Transcript Slide 1

Financing Healthcare
and
The Uninsured
Kiersten Adams
Jay Singerman
Jen Storch
Ashley Thomas
James Trinidad
Agenda
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Overview of Financing
Overview of The Uninsured
Key Issues for Republicans
Key Issues for Democrats
Current Legislation
Proposed Legislation
Overview of Financing
Overview- Medicare
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Medicare- started in 1965 with Title
XVIII of the social security
amendments
Medicare– Part
– Part
– Part
– Part
A- Hospital Insurance
B- Supplemental Medical Insurance
C- Medicare Advantage
D- Prescription Drug Coverage
Overview- Medicaid
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Medicaid- started in 1965 with Title
XIX of the social security amendments
States determine eligibility, receive
portion of funding from Federal
government
Employer- Sponsored &
Blue Cross Blue Shield
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Employer-Sponsored Plans
– 19th century Europe- to compensate for
dangerous jobs
– WWII wage controls
– 1954- HI benefits tax deductible to employers
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Blue Cross Blue Shield
– 1930’s- community-based, voluntary, not for
profit
– Blue Cross- Hospitalization
– Blue Shield- Physician Services
National Health
Expenditures
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In 2004, national health expenditures
equaled $1.8 trillion
Expected to increase approximately 8%
annually
17% of the GDP, increasing annually
U.S. health care spending is expected to
increase at similar levels for the next decade
reaching $4 TRILLION in 2015, or 20
percent of GDP
Trends equate to higher premiums, higher
out-of pocket spending and higher taxes
Self-Pay v. Third-Party
Spending
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Self-Pay= 12.6% of all healthcare
expenditures
Third-Party= 87.4%
Percentage of third-party spending
increased dramatically from the
1950’s-1990’s and has since been
stagnant
Public v. Private Spending
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Private= 54.9% of all healthcare
expenditures
Public= 45.1%
Public spending has been increasing
dramatically
32% of Americans are covered by
Medicare or Medicaid
Financing Trends
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Healthcare is unique because the
person who pays is often not the
person who receives health services
Financing has shifted from individuals
to employers and the government
Financing Trends
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Premiums are increasing faster than
inflation and increases in wages
Many employers are no longer offering
health benefits
Therefore, an increasing number of
people can no longer afford health
insurance
Those who can are facing increased
premiums, deductibles, employee
contributions and taxes
Overview of the
Uninsured
Number of Uninsured
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Number reached 46.1 million in 2005
80% of these live in households below
300% of the poverty level
25% eligible for SCHIP or Medicaid
56% not eligible, but need assistance
in obtaining private insurance
Characteristics of Uninsured
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With Children
Predominantly US
Citizens
Majority have one
worker in family
Mostly Hispanic
Live primarily in
South
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Without Children
Predominantly US
Citizens
56% come from
families with no
workers
Mostly White
Live primarily in the
West and Northeast
Health Status by
Race/Ethnicity and Income
Health Insurance Coverage
by Race/Ethnicity
Uninsured among those who
work
Uninsured Children
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8 million are uninsured
74% are eligible for SCHIP
60% of these children live in families
with income at FPL
Characteristics of Uninsured
Children
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Mostly teens
25% under age 6
40% Hispanic
33% White
18% Black
85% US Citizens
Live mostly in West and South
Characteristics of Uninsured
above 300% FPL
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Age 19-29 with income above 300%
FPL more likely to be uninsured
Hispanics with income above 300%
FPL
More likely to have one worker in a
small firm
Less likely to report excellent or very
good health
Illegal Aliens (AKA
Undocumented Non-US Citizens)
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Comprise 5 million of the uninsured
NOT eligible for public assistance
programs
Numbers skew uninsured
characteristics
Elderly Without Health
Insurance
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Some have only Medicare Part A to fall back on
17% (41 million) of those 65 and older have no other
insurance
Access and Outcomes for
Uninsured
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Study used Medical Expenditure Panel Surveys to
assess people’s SES, insurance coverage and access
to care.
