U.S. Health Care Reform: Challenges and Opportunities
Karen DavisPresident
The Commonwealth Fundwww.commonwealthfund.org
Toledo Rotary ClubSeptember 17, 2012
2
U.S. Health Reform: Challenges and Opportunities
• Why Health Reform is Needed• Early Evidence on Impact • Issues Ahead:
– Supreme Court Decision and State Expansion of Medicaid
– State Health Insurance Exchanges• What’s Next? Medicare and the Presidential Election
3
Why Health Reform is Needed
Uninsured Rates
Quality of Care Chasm
Costs of Care
Administrative Complexity
4
Signs and Symptoms of a Sick Health Care System
Chronic Disease Under Control: Managed Care Plan Distribution, 2009
72 72
55
8289
72
61
49
37
0
25
50
75
100
Private Medicare Medicaid
Mean 90th %ile 10th %ile
Note: Diabetes includes ages 18–75; hypertension includes ages 18–85.Data: Healthcare Effectiveness Data and Information Set (NCQA 2010).
Percent of adults with diagnosed diabetes whose hemoglobin A1c level <9.0%
QUALITY: EFFECTIVE CARE
Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011. 1
6460
55
73 7267
5346 42
0
25
50
75
100
Private Medicare Medicaid
Mean 90th %ile 10th %ile
Percent of adults with hypertension whose blood pressure <140/90 mmHg
Diabetes Hypertension
International Comparison of Spending on Health, 1980–2009
* PPP=Purchasing Power Parity.Data: OECD Health Data 2011 (database), version 6/2011.
Average spending on healthper capita ($US PPP*)
Total expenditures on healthas percent of GDP
1
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
United StatesCanadaGermanyFranceAustraliaUnited Kingdom
0
2
4
6
8
10
12
14
16
18
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
United StatesFranceGermanyCanadaUnited KingdomAustralia
Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.
EFFICIENCY
1
76
88 8981
8899 97
109116
10697
134
115 113
127120
55 57 60 61 61 64 66 67 74 76 77 78 79 80 8396
0
50
100
150 1997–98 2006–07
Deaths per 100,000 population*
* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections.See Appendix B for list of all conditions considered amenable to health care in the analysis.Data: E. Nolte, RAND Europe, and M. McKee, London School of Hygiene and Tropical Medicine analysis of World Health Organization mortality files and CDC mortality data for U.S. (Nolte and McKee, 2011).
Mortality Amenable to Health Care
HEALTHY LIVES
Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011. 1
High Costs
Poor Population Outcomes
Suboptimal and Variable Quality
5
6
Overall Health System Performance
Source: Commonwealth Fund Scorecard on Local Health System Performance, 2012
Top : St. Paul MN, Dubuque IA, Rochester MNBottom: Shreveport LA, Jackson MS, Texarkana AR, Alexandria LA, Beaumont TX, Oxford MS, Hattiesburg MS, Monroe LA
1. St. Paul, MN
306. Monroe, LA
124. Toledo, OH
96. Ann Arbor, MI
72012 Local Scorecard on Health System Performance, Ohio and Michigan HRRs
Hospital Referral Region Overall Rank
Overall Quartile
Access Quartile
Quality Quartile
Potentially Avoidable Hospital Use and
Cost Quartile
Healthy Lives
Quartile
Kettering 85 2 1 1 3 2Cleveland 124 2 1 2 4 2Toledo 124 2 1 3 2 2Akron 132 2 1 2 3 2Cincinnati 142 2 2 2 3 3Elyria 145 2 2 1 4 2Dayton 160 3 1 3 3 3Canton 176 3 3 3 2 2Columbus 207 3 2 3 3 3Youngstown 219 3 2 3 3 4
Ann Arbor 96 2 2 1 3 2Kalamazoo 99 2 2 1 1 3Detroit 189 3 2 2 4 3Dearborn 241 4 3 3 4 4
Source: Commonwealth Fund Scorecard on Local Health System Performance, 2012
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HRR = hospital referral regionDATA: U.S. Census Bureau, 2009-10 American Community Survey
Percent of Adults Ages 18-64 Uninsured, 2009-2010
Worcester, MA5%
McAllen TX53%
Toledo, OH17.0%
Source: Commonwealth Fund Scorecard on Local Health System Performance, 2012
Ann Arbor, MI16.9%
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Health Reform “Game Changers”
Source: K. Davis, A New Era in American Healthcare, (New York: The Commonwealth Fund, June 2010); C. Schoen, D. Helms, and A. Folsom, Harnessing Health Care Markets for the Public Interest: Insights for U.S. Health Reform from the German and Dutch Multipayer Systems, (New York and Washington: The Commonwealth Fund and AcademyHealth, December 2009); C. Schoen, U.S. Health Reforms to Improve Access, Outcomes, and Value: International Insights and Innovative Policies, Invited Testimony, Senate Committee on Aging, September 30, 2009
• Affordability provisions– Income-related assistance with premiums and medical bills; essential benefits;
Medicaid expansion• New federal insurance market rules
– Individual mandate; restrictions on underwriting, minimum medical loss ratio requirements, review of premium rate increases, and important consumer protections
• New health insurance exchanges – Lower administrative costs and more choice of affordable health plans for eligible
individuals and small businesses• Provider payment and delivery system reforms
– Patient centered medical homes– Bundled acute and post-acute care payment– Accountable Care Organizations– CMS Innovation Center and Independent Payment Advisory Board
10
CBO estimate of Affordable Care Act
Gross Cost of Coverage Provisions $1,677Offsetting Revenues from Individual Mandate, Employers, and Excise Tax on High Premium Plans
–$506
Savings from Payment and System Reforms –$711• Productivity updates –415• Medicare Advantage reform –156• Provider payment changes and other
improvements–140
New Tax Revenues* –$569Total Net Impact on Federal Deficit, 2013–2022 –$109
Major Sources of Cost, Savings and Revenues Compared with Projected Spending, Net Cumulative Effect on Federal Deficit, 2013–2022
Dollars in billions
Note: *New tax revenues include annual fees on manufacturers and importers of braded drugs, manufacturers and importers of certain medical devices, health insurance providers; and additional HI tax of 0.9% on high-income ($200,000/$250,000) earners. Source: Congressional Budget Office, Letter to the Honorable John Boehner, July 24, 2012.
