Cost management
1. Would the new system be sound from
an actuarial standpoint?
SB 840 provides for a universal risk pool that
spreads the risk over the entire population, simplifying administration
and saving billions of dollars. In 2003, 20 percent of the population
used 80 percent of the health services.[1]
Everyone, including the young and the healthy, must be included
in the universal risk pool so that funds are available to provide
care for every resident as needed for accidents, illness or infirmities
of age. Actuarial soundness is designed into the new system.
2. How can growth in spending be controlled?
SB 840 provides for many tools to control spending:
primary and preventive health care, referral policy for specialty
care, streamlined administration, provisions for establishing provider
reimbursement, capital investment management, consolidated budgetary
authority, statutory spending limits, the state’s power to negotiate
for lower prices, system-wide health care planning and evidence-based
care standards to improve care quality and prevent medical errors.
Also, cost constraints will be applied to the
system’s budget if necessary to prevent total system spending on
health care from exceeding the rate of growth of the state’s Gross
Domestic Product (GDP). Runaway health care costs would no longer
out-pace economic growth.
3. How can money be saved when
covering undocumented residents?
Providing everyone with health care would help
prevent epidemics and reduce the spread of contagious diseases like
HIV/AIDS, tuberculosis or worse.[2]
It is cost effective to provide health care to the entire population.
Providing primary and preventive care helps prevent serious illnesses
and to detect them earlier when it is less costly to treat them.
It is estimated that the state would save more than $3.4 billion
per year by providing primary care to the entire population.[3]
4. Could costs be managed as "baby
boomers" reach retirement age?
It is likely that an aging population would
use more services, which would increase spending. However, the overall
negative impact would be less under SB 840 than under the current
for-profit insurance system. It is expected that some of the increased
spending would be offset by new cost-saving technologies, bulk purchasing
of pharmaceuticals and medical equipment, system-wide planning and
other cost control tools that are absent in the current multi-payer
insurance system.
SB 840 also provides for other ways to help
deal with this issue. For example, all seniors will have health
care and prescribed drugs when they are needed. With access to primary,
preventative and timely care, health problems can be detected in
their early stages when treatment is less costly. This reduces the
money spent for needed acute care and complex treatment of illnesses.
The fast-growing aging population could become healthier seniors.
5. Would fraud be a problem for the publicly
financed universal health system?
SB 840 provides for strong fraud protection
measures. Fraud is an issue that needs to be challenged. Bills submitted
for unneeded services and for care that is not provided are motivated
by greed. Another motivating factor can be frustration when compensation
is not fair or reimbursed in a timely manner.
SB 840 provides for a fair and just compensation
for health care providers and requires payment for all services
within 30 days of delivery of service. Fair compensation and prompt
settlement of claims could reduce the motivation to submit some
fraudulent claims.
In addition, SB 840 provides within the Office
of Attorney General, an Office of Inspector General with the authority
to inspect public and private business records. This is a key to
fraud detection of system providers and venders who are bent on
cheating the system. It will be easier to spot fraudulent billing
when all payment requests are made to one payer instead of hundreds
of different payers.
6. Does SB 840 require referrals for specialist
care?
Referrals are an important part of controlling
costs. They help to ensure that patients use the primary care system
and see the right doctor at the right time for the right reason.
SB 840 provides that patients can see any appropriate specialist.
Primary care physicians, who have been chosen by their patients,
and emergency care providers will refer patients to specialists.
Primary care physicians will coordinate and track patient care,
help insure that treatments are not in conflict and that the most
appropriate specialist is selected.
When
the new system goes into effect, patients can continue seeing the
specialist who is already providing care for them. Also, patients
can choose to see a specialist without a referral and pay the specialist
directly for their service.