Found:
– Those uninsured who have an injury or new
chronic condition have trouble accessing care
and it takes longer for them to return to full
health
– No difference in referral of additional services
(PT, Home Health, etc)
– More difficult to obtain health insurance in the
future
– Those with chronic conditions less likely to
receive treatment beyond initial consultation.
Why are so many uninsured?
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Lack of employer sponsored insurance
Health costs are outpacing inflation
increases
Limited Medicaid coverage for low
income adults
Variations in state economies
Key Issues for
Republicans
Republican Views
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Freedom to Choose Health Savings Accounts
Individuals to Choose Their Own Health
Insurance Benefits
Providing More Affordable Health Care
Choices by Expanding Competition
Expanding Coverage Options for the
Working Uninsured
Task Force on Health Care
Costs and the Uninsured
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2004
Republican Senate Majority
Senator Judd Gregg, chairman
Proposed Solutions
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Create incentives for young adults to purchase
lifetime, portable insurance
Improve enrollment in existing public programs
Association Health Plans
Encourage more doctor and provider participation in
the safety net of care…
On National Health Care
BUSH: I’m absolutely opposed to a national
health care plan. I don’t want the federal
government making decisions for consumers
or for providers. I remember what the
administration tried to do in 1993. They
tried to have a national health care plan,
and fortunately it failed. I trust people; I
don’t trust the federal government. I don’t
want the federal government making
decisions on behalf of everybody.
Reasons Why Not
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Inefficiency of federal government
Decrease in patient flexibility
Reduce doctor flexibility
Healthy people to pay the burden
No benefit to be a practicing physician
Defending John Q.
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an uninsured worker who forces
doctors at gunpoint to treat his son
a legitimate right doesn't impose
obligations on anyone else
Competition
"Competition must be seen as a process
in which people acquire and
communicate knowledge“
~ Nobel laureate Friedrich Hayek
Competition
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Where real market competition can be
found in health care, it drives quality
upward and prices downward
Laser eye surgery & cosmetic surgery
Competition- The
Problems
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we have disabled market competition
throughout the health care sector
too little competition, too little choice,
and too little attention paid to costs
and quality.
Health Savings Accounts
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Medical savings account
accompanied by a health plan with a
high deductible
Health Savings Accounts
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reduce medical spending by making
consumers more sensitive to the costs
of care
together with high-deductible health
plans should encourage consumers to
make prudent treatment decisions
because they are spending their own
money
Key Issues for
Democrats
Unimaginable Choices
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A severely disabled man’s wife leaves her
low-paying service sector job (which did
provide health benefits) so she can care for
her increasingly frail husband
Although he qualifies for Medicare they
cannot afford the $600 a month in
prescriptions he requires
In desperation she takes another service
sector job, but it doesn’t offer benefits and
now she can’t help her husband
NCMJ January/February 2002, Volume 63, Number 1
Uninsured
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The above stories represent just some
of the causes for uninsured status
Others include:
- small business who cannot afford
health coverage
- low income populations not realizing
their eligibility status
Results
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These people will either delay
treatment as long as possible, or they
will simply not get care
When they do get care, it often is in a
free clinic, public hospital, or
emergency room
Now, their condition has become far
more serious and expensive to treat
because of the delay
What must happen next?
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Uninsured Americans have:
- Limited access to medical care
- Social/physiological environment
that increases their vulnerability to
disease
- Differences in life-style that account
for differences in health rates
Uninsured Americans need programs that
will help remedy their plight!
Democratic Views
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Democrats aim to pursue a legislative
agenda that reflects the interests of
middle- and working-class Americans
Democrats want to extend health
insurance to people who cannot afford
coverage
The following will be major issues for
consideration:
Three Major Issues
1. Expanding insurance to as many
children of low-income families as
possible
2. Empowering Medicare to negotiate
prices of prescription drugs
3. Eliminate health insurance
companies’ discrimination on the
basis of pre-existing conditions
Boost S-CHIP
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Title XXI of Social Security Act: jointly
financed by Federal & State governments
and administered by the States
Democrats must focus on expanding
insurance to as many children of lowincome families as possible
SCHIP offers states federal funds for
insurance coverage for children
NEJM, Volume 356:1-4, Jan. 4th, 2007
Centers for Medicare/Medicaid Services; DHHS
S-CHIP
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Families that do not currently have health insurance
may be eligible
States have different eligibility rules, but in most,
uninsured children under the age of 19, whose
families earn up to $36,200 a year (for a family of
four) are eligible.
