HEALTH REFORM ISSUES HEALTH REFORM ISSUES FACING THE NEXT FACING THE NEXT

PRESIDENTPRESIDENT

Brian Biles, MD MPHBrian Biles, MD MPH

Department of Health PolicyDepartment of Health Policy

George Washington UniversityGeorge Washington University

February 21, 2008February 21, 2008

HEALTH REFORM ISSUES IN HEALTH REFORM ISSUES IN 20092009

Health insurance Health insurance coveragecoverage/uninsured/uninsured

Health care costsHealth care costs/increases in /increases in costscosts

EffectivenessEffectiveness/quality of health care /quality of health care

HEALTH INSURANCE HEALTH INSURANCE COVERAGECOVERAGE

Children and Nonelderly Adults, Children and Nonelderly Adults, 20062006

Uninsured12%

Medicaid28%

Other Private4%

Employer56%

Uninsured20%

Medicaid11%

Other Private6%

Employer63%

Children Adults under 65

Total: 78.2 million

Total: 181.8 million

Note Medicaid also includes S-CHIP, other state programs, Medicare, and military-related coverage.

SOURCE: KCMU and Urban Institute estimates based on March 2007 Current Population Survey.

NUMBER OF UNINSURED AMERICANS IS HIGH &

INCREASING

34.6 37.0

8.4 8.7 9.4

35.6

2004 2005 2006

Children

Adults

Uninsured in Millions

SOURCE: KCMU/Urban Institute analysis of March CPS for each year.

43.043.0 44.444.4 46.546.5

PERCENTAGE OF FIRMS PERCENTAGE OF FIRMS OFFERING HEALTH BENEFITS IS OFFERING HEALTH BENEFITS IS

DECREASING DECREASING 2000–20072000–2007

66% 69% 68% 66% 66% 63% 60% 61% 60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007

*Tests found no statistical difference from estimate for the previous year shown (p<.05).

Note: As noted in the Survey Design and Methods section, estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2007.

THE UNINSURED ARE LOW-THE UNINSURED ARE LOW-INCOME WORKERS AND THEIR INCOME WORKERS AND THEIR

FAMILIES FAMILIES 20062006

400% FPL and Above11%

200-399% FPL24%

100-199% FPL29%

<100% FPL36%

Family IncomeFamily Work Status

Total =Total = 46.5 million uninsured46.5 million uninsured

1 or More Full-Time Workers

71%

No Workers

18%

Part-TimeWorkers

11%

Age

55-649%

35-5432%

19-3439%

0-1820%

The federal poverty level was $20,614 for a family of four in 2006. SOURCE: KCMU/Urban Institute analysis of March 2007 CPS.

IL

UNINSURED ARE HEAVILY LOCATED IN UNINSURED ARE HEAVILY LOCATED IN SOUTHERN AND WESTERN STATES SOUTHERN AND WESTERN STATES 2005-2005-

20062006

AZAR

MS

LA

WA

MN

ND

WY

ID

UTCO

OR

NV

CA

MT

IA

WIMI

NE

SD

ME

MOKS

OHIN

NY

KY

TNNC

NH

MA

VT

PA

VAWV

CTNJ

DE

MD

RI

HI

DC

AK

SCNM

OK

GA

SOURCE: Urban Institute and KCMU analysis of the March 2006 and 2007 Current Population Survey. Two-year pooled estimates for states and the US (2005-2006).

TX

FL

AL

US Average = US Average = 18%18%

NE

13-17% (18 states & DC)18%-20% (9 states)

< 13% (13 states)

>20% (10 states)

HEALTH INSURANCE MATTERSHEALTH INSURANCE MATTERSBARRIERS TO HEALTH CARE BARRIERS TO HEALTH CARE

By Insurance StatusBy Insurance Status 2006 2006

4%

3%

6%

10%

14%

9%

11%

10%

23%

23%

26%

54%

Could Not AffordPrescription Drug

Needed Care butDid Not Get It

Postponed SeekingCare because of

Cost

No Regular Sourceof Care

Uninsured

Medicaid/Other Public

Private

NOTE: Respondents who said usual source of care was the emergency room were included among those not having a usual source of care. SOURCE: KCMU analysis of 2006 NHIS data.

