A Plan for Universal Health Care: Utah —A Case Study


A national solution may be less likely than solutions derived at the state level. I offer a proposal based upon factors found in the State of Utah.

Joseph Q. Jarvis, MD, MSPH, Utah Health Policy Project (1)

Americans are the only first world citizens at risk for illness and injury without financing for needed health care services. This is despite the fact that Americans pay more per capita taxes devoted to health care programs than any other citizenry. US businesses, increasingly competing in a global economy, find themselves with health benefit costs more than an order of magnitude greater than those paid by companies throughout the rest of the industrialized world. For these and other reasons there is increasing pressure to finally solve America 's health care problems. A national solution may be less likely than solutions derived at the state level. I offer a proposal based upon factors found in the State of Utah .

For more than a decade health care policy in Utah has languished under misguided principles. The result: a decade of increasing costs, lagging quality, and rising numbers of uninsured. Utahns are less able to receive needed health care. Utah businesses are straining under the burden of double digit health benefit cost increases each year.

Over the past 13 years, the official position of Utah state government concerning health policy has been Utah HealthPrint. HealthPrint has been described as “a flexible, market-oriented master plan that outlines a realistic approach for the Utah Health Policy Commission to increase access to health care, contain cost, and improve the quality of health care for all Utahns.”(2) HealthPrint was a plan to incrementally reform health care in Utah , thereby providing affordable health care coverage for all Utahns. In 1994 the Utah Health Policy Commission was established by the Utah Legislature to carry out the goals of HealthPrint. HealthPrint employed three strategies to increase access: 1) insurance reform; 2) Medicaid expansion; and 3) the creation of purchasing cooperatives. Cost containment was targeted by other strategies: 1) enhancing competition; 2) endorsing managed care and greater use of capitation; and 3) increasing efficiency. HealthPrint supported data collection, analysis and reporting as a means of continually improving quality of health care. After a flurry of legislative activity, the Utah Health Policy Commission was suddenly decommissioned on June 30, 2000.

None of the goals of HealthPrint were ever achieved. In 1994, 11.5% of Utahns were uninsured, while in 2002 13.6% had no health insurance.(3) This represents an increase of almost 50,000 Utahns without health insurance, to a total of approximately 300,000 people, during the years when HealthPrint was official policy under the Utah Health Policy Commission. In 1998, the government of the State of Utah had total health expenditures of $998,200,000, of which $552,800,000 were federal funds.(4) By 2001, total state expenditures for health in Utah had grown to $1,304,700,000, of which $718,700,000 were federal funds.(5) This represents a 31% growth in Utah state expenditures for health programs in just 4 years, clearly an unsustainable pattern. Employers in Utah during the current year are expected to see an increase in employee health benefit costs of approximately 16%, which is higher than the national average.(6) Nationally, this is the fourth year in a row of double digit inflation in employer health care costs. One critic has charged that HealthPrint's central proposals for increasing Medicaid access rested on faulty assumptions.(7) There is no evidence that HealthPrint associated data collection has had any impact on the quality of health care in Utah. The failure of HealthPrint and the demise of the Utah Health Policy Commission places Utah health policy in chaos. Meanwhile Utah patients go without needed care, Utah families fall into financial ruin and bankruptcy due to illness and injury, and Utah businesses, burdened with high and rising health care costs, struggle in a global economy.



The citizens of Utah deserve a better health policy. A new state administration in Utah is trying to outline the future of health care for all Utahns. Old formulas and rhetoric can be laid aside. A fresh look at the facts concerning health care in Utah is just beginning. No reasonable proposal for health care reform should be rejected solely because of ideological concerns. Organizations and corporations with vested financial interests in health care must be kept at arms length while the people of Utah examine the issues and determine how best to reform Utah health care.




Table 1

Per capita health spending in the United States is twice as high as the amount spent in other industrialized countries, and spending is rising faster in the US than anywhere else in the world. The US Department of Health and Human Services estimates that per capita health spending in 2004 will exceed $6000. Utah citizens are favored by having lower per capita spending than the average in the US , but still spend more than do the citizens of any other country.


