Visit UCLA Site Here. Interview Re-posted to SPN website.
Three Questions for the Expert Gerald F. Kominski, PhD
Gerald Kominski is the director of the UCLA Center for Health Policy Research and co-author of a new policy brief on the share of taxpayer dollars that are spent on health care expenditures. In this brief interview, Kominski discusses how tax exemptions for employer-sponsored health insurance premiums benefit the rich more than the poor, why California’s share of Medicaid spending is 10 percentage points higher than the national average, and why a streamlined single-payer system might be preferable to the nation’s current “crazy patchwork” of health care financing.
Q: California spends money on health care in a variety of ways, including through tax exemptions for employer-sponsored health insurance premiums. Can you explain how this works ? or does not work?
The premiums that employers and workers pay for employer-sponsored health insurance (ESI) are exempt from taxation. These “foregone” taxes deduct $10.9 billion annually from the state coffers that could be spent on state programs like Medi-Cal and Healthy Families. Nationally, ESI tax subsidies are the third-largest health care program after Medicare and Medicaid, according to the National Bureau of Economic Research. And the ESI exclusion doesn’t help low-wage workers much — it benefits those with the highest incomes who have the most generous health plans. More than anything, the tax exempt status of ESI seems like an inefficient way to finance employer-based insurance.
Q: California’s share of Medicaid spending is 10 percentage points higher than the national average (27% versus 17%). Why is this?
Almost 33% of the population in California is enrolled in Medicaid, which is notably higher than average enrollment across the U.S. California has done a much better job at enrollment and has embraced the Medicaid expansion under the ACA. The major disadvantage of having a higher share of public spending in California for both Medicaid and total health spending is that there are fewer funds provided by private insurers. This creates pressure on providers to compete more intensely for a smaller share of privately insured patients, because they are generally the most profitable.
When providers select patients based on their profitability, we find greater disparities in access at a time when we are trying to reduce and eliminate disparities by expanding public insurance programs. This isn’t a problem California can solve on its own, unless the state applies for a federal waiver to develop a single-payer system that puts everyone on equal footing.
Q: Does the current system of multiple health care programs and health-related tax incentives make sense?
Despite the great successes of the ACA nationally and in California, our findings focus attention once again on the crazy patchwork of health care financing we have in the U.S. I believe that Sen. Sanders’s campaign pledge of Medicare for All resonated with so many because it acknowledged a simple truth that most people understand intuitively; namely, that not only should everyone have health insurance, we shouldn’t have significantly different health care options for the poor, for seniors, and for the working population. Far from creating “one size fits all” as critics also complain, it is possible to design a single-payer system in the U.S. that provides multiple options, subject to minimum benefit requirements that guarantee a floor for everyone.
Now that we have health insurance exchanges as a result of the ACA, maybe ACA 2.0 should find a way to move ESI, Medicare Part C, and Medicaid eligible populations into those exchanges so that insurers are required to compete for all categories of insurance, not just those they find most profitable.
Or, if insurers like Aetna don’t really want to sell health insurance, it might be time to pull the plug on this grand 87-year “experiment” with trying to make private insurance markets work, and finally admit once and for all, that in this sector of the economy, government really is the best choice for financing everyone’s health care.