On Feb. 8, health policy professors Richard Scheffler and Stephen Shortell of UC Berkeley’s School of Public Health released a proposal for funding a universal health care plan in California, estimating the cost of covering the uninsured population to be about $7 billion per year.
Scheffler and Shortell’s proposal to generate the revenue needed for their universal plan includes a tax on health care providers and insurers, a mandated tax on companies that do not provide health insurance for their employees and a new airport landing fee and rental car tax — all while using less than $2 billion from the state’s General Fund, according to a press release by the School of Public Health.
According to Shortell, the proposal also calls for the expansion of integrated care models in California through the increase of “capitated contracts,” health care plans in which a flat fee is paid for each patient they cover, to control the cost of health care. Shortell explained that under capitated contracts, insurance companies “pay so much per member per month for all the people that have enrolled” in it, thus creating “a budget up front” and creating a financial “incentive (for companies) to innovate and keep people well.”
Shortell also mentioned that one of the four major health care insurers in California, Kaiser Permanente, has already moved to a capitated contract system, while the other three insurers have partially implemented this system as well.
The proposal also highlights the issue of reducing health care costs by changing the way care is provided. According to Shortell, in California, the health care costs of 5 percent of people account for 50 percent of the overall cost of health care, signaling that this group of people needs to be “very well managed.” Shortell described how these costs can be greatly reduced through the implementation of the “hospital at home” system currently being experimented with by Kaiser Permanente.
Laurel Lucia, the Health Care Program director for the UC Berkeley Labor Center, also stated in an email that their research can “underscore the need for state-level policies to control health costs,” as the cost of health care in California is higher than the national average, largely because of the “the high level of consolidation in the state’s hospital, physician and insurance markets.”
According to Shortell, health care in California could also potentially go the “single-payer plan” route. James Kahn, a health policy professor at UCSF, described this plan as one that aggregates all the money currently spent on more than 60 public health care programs into one “public pool” of money, thus generating “huge savings around administrative paperwork,” which currently costs the government $450 billion annually.
Kahn said that in the single-payer system, tax rates would “go up progressively” based on income. He added that under a single-payer program, “everyone has the same comprehensive coverage.”
According to Kahn, many countries in the Organization for Economic Cooperation and Development, or OECD, already implement the single-payer system. Kahn stated that “they pay anywhere from one-third to one-half less than we pay,” yet they have both “better health insurance and health outcome.”
Concerning Scheffler and Shortell’s proposal, Kahn said he believed that “there is a profound structural problem with our current system that is not being addressed with the solution they’re proposing.” Shortell, however, said their plan can be seen as a “glide path to single-payer, four to five years from now.”
Madison Seifer, an enrollment counselor for the Berkeley Free Clinic, also stated that “it’s important to enforce health care plans that aren’t going to put people in more financial distress than they already are” and that from the clinic’s viewpoint, “single-payer seems more fair” as it rests on the ideal of “community supporting community.”