BASIC POLICY FACTS: 1) American taxpayers pay the world's largest tax burden for health care; 2) the American health care system is primarily a tax based system, not a system mostly paid by private employers; 3) Individual out of pocket expenses for health care are in aggregate as large as the share paid by private employers, with individual out of pocket expenses growing faster.

Table 3: People with no health insurance in the United States are either employed or dependent upon someone who is employed (with few exceptions).

BASIC POLICY FACT: Because uninsured Americans are virtually all members of working households, they are contributing to the payment of the world's greatest health care tax burden, but have no financial support when they need health care. This could be the most unfair tax policy in our society.


Table 4

The non-profit, non-partisan Institute of Medicine found that more than 18,000 adults ages 25-65 die annually due to lack of health insurance. This observation qualifies lack of health insurance as one of the most important causes of preventable premature death in the United States . No other developed country has an epidemic of adult death due to lack of health insurance.


BASIC POLICY FACT: On average, two Utahns die each week prematurely due to lack of health care financing.


Table 5

American health care costs are twice the median per capita spending of other developed nations not because Americans receive more hospital care, visit physicians more often, or have more high-tech medical devices, but because America leads the world in health care bureaucracy. Over the last thirty years of the 20 th century, the number of physicians doubled in the US (red wedge) while the number of health care bureaucrats increased 2500% (yellow area). These bureaucrats are largely in the private sector, staffing the benefit denial activities of health insurance and managed care companies, or the billing departments of hospitals and doctors offices.

BASIC POLICY FACT: By reducing bureaucratic staff and red tape, Americans could save close to $300 billion each year ($1.6 billion in Utah ); enough to pay for medically necessary care for all citizens without increasing overall per capita costs.



A public opinion poll conducted in Utah nearly four years ago for the Robert Wood Johnson Foundation found(8):

•  91 percent of Utahns said that passing laws to help the uninsured receive health care coverage should be a priority;

•  70 percent of Utahns favor making sure that all families have access to affordable health insurance, even if it costs more; and

•  63 percent of Utahns would be willing to pay as much as $50 a year more to assure all residents have health insurance coverage.

The Utah Medical Association and virtually all other health professional organizations agree that health care financing should cover all Utahns.



The 10 th Amendment to the US Constitution states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.” Health policy is neither delegated to the United States nor prohibited to the states by the Constitution, and should, therefore, be reserved for state action. Utahns are generally healthier than the residents of other states. Health care costs are below the US average in Utah . Most health care corporations in Utah are non-profit, which keeps health care costs lower and quality higher. Utahns should be the beneficiaries of their better health choices. However, federal health laws and regulations prevent Utahns from exercising their full authority over health policy decisions. What is needed is an act of Congress authorizing states with a good faith plan for universal health care to receive exemptions from federal laws and regulations while retaining full federal funding for Medicare, Medicaid, and other federal health revenues. A proposed bill entitled “The States' Right to Innovate in Health Care Act” would fulfill that need. Utah citizens should query candidates for federal office about their intended support for this bill. Without passage of this bill, Utahns will continue to be deprived of their Constitutional powers to set their own state health policy.



Less than a year ago, while preparing for another round of labor negotiations dominated by health care issues, William Clay Ford Jr., chairman of Ford Motor Co., said that the rising costs of health benefits is the “biggest issue” that American businesses can't solve. “Health care is just out of control, it's a system that's broke.”(9) He noted that the US is the only industrialized country with employer-based health care, putting US businesses at a competitive disadvantage in a global economy. Ford called for a national solution to the American health care crisis. Without such a solution, all North American cars may someday be manufactured in Canada, where labor costs are significantly cheaper primarily because health care financing is much more efficient.(10) Wall Street analysts have already begun referring to the Big Three American automakers as HMOs with wheels that only incidentally make cars to finance health care.(11) American businesses, including those in Utah, pay 8 times more internal costs for arranging health benefits than do Canadian businesses.(12)



