Len Nichols: All Publications, Events and Press

Committe for a Responsible Federal Budget Event Covered By the Wall Street Journal | 'Vital Signs in Health-Care Debate'

Communications — Tue, 13 May 2008 17:45:00 -0400

New America in the News:

The Committee for a Responsible Federal Budget’s April 29 event that highlighted the presidential candidates' domestic policy plans appeared in David Wessel’s column in The Wall Street Journal (5/1/08). New America's Health Policy Program Director is quoted in the article.

. . Mr. Nichols says that Sen. McCain's plan to allow people in one state to buy individual insurance in another -- essentially deregulating this part of the insurance market -- amounts to "ideology trumping policy." Rational insurers will attract the healthy with low premiums and boost premiums for those with pre-existing conditions. "Fifty to 75 million Americans will discover what 'actuarially fair' really means," he says. (Sharply higher premiums.) The result, he predicts, will be a rush to Medicare-for-all that Republicans will hate. . .

Crossroads in Quality

adminn — Tue, 13 May 2008 11:43:00 -0400

Expanding insurance coverage is a critical step in health reform, but we argue that to be successful, reforms must also address the underlying problems of quality and cost. We identify five fundamental building blocks for a high-performance health system and urge action to create a national center for effectiveness research, develop models of accountable health care entities capable of providing integrated and coordinated care, develop payment models to reward high-value care, develop a national strategy for performance measurement, and pursue a multistakeholder approach to improving population health.

* * *

For the full text of this essay, please see the… more

The Long Road To Health Reform Requires Bipartisan Leadership

adminn — Tue, 13 May 2008 09:27:00 -0400

The United States appears headed toward another national debate about health system reform. Worry about access and health system deficiencies has reached critical mass, and polls indicate that health care leads the domestic agenda for the 2008 elections. This debate, like previous debates, will succeed or fail in Congress. We highlight key elements of recent sagas in health legislation and offer advice to the next president and Congress for improving the likelihood of a successful outcome in 2009-10:

make health reform a top legislative priority; be leaders, not partisans; and develop broad policy consensus but leave the policy details to Congress. more

Employer Health Costs in a Global Economy

Communications — Thu, 08 May 2008 22:00:00 -0400

A New America Event
05/09/2008 - 10:00am

Voters are sending a clear message: they are concerned about the economy and worried about being able to afford health care. To examine this important nexus of health care and the economy, the New America Foundation welcomed Senator Deborah Stabenow (D-MI), the Wall Street Journal’s Laurie McGinley, and representatives from the business, labor, and economic communities to discuss the impact of rising health care costs on U.S. competitiveness and American jobs. The Capitol Hill event was focused on the recent work by Len Nichols and Sarah Axeen entitled, “Employer Health Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms.”

Senator Stabenow kicked off the event by thanking Len and New America for producing the data necessary bolster what she has believed for years: our nation’s health care crisis costs Americans jobs and hinders the ability of U.S. businesses to thrive in a global economy.

Len Nichols, Director of the Health Policy Program at New America, argued that while economic theory teaches us that it is workers—rather than employers—who pay for health care through lower wages, employers face a variety of constraints that may make it difficult for them to fully shift health costs in the short run. Therefore, health care costs are having a real effect on employers and workers.

Following Len’s presentation, Joe Antos from AEI spoke about the importance of focusing on the steps necessary to get our nation from its current health system to a reformed system. Charlie Kolb, President of the Committee for Economic Development, stressed the need to transition away from an employer based system, while Andrew Webber, President and CEO of the National Business Coalition on Health, argued that employers should demand the changes necessary to continue to offer health benefits and improve the system. Finally, Gerald Shea, Assistant to the Director of Government Affairs for AFL-CIO, stressed the need for substantive change through a public-private partnership. Shea emphasized that the status quo is unsustainable for workers and employers. Panelists were largely in agreement that rising health care costs represent a serious problem for employers.