This insurance pays for:
- doctor visits
- prescription medicines
- immunizations
- hospitalizations
- emergency room visits
http://www.insurekidsnow.gov/
S-CHIP
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We must provide more
funding to local health
departments
In 2005, 8.3 million
children w/o coverage
Pelosi has said
repeatedly that she will
take up her gavel "on
behalf of America's
children"
Prescription Drugs
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The current Medicare Rx drug law has failed to slow
the rapid growth in drug prices – they are not
containing drug price inflation
Big drug companies report record profits and
seniors pay higher drug prices
http://www.house.gov/pelosi/
http://www.wvec.com/news/health/stories/wvec_medical_011207_medicare_drugs_house.32d0fd62.html
Tricky…
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One way to win discounts is to favor
some drugs over others
Beneficiaries could face a more limited
choice of medications
Lobbyists may influence which drugs are
available
Pharmaceutical industry could discourage
the development of new drugs
Washington Post; December 9, 2006; Article #AR2006120801578
Mandatory Discounts on
Drugs
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Dept of Veterans Affairs
negotiates effectively to secure
better prices for the 4.4 million
veterans who use its drug
benefit
"43 million people can have
the purchasing power to
perhaps encourage these drug
houses to give the government
and the American retirees a
better price"
- John Dingell, D-Mich.,
Chairman of the House Energy
and Commerce Committee
Piper Report; http://www.piperreport.com/archives/2007/01/medicare_drug_p.html
http://www.wvec.com/news/health/stories/wvec_medical_011207_medicare_drugs_house.32d0fd62.html
Comprehensive Health
Insurance
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Provide health insurance coverage to
Americans who would not have it due to a
pre-existing condition
Not a welfare or entitlement program
You must pay premiums to participate in
this plan
Comprehensive major medical indemnity
plan for persons not eligible for Medicare
http://www.illinoislegalaid.org/index.cfm?fuseaction=home.dsp_content&contentID=256
Current Legislation
Current Reform Proposals
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Massachusetts
– Requires everyone to purchase health insurance
– “Connecter” links individuals with the insurance
plan that is right for them
– Employers with over 10 employees must offer a
plan or possibly pay into a state
insurance
pool (debate between gov. and leg.)
– Government subsidizes those who are unable to
afford coverage
– Enforcement through income tax penalties
Current Reform Proposals
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California
– Focus on preventative care
– Everyone must purchase insurance, no employer
mandate
– Low income individuals will be offered expanded
state insurance and will be provided financial
assistance to purchase insurance through a state
pool
– Insurers will be required to guarantee coverage
and charge like prices for like populations.
