Health Plan :: US New Health Plan covers uninsured Americans, reduces US health spending

A new analysis of health reform bills in Congress prepared for the Commonwealth Fund Commission on a High Performance Health System shows that many current Congressional health care proposals could significantly reduce the number of uninsured Americans and also decrease overall health care expenditures including those for insurance administration and prescription drugs.

The analysis finds that while the plans put forth in Congress vary greatly in their scope, many of them would do more to cover uninsured Americans than the current Administration proposal.

This first-ever review of leading Congressional bills and the administration’s proposal concludes that elements of many of the plans proposed in Congress are feasible and would reduce health care costs over time. Representative Stark’s AmeriCare proposal, which would open the Medicare program to everyone, would cover nearly all of the uninsured as would Senator Wyden’s Healthy Americans Act, which would help people purchase coverage through large regional insurance exchanges. President Bush’s plan would cover 1 in 5 uninsured Americans.

The Stark proposal would cost the federal government $154.5 billion in 2007 but reduce overall health spending by $60.7 billion because of savings in insurance administration and prescription drugs. The Wyden proposal would increase federal spending by less, $24.3 billion in 2007, because of offsetting tax revenue effects of requiring employers to “cash-out” their health benefits as wages to employees. It would reduce overall health spending by $4.5 billion, partly through insurance administration savings. President Bush’s plan would cost the federal government $70.4 billion in 2007 and reduce health system spending by $11.7 billion, as people would reduce their use of health services. Insurance administration costs would increase under his plan.

Building on the current momentum at the state level to expand health insurance, two currently introduced bills propose state demonstrations to expand health insurance. These bills do not provide enough details to estimate their cost. However, the analysis assumed a model where 15 states (Arizona, California, Georgia, Illinois, Iowa, Kansas, Louisiana, Massachusetts, Montana, New Mexico, New York, North Carolina, Ohio, Texas, and Wisconsin) would implement a blended version of Massachusetts’s Commonwealth Care and Governor Schwarzenegger’s health proposal for California, with federal matching funds provided for Medicaid and State Children’s Health Insurance Program (SCHIP) expansions. Based on this model, about 20 million people are estimated to gain coverage out of 23.6 million currently uninsured in those 15 states.

“The Institute of Medicine estimates that the poor health and shorter life spans of the uninsured cost between $65 billion and $130 billion a year,” said Sara Collins, assistant vice president for the Future of Health Insurance at the Commonwealth Fund and lead author of the report. “That provides a stark benchmark against which we can compare the cost of inaction versus the costs and savings of investing in a more rational and equitable system of health care in the United States.”

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