Stay tuned as the Health Policy Program continues to examine the economic case for a quality health care system for all Americans.

Len Nichols and Elizabeth Carpenter in BNA | 'Report Says Health Costs Hamper U.S. Firms'

Communications — Wed, 07 May 2008 07:46:00 -0400

New America in the News:

Full article (subscription only)

Employer health costs put U.S. firms at a competitive disadvantage compared with certain trading partners, highlighting the need to separate health coverage from employer financing, according to a report scheduled for release May 7.

The report by the New America Foundation found that, while U.S. manufacturers pay $2.38 per hour for health benefits, five of the country's major trading partners pay an average of $0.96 per hour. The report looked at health care costs in Canada, France, Germany, Japan, and the United Kingdom compared with the United States.

The results do not indicate that U.S. firms are not competitive overall, but it does mean that "all else being equal, employer health costs make the United States less competitive than it could otherwise be," according to Employer Health Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms.

U.S. business leaders are aware of the effects high health costs are having on them, Len Nichols, director of the Health Policy Program at the New America Foundation and lead author of the report, said. Knowing that they cannot remain competitive if they shift costs to workers or raise prices, they are increasingly pushing major reform efforts. . .

Additional changes are needed, though, to improve outcomes and curb costs, Nichols said. Those changes include market reforms to ensure all people have access to health insurance, as well as improvements in the health care delivery system through comparative effectiveness research, consistent use of best practices, and information technology.

Ending employer-based financing must be accompanied by an improved delivery system because compared to foreign companies, U.S. firms are "still paying a bigger chunk of a bloated bill," Nichols said.

The market reforms would include plans for guaranteed issuance, as well as subsidies to ensure that all those seeking insurance can pay for it, according to Elizabeth Carpenter, a senior program associate for the health policy program.

The New America Foundation describes itself as "a nonprofit public policy institute that was established through the collaborative work of a diverse group of public intellectuals, civic leaders and business executives."

Link to the report:
http://www.newamerica.net/publications/policy/employer_health_costs_global_economy

Len Nichols in Los Angeles Times | 'Healthcare Costs Pinch Employers'

Communications — Wed, 07 May 2008 07:39:00 -0400

New America in the News:

Full article

U.S. manufacturers who provide health insurance spend an average of $2.38 per worker per hour on healthcare -- more than twice as much as their foreign competitors, an analysis released Tuesday found. . .

But the new analysis suggests that neither lower wages nor higher prices are an option for most companies. Employers can't slash wages fast enough to keep up with rising healthcare costs because of minimum wage laws, union contracts and other factors, said economist Len Nichols, the analysis' author and a policy director for the New America Foundation.

"There's no question that if employers could push this into wages they would," Nichols said. "But every single year, healthcare costs rise faster than productivity and wages," he said. "Thus, they try to push it into prices. But with China and India competing against you, you can't do that." . . .

Nichols found that healthcare costs were outpacing wages and productivity. With stiff global pricing competition, that means healthcare costs have to come out of the bottom line, he said.

"That," he said, helps "explain why so many employers are hyper-focused on health reform this time around compared to 1992-93."

Nichols said his study was prompted by a question from a manufacturer in the Midwest who was shifting his jobs overseas. "My question for you is this," Nichols recalled, "who is going to buy my stuff? If we move jobs overseas, who is going to be able to buy our middle-class stuff."

Link to the analysis: http://www.newamerica.net/publications/policy/employer_health_costs_global_economy

New Report Shows Impact of Employer Health Care Costs on Global Competition and U.S. Jobs

Communications — Wed, 07 May 2008 05:22:00 -0400

Contact: Elizabeth Carpenter New America Foundation 401-529-9379 (cell) 202-261-6585 (office) carpenter@newamerica.net

Washington, DC -- Rising health care costs undermine the ability of U.S. firms to compete internationally and threaten good American jobs, according to a report released today by the New America Foundation.

