Summary of the RAND study
on health care financing in Oregon
--by Charlie Swanson, HCAO-Action Legislative committee chair
The RAND study found that
“Should Oregon want to achieve universal coverage, Single Payer and Health Care Ingenuity Plan (HCIP) are the most promising options."
Single Payer (SP) would cost roughly the same as the status quo, whereas HCIP would be significantly more expensive.
SP is the only option that significantly reduces financial barriers to care.
SP is the only option for which the % of household income going to health care decreases as income decreases - all of the other options are significantly regressive.
With SP, all income groups except those above 400% of poverty level would have lower health care costs than any other option.
RAND recommends that Oregon “seek legal counsel to determine whether an ERISA challenge is likely and to assess possible steps to minimize the possibility of a successful challenge.” ERISA is a federal law protecting employee retirement and health benefits which prohibits states from interfering with health care provided by self-insured employers or multi-employer multi-state plans. Such plans cover 25% of Oregon’s population.
RAND did not appropriately examine how SP reduces administrative costs, primarily because RAND completely ignored the effect of administrative simplicity in provider offices under SP.
RAND referenced appropriate studies finding SP would lead to average administrative savings of 11% of total health care costs, but then claimed Oregon administrative savings would be only 1.7% ($600 million annually).
11% savings in Oregon would be $4 billion annually, or $3.4 billion greater than what RAND reported.
RAND assumes provider reimbursement is 10% lower with SP than the status quo, which amounts to $3.1 billion.
The extra $3.4 billion in administrative savings is greater than the $3.1 billion decrease in reimbursement, leading to a likely increase in provider net compensation on average.
Billing and insurance related activities (BIR), a significant part of administrative activity in the U.S., consume substantially more time in provider offices in the U.S. than in countries with SP.
SP administrative simplicity would allow providers either to see more patients (and thus increase compensation), spend more time with patients (thus increasing the quality of care), or spend less time in the office (leading to less burnout). All of these factors would help mitigate the expected increase in congestion due to increased demand.
Some of RAND’s financial details seem questionable, so the study does not provide us with the sound quantitative data we need to design an appropriate tax structure to finance a single payer system in Oregon. RAND also did not respond to a request to explore the possibility of the state becoming a Medicare Advantage plan provider.
Rep. Mitch Greenlick has formed a legislative work group to look further into a universal health care system in Oregon. The work group’s scope – Given the federal uncertainty with the ACA, the work group is tasked with developing a set of recommendations to the Legislature to guide consideration of approaches that would achieve “universal access to an adequate level of high quality health care at an affordable cost" (ORS 414.018) for all Oregonians and would promote long-term financial stability of the state’s health care system.
For more details on the work group, and to see its schedule, see Rep. Andrea Salinas' website (chair of the work group) – https://www.oregonlegislature.gov/salinas/Pages/healthcare.aspx. You can subscribe to emails related to this work group there at Click to subscribe to recieve email updates for this workgroup.
The RAND Report Simplified
The RAND researchers found that Medicare for all, aka single-payer, would cost about the same as what we in Oregon currently pay, But gone would be most premiums, co-pays, and deductibles. All income groups except those earning above 400% of poverty level would have lower healthcare costs than with any other option.