BY MARTIN KICH

One of the biggest issues for just about every AAUP collective-bargaining unit in the country is healthcare costs. Most of our institutions are self-insured, and although good benefits packages have long been one of the salient advantages of public-sector employment in general, many of our institutions have been trying to move employees to high-deductible plans or plans that are just a step or two away from high-deductible plans.

Since many, if not most, of our institutions are self-insuring, this shift essentially means that our administrations and boards of Trustees are prioritizing other types of spending over employee benefits. Nationally, the double-digit increases in healthcare costs have leveled off, in large part because of the impact of the ACA. Likewise, tuition has increased as state subsidies have decreased. and so, institutional revenues have essentially been flat, which is not sustainable over the longer term but is not a crisis in the shorter term. And since spending on instruction has not increased in any dramatic way almost anywhere, other spending is clearly being prioritized over spending on instruction and employee benefits.

Still, we are told that spending on healthcare is increasing at such a dramatic rate that it is impacting the ability to balance budgets, and therefore, there are no real alternatives other than moving toward high-deductible plans. At Wright State, our Board members have pointed to the cost of healthcare for the companies that they run, but those companies have the added need to produce profits, to provide dividends for their shareholders. But, it seems that no one is supposed to ask where the “profits”—the equivalent revenues—are going in public colleges and universities.

Healthcare costs turned out to be a major issue—if not the major issue–in the midterm elections. The concern over affordability demonstrates that the idea that a single-payer system of healthcare will limit the treatment options available to most Americans is fast becoming exposed as an empty talking point. Affordability is the real limiting factor. And if concern over the individual’s freedom of choice is not the main practical reason to object to a single-payer system, then it does not take much imagination to identify what the real reasons might be.

In any case, this news release from the University of Massachusetts Political Economy Research Institute reports on a study that debunks the notion that a single-payer system would be unaffordable and economically disastrous:

A team of economists from the University of Massachusetts Political Economy Research Institute (PERI) has found that the Medicare for All Act of 2017, introduced to the United States Senate by Senator Bernie Sanders, is not only economically viable, but could actually reduce health consumption expenditures by about 9.6 percent while also providing decent health care coverage for all Americans.

The economists outline seven major aspects of transforming the U.S. health care system, detailing step-by-step the actions needed to be taken to achieve truly universal health care and its potential impacts on individuals, families, businesses and government. The analysis, which was in development for 18 months, has received praise from 11 distinguished experts in the fields of economics and health care studies who have rigorously reviewed the researchers’ findings.

“The most fundamental goals of Medicare for All are to significantly improve health care outcomes for everyone living in the United States while also establishing effective cost controls throughout the health care system. These two purposes are both achievable,” says lead author Robert Pollin, Distinguished Professor in economics at UMass Amherst and co-director of PERI. “As of 2017, the U.S. was spending about $3.24 trillion on personal health care—about 17 percent of total GDP. Meanwhile, 9 percent of U.S. residents have no insurance and 26 percent are underinsured—they are unable to access needed care because of prohibitively high costs.  Other high-income countries spend an average of about 40 percent less per person and produce better health outcomes. Medicare for All could reduce total health care spending in the U.S. by nearly 10 percent, to $2.93 trillion, while creating stable access to good care for all U.S. residents.”

The PERI research team of Pollin, James Heintz, Peter Arno, Jeannette Wicks-Lim, and Michael Ash, found that Medicare for All would reduce annual health care spending to $2.93 trillion from the current level of $3.24 trillion. Public health-care revenue sources that presently provide about 60 percent of all U.S. health care financing, including funding for Medicare and Medicaid, would provide $1.88 trillion of financing for the new system. Removing the other costs attributed with the current system would leave a gap of $1.05 trillion, which the economists suggest could be raised with a set of four proposals that will generate enough revenue to create a surplus of 1 percent for the system.

The researchers propose:

–Continuing business health care premiums, but with a cut of 8 percent relative to existing spending per worker. Businesses that have been providing coverage for their employees would thereby see their health care costs fall by between about 8-13 percent. ($623 billion)

–A 3.75 percent sales tax on non-necessities, which includes exemptions for spending on necessities such as food and beverages consumed at home, housing and utilities, education and non-profits. The researchers include a 3.75 percent income tax credit for families currently insured by Medicaid. ($196 billion)

–A net worth tax of 0.38 percent, with an exemption for the first $1 million in net worth. The researchers state that this tax would therefore apply to only the wealthiest 12 percent of U.S. households. ($193 billion)

–Taxing long-term capital gains as ordinary income. ($69 billion)

Under these recommendations, the researchers find that the net costs of health care for middle-income families would fall by between 2.6 and 14 percent of income. For high-income families health care costs will rise, but only to an average of 3.7 percent of income for those in the top 20 percent income group, and to 4.7 percent of income for the top 5 percent.