1st Principle: Finance medically necessary care for all Utah residents. There would appear to be little dispute about the need for financing care for everyone. All health professional organizations, including the Utah Medical Association, have called for some form of universal health care financing. Four in five Americans, polled repeatedly over many years, have called for universal health care. This consensus exists because we all know the devastating consequences which occur when people can not afford health care. The Institute of Medicine , or IOM, estimates that more than 18,000 adults die prematurely each year because they lacked health care financing. A Harvard Law School study estimated that nearly half of all personal bankruptcies are caused by the costs associated with illness or injury in the family.(13) Costs for employee health benefits have been rising with double digit annual inflation for four years. Church and community charities are depleted by medical welfare needs. Entrepreneurialism is stunted by job lock caused by the fear of losing health benefits. Virtually all of the uninsured hold jobs or are dependent upon a worker. Because Americans pay a higher tax burden for health care than do the taxpayers of any other country, the working uninsured in the US are paying the highest health care taxes in the world without receiving any benefit when they need medical care. Relief from all these problems can only occur when every citizen has financing for all medical services determined necessary by their own doctor.

2nd Principle: Patients in Utah should be able to make an unrestricted choice of any willing, licensed provider of health services. Doctors should have no greater obligation than the one owed to their patients. Without a protected relationship between doctor and patient, the trust needed for full patient disclosure can not develop; no doctor can offer the best care when only part of the patient history is known. Patient care is not an assembly line process with quality control imposed by supervision from outside the therapeutic alliance. The intimate doctor-patient relationship, protected from invasion by business interests, is the guarantor of quality health care. Small wonder that Americans are lagging behind other developed countries in assessment of health care quality, ranking 37 th in the world, while outspending any other country 2:1. Americans are least able among first world citizens to maintain long term continuity with their chosen physicians. Business interests increasingly rob the patient of unrestricted choice of doctor while doctors find themselves subject to contractual obligations for increased patient throughput, gag orders, and financial risk for patient referral. Bureaucratic hassle is toxic to quality health care. The only health care decision a patient can make unassisted is choice of doctor; all other decisions are best made together with a trusted physician. A Utah cancer patient desiring a second opinion from the Huntsman Cancer Center should have no financial barrier in seeking that service.

3rd Principle: Finance all medically necessary care and allow patients an unrestricted choice among licensed and willing physicians without increasing per capita health care expenditures. Health care reform in Utah should be budget neutral, which means that there would be no increase in the aggregate amount of money spent on health care in Utah . This principle may seem counterintuitive; how will we cover the uninsured and guarantee unrestricted choice for all patients without paying more? The answer is straightforward: at more than $6000 spent per person this year for health care in the US , we are the world's leaders in health care expenditures by a wide margin. On average, 60% of health care revenues in the US are from taxpayers, making Americans the most taxed citizenry in the world for health care. Because Americans have been so generous with health care budgets, it can not be argued that inadequate coverage and quality are due to stinginess. We do not have a revenue problem in our health care system; we already are paying enough to fund universal care of high quality with unlimited choice of provider. Any proposal for health care reform which begins by asking for an increase in per capita health spending should be rejected as fiscally unsound.

4th Principle: Finance universal care and unlimited choice of provider without raising per capita health care revenues by reducing administrative waste. Though our politicians are fond of saying so, Americans on average do not have the best health care in the world, but we do have the most profitable and the most bureaucratic health care system. Increasingly, our health care institutions, many originally built with Hill-Burton tax funds or through the generosity of donations, are being purchased by investors. The for-profit motive in health care is demonstrably more expensive while providing lower quality care. Investor owned interests in health care are also responsible for an increasing rate of medical fraud on a scale similar to Enron and WorldCom-MCI. US hospitals and doctors offices are forced into benefit denial paper chase which raises American provider administrative costs to a level five times higher than Canadian providers experience. Up to 30% of the premium dollar given to US health insurance/managed care companies is not used on patient care. Many studies of the US health care system have documented that vast administrative savings are legitimately available, the most recently published in the New England JJournal of Medicine in August 2003(14) documented nearly $300 billion in savings available nationwide with $1.6 billion in administrative savings achievable in Utah. To be clear, the administrative waste problem in the US is primarily a private sector problem, where administrative costs are 2.5 times higher than in the public health sector.(15)

