Dr. Paul KeckleyPaul H. Keckley, Ph.D.Deloitte Center for Health SolutionsWashington, DC

KEYNOTE:

Health Reform – What does it mean for SE Michigan? What can we do?

The US health system: big, complex, fragmented, uneven…

Deloitte Center for Health Solutions 2008

BIOTECH

INNOVATORS

ADMINISTRATORS/WATCHDOGS

SERVICE PROVIDERS

Physicians

HCIT

Pharma

Device

HospitalsOutpatientFacilities

Insurers

Regulators

Long TermCare

BioTech

Professional Societies/

Special Interests

Accrediting Agencies

DiseaseManagement

Employers

CAM

Media

AcademicMedicine

CONSUMERS

Allied HealthProfessionals

Costs, access and quality are major issues!

Deloitte Center for Health Solutions 2008

Lack of capital and resources

Explosion in clinical

knowledge

Lack of political will, leadership

Lack of consumer

involvement

Lack of appropriate technology

Lack of trust among Key

Players

Lack of incentives for

right behaviors

Runaway Costs

Uneven Access

PoorQuality

The majority support reform: Two in five rate the system unfavorably

5

How Would You Grade the Overall Performance of the U.S. Health Care System?

2%

18%

43%

25%

13%

A(Excellent)

B C(Average)

D F(Failing)

38%

Deloitte's 2009 Survey of Health Care Consumers

20%

Unfavorable report card grades are more likely

among Gen X and Boomers (4 in 10) than among Gen Y and Seniors

(3 in 10)

Unfavorable report card grades are more likely

among Gen X and Boomers (4 in 10) than among Gen Y and Seniors

(3 in 10)

Most do not understand the “system” and believe it is wasteful. Insecurity about health costs is high:Seniors “in public plan” most favorable.

Total1982 - 1993

(Gen Y)1965 - 1981

(Gen X)1946 - 1964 (Boomers)

1945 and earlier

(Seniors)

Overall performance of the U.S. health care system (% grade D/F) 37.3% 30.9% 40.6% 41.4% 28.9%

Comprehension of how the U.S. health care system works (% who say they understand somewhat)

25.3% 33.1% 27.3% 23.7% 18.4%

% who believe more than 50 percent of the U.S. health care system expenditures are wasted

50.5% 49.8% 57.0% 51.4% 37.3%

Extent household is financially prepared to handle future health care costs (% who feel somewhat secure)

33.6% 26.7% 40.0% 38.8% 17.4%

Source: 2009 Deloitte Survey of US Health Consumers, Deloitte Center for Health Solutions

Public opinion about health reform (Deloitte Pulse Survey, September 10-13, 2009)

54% of U.S. adults believe health care reform will not pass this year vs. 41% who do 48% believe the U.S. health system needs a major overhaul—among the uninsured

(60%) and underinsured (55%) 73% of respondents believe it is important for every American to have health

insurance but 55% do not believe coverage for the uninsured should be the sole focus of the debate

The most trusted sources to reform health care are providers (37%), the White House (21%), Congress (13%), employers (11%) and health insurance companies (7%)

61% believe that Congress is likely to make the health care situation worse than better

55% believe government solutions to health care will cost more and deliver less compared to private sector solutions.

51% believe health reform should not wait until the economy is better compared to 47% who thought it should wait.

White House #1 domestic issue: Reduce costs, cover everyone

• February 24, 2009 to joint session of Congress: Reform energy, education and health care. Pass bill in 2009.

• May 11, 2009 to major trade organizations: Cut CAGR to 4.7%, reduce costs by $2 trillion (2008 – 2018).

• June 3, 2009: Everything on the table—mandates, employer tax exclusion, employer mandate, public plan, etc.

• September 9, 2009: President Obama’s address to joint session of Congress, reiterating commitment.8

White House messaging:•Reform is necessary to create competition in the insurance market

•Reform is necessary to economic recovery

•Reform is a moral imperative

•Reform must be deficit neutral

Major elements of the “Kennedy” reform bill--

•Access--Individual mandate, Medicaid expansion, employer mandate

•Quality—comparative effectiveness, episode-based payments, transparency

•Cost—insurance regulation, health exchanges

Looking ahead…a bill in December 2009 (~$900 billion)

ConsumerismFocus:

Self careAchieves $ TBD

Comparative Effectiveness/EBMFocus: (1) Personalized medicine,

(2) bundled based payments, (3) provider adherence/performance-based payments

Achieves uo to $30B/yr savings

2

Health Care Information TechnologyFocus: (1) e-prescribing, (2) fraud detection

(3) administrative cost reduction , (4) care coordinationAchieves $33-70 B/ yr savings

1

3

4

Primary Care 2.0

Focus: Prevention, Chronic, LTC

Achieves $24-57B/yr savings

Major Sources of funding

• Medicare cuts

• Industry fees

• Cadillac plans

• Income taxes

As of October 15—40 proposals, 3 major bills

Senate Finance Senate HELP House Tri Committee

2019 Coverage, Cost

94%$829B

93%$1.2T

97%$1.182T

Individual mandate

YesPenalty: $750/1500 Subsidy:to 400% FPL

YesPenalty:Subsidy to 400% FPL

YesPenalty: 2.5% AGI Subsidy: to 400% FPL

Employer mandate

YesSize: 50+ employeesPenalty: $400/employee if tax credits used

Yes (Must pay 60% of premiums or $750/employee)

YesSize: 25+ employees Penalty: 2-8% of payroll

Medicaid expansion

Yes (133% FPL) Yes (150% FPL) Yes (133% FPL)

Insurance reforms

Yes Yes Yes

Comparative effectiveness

Yes No No

Liability reform No No No

Performance-based payments

Yes Yes Yes

In southeast Michigan, what if…

Every price for every healthcare transaction was known before the purchase?

Every treatment recommendation was based on evidence ?

Every dollar spent for facilities and technology necessary?

Every person knew as much about the industry as they know the auto industry?

Every person lived a healthier life and managed their own care?

11