– State program reimbursement rates to providers
will increase
– Providers will take on responsibility for
enrollment
State of the Union and
Financing Health Care
www.youtube.com/watch?v=ICEwfkNxhkA
Proposed Legislation
Proposed Legislation:
Part 1
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Standard deduction
– All health insurance becomes subject to
income tax above the tax deductible
amount
Singles can deduct up to $7,500
 Families can deduct up to $15,000
 Standard deduction follows MPI
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– Eliminates tax-deductible health care
expenditures incurred by employers
Rationale: Standard Deduction
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Higher wages and health expenditure visibility
– Consumer choice between taxed wages and mostly
non-taxed health insurance
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Increases visibility of health care costs
Level playing-field
– Non-employer-sponsored health insurance tax code
penalization
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Penalizes non-employer sponsored health insurance
Penalizes less expensive employer-sponsored insurance
– With standard deduction, all workers receive tax
benefits
Proposed Legislation:
Part 2
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Affordable Choices Initiatives (ACI)
– Provide States financial incentives to make basic,
affordable private health insurance policies
available
– Shifts funds aimed at alleviating ‘bad debts’
expenditures of health care providers to insuring
the uninsured
– HHS and states work closely to find innovative
ways to insure uninsured in each states’ market
Rationale: ACI
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Allocation of funds for more efficiency
– Theoretically, fiscally-neutral
– Publicly-funded health expenditures have risen
– State reduction inefficient expenditures can be
supported with reallocated federal funds (e.g., Medicaid)
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Competition & consumer-directed health care
(CDHC)
– Combined with the standard deduction, the market of
health insurance will be more accessible to more
consumers
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Increases in competition among health insurance plans
Affordability and responsibility brought to consumer
Deregulation
Target Groups: Standard
Deduction
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Winners
– 80% of employees: receive tax benefits
or choose higher wages
Neutral
– 20% of employees: generous health care
policy owners will have to decide
between higher taxed wages or better,
but taxed health care coverage
Losers
– Employers: tax-deductible health
expenditures will disappear
Target Groups: ACI
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Winners
– Uninsured and hard-to-insure peoples: with more
innovation in the individual markets, the number of
privately-insured will rise
– Tax-payers: with more privately-insured, the less
government needs to pay for health care; thus, less
tax-payer’s dollars can be better allocated
– Out-patients services: increases in number of
insured increases utilization of out-patient services
Neutral
– Hospitals: with less uninsured patients, hospitals
will receive less government subsidies, but they will
also be able to allocate care to more deserving
health needs
Mechanism: Standard Deduction
& ACI
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Increasing the risk pools
– Higher wages and a non-restrictive benefit plan
offered by employers under standard deduction will
allow employees to shop around
– ACIs may allow uninsured to shop in same market
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E.g., ‘Commonwealth Health Insurance Connector”
Increased visibility of health-care costs
– A standard deductible will allow peoples to realize
the actual cost of health insurance
– Combined with ‘cafeteria’ and other CDHC plans
proposed via ACIs, both the uninsured and insured
will purchase only what they need
Financing: Standard Deduction &
ACI
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Government intervention
– Fiscally neutral solution
 It shifts tax-deductible health expenses from
employer to employee
– Successful ACIs may shift cost of uninsured unto
insurance companies rather than tax-payers
– ACIs: income-related subsidies/premium assistance
Market forces
– More consumers in non-employer sponsored
market = more competition
 Aided by CDHC, e.g., HSA’s
Limitations
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Standard deduction limitations
– Higher wages = misplaced priorities
– More consumer choice will cause adverse (and favorable)
selection
 The ability for consumers to jump in-and-out of risk pools
due to favorable selection by insurance companies may
cause adverse selection for sicker patients
 Can be remedied by subsidies and other interventions
– Assumes that consumers can be responsible for their own
health care
 Though employers can still be a source of a risk pool,
other sources of risk pool may arise, from small pools
made up of likeminded people to ‘connector’ plans
instituted by the gov’t
Strengths
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Considered fiscally ‘neutral’
Incremental, but bold
– Increased consumer awareness (transparency)
of health care costs drives…
– Increases in private health insurance
expenditures, which drives…
– Bigger risk pools, which drives…
– Lower premiums, which results in…
– A greater number of insured
References
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Levit, Katharine, Cathy Cowen, “Business, Households and
Governments: Helathcare Costs 1990- Healthcare Financing Trends,”
Helathcare Financing Review.
http://findarticles.com/p/articles/mi_m0795/is_n2_v13/ai_12160563.
Smith, Cynthia, Cathy Cowan, Stephen Heffler, Aaron Catlin, and the
National Health Accounts Team, “National Health Spending in 2004:
Recent Slowdown Led by Prescription Drug Spending,” Health Affairs
Vol. 25, No. 1 (January/February 2006): 186-196.