5th Principle: By its nature, health care is best delivered when hospitals, doctors, health departments, and other institutions cooperate together to assure patients are matched to the services they need. The United States , which manifestly has the most competitive health care sector in the developed world, also has the least efficient health care sector in the developed world. A product of fierce competition in the health care sector is the medical arms race, which has all hospitals vying to be all things to all patients, even in catchment areas not large enough to sustain a single high level intensive care unit. These competitions inevitably lead to inflated prices and higher morbidity and mortality. Another example of useless competition in health care is the now nauseatingly frequent use of commercial speech to advertise health care products. What community health benefit is achieved by a hospital repeatedly claiming pre-eminence in heart care, or integrated care, or by a pharmaceutical firm assuring that we all have heard of the purple pill? But the problem with competition goes deeper, because health care is, after all, not a commodity efficiently delivered in a market economy. Demand for health services is not elastic depending on price. People do not decide to have heart surgery because it is on sale this week. Nor do the parents of a leukemic child forgo needed chemotherapy because they cannot afford it. Sellers of health services, like doctors and nurses, can not enter the market with their own selfish interests at heart. The ultimate users of these services are not shoppers, they are patients. They do not have the special knowledge to be customers in a health care market, nor do they have the time, energy, or judgment to find the lowest price or best value. In health care, the buyer can not beware. Unlike a real commodity, with health care, factors outside of medicine come into play. This means that it matters to each of us whether all of our community members receive timely and necessary health care. Each case of communicable disease undetected and untreated represents a risk to others. Each baby born without adequate prenatal care is a risk to society for high cost developmental and educational services as well as poor lifetime productivity. Each time a financial barrier keeps a surgical patient from care, our doctors and nurses are that less well practiced for the time we need their help. Any health care reform proposal which begins by assuming that competition is good is ignoring the last decade of market-based health reform efforts in Utah , which have failed to register a single significant improvement in cost, access, or quality. The only substantial improvement in health care access during this decade has been CHIP (the Children's Health Insurance Program), a tax-based government effort.

6th Principle: If market competition is eliminated as a mechanism for financing health care, what other options can be tried? Socialized medicine, where government owns and operates both the financing and delivery of health care is not an option in the United States . Americans do not want government ownership of health care infrastructure such as doctors and hospitals. Managed competition, the Clinton proposal, was soundly rejected only a decade ago, because it worsens the health benefits obligations of businesses through employer mandates and it increases administrative waste by locking in private sector health bureaucracies. What is needed is a system which allows public funding of health care, and private sector health care delivery. Public funding of health care is essentially already occurring; most health care revenues are tax dollars. A non-profit trust fund created to receive and spend public sector revenues intended for health care in Utah can be administered by a private board in a publicly accountable manner. Health care delivery would remain in the private sector.

Hospitals would be funded with two methods: 1) an operating budget for each institution could be negotiated reflecting the true costs of hospital function, with payments made at regular intervals; expensive and wasteful hospital billing practices would be eliminated; 2) a capital budget could be held in reserve for use in maintaining pace with developing technology and population shifts; the medical arms race would be over.

octors would be primarily paid fee-for-service. A panel representing more than 50% of the doctors of Utah (including the Utah Medical Association, the Federation of Physicians and Dentists, and other possible physician's groups) would negotiate compensation, fee schedules and contract terms (such as billing, payment, length of contract, grievances, arbitration, termination, dispute resolution, utilization review, and how modifications are handled) with the representatives on the administrative board of the private, non-profit trust fund .



The Utah Health Cooperative is a proposed private, non-profit, trust fund which would finance health care for all Utah residents. By replacing the administrative waste of managed care and health insurance, the Utah Health Cooperative would save enough money to be able to fund all medically necessary care, including mental health services, long term care, dental services, and pharmaceuticals to Utah residents. The creation of the Utah Health Cooperative would require action by Congress in the form of a States' Right to Innovate in Health Care Act. In essence, this bill establishes procedures for states to demonstrate a commitment to providing health services for all state residents. For the state that satisfies those procedures, the federal government will provide development grants and eliminate legal and bureaucratic barriers to state health policies, such as ERISA. Most importantly, the bill provides for qualifying states to receive federal health funds, including Medicare, Medicaid, and CHIP, at levels equivalent to current revenues. With the Utah Health Cooperative, Utah could qualify for these funds. Thus, the Utah Health Cooperative could become the means for re-asserting state prerogatives in setting health policy and financing needed medical services for all Utahns, while freeing our businesses to better compete in a global economy.