The New America report, "Employer Health Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms," found that U.S. manufacturers spend more than twice as much for health benefits than their foreign trading partners.

"At a time when our nation is thinking seriously about how to stabilize its fiscal future and fix… more

Employer Health Costs In a Global Economy

Health Policy — Tue, 06 May 2008 06:29:00 -0400

Increasing Employer Health Costs, Lowering U.S. Competitiveness

Although most Americans get health insurance through their employers, business leaders are increasingly united in their belief that rising health care costs threaten America’s competitiveness in the global economy. Business support for comprehensive health reform has been growing as a result.

However, economists generally believe that it is workers -- rather than employers -- who pay for health care through lower wages. Although this proposition may hold true in the long run, employers face a variety of constraints that may make it difficult for them to fully shift health costs in the short run.… more

Len Nichols in Los Angeles Times | Democratic and Republican Healthcare Plans Offer Clear Choices

Communications — Mon, 05 May 2008 09:05:00 -0400

New America in the News:

Los Angeles Times | Democratic and Republican Healthcare Plans Offer Clear Choices

"McCain is talking about Wild West competition where there are no limits," said economist Len Nichols, who directs the Health Policy Program at the New America Foundation and served as an advisor in the Clinton White House.

Len Nichols in Detroit Free Press | 'Healthcare Among Top Issues for Voters'

Communications — Mon, 05 May 2008 04:10:00 -0400

New America in the News:

Full article

. . . Len Nichols of the Washington-based New America Foundation, a public policy institute, said at a panel discussion on health care in Washington last week: "If we could just agree to cover everyone, we could talk about how." . . .

Nichols said the quickest way to get Congress to create a Medicare-like plan for all is to suggest that big employers don't have to offer health insurance. In other words, workers wouldn't stand for it. . .

Len Nichols in Wall Street Journal | 'Vital Signs in Health-Care Debate'

Communications — Thu, 01 May 2008 10:22:00 -0400

New America in the News:

Full article

. . . Mr. Nichols says that Sen. McCain's plan to allow people in one state to buy individual insurance in another -- essentially deregulating this part of the insurance market -- amounts to "ideology trumping policy." Rational insurers will attract the healthy with low premiums and boost premiums for those with pre-existing conditions. "Fifty to 75 million Americans will discover what 'actuarially fair' really means," he says. (Sharply higher premiums.) The result, he predicts, will be a rush to Medicare-for-all that Republicans will hate. . .

Len Nichols on Utah's KUER Radio | 'Health Care Reform: What's Possible?'

Communications — Thu, 01 May 2008 09:32:00 -0400

New America in the News:

Full article

. . . Since the Utah legislature passed a bill setting up a task force to study comprehensive health care reform, everybody with a stake in the issue has been bringing out ideas and issues for discussion, hoping to see its positions reflected in the final recommendations. The Utah Health Policy Project brought Len Nichols to Salt Lake City to address the issue. He's a health care economist with the New America Foundation, a think tank based in Washington, DC. . . Today he says all three leading candidates for president have ideas that will be important to any solution. And he says there's at least one excellent proposal coming out of Congress. . .

CBO Reports Healthy Americans Act would be Budget-Neutral

Communications — Thu, 01 May 2008 08:47:00 -0400

Contact: Elizabeth Carpenter New America Foundation 401-529-9379 (cell) 202-261-6585 (office)

Len Nichols, Director of the Health Policy Program at the New America Foundation, released the following statement in response to the Congressional Budget Office's report that the bipartisan Healthy Americans Act (HAA) would be roughly budget-neutral in its first year, and actually produce budget surpluses in following years.