References
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Centers for Medicare/Medicaid Services; http://www.cms.hhs.gov/LowCostHealthInsFamChild/
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North Carolina Medical Journal; January/February 2002, Volume 63, Number 1
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AARP Public Policy Institute, August 2002
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The Health Insurance In The Private Sector (HIPS) Survey of Private Sector Firms September 2001;
http://www.moh.gov.jo/phr_studies/hips.htm
New England Journal of Medicine, Volume 356:1-4, Jan. 4th, 2007
Illinois Green Party; http://www.ilgp.org/new-groups/media/ilgp-press-coverage/can-state-s-uninsuredbe-helped/view
U.S. Chamber of Commerce; http://www.uschamber.com/issues/index/health/ahps.htm
Health Resources and Services Adminstration’ http://www.insurekidsnow.gov/
http://www.house.gov/pelosi/
Washington Post; December 9, 2006; Article #AR2006120801578
Piper Report; http://www.piperreport.com/archives/2007/01/medicare_drug_p.html
http://www.wvec.com/news/health/stories/wvec_medical_011207_medicare_drugs_house.32d0fd62.ht
ml
Illinois Legal Aid;
http://www.illinoislegalaid.org/index.cfm?fuseaction=home.dsp_content&contentID=256
References
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Holahan, J., Cook, A. and Dubay, L. Characteristics of the Uninsured: Who Is
Kaiser
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Eligible for Public Coverage and Who Needs Help Affording Coverage?
Commission on Medicaid and the Uninsured. Feb. 2007.
QuickStats: Reasons for No Health Insurance Coverage* Among Uninsured
Persons
Aged <65 Years. National Health Interview Survey, United
States, 2004
JAMA. 2007;297:1054.
Hadley, J. Insurance Coverage, Medical Care Use, and Short-term Health
Changes
Following an Unintentional Injury or the Onset of a Chronic
Condition.
JAMA. 2007;297:1073-1084.
Key Facts: Race, Ethnicity and Medical Care, 2007 Update. Kaiser Family
Foundation
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The Uninsured and their access to health care. Kaiser Commission on Key
Facts:
Medicaid and the Uninsured, October 2006.
Massachusetts Health Care Reform Plan. Kaiser Commission on Key Facts:
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Governor’s Health Care Proposal
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Medicaid and the Uninsured. April 2006
http://www.adp.ca.gov/pdf/Governors_Health_Care_Proposal.pdf
References
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D. K. Remler and S. A. Glied, How Much More Cost-Sharing Will Health Savings Accounts Bring?, Health
Affairs, July/August 2006 25(4):1070–78
http://www.cmwf.org/publications/publications_show.htm?doc_id=382001
Cannon, Michael F. Real Competition is the Cure for Health Care. September 26, 2005.
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Goodman, John C. and Musgrave, Gerald. Twenty Myths About National Health Insurance.
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Eric Robinson, Chairman of the Sarasota County Republican Party
Dunn, Wayne. Defending rights of John Q- dr. John Q. Capitalism Magazine. February 2002.
http://www.capmag.com/article.asp?id=4903
References
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Affordable, Accessible, and Flexible Health Coverage. Online
analysis. Health Initiatives.
www.whitehouse.gov/stateoftheunion/2007/initiatives/healthcare.ht
ml. Accessed: March 18th, 2007
Wages and health expenditure visibility, from: Sherk, J. &
Owcharenko, N. (2007). How Bush’s Health Care Tax Plan Will Raise
Wages. WebMemo #1345. Heritage Foundation.
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March 18th, 2007
Woolhander, S. & Himmelstein, D. U. (2002). Paying for national
health insurance – And not getting it. Health Affairs, 21(4), 88-98
Furrow, B. R., Greaney, T. L., Johnson, S. H., Jost, T. S., & Schwartz,
R. L. (2004). Health Law: Cases, Materials, and Problems, 5th ed.
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Hadley, J. & Holahan, J. (2004). The Cost of Care for the Uninsured:
What Do We Spend, Who Pays, and What Would Full Coverage Add
to Medical Spending? KFF. Medicaid and the Uninsured: Issue
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References
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Hadley, J. (2007) Insurance Coverage, Medical Care Use, and Shortterm Health Changes Following an Unintentional Injury or the Onset
of a Chronic Condition. JAMA. 2007;297:1073-1084.
Massachusetts Health Care Reform Plan. (2006). KFF. Medicaid and
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Butler, S. M. & Owcharenko, N. (2007). Making Health Care
Affordable: Bush’s Bold Health Tax Reform Plan. WebMemo #1316.
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