Assessing U.S. and International Experience with

Health Reform and Implications for the Future

National Chlamydia Coalition Meeting

W. David HelmsDecember 3, 2009

Presentation Outline

I. Case for Reform: Coverage, Quality and Cost

II. Why U.S. Has Yet to Enact National Health Reform

III. How U.S. Compares Internationally

IV. What Will We Do This Time?

2

Source of Insurance

Employer (55%)

Uninsured(15%)

Military(1%)

Individual(5%)

Medicaid(10%)

Medicare(13%)

Total population

Data: K. Davis, Changing Course: Trends in Health Insurance Coverage 2000-2008, The Commonwealth Fund at Joint Economic Committee hearing, September 10, 2009.

46.3 Million Uninsured, 2008

3

Growth in the Uninsured

Data: K. Davis, Changing Course: Trends in Health Insurance Coverage 2000-2008, The Commonwealth Fund at Joint Economic Committee hearing, September 10, 2009.

38 4042 43 43 45

47 4648 49 50 52 53 55 56

46

6160595857

0

10

20

30

40

50

60

70

Projected estimates

Uninsured Projected to Rise to 61 million by 2020

Millions uninsured

4

Health Insurance Coverageby Poverty Level, 2008

42%

71%

29%

12%29%

18% 10%

83%

20%

92%

7%

45%

4%5%

35%

0%

100%

<100% FPL 100-199%FPL

200-299%FPL

300-399%FPL

400%+ FPL

Employer/Other Private Medicaid/Other Public Uninsured

FPL -- The federal poverty level was $22,025 for a family of four in 2008. Data may not total 100% due to rounding. SOURCE: KCMU/Urban Institute analysis of 2009 ASEC Supplement to the CPS. 5

Average Family Premium as a Percentage of Median Family Income, 1999–2020

11%12%

13%

14%

16%17%

18%18%18% 18%19%19%19%20%20%21%21%

22%22%

23%24%

18%

0%

5%

10%

15%

20%

25%19

99

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: K. Davis, Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums, The Commonwealth Fund, August 2009.

Projected

6

Who are the Uninsured? Working families—66% of the uninsured are in families with one or more full-time

workers

More than half of uninsured workers are ineligible for their firm’s plan or employed by firms that do not offer health benefits

2/3 have incomes below 200% FPL ($44,100 for a family of 4.) With the average family insurance policy now costing around $12,680, this group cannot afford health insurance without a subsidy.

Another 23% have incomes from 200-400% FPL. This group would require a sliding scale subsidy to make health insurance affordable

Minorities—Almost one-third of Hispanics and Native Americans, and 19.4% of African-Americans lack health insurance

Young adults have the highest uninsured rates; those aged 18-24 and 25-34 have uninsured rates at 28.1 percent and 25.7 percent, respectively.

More than 9 million children are uninsured. When including those with a coverage gap at some point during the year, that number doubles. It is estimated that almost 75% of these children qualify for public insurance coverage.

Source: State of the States, AcademyHealth, 2009

7

Why Health Insurance Matters Uninsured are:

– Less likely to receive medical and dental care and have substantially higher unmet health care needs

– More likely to receive lower quality of care– More likely to be hospitalized for preventable conditions– Have a higher risk of dying in the hospital or shortly after discharge– More likely to go bankrupt because of high medical bills

Per IOM, death rate is 25% higher from being uninsured, cancers are detected later

Reduction in mortality of 10-15% could be expected if uninsured were continuously insured

Nearly 45,000 deaths each year are associated with a lack of health insurance

Source: Alliance for Health Reform. “Health Care Coverage in America: Understanding the Issues and Proposed Solutions,” Updated March 2008.; “Health Insurance and Mortality in US Adults” Wilper et al. Am J Public Health.2009; 99: 2289-2295 8

Quality of U.S. Health Care Early 1980s: RAND assessed clinical

appropriateness for a variety of procedures– One-third of procedures clinically inappropriate

or of uncertain value

RAND reported in 2003 and 2007 that adults and children receive the standard of care about half the time

Care for geriatric conditions is poorer than care for general medical conditions

Source: McGlynn, B. Colorado College Lecture April 7, 2008

9

No One is Immune From Quality Deficits

Source: McGlynn, B. Colorado College Lecture April 7, 2008 (Data Source Asch et al 2006)

10

Money Doesn’t Buy Quality

Source: McGlynn, B. Colorado College Lecture April 7, 2008 (Data Source Asch et al 2006)

11

Total and Per Capita Spending on Health Care, 1965-2005

Source: CBO based on data on spending on health services and supplies, as defined in the national health expenditure accounts, maintained by the Centers for Medicare & Medicaid Services.