"The CBO report proves that the U.S. can afford a high-value health system that guarantees every American quality, affordable health coverage and takes care of our nation's most vulnerable. In addition, this analysis serves as further evidence that… more

The Presidential Candidates' Domestic Policy Plans

Communications — Sun, 27 Apr 2008 22:30:00 -0400

A New America Event
04/29/2008 - 8:30am

On Tuesday the 29th of April, the Committee for a Responsible Federal Budget, in association with the New America Foundation, American University and the Tax Foundation, hosted an event concerning the major domestic policy issues facing the nation before the upcoming presidential election. Focusing on the candidates’ policy proposals, the event featured four panels of policy experts. The first three—on climate change, health care, and tax reform—featured independent experts from across the political spectrum, expressing varied and often contradictory views on their issues of expertise. The final panel featured economic advisors from the campaigns themselves, who gave the audience a glimpse of the candidates’ views on these important policy issues.

The first panel, moderated by David Wessel of the Wall Street Journal, concerned climate change policy. The panelists, William Pizer of Resources for the Future, Nikki Roy of the Pew Center on Global Climate Change and Robert McNally of the Tudor Investment Corporation agreed that all three candidates had promising positions on the issue from the perspective of an environmentalist. At the same time, all three expressed skepticism about the candidates’ commitment to the issue. Pizer pointed out that there are four major components to a national environmental policy—cost, competitiveness, allocation and treatment of preexisting state-level climate policies—that will make climate legislation difficult to design and equally difficult to move through congress. Roy complained that none of the candidates were campaigning on the issue, despite supporting it on their websites. Without putting it out front in the campaign, he suggested, the candidates would not have the political capital to push legislation through once they are elected. McNally added that whatever legislation eventually passed would take years to do so, and that eventual success might have to be driven by a small energy crisis, such as widespread brown-outs in major cities. In the end, the panelists agreed that the scientific community had reached a strong consensus, but disagreed about whether the American public would continue to support climate change policy as it drives up energy bills.

The second panel, also moderated by Wessel, featured a discussion on healthcare reform from John Sheils of the Lewin Group, Joe Antos of the American Enterprise Institute, and Len Nichols of the New America Foundation. Sheils spoke first, discussing the employer tax exclusion for health insurance and the problems associated with it. In addition to costing around $250 billion in forgone public revenue, he explained, the exclusion is regressive and leads to over-purchasing of health insurance. It could be improved, he suggested, by replacing the exclusion with a standard deduction or tax credit. Nichols and Antos spoke next, taking turns discussing the good and bad parts of the Presidential candidates’ proposals. Nichols spoke favorably of McCain’s willingness to propose supply-side delivery system reforms and his decision to use the existing employer tax exclusion funds to subsidize individuals through a tax credit, rather than a tax deduction. At the same time, Nichols expressed concerns that McCain’s proposal to allow insurance to be purchased across state lines would leave insurance inaccessible for some Americans, particularly the sick, and disappointment that McCain has not discussed covering all Americans as a goal. Antos liked that the Democrats focused on bringing down healthcare costs and included some elements of consumerism, and was also happy that neither was claiming universal coverage as a free lunch. At the same time, he felt their plans include promises which couldn’t be kept, such as universal coverage and insurance “as good as your Congressman’s,” while over-regulating, overspending, and providing a back-door to single-payer healthcare.

The third panel, on tax policy, was moderated by Rudy Penner of the Urban Institute. Penner gave opening remarks, and then handed the microphone over to Alex Brill of the American Enterprise Institute, Len Burman of the Tax Policy Center and Scott Hodge of the Tax Foundation. All three agreed that tax policy is reaching a crucial point, with the Bush tax cuts expiring, the AMT reaching millions of new taxpayers every year, and the costs of government rising. Both Brill and Hodge supported McCain’s proposal to lower the corporate rate, citing its positive effect on growth and American competitiveness. Burman had few kind words for the current slate of policies the candidates have proposed, reserving particular disapproval for McCain’s gas-tax-holiday proposal, which Clinton has since supported. Following their opening remarks on the candidates’ plans, the panelists discussed the potential for a value added tax (VAT) to help solve some of these problems. All three agreed that it could be a useful tool, with Burman suggesting that it might help pay for health care, and Hodge saying that it could cover some of the cost of lowering the corporate tax rate.