The researchers also find that based on 2017 U.S. health care expenditure figures, the cumulative savings for the first decade operating under Medicare for All would be $5.1 trillion, equal to 2.1 percent of cumulative GDP, without accounting for broader macroeconomic benefits such as increased productivity, greater income equality and net job creation through lower operating costs for small- and medium-sized businesses.

“Medicare for All will produce large cost savings for both businesses and households,” says co-author Jeannette Wicks-Lim, associate research professor at PERI. “Under our proposal, all businesses that now provide health care coverage for their employees will receive an across-the-board 8 percent cut in premiums. For families, our results show that Medicare for All will promote both lower average costs and greater equity. For example, middle-income families who now purchase private insurance on the individual market would see their health care costs fall by an average of 14 percent under Medicare for All.”

“This study is the most comprehensive, detailed, authoritative study ever undertaken of Medicare for All, and it points powerfully and unassailably in support of MFA,” said economist and public policy expert Jeffrey Sachs, University Professor at Columbia University, in reviewing the researchers’ analysis. “Medicare for All promises a system that is fairer, more efficient, and vastly less expensive than America’s bloated, monopolized, over-priced and under-performing private health insurance system. America spends far more on health care and gets far less for its money than any other high-income country. This study explains why, and shows how Medicare for All offers a proven and wholly workable way forward.”

In his review of the report, William Hsiao, K.T. Li Professor of Economics at the Harvard University T.H. Chan School of Public Health, said the study “presents an objective, unbiased, comprehensive and thorough economic analysis of Medicare for All. Professor Pollin and his co-authors have set a new high standard for transparency and clarity in presenting their analyses, estimations, and conclusions. The research methods they used to estimate both the cost increases and savings are sound. The assumptions they used to generate cost estimations are based on the latest empirical evidence. Consequently, the conclusions of this study on the overall costs and savings of Medicare for All are reasonable and scientifically sound.”

“This stellar economic analysis of a single-payer, universal health care system for the U.S. is the first to sufficiently document each step of the calculations, enabling reproducibility of the findings. It is also the first study that thoroughly addresses the transition to and financing of a universal health care system for the U.S.,” said Alison Galvani, director of the Center for Infectious Disease Modeling and Analysis and Burnett and Stender Families’ Professor of Epidemiology at Yale University, in her review of the report. “Underlying the analysis is an interdisciplinary evidence base that has been compiled from literature spanning economics, health policy and clinical care both within the US and internationally.  The methodology is sound and the assumptions are conservative with regard to their conclusions. Specifically, lower-end figures from the expert literature are used in the calculation of savings, whereas anticipated expenditures are based on the higher end of empirical distributions. Despite stacking the deck against Medicare for All, this analysis convincingly demonstrates the substantial improvements in cost efficiency that could be achieved by Medicare for All. I am confident that the Pollin et al. study will become recognized as the seminal analysis of a single-payer universal health care system for the U.S.”

Pollin and Wicks-Lim were joined in crafting the analysis by UMass Amherst colleagues James Heintz, associate director and Andrew Glyn Professor of Economics, Peter Arno, senior fellow and director of health policy research, and Michael Ash, senior research fellow and professor of economics and public policy.

 

The complete report, “Economic Analysis of Medicare for All:” can be found online here (pdf).

The full set of reviews of the report by economics and health care studies experts can be found here.

 

At Wright State, our administration and Board have proposed that we give up our right to negotiate healthcare entirely–and thus give up our right to negotiate in any meaningful way over compensation–and give them the right to make unilateral changes in our plan with 60 days’ notice.

Not coincidentally, they have just agreed to pay a $1 million federal fine to settle a four-year investigation into abuses of H1B visas and other irregularities. That fine was on top of $2.2 million spent on attorneys’ fees during the investigation—as of the end of 2017.

In addition, they have allocated $400,000 to cover the costs of the outside attorney whom they hired to negotiate with us.

And those expenses are in addition to the $132 million in reserves that were expended over just four years on non-academic initiatives and enterprises, none of which produced any of the additional revenue streams that were promised.

 

Please sign and share a petition of support for our chapter’s efforts to get a fair contract:

https://actionnetwork.org/petitions/stand-with-wright-statefaculty.