Percent of adults (age 19 – 64) reporting in Percent of adults (age 19 – 64) reporting in past 12 months:past 12 months:

HEALTH CARE COSTSHEALTH CARE COSTS

US health care costs substantially exceed US health care costs substantially exceed those of other major OECD nationsthose of other major OECD nations US costs now average US costs now average $7,500$7,500 per person while per person while

Germany, Canada, Britain and other major Germany, Canada, Britain and other major nations spend under nations spend under $4,000$4,000

US spends US spends 16%16% of its GDP on health care while of its GDP on health care while the major European nations spend less than the major European nations spend less than 12%12%

US spending in US spending in 20182018 is now projected to is now projected to exceed exceed $12,500 per person and 19.5% of $12,500 per person and 19.5% of GDPGDP

$148$356

$1,102

$2,813

$4,299$4,522

$4,790$5,148

$5,559$5,952

$6,322$6,697

$3,783$3,938

$4,104

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1960 1970 1980 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

NHE as a Share of GDP

HEALTH COSTS CONTINUE TO HEALTH COSTS CONTINUE TO INCREASEINCREASE

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData (see Historical; NHE summary including share of GDP, CY 1960-2005; file nhegdp05.zip).

5.2% 7.2% 9.1% 12.3% 13.7% 13.7% 13.6% 13.6% 13.7% 13.8% 14.5% 15.3% 15.8% 15.9% 16.0%5.2% 7.2% 9.1% 12.3% 13.7% 13.7% 13.6% 13.6% 13.7% 13.8% 14.5% 15.3% 15.8% 15.9% 16.0%

$2,137$3,785

$4,819

$8,825

$3,281$1,619$694$334

2000 2007 2000 2007

Employer ContributionWorker Contribution

ANNUAL PREMIUM COSTS FOR ANNUAL PREMIUM COSTS FOR COVERED WORKERS INCREASE: 2000 COVERED WORKERS INCREASE: 2000

and 2007and 2007

Note: Family coverage is defined as health coverage for a family of four. Data represents average for all types of plans.SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2007.

$2,471$2,471

$6,438$6,438

$4,479$4,479

$12,106$12,106

Single CoverageSingle Coverage Family Family CoverageCoverage

EFFECTIVENESS/QUALITY OF EFFECTIVENESS/QUALITY OF

HEALTH CAREHEALTH CARE IOM’s IOM’s To Err is HumanTo Err is Human and and Quality Quality

ChasmChasm reports document in great detail reports document in great detail the quality shortcomings of US health the quality shortcomings of US health care care

National National longevity and mortality rateslongevity and mortality rates trail almost all other OECD nationstrail almost all other OECD nations

Detailed health services outcomes Detailed health services outcomes research indicates that much US health research indicates that much US health care care fails to address conditions fails to address conditions amenable to healthamenable to health care care

Source: Kaiser Health Tracking Poll: Election 2008

Percent naming HEALTH CAREHEALTH CARE as one of the top two issuestop two issues they’d most like to hear presidential candidates talk about, by political party self-identification:

OPPORTUNITY FOR HEALTH REFORM OPPORTUNITY FOR HEALTH REFORM IN 2009IN 2009

30%30%

45%

21%

42%

26%25%

39%

24%

22% 21%

18%

0%

10%

20%

30%

40%

50%

Mar-07 Jun-07 Aug-07 Oct-07

Democrats

Independents

Republicans

WHAT THE PUBLIC WANTSWHAT THE PUBLIC WANTS

15%

51%

25%

A new health plan that would provide insurance for nearly all of the

uninsured and would involve a substantial increase in spending

A new health plan that is more limited and would cover only

some uninsured groups, but would involve less spending

A health plan that would keep things basically as they are

Proposals from 2008 Proposals from 2008 Candidates:Candidates:

SOURCE: Kaiser Health Tracking Poll: Election 2008, Volume 3, October 2007.