The final panel, also moderated by Penner, featured a discussion between the economic advisors of the remaining presidential candidates, including Brian Deese, Dan Tarullo, and Kevin Hassett of the Clinton, Obama, and McCain campaigns, respectively. All three representatives believed his candidate would be best for the economy, but set out different economic goals. According to Tarullo, Obama’s policies will aim to foster a stable environment for economic growth, relief for the middle class, improved productivity, and a sustainable international economic environment. McCain, according to Hassett, would lower tax rates and improve the tax code to encourage economic growth and international competitiveness, while ensuring that lower taxes are accompanied by smaller government. Deese, finally, explained Clinton’s goals of addressing the “middle-class squeeze,” increasing the international attractiveness, restoring fiscal responsibility, and ensuring proactive and pragmatic executive leadership to address economic problems as they come.

-Marc Goldwein and Paul McLaughlin, Program Associates for the Fiscal Policy Program

Len Nichols in AAFP News | Senate Bill May Provide Starting Point to Fix Health Care System

Communications — Fri, 25 Apr 2008 06:41:00 -0400

New America in the News:

AAFP News | Senate Bill May Provide Starting Point to Fix Health Care System

The Senate Finance Committee is considering legislation that could serve as the basis for major health care reform efforts during the next presidential administration, according to analysts interviewed by AAFP News Now.

In January 2007, Ron Wyden, D-Ore., introduced the Healthy Americans Act, S. 334, (at the THOMAS Web site, type "S. 334" in the search box after selecting "Bill Number") a bipartisan bill that reflects the values of both the Democratic and Republican parties, making it a viable vehicle for health care reform. That's according to Len Nichols, Ph.D, director of the Health Policy Program for the New America Foundation, a think tank created to promote bipartisan solutions to problems.

"I will be the first to say this bill is not perfect," said Nichols. "It will not be the (health care reform) bill that actually passes in 2009 or 2010. But it is a perfect place to have a conversation."

The bill addresses key Democratic concerns by requiring adults to carry health insurance, thus promoting the Democratic goal of universal coverage. Under the legislation, adults without insurance would be required to enroll themselves and their children into Healthy Americans Private Insurance plans, which would provide beneficiaries with the same benefits members of Congress receive.

"(The bill) says coverage is going to be comprehensive and affordable," said Nichols in an interview with AAFP News Now. "It also protects the sick -- those with chronic conditions -- from being discriminated against in the insurance market, as they are today." . . .

"I believe if everyone had a medical home, we could manage a lot of conditions medically and keep people out of the hospital," said Nichols. "We would, therefore, save money in the long run."

In the past 15 months, the bill has picked up 14 co-sponsors, including eight Republicans, who represent the "critical mass" needed to move the health care reform debate forward, Nichols said. He describes the Healthy Americans Act as the "first comprehensive reform bill that has ever been co-sponsored by both parties."

According to Nichols, two key factors will drive health care reform efforts during the next few years: cost considerations and international competition. During the past 20 years, health care costs have jumped dramatically, consuming an ever-increasing share of individual incomes and sparking an outcry from the nation's middle class for health care reform. In 1987, family insurance premiums comprised 7 percent of median family income; that number stands at 17 percent today, Nichols said.

In the meantime, the global economy has put tremendous pressure on American businesses, which are struggling to meet the health care costs of their workers.

"The global economy is here," said Nichols. "It is relentless, it is amoral, it is highly efficient … so fundamentally, we have to figure out how to get health care costs under control."

That is why, he added, business coalitions are "grabbing politicians by the lapels and saying, 'Quit the dance already, let's get this solved.'"

Nichols notes that during the past few years, Republicans and Democrats have undergone fundamental shifts in their respective thinking about health care reform. Democrats have "discovered markets -- they have figured out that the center of health reform needs to be markets and choices," said Nichols. Republicans, for their part, have "discovered that many people cannot afford health care," and have proposed ways to make health insurance more affordable and accessible.

