reduce costs for businesses that are currently providing insurance and also eliminate retiree benefit costs. Businesses will no longer have to negotiate with insurance companies or labor unions about health coverage. National coverage will free up more money for consumer spending and also create a healthier, more productive work force. Health care costs will be controlled and predictable, and businesses would no longer lose employees to those companies offering better benefits.

FURTHER RESOURCES:

• “Single-Payer: Good for Business,” Morton Mintz, The Nation, October 28, 2004.
• “Changes in Employees’ Health Insurance Coverage, 2000-2005,” Kaiser Family Foundation, October 2006.
• “Ailing GM looks to scale back generous health benefits,” Julie Appleby and Sharon Silke Carty, USA Today, June 23, 2005.
• “Workers’ Health Insurance: Trends, Issues, and Options to Expand Coverage,” Paul Fronstin, Commonwealth Fund, March 28, 2006.

Young adults, ages 19 to 29, are more likely to be uninsured than any other age group, and are the fastest growing uninsured population in the country. In 2004 young adults represented 17 percent of the non-elderly population, but 30 percent of the uninsured. They also accounted for 40 percent of the growth in uninsured people between 2000 and 2004. Young adults often fall off of their parents’ health plans with no alternative source of coverage, disproportionately work at low-income jobs classified as part-time or temporary that offer no health benefits, and have seen falling real incomes in recent decades making this age group less able to afford commercial insurance. While often discounted as a relatively healthy population, young adults have special health care needs. For example, one third of all HIV diagnoses are made among young adults, injury-related visits to emergency departments are far more common among this group, they have seen the fastest growing rates of obesity, and 3.5 million out of 21 million women ages 19 to 29 each year become pregnant.

A health care system based on workplace coverage and ability to pay discriminates heavily against young adults, who are increasingly disadvantaged in the labor market and have seen falling real incomes in the United States. A universal single payer health care system would make comprehensive access to health care available, regardless of age, job status, or income.

Further Resources:

• “Rite of Passage? Why Young Adults Become Uninsured and How New Policies Can Help,” The Commonwealth Fund, May 24, 2006.
• “On their Own: Young Adults Living Without Health Insurance,” The Commonwealth Fund, May 1, 2000.
• “The Changing Definition of ‘Dependent’: Who is Insured and For How Long?” National Conference of State Legislatures, February 2008.
• “Young and Uninsured,” Wiretap Magazine, November 23, 2005.
• “Young adult plans limit coverage: State’s low-cost insurance can be risky, report says,” Boston Globe, May 29, 2007.
• “Young adults aren’t sold on health law: Options weighed as plan takes effect,” Boston Globe, July 1, 2007.

• 2010: Gerald Friedman Report on Cost and Funding of the Improved Medicare for All in Massachusetts Bill: a study of the funding of a single payer plan for Massachusetts, savings to the state, and impact on household and business costs.
• 2002: LECG’s Report on consolidated and streamlined financing of health care in Massachusetts, commissioned by the Commonwealth of Massachusetts to compare several health reform options for the state, including single payer.
• 2000: Solutions for Progress/Boston University Report on single-payer reform: one of two studies commissioned by the Massachusetts Medical Society.
• 2000: Lewin Group’s Report on single-payer reform: the second study commissioned by the Massachusetts Medical Society.

The patchwork system of health insurance in the United States causes many individuals to fall through the cracks. Currently, 15% of Americans are uninsured, and many more struggle to afford their care. This amounts to a health care crisis of epidemic proportions. The brunt of this epidemic is borne by women, people of color, immigrants, and the young. These groups, already vulnerable because of their marginalized status in society, are further abused by our health care system. Universal single-payer health care is essential to ensuring equal access for all members of society. A single-payer system would provide health care to all residents, regardless of income level, employment status, citizenship status, age, race, ethnicity, or gender. See the links below to learn more about health care disparities.

• Young Adult Access to Health Care
• Seniors’ Access to Care
  
• Gender Disparities in Access to Health Care
• Racial and Ethnic Disparities in Access to Health Care
• Immigrant Access to Health Care

In the United States we spend significantly more than other countries for the same exact prescription drugs, as we do not collectively negotiate fair prices with pharmacy chains and drug manufacturers. Drug companies in the U.S. realize annual profits roughly three times the norm for Fortune 500 firms.

Legislation passed in 1999 in Massachusetts requires the state’s administration to collectively negotiated lower drug prices across all public agencies, but this legislation has never been implemented by previous Republican administrations. A 2007 proposal delivered to the administration by Mass-Care, MassPIRG, and Mass. Senior Action Council details the state’s current prescription drug purchasing policy, and proposes a means for the state to comply with the 1999 law while reducing drug costs for the Commonwealth and all Massachusetts residents.

RESEARCH ON PRESCRIPTION DRUG COSTS

• “Making Prescription Drugs Affordable for Massachusetts,” Report by Mass-Care, MassPIRG, and Mass Senior Action Council, June 2007.
• Section 271 of Chapter 127 of the Acts of 1999 instructing the Administration to implement bulk purchasing of prescription drugs in Massachusetts.
• “Paying the Price: The High Cost of Prescription Drugs for Uninsured Americans,” MassPIRG, July 2006.
• “Report on Consolidated Prescription Drug Purchasing by Massachusetts State Agencies,” Massachusetts Department of Public Health, April 2004.
• “Aggregate Purchasing of Prescription Drugs: The Massachusetts Analysis,” Heinz Family Philanthropies, September 2001.

ACT RELATIVE TO PROMOTING THE EFFICIENT USE OF HEALTH CARE REVENUES (S.593)

LEAD SPONSOR: SENATOR PATRICIA JEHLEN

Summary of Proposed Law:

• Would require all insurers to devote at least 90% of their total annual Massachusetts-associated revenues on health services for its policyholders.  This percentage is referred to as an organization’s “care share.”
• Insurers would be prohibited from spending more than 10% of premium revenues on non-health expenditures, with the exception of small or out-of-state companies, so long as they maintain stable operating budgets in Massachusetts.
• Insurers who have been established in the Commonwealth for more than one year and insure between 25,000 and 50,000 individuals would have a minimum care share of 85%.
• Care share standards would not apply to insurers who have operated for less than one year in Massachusetts and those insuring fewer than 25,000 individuals.
• Insurers conducting business in other states as well as in Massachusetts would only be subject to this law in proportion to its Massachusetts revenues.

Role of the Insurance Commissioner in Enforcement:

• Organizations would be required to submit financial reports to the commissioner of Insurance to demonstrate compliance with the expenditure standards.
• Both the Commissioner and insurers would publish care share percentages expended the preceding year to allow the public to compare organizations.

Penalties for Violation:

• Insurers failing to comply with their cost share on member health services would be seen as charging exorbitant premiums and would be forced to return the difference between cost share and premiums charged to the insured.
• Violation of the proposed law would be subject to a fine of up to 40% of the insurer’s Massachusetts-associated revenues; insurers would also be subject to the consumer fraud statute.

For further information, contact Megan Shannon in Senator Jehlen’s office at (617) 722-1578; to get involved in supporting efforts to regulate health insurance overhead, contact Mass-Care.