Endnotes for "Universal Coverage: How Do We Pay for It?"

1. In other words, this financing system could be modified to fund a state- based universal health system or a universal system restricted to people of particular ages or other characteristics. Return to body of text.

2. It is preferable, but not necessary, that the new health care system be used throughout the nation. A system that covered only part of the country would be possible-where "part" could be defined either geographically (for example, particular states or regions) or demographically (certain demographic groups based on age or income)-but administratively more complex and more expensive. However, for the "partial" universal system to operate with adequate cost containment, it would need to function completely autonomously and in isolation from any other health care system (including the currently existing one). To prevent selection bias, consumers would need to be assigned to one system and prohibited from switching between them. Providers would need to participate in, or fully opt out of, the universal plan, similar to the current situation for Medicare. In accordance with capital planning and budgeting, the universal system would pay for only those services performed in facilities and using equipment previously approved by the capital planning process. Return to body of text.

3. CBO (1993, p. 9) assumes that cost containment is just 75% effective with base costs expected to rise at the rate of population plus GDP growth. Return to body of text.

4. By the fourth year, spending under the new system would be equivalent to baseline spending. Over the following three years (years five through seven), total savings (compared to baseline) would exceed the increased (above baseline) expenditures of the first four years. In sum, over the first seven years, expenditures would be roughly the same under either system. In subsequent years, however, savings (compared to baseline) would accrue. In year five (that is, in 2002 if the plan were implemented in 1998), savings would approximate 1.7% of national health expenditures, or $24 billion in a $1.4 trillion system (author's calculations based on CBO 1993, p. 9 and CBO 1998, p. 144). In year six, savings would total 3.5% of health expenditures, and 5.4% in year seven. Return to body of text.

5. This includes all prescription drugs and 25% of nondurable medical goods, 90% of physician services, all nursing home stays, 90% of other professional services, 85% of dental services, 99% of all hospital services, 75% of durable medical goods, and all home health. This figure is in accordance with CBO's (1993) assessment of S. 491 (American Health Security Act of 1993). CBO analysts estimated that out-of-pocket spending would fall by 80% when medically-necessary services were covered by the new plan. Return to body of text.

6. Alternatively, either more or less money than is currently paid could be collected from employers. Like the current payroll tax for Medicare, the payroll tax proposed here would apply to all earnings. There would be no cap on earnings subject to the tax. Return to body of text.

Bibliography

Congressional Budget Office. 1998. The Economic and Budget Outlook: Fiscal years 1999-2008. Washington DC: U.S. GPO.

Congressional Budget Office. 1993. American Health Security Act of 1993. Washington DC: U.S. GPO.

U.S. General Accounting Office. 1991. Canadian Health Insurance: Lessons for the United States (HRD-91-90). Washington, DC: GAO.