In many ways, the Healthy Americans Act reflects the changing attitudes of both Democrats and Republicans on the issue of health care reform, said Nichols.

Len Nichols in U.S. News | Voters See Very Different Healthcare Plans from Obama, Clinton, and McCain

Communications — Fri, 18 Apr 2008 12:01:00 -0400

New America in the News:

U.S. News | Voters See Very Different Healthcare Plans from Obama, Clinton, and McCain

. . . "The middle class is worried about affordability. They see it in rising premiums and in copays," says Len Nichols, director of the Health Policy Program at the New America Foundation. Premiums rose 6.1 percent last year, more than twice the rate of inflation and significantly outstripping the 3.7 percent increase in workers' earnings, according to the Kaiser Family Foundation's 2007 Employer Health Benefits Survey. Since 2001, healthcare costs have increased 78 percent, according to Kaiser. Meanwhile, high healthcare costs make it increasingly difficult for businesses to compete against companies overseas that typically don't offer health benefits, says Nichols. Since 2000, the portion of firms offering health insurance has shrunk from 69 percent to 60 percent. . .

Len Nichols in Miller-McCune Online | A Prognosis on Mandates and Guarantees

Communications — Tue, 15 Apr 2008 13:32:00 -0400

New America in the News:

Miller-McCune Online | A Prognosis on Mandates and Guarantees

. . . Those who support individual mandates are by no means dominated by the insurance industry. Advocates include The Brookings Institution, The Urban Institute and The New America Foundation, where health care economist Len Nichols says major reform doesn't have to start with a mandate, but it needs to be included pretty early on.

Even more important, he adds: America's health care system needs to be more rational.

"If you impose guaranteed issue without a mandate, you put insurers at risk for adverse selection," Nichols said.

Young and healthy people tend to leave an insurance pool first, Nichols said. And it's those premium dollars that typically pay for the sick. "Insurers have to protect themselves. Protecting themselves from that risk is how they develop underwriting techniques," he said. "It's why they exclude people completely." . . .

In 2006, Massachusetts became the first and only state to impose an individual health insurance mandate. It came with an employer mandate, government subsidies and other cost-saving measures. Even though they made a few mistakes, Nichols said more attention should be paid on what Massachusetts got right. "They got all the big things right," he said, "starting with agreeing to cover everyone." . . .

In the simplest terms, Nichols and other reformers say, we must buy smarter by instituting incentives that emphasize prevention and medical treatments with the highest value.

"We won't say ‘no,' to providing care," Nichols said. "We will just make the co-pay higher. We have to stop collectively financing low-value care. I don't think that's rationing. Rationing is denying known efficacious care. We ration today by income. Being rational doesn't mean rationing. At the same time, we have to work really hard at earning trust."

Len Nichols in NJBIZ | Hospitals See Benefits in Universal Insurance

Jerry Irvine — Mon, 31 Mar 2008 12:53:00 -0400

New America in the News:

Hospitals See Benefits in Universal Insurance

Hospitals and insurers, the health care players at the center of a bill to cover uninsured New Jerseyans with government-funded health insurance, stand to be financial winners under the plan, industry insiders say.

The measure (S-1557) would put New Jersey in the forefront of health care reforms being enacted by states and debated on the presidential campaign trail. The plan, proposed by Sen. Joseph Vitale (D-Middlesex), would make New Jersey the second state after Massachusetts to require all residents to have health care coverage.

There are almost 1.3 million uninsured people living in New Jersey, 242,000 of whom are children, according to a team that was spearheaded by Vitale to research universal health care. Uninsured residents would be automatically enrolled in a state-sponsored plan at places like emergency rooms and pharmacies.

...

