the opportunity is now

The Opportunity Is Now

Consumer Advocacy for Health Care Reform in Illinois: The Costs of Inaction, the Benefits of Reform

Presentation to the Dorsey Hughes Symposium

by the Campaign for Better Health CareJuly 26, 2007

Illinois’ Health Care Crisis

A shared responsibility

A shared opportunity

Individuals • Business • Insurers

Providers • Government

Human and Financial Costs are Rising

Uninsured in Illinois: 1.8 millionUninsured who work: over 66%

(57% work for small firms)

Lives lost nationally: 18,000Personal bankruptcies: over 50%

Price tag for health care in Illinois (2006): $75.3 Billion

Ken Thorpe, Ph.D., Dept. of Health Policy & Management, Emory University, 2007

The Facts

At some point over the two year period from 2003-2004, 3.6 million people under the age of 65 were uninsured in Illinois.

Without effective health care reform

Illinois health care spending will almost double in ten years – growing 150% faster than the economy and more than twice as fast as wages.

Projected Average Annual Growth in Illinois Health Care Spending without reform (Gross State Product and Wages, 2005 - 2015)

7.50%

4.80%

3.20%

0%

2%

4%

6%

8%

Wages Gross StateProduct

Health Care

Av

era

ge

An

nu

al

Gro

wth

20

05

-20

15


Private Sector Health Care Spending:The No Reform Scenario

By 2011, absent reform of the health care system in Illinois : Employers will spend $26 Billion on

health care — about 10.2% of payroll Workers will spend $4.4 Billion on health

care premiums — an additional 1.7% of payroll

Households overall — both out of pocket and premiums — will spend nearly $32 Billion by 2011

Illinois Private Sector Health Care Spending with No Reform (in Billions)

2008 2009 2010 2011

TOTAL $78.9 $85.2 $92.2 $99.6

Business $20.5 $22.2 $24.0 $25.9Households $25.2 $27.3 $29.5 $31.9

NOTE: Government and other private spending account for the residual


Addressing the affordability of health care requires a clear diagnosis of what accounts for this growth in spending

Key facts:1. About 75% of total health care spending linked to

chronically ill patients2. Chronically ill receive approximately 56% of all

clinically recommended medical care

3. Rise in prevalence of treated disease accounts for a substantial share (two-thirds) of the growth in health care spending.


Overview

4. Rise in obesity prevalence in the US accounted for 30% of the growth in health spending over the past 20 years.

5. Substantial dollar volume rise in spending linked to modifiable individual risk factors


Overview

Age-Adjusted Prevalence of Treated Disease for Adults 18+ (1987-2003)

Medical Condition 1987 2003

Mental DisordersMental DisordersHyperlipidemiaHyperlipidemiaHypertensionHypertensionDiabetesDiabetesPulmonary Conditions (OPD, Pulmonary Conditions (OPD, Asthma)Asthma)Lupus/Other RelatedLupus/Other RelatedArthritisArthritisBack ProblemsBack ProblemsUpper GIUpper GIKidney ProblemsKidney Problems

5.3%5.3%1.4%1.4%

13.4%13.4%4.0%4.0%9.3%9.3%4.8%4.8%7.7%7.7%5.2%5.2%3.8%3.8%0.7%0.7%

17.4%17.4%10.7%10.7%19.1%19.1%7.0%7.0%

17.7%17.7%8.5%8.5%

13.8%13.8%11.8%11.8%9.8%9.8%1.3%1.3%


Overview

Other key facts:1. Number of uninsured will rise from 1.8 million in Illinois

today to 2.3 million by 2010.2. The amount of uncompensated provided to the

uninsured potentially built into the cost of private insurance will rise from $1.8 Billion today to $2.6 Billion by 2010 in Illinois.

3. This cost shift adds approximately 9 percent to the cost of private health insurance.


What to do? Consumers take action!

2004 - HCJA

2005 - Task Force

May ‘06 - Hearings

Jan ‘07 - Report

July ‘07 - Enact

What is the Campaign for Better Health Care?

A statewide grassroots’ advocacy coalition that believes that accessible, affordable, quality health care is a basic human right for ALL people.

In 2002, CBHC established the Health Care Justice Campaign.

Creates a 34 member Task Force

Requires public hearings on health care reform in all 19 Congressional districts of Illinois

Calls for money to be appropriated that will fund research on different health care reform proposals

What is the Health Care Justice Act?

The Task Force must present recommendations for a new health care system in the Spring of 2006.

The General Assembly votes for a new health plan by December 31, 2006.

Implement plan by July 1, 2007

What is the Health Care Justice Act?

Key Outcomes Called for in the Health Care Justice Act

Provides access to a range of preventive, acute and long-term services.

Maintains and improves quality of health care services.

Provides core benefits to all Illinois Residents.

Key Outcomes Called for in the Health Care Justice Act

Provides portability regardless of employment.

Contains costs.

Promotes affordability for small businesses.

Why the Health Care Justice Act?

Sets in place a timeline for a vote on a new health care plan in Illinois

Allows time to build a powerful coalition united by key principles that can advocate for real change

What will this new health care plan look like?