DEMOCRATIC VIEWS ON DEMOCRATIC VIEWS ON HEALTH REFORMHEALTH REFORM

Presidential candidates: Obama, Presidential candidates: Obama, ClintonClinton

Congressional leaders: Congressional leaders: Representatives Representatives StarkStark, Dingell, , Dingell, WaxmanWaxman; Senators Baucus, ; Senators Baucus, KennedyKennedy

Congressional leaders: Speaker Congressional leaders: Speaker PelosiPelosi, Majority Leader Reid, Majority Leader Reid

DEMOCRATIC PROPOSALS TO DEMOCRATIC PROPOSALS TO EXPAND COVERAGEEXPAND COVERAGE

Employers mandatedEmployers mandated to provide health to provide health insurance coverageinsurance coverage Or pay percentage of payroll towards costs Or pay percentage of payroll towards costs

of public planof public plan ““Pay-or-playPay-or-play” approach to coverage” approach to coverage

Subsidies to low-wageSubsidies to low-wage firms and firms and individualsindividuals

Some proposals include individual Some proposals include individual mandate with subsidies to low-income mandate with subsidies to low-income individualsindividuals

DEMOCRATIC PROPOSALS TO DEMOCRATIC PROPOSALS TO EXPAND COVERAGEEXPAND COVERAGE

National health insurance National health insurance connectorconnector/FEHBP-type private health /FEHBP-type private health insurance options programinsurance options program

Uniform benefit packagesUniform benefit packages Risk adjustment systemRisk adjustment system

Medicare-type public planMedicare-type public plan offered as offered as option in connector programoption in connector program

Expansion of Medicaid and SCHIPExpansion of Medicaid and SCHIP

Some proposals include reinsurance for Some proposals include reinsurance for employer plans for catastrophic costsemployer plans for catastrophic costs

DEMOCRATIC PROPOSALS TO DEMOCRATIC PROPOSALS TO LIMIT COSTSLIMIT COSTS

Health insurance connector Health insurance connector to reduce to reduce administrative costsadministrative costs

Medicare-type planMedicare-type plan as option in connector with as option in connector with lower provider payments and administrative lower provider payments and administrative costscosts

National National Health Information TechnologyHealth Information Technology systemsystem

RRxx drug reforms drug reforms in advertising and marketing in advertising and marketing

Elimination of Elimination of over payment to Medicare MA over payment to Medicare MA plansplans

TOTAL NATIONAL HEALTH TOTAL NATIONAL HEALTH EXPENDITURES, 2008–2017 EXPENDITURES, 2008–2017

Projected and Various ScenariosProjected and Various Scenarios

4.44.1

3.9

3.63.4

3.23.0

2.82.6

2.42.3

4.13.9

3.73.4

3.23.0

2.92.7

3.63.4

3.33.1

3.02.9

2.82.6

2.52.4

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Projected under current system

Insurance Connector plus selected individualoptions*

Spending at current proportion (16.2%) of GDP

* Selected individual options include improved information, payment reform, and public health.Source: Based on projected expenditures absent policy change and Lewin estimates.

Dollars in Dollars in trillionstrillions

DEMOCRATIC PROPOSALS TO DEMOCRATIC PROPOSALS TO IMPROVE QUALITY/HEALTH SYSTEM IMPROVE QUALITY/HEALTH SYSTEM

PERFORMANCEPERFORMANCE National National Health Information TechnologyHealth Information Technology

systemsystem

Comparative effectivenessComparative effectiveness research and research and paymentspayments

Pay-for-qualityPay-for-quality payments system Medicare payments system Medicare

Malpractice reformMalpractice reform

CHALLENGES TO HEALTH CHALLENGES TO HEALTH REFORM REFORM

Costs of new health insurance for 45 Costs of new health insurance for 45 millionmillion Over $100 billion per year and $1 trillion Over $100 billion per year and $1 trillion

over 10 yrsover 10 yrs Over $2 per hour for individual and $6 per Over $2 per hour for individual and $6 per

hour for family employer coveragehour for family employer coverage

Lack of experience with Lack of experience with effective cost effective cost controlcontrol programs in the US programs in the US Little effective public sector regulationLittle effective public sector regulation Little effective private sector competition Little effective private sector competition

CHALLENGES TO HEALTH CHALLENGES TO HEALTH REFORM REFORM

History of History of provider oppositionprovider opposition to major to major changeschanges

Health care lobbying effort in Health care lobbying effort in WashingtonWashington is huge: at $300 million per is huge: at $300 million per year it is larger than any other industry year it is larger than any other industry

OPPORTUNITIES FOR HEALTH OPPORTUNITIES FOR HEALTH REFORM LEGISLATIONREFORM LEGISLATION

Democratic Democratic president and increased majority president and increased majority in Senatein Senate

Health care widely discussedHealth care widely discussed as major issue in as major issue in Presidential campaign in 2008Presidential campaign in 2008