Note: Spending amounts are adjusted for inflation using the gross domestic product implicit price deflator from the Bureau of Economic Analysis.

12

Projected Growth in Medicare and

Medicaid as Percent of GDP

Source: Congressional Budget Office, Projected Federal Spending Under One Fiscal Scenario

(Percentage of gross domestic product)

13

II. Why the U.S. Has Yet to Enact Universal Coverage

Difficulty of making major reforms in the American governmental system

Universal coverage requires substantial income redistribution

Powerful interest groups

Dueling ideologies– Fear of too much government control– Competition vs. regulation

14

Health Reform Requires Imposing Limits

Americans have historically resisted prior attempts to impose limits

Coverage costs more given American resistance to setting limits:– Planning and capacity controls– State rate regulation– Managed care plans with restricted access– Comparative effectiveness research?

15

Prior Justifications For Not Enacting Major Coverage Expansion

1. Need to have well-regulated/managed system before introduce new demand

2. Before expanding coverage – especially entitlement to coverage – first must get health costs under control

3. The numbers of uninsured are exaggerated

4. The uninsured don’t work

5. The uninsured get care anyway

16

Prior Justifications…

6. There are no major health consequences from being uninsured

7. Before enacting new national reform, first need to demonstrate the extent problem can be addressed via voluntary approaches

8. Cannot enact major new coverage expansion while facing a significant budget deficit

9. Why dramatically change a system that works for most Americans just to fix the “uninsured problem?”

17

III. How the U.S. Compares Internationally

The comparative data presented in this segment on quality and cost demonstrates that the US could cover all its residents and provide higher quality at a lower cost to government, employers, and individuals

Not necessary to adopt a government run or single payer system like England, Canada, France or Japan

Could achieve better outcomes at lower cost through some combination of employer requirement and individual mandate that offers coverage through competitive private health plans such as is done in Germany, Netherlands or Switzerland

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7.2 7.0 6.9 6.8 7.0 6.8 6.8

10.311.1

10.2 9.9 9.9 9.610.1

5.3 5.1 5.0 4.9 4.8 4.7 4.7

0

4

8

12

1998 1999 2000 2001 2002^ 2003 2004

U.S. average Bottom 10% states Top 10% states

National Average and State Distribution International Comparison, 2004

2.8 2.8 3.1 3.2 3.3

4.4

5.3

6.8

Japan

Iceland

Sweden

Norway

Finland

Denmark

CanadaU.S.

Infant Mortality RateInfant deaths per 1,000 live births

^ Denotes baseline year.Data: National and state—National Vital Statistics System, Linked Birth and Infant Death Data (AHRQ 2003, 2004, 2005, 2006, 2007a); international comparison—OECD Health Data 2007, Version 10/2007.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008 19

Mortality Amenable to Health Care

7681

88 84 89 8999 97

8897

109 106116 115 113

130 134128

115

65 71 71 74 74 77 80 82 82 84 84 90 93 96 101 103 103 104 110

0

50

100

150 1997/98 2002/03

Deaths per 100,000 population*

Data: E. Nolte and C.M. McKee, "Measuring the Health of Nations: Updating an Earlier Analysis," Health Affairs Jan.-Feb. 2008, 27(1):58-71 analysis of World Health Organization mortality files.Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008.

* Countries’ age-standardized death rates before age 75, including ischemic heart disease, diabetes, stroke, and bacterial infections.

20

International Health Expenditures Per Capita, 1980-2005

Data: OECD Health Data 2009 (June 2009)

Average spending on health per capita ($US PPP)

0

1000

2000

3000

4000

5000

6000

7000

1980 1984 1988 1992 1996 2000 2004

United States

Canada

France

Germany

Netherlands

United Kingdom

21

Percentage of NHE Spent on Health Administration and Insurance, 2003

*Includes claims administration, underwriting, marketing, profits and other administrative costs. Data: OECD Health Data 2005Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

Net costs of health administration and health insurance as percent of national health expenditures

1.9 2.1 2.12.6

3.34.0 4.1 4.2

4.8

5.6

7.3

0

2

4

6

8

France

Finla

nd

Japan

Canad

a

Unite

d Kin

gdom

Nether

lands

Austri

a

Austra

lia

Switzer

land

Germ

any

Unite

d Sta

tes

a

a2002 b1999

b

c2001

c *

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IV. What Will We Do This Time? The cost of doing nothing is staggering Considerable areas of agreement but we could again let our ideological battle prevent

us from enacting needed reforms No pain, no gain. Cannot cover everyone without either raising taxes or making cuts in

existing programs Predict legislation will be signed by the President that will make a meaningful start on

increasing coverage and “bending the cost curve.” Further reforms will be needed in the years ahead to obtain additional quality improvements and cost savings.