Len Nichols, a health care economist with the New America Foundation, says “there’s no question that [Vitale’s plan] is good” for hospitals and insurers. “Hospitals end up delivering the great bulk of the uncompensated care that the uninsured get,” he says. “If everyone is covered, and hospitals are giving up their [under-funded] subsidies, they should be able to reduce that cost shift to the privately insured and save money.”

Meanwhile, insurers that are “very good” at attracting market share and managing their costs efficiently “may end up making more money than before,” says Nichols.

Len Nichols in U.S. News & World Report | Unions Shaping Health Care Debate?

Jerry Irvine — Thu, 27 Mar 2008 12:47:00 -0400

New America in the News:

Do Unions Still Shape the Healthcare Debate?

A survey released this week came to the unsurprising conclusion that people are having a hard time paying for healthcare. The totally nonrandom sample of more than 26,000 people who took the online survey skewed heavily toward the insured (77 percent), unionized (57 percent), college educated (80 percent), and white (86 percent). If anybody should be able to afford healthcare, it would be these folks, right? So it was interesting to see that a third of them said they'd skipped getting necessary medical care because it was too expensive, and half of those with health insurance said it doesn't cover what they need at a price they can afford.

The AFL-CIO, which sponsored the survey with an affiliated outreach group called Working America, has its eye on the upcoming election season, of course. "We're going to take this survey into the election and raise it with candidates at all levels," says Heather Booth, director of the healthcare reform campaign for the AFL-CIO. But with organized labor representing only about 15 percent of workers in the United States today, it's worth asking what role it plays in protecting healthcare benefits or setting the agenda for healthcare reform. Are labor unions still relevant?

...

"What seems to be going on is that labor is accepting the concept of shared responsibility for healthcare going forward," says Len Nichols, director of the health policy program at the New America Foundation, a Washington think tank. Rather than simply protecting its own, organized labor has become increasingly receptive to the idea that it must work with business and government to find healthcare solutions, says Nichols.

Unions may have less clout at the bargaining table, but in the political arena organized labor is still a force to be reckoned with, say experts. Labor unions buy advertising and invest in public education campaigns that can influence public opinion. "They're able to marshal and focus the messages that the general public will see," says Nichols.

Len Nichols in BNA News | Poor Health, Shorter Lives of Uninsured Costlier Than Providing Coverage, Study Says

Communications — Thu, 27 Mar 2008 12:07:00 -0400

New America in the News:

BNA News | Poor Health, Shorter Lives of Uninsured Costlier Than Providing Coverage, Study Says

The economic costs caused by the uninsured are at least as great as the public cost of providing coverage, according to a report released March 26 by the New America Foundation.

The report, Cost of Failure: The Economic Losses of the Uninsured, found that the poor health and shorter life spans of the uninsured cost the United States between $102 billion and $204 billion in 2006.

"Some might argue that given the sudden economic downturn, we cannot afford health reform. To the contrary: these numbers only further emphasize that the cost of doing nothing is more than the cost of health reform," Len Nichols, director of the New America Foundation's health policy program, said in a statement.

The New America Foundation is a nonprofit, public policy institute headquartered in Washington, according to its Web site.

Sarah Axeen and Elizabeth Carpenter of the Health Policy Program authored the report, which is based on a study done in 2000 by the Institute of Medicine.

The IOM study estimated that the economic costs of those who lack insurance cost was between $65 billion and $130 billion for "each year of health insurance forgone." The estimate considered economic losses because of premature mortality and unnecessary prolonged illness, according to the report. . .

The New America Foundation said in a press release that the higher estimate is likely more accurate because "the uninsured die sooner and remain sicker longer than the insured."

They added that the cost estimates would have been higher had they included "spillover costs" such as increased provider rates and insurance premiums that may result when medical bills go unpaid.

"This vicious cycle of "cost shifting" inextricably links the uninsured to rising health care costs and premium rates for the uninsured," the report said.

The report is available at http://www.newamerica.net/publications/policy/cost_failure.