Democrats have Democrats have settled public/private coverage settled public/private coverage dividedivide with Medicare-type plan offered in health with Medicare-type plan offered in health care connector and pay-or-play proposals care connector and pay-or-play proposals

$100+ b a year isn’t really a lot in a $$100+ b a year isn’t really a lot in a $2/4 trillion 2/4 trillion health care system and a $14/21 t national health care system and a $14/21 t national economyeconomy

Providers are now beginning to supportProviders are now beginning to support expanded coverage proposals: FAH, AMA, othersexpanded coverage proposals: FAH, AMA, others

OPPORTUNITIES FOR HEALTH OPPORTUNITIES FOR HEALTH REFORM LEGISLATIONREFORM LEGISLATION

Priority legislation has been adopted in Priority legislation has been adopted in first yearfirst year of term for the last four of term for the last four Presidents:Presidents: Bush II: Tax cuts in 2001Bush II: Tax cuts in 2001 Clinton: Deficit reduction reconciliation bill in Clinton: Deficit reduction reconciliation bill in

19931993 Bush I: Deficit reduction reconciliation bill in Bush I: Deficit reduction reconciliation bill in

19891989 Reagan: Tax cuts in first big reconciliation bill in Reagan: Tax cuts in first big reconciliation bill in

19811981

Major health legislation in Major health legislation in third yearthird year of first of first term of Bush IIterm of Bush II Medicare Modernization Act in 2003Medicare Modernization Act in 2003

2009 COULD BE SECOND CHANCE 2009 COULD BE SECOND CHANCE AT 1993AT 1993

AND 1973-74AND 1973-74 It’s the economy stupidIt’s the economy stupid

And And don’t forget about health caredon’t forget about health care

With some lessons learnedWith some lessons learned It’s a It’s a one year windowone year window of opportunity of opportunity Let Let CongressCongress do the work do the work Don’t let the Don’t let the perfectperfect be the enemy of be the enemy of

the the goodgood

INFORMATION AND ANALYSIS OF INFORMATION AND ANALYSIS OF HEALTH REFORM ISSUESHEALTH REFORM ISSUES

The Commonwealth Fund: The Commonwealth Fund: Commission on a High Performance Commission on a High Performance Health SystemHealth System

www.commonwealthfund.orgwww.commonwealthfund.org

Kaiser Family Foundation: Kaiser Family Foundation: Commission on Medicaid and the Commission on Medicaid and the UninsuredUninsured

www.www.kffkff.org.org

Barack ObamaBarack Obama

Require children to have health coverageRequire children to have health coverage

Expand Medicaid and SCHIPExpand Medicaid and SCHIP

Require employers to offer or contribute a percentage of Require employers to offer or contribute a percentage of payroll to coverage payroll to coverage

Provide income-related subsidies for low-income familiesProvide income-related subsidies for low-income families

Create a national health insurance exchange with private Create a national health insurance exchange with private plans and a public plan with benefits similar to those in plans and a public plan with benefits similar to those in FEHBPFEHBP

Regulations on insurers to prevent denials of coverageRegulations on insurers to prevent denials of coverage

Estimated cost is $50-65 billion, funded by ending tax Estimated cost is $50-65 billion, funded by ending tax cuts for those with incomes over $250,000 and savings to cuts for those with incomes over $250,000 and savings to health systemhealth system

Hillary Hillary ClintonClinton

Require large employers to offer or contribute; tax credits for Require large employers to offer or contribute; tax credits for small employers that offer coveragesmall employers that offer coverage

Expand Medicaid and SCHIP Expand Medicaid and SCHIP

Expansion of group insurance options through Health Choices Expansion of group insurance options through Health Choices Menu Menu FEHBP buy-in with public plan option based on MedicareFEHBP buy-in with public plan option based on Medicare

Premium subsidies through refundable tax credits, with limit on Premium subsidies through refundable tax credits, with limit on premiums as a percent of incomepremiums as a percent of income

Reinsurance for catastrophic retiree health costsReinsurance for catastrophic retiree health costs

Regulations on insurers to prevent insurance discriminationRegulations on insurers to prevent insurance discrimination

Individual mandateIndividual mandate

Estimated cost is $110 billion per year, funded by ending tax Estimated cost is $110 billion per year, funded by ending tax cuts for those with incomes over $250,000, health system cuts for those with incomes over $250,000, health system savings and limiting the tax exclusion for ESIsavings and limiting the tax exclusion for ESI