The Utah Health Cooperative is the most conservative health care reform proposal presently before the public. It is a budget neutral proposal and is therefore the most fiscally conservative. It preserves the private sector in health care delivery, allowing patients to freely choose their doctors, and doctors to freely choose what and where to practice. It re-establishes the federal-state balance in health policy anticipated by the Constitution. It fulfills the societal obligation of caring for the sick and injured. And it will energize Utah 's economy.



1) The Utah Health Policy Project is a 501c3 non-profit corporation which offers these briefing materials to all. For more information about the Utah Health Policy Project, please visit the website at www.healthpolicyproject.org.

2) Utah Health Policy Commission. “ Utah HealthPrint: A Blueprint for Market-oriented Health Care.” May 1997 Edition, 1 st Printing.

3) US Census Bureau

4) Millbank Memorial Fund. “1998-1999 State Health Expenditure Report.” March 2001.

5) Millbank Memorial Fund. “2000-2001 State Health Expenditure Report.” April 2003.

6) Bob Mims. “Cost of Utahns' health insurance to soar in 2004.” The Salt Lake Tribune , 12/8/03.

7) Norman J. Waitzman PhD. “SmallPrint: Why HealthPrint's Goals for Access to Care Have Translated into Little Achievement.” Poverty Issues Monograph 1997-01, August 1997.

8) Jill Vicory. “ Utah : Profile on the Uninsured.” The Alliance for Health Reform. December 18, 2000.

9) Morris, K. “Ford: Health costs ‘out of control'”. The Detroit News and Free Press. May 31, 2003.

10) Joint letter on publicly funded health care to the Canadian Government, from the Canadian CEOs of Ford, GM, and Daimler-Chrysler and the National President of CAW, November 2002.

11) Hakim, D. “Health Costs Soaring, Automakers Are to Begin Labor Talks”. The New York Times. July 15, 2003.

12) Woolhandler S, Campbell T, and Himmelstein DU. “Costs of Health Care Administration in the United States and Canada ”. New England Journal of Medicine 349:768-75. August 21, 2003.

13) Norton's Bankruptcy Advisor, May 2000.

14) See reference 12.

15) Reinhardt UE, Hussey PS, and Anderson FG. “US Health Care Spending in an International Context”. Health Affairs 23(3):10-25, 5/4/04.



The Utah Health Policy Project, a non-profit Utah corporation with a mission to provide information about basic health policy and economics to Utahns, has offered a proposal for financing all medically necessary health care for Utah residents. The proposal is called the “Utah Health Cooperative.” This briefing paper provides background information about this proposal and the basic health policy facts which support it. The briefing paper is intended to be read by all people with an interest in fixing the sick health care system that we have now.

The Utah Health Cooperative is the most conservative health care policy proposal offered in Utah , because:

•  It is a fiscally responsible proposal; no net increase in per capita revenues for health care would be required to fund the Utah Health Cooperative;

•  It is a business friendly proposal; the Utah Health Cooperative would relieve businesses in Utah from double digit annual increases in the cost of health benefits, leading to economic growth out of health care reform;

•  It is a patient centered proposal; all medically necessary care and unrestricted choice of physician would be guaranteed under the Utah Health Cooperative;

•  It is a states' rights health care reform proposal; Utah health care policy should be fashioned in Salt Lake City , not Washington DC ;

•  The Utah Health Cooperative would preserve the Utah tradition of non-profit, community based, private hospitals and health care delivery;

•  The Utah Health Cooperative would protect fee-for-service medicine.

For further information, please visit the Utah Health Policy Project website:www.healthpolicyproject.org or call 801 422 3399.

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