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Cost of Inaction Over the Next Decade (2009-2019)

Number of uninsured Americans will rise to between 57 and 65 million

Number lacking health insurance will grow by 10% in every state

Businesses will see premiums increase from 60-100%

More employers will drop employer-sponsored group insurance

States will be forced to spend much more on Medicaid, Children’s Health Insurance Programs (CHIP), and safety net services

“Under any scenario, the analysis shows a tremendous economic strain on individuals and businesses in all states if reform is not enacted.”

Source: Garrett B et al. “The Cost of Failure to Enact Health Reform: Implications for States.” Robert Wood Johnson Foundation, 2009.

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State of Play for Congressional Proposals(As of December 1, 2009)

Net Change in Deficit Over

10 years

Net Change in # Uninsured Over

10 years

Senate Leadership

-$130 billion -31 million

House Leadership

-$109 billion -36 million

Source: Congressional Budget Office

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Prevention and WellnessProvision Senate Bill House Bill

Preventive services Plans must provide coverage, without cost-sharing for preventive services and immunizations

No cost-sharing for preventive services, as defined by HHS

Prevention and wellness trust

Authorizes up to $12.9 billion from FY 2010-2014 for Prevention and Public Health Fund

Authorizes up to $15.4 billion from FY 2011-2015 for the Prevention and Wellness Trust Fund

Focus on prevention -Creates the National Prevention, Health Promotion, and Public Health Council to establish and implement a national prevention and health promotion strategy

-Invests in programs at the federal, state, and local level to increase access to clinical preventive services

-Creates a national prevention and wellness strategy to improve the nation’s health through evidence-based clinical and community-based prevention

Focus on wellness Creates a 10-state pilot project that tests the impact of providing wellness programs to at-risk communities

Focus on community prevention and wellness services

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Lessons from Implementing State Health Reform

Reform is an evolutionary process– Massachusetts did not pass comprehensive reform until its third attempt. Incremental

and failed attempts can lay the groundwork for future efforts– New Jersey, Iowa, and Wisconsin are taking a phased approach. Policymakers are

developing multi-year plans, enacting building block reforms, and planning to pass additional reforms in subsequent years

Coverage expansions must be accompanied by value-enhancing strategies that contain costs and improve quality

Reform proposals can succeed or fail in the implementation process – Key stakeholders are needed during implementation to ensure reform is successful– Programs must have simple, understandable rules. – Outreach and education are critical.

Maintaining sufficient and sustainable funding for reform is essential

Need effective evaluation mechanisms to allow policymakers to adapt programs as needed

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Massachusetts Division of Health Care Finance and Policy

Health Safety Net Total Volume and Payments Health Safety Net

(HSN) total volume for hospitals and community health centers increased by 2% in the first six months of Health Safety Net fiscal year 2009 (HSN09) compared to the same period in the prior year.

HSN payments for hospitals and community health centers increased by 0.4% in the first six months of HSN09 compared to the same period in the prior year.

588

347 361

195

140 133

PFY07 (Oct - Mar)

HSN08 (Oct - Mar)

HSN09 (Oct - Mar)

Community Health Centers

Hospitals Inpatient andOutpatient

$310

$177 $176

$21

$18 $20

PFY07 (Oct - Mar)

HSN08 (Oct - Mar)

HSN09 (Oct - Mar)

Community Health Centers

Hospitals Inpatient andOutpatient

783 K

486 K494 K

$331 M

$195 M $196 M

-38%

+2%

-41%

+0.4%

Volume Payments

Source: DHCFP, Health Safety Net Data Warehouse as of 4/9/09

Note: The Uncompensated Care Pool fiscal year (PFY) and the Health Safety Net fiscal year (HSN) run from Oct 1 through Sept 30 of the following year.

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Need to Get Started Now! Unrealistic to make all needed reforms at once

Incremental + Vision = Sequential

Even if sequential:– Need to make commitment now to provide universal

coverage, recognizing may have to be phased in over time

– Need framework so can make progress on:• Payment reforms• System integration, including prevention and wellness • Use of HIT and CER• Increased capacity to provide primary care, medical

home

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