The Health Care Justice Campaign is working to make sure that the plan developed by the task force reflects the following key principles for an affordable, accessible, quality health care plan

Key Principles of the Health Care Justice Campaign

All people in Illinois have the ability to access health care services and make choices about their health care.

Health Care is affordable for consumers to get care, for providers to give care and for businesses to pay for coverage.

Key Principles of the Health Care Justice Campaign

High quality care is given and provided in a timely manner for all.

Health care system dollars geared toward care.

Why Do We Need Your Help?

There are many proposals to reform the health care system. Some claim to lower costs and give more coverage, but many will not. Most proposals do not go far enough.

We need your voice to advocate for health care justice.

Get Involved in the Health Care Justice Campaign

Endorse the campaign. Make an investment. Participate in upcoming public

hearings in your community. Get your friends involved! Help coordinate an educational event. Meet with your state legislators about

the Health Care Justice Act.

Get Involved in the Health Care Justice Campaign

Share personal health stories.

Write/submit a letter to the editors of local newspapers about the Health Care Justice Act.

Attend local HCJC committee meetings.

Participate in the HCJC faith initiative.

Taking Action: What’s on the table now

Illinois Choice

Illinois Assist

Illinois Rebate

Illinois Covered

Everyone in IL

Revenue Options

Cost containment elements in the Illinois Covered reform plan

Roadmap to Health — statewide “best practices” chronic care delivery model

Health information technology (Illinois Health Information Network), electronic records and administrative simplification

Reduction in the cost shift due to coverage of uninsured

Illinois Covered Choice and Covered Rebates that reduce the cost of insurance to those currently insured by small businesses and currently insured workers

Nature of Savings

Proposals that reduce clinical and administrative costs of health care Roadmap to health, health information

technology, administrative streamlining

Proposals that redistribute spending within the state (i.e. new state spending reduces spending among those with private insurance) Reduction in the cost shift, Illinois Covered

Choices and Covered Rebate program

Savings Associated with the Plan (full implementation by 2011)

Roadmap to health/chronic care: 3.8%

Electronic records and IT: 2.5% Reduction in cost shift: 2.7%

Total savings as a percentage of premiums: 9.0%


Savings for Privately Insured Individuals and Families

When fully implemented by 2011, premiums for those keeping their current private plan will be:

$645 per year lower for an individual contract

$1,775 per year lower for a family policy


Savings By Component of the Illinois Covered Plan (in Millions)

Components 2008 2009 2010 2011

Total(2008-2011)

Roadmap to health/chronic care $0 $1,178 $1,810 $2,896 $5,885

Electronic records, IT, admin savings $0 $775 $1,190 $1,905 $3,871

Reduction in uninsured cost shift $0 $838 $1,286 $2,059 $4,183

New programs- Covered Choices, Covered Rebates $0 $448 $560 $605 $1,613

TOTAL $0 $3,239 $4,846 $7,465 $15,552


Private Employer and Household Health Care Spending, Under Current Law and Under the Reform Plan (in Billions of Dollars) 2008-2011

50

52

54

56

58

60

62

64

66

68

2008 2009 2010 2011

Current LawReform


Eliminating the “Big Gorillas” in the Room:

The Cost Shifting Tax

Uncompensated care for the uninsured

built into the cost of insurance in Illinois:

$1.8 Billion (2007) $2.6 Billion (2010)

This shift adds 9% to the cost of health

insurance.

We pay the price.


Wage and Premium Taxes

The Wage Tax

Health care costs are growing 3-5 times faster than wages. Employer resources go to health care, not wages.

The Premium TaxThe average Illinois family of four pays $1,000 more in health insurance premiums per year to subsidize care for the uninsured


Hidden Taxes Homeowners and auto insurance

A portion pays for potential health care if accidents occur. If everyone had health insurance, this cost would be off the table.

Health Care Property

TaxIf costs are contained at inflation, an average homeowner would see a savings of $100 or more in their property taxes.Ken Thorpe, Ph.D., Dept. of Health Policy & Management, Emory University, 2007

“Free Lunch for Business” Tax

From 8/05 to 4/06, Illinois taxpayers (individuals

&

businesses) paid over $335 Million

to provide health insurance

to low-wage workers whose

employers gave nothing,

a “free lunch”for big business


The Result?

The cost of doing nothing is a new, 10-year tax of $30 Billion


Health Care Spending in Illinois : Status Quo and Reform (in Billions)

20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015

Status QuoStatus Quo $75.3$75.3 $80.7$80.7 $86.9$86.9 $93.6$93.6 $100.2$100.2 $107.1$107.1 $114.7$114.7 $122.9$122.9 $131.3$131.3 $140.3$140.3

ReformReform $73.3$73.3 $77.7$77.7 $85.9$85.9 $92.1$92.1 $98.1$98.1 $104.4$104.4 $111.3$111.3 $118.7$118.7 $126.2$126.2 $134.2$134.2

SavingsSavings $2$2 $3$3 $1$1 $1.5$1.5 $2.1$2.1 $2.7$2.7 $3.4$3.4 $4.2$4.2 $5.1$5.1 $6.1$6.1


Conclusions: 2008-2011

With enactment of the Illinois Covered reform plan: Plan costs (presumed to be financed by the proposed

Gross Receipts Tax) will be: $7.2 billion New savings (reduced growth in private health insurance

premiums & other reduced health care costs): $15.6 billion

Net Savings (new saving minus plan costs) will be: $8.4 billion

Each $1 of public revenues spent on Illinois Covered will generate more than $2 in new health care savings, mainly through reduced growth of health insurance premiums paid by Illinois businesses, families and individuals.

Health care is the top economic concern across party lines.

1%

11%

14%

10%

37%

9%

9%

6%

21%

20%

27%

6%

11%

12%

14%

14%

36%

18%

Expenses likechild care, tuition

Losing your job

A secureretirment

Higher taxes

Rising gas prices

Rising health carecosts

DemocratRepublicanIndependent

Thinking specifically about the economy, what are you personally worried about the most?

Lake Research partners Poll sponsored by: America’s Agenda health Care Education Fund, AARP, Campaign for Better Health Care and the AFL-CIO

Illinoisans rate health care reform as the most important issue facing the legislature during the extended session.

17%

19%

40%

48%

16%

20%

25%

28%

20%

26%

15%

9%

Unfunded statepensions

Improvingroads and

transportation

Educationinvestment and

reform

Health carecosts and

reform

Extremely (10) Very (8-9) Somewhat (6-7)

As you may know, Illinois state legislators are currently in an extended session considering a number of proposals. Now I’m going to read you a set of issues they could address. For each one I read, please rate how important it is to you for the legislature to take action on that issue on a scale of 0 to 10, where 10 means it is an extremely important issue and 0 means it is not at all important. If you are not sure, please say so. Important

85%

80%

65%

53%


Democrats, Republicans, and Independents agree that health care is the most important issue during the extended session.

Mean Rating (0-10)

6.1

7.0

7.8

8.5

6.0

6.3

7.7

7.8

6.3

6.9

8.0

8.8

Unfunded statepensions

Improvingroads and

transportation

Educationinvestment and

reform

Health carecosts and

reform

Democrat

Republican

Independent

As you may know, Illinois state legislators are currently in an extended session considering a number of proposals. Now I’m going to read you a set of issues they could address. For each one I read, please rate how important it is to you for the legislature to take action on that issue on a scale of 0 to 10, where 10 means it is an extremely important issue and 0 means it is not at all important. If you are not sure, please say so.


Republicans, Democrats, and Independents support Illinois Covered even after hearing about the funding mechanisms.

11% 6%

8% 8%

5%

66%

40% 45% 14%6%

78%

9%

26%

85%

66%

Dem Rep Ind Dem Rep Ind Dem Rep Ind

Would you favor or oppose a proposal for health care reform in Illinois that creates a choice of new, affordable, comprehensive health insurance plans that will be available to small businesses and individuals who do not have job based health benefits. The reform is paid for by an increase in gaming taxes, a tax on employers who don’t offer adequate health care, and a sliding scale (premium/fee) based on income?*Darker colors indicate intensity

FAVOR OPPOSE UNDECIDED


Both those who have insurance coverage for everyone in their household (82%) and those who do not (13%) overwhelmingly favor Illinois Covered.

76%

9%

89%

7%15%

4%

Favor Oppose Undecided

All Insured

Some Uninsured

Based on the description you just heard, do you favor or oppose this proposal, or are you undecided?


Republicans, Democrats, and Independents all want their legislators to support this reform.

Would you be more or less likely to vote to re-elect your legislator if they supported this proposed health care reform, or would it not make a difference?

Total

55%

10%

Bipartisan Support

7%

52%

16%

40%

7%

67%

Less Likely

More Likely

Democrat

Republican

Independent


We tested a variety of positive messages and negative attacks.

Summary of tested positive messages

Investment now leads to future savings

Plan saves on emergency room costs

Our values demand affordable coverage for all

Coverage for the uninsured Will result in increased wages

and better economy Illinois will be a model Government will act as a

watchdog on prices

Summary of tested negative messages

$12 billion tax increase Many higher funding

priorities Health care is a national

issue Attracts illegal immigrants Proposal is a complicated

bureaucratic nightmare


Support remains strong across all parties

Based on the description you just heard, do you favor or oppose this proposal, or are you undecided?

13% 8%

9% 11%

7%

57%

28%36% 14%

6%

75%

10%

29%

84%

62%

Dem Rep Ind Dem Rep Ind Dem Rep IndFAVOR OPPOSE UNDECIDED

*Darker colors indicate intensity


Campaign for Better Health Care

Campaign for Better Health Care(312) 913-9449www.cbhconline.org

Kenneth E. Thorpe, Ph.D.Robert Woodruff Professor & ChairDept. of Health Policy and ManagementRollins School of Public HealthEmory [email protected]

Lake Research Partners

Thanks to those who provided slides:

a presentation by

the opportunity is now

Documents

health spending

health care premiums

affordability of health

health care system

health policy management

total health care spending

better health carejuly

emory university