11By 2019 Health Reform Will Reverse the Deterioration of Health Insurance
Coverage for Working Age Adults over the Last Decade and Achieve Near Universal Coverage
Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.
19%–22.9% 14%–18.9%23% or more7.1%–13.9% 7% or less
1999-2000Avg = 16.6%
2009-2010Avg = 21.8%
2019 (estimated)Avg = 9.4%
12Percent of the Non-Elderly Population in the Toledo Area Who
Could Benefit From the ACA Coverage Expansions
Source: Kaiser Family Foundation, Mapping the Effects of the ACA's Health Insurance Coverage Expansions, available at http://healthreform.kff.org/Coverage-Expansion-Map.aspx.
18%
19%
25%
11%
12%
13
Millions of uninsured
Source: Income, Poverty, and Health Insurance Coverage in the United States: 2011 . United States Census Bureau, September 2012.
Number of Uninsured Dropped by 1.3 Million People in 2011
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
10
20
30
40
50
60
36.6 38.0 39.841.9 41.8 43.0
45.2 44.1 44.849.0 50.0 48.6
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Reform Has Dramatically Reduced the Number of Young Adults Without Health Insurance Coverage
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q0
5
10
15
20
25
30
35
40Age 19-25 Age 26-35
Source: S. R. Collins, R. Robertson, T. Garber, and M. M. Doty, Young, Uninsured, and in Debt: Why Young Adults Lack Health Insurance and How the Affordable Care Act Is Helping, (New York: The Commonwealth Fund, June 2012); HHS, ASPE Office of Health Policy based on CDC/NCHS National Health Interview Survey, 2009-2011.
Percentage of Young Adults Without Health Insurance
September 2010: Health Reform Allows Children to Remain on Parents’ Plans
Until Age 26
• 6.6 million young adults enrolled in parents’ policies in 2011 who would not have been able to do so prior to law; 3 million newly insured
• 62,000 people have been enrolled in Pre-Existing Condition Insurance Plans as of June 2012
• 102 million policyholders no longer have lifetime benefit limits
• Beginning in 2014 insurance coverage for working families will improve markedly – up to 32 million newly covered; 39 million with subsidies and lower costs
2009 2010 2011
15Projected Health Spending in 2020
$275 Billion Lower Than Pre-Reform PredictionsCumulative Reduction of $1.7 Trillion over 2011-2020
Pre-Refo
rm
After R
eform
Lates
t Esti
mate$0
$1,000
$2,000
$3,000
$4,000
$5,0004,913 4,861 4,638
Estimated NHE in 2020 ($ bil-lions)
−5.6%
19.8% of
GDP
21.1% of
GDP
19.9% of
GDP
• Lowest health care cost increase in 50 years -- 3.9% in 2009 and 2010
• $1.7 trillion lower health spending over the decade than projected 2 years ago• Medicare $750 billion
lower• Private spending $1.1
trillion lower• Predictions that health
reform would cause health care costs to rise not borne out
• Health delivery system changes may be beginning to have an effect
Source: K. Davis, Bending the Health Care Cost Curve: New Era in American Health Care?, (New York: The Commonwealth Fund Blog, January 2012).
16
Health Insurance Premium Trends• Employer-Sponsored Health Plan Premium Increases Slowed in
2012• Single health coverage -- $5,615; family coverage $15,745• Up 3 percent for single coverage and 4 percent for family
coverage in 2012 over 2011; wages rose by 1.7 percent• Health care expenditures rose 3.9 percent in 2010 and 2011;
lowest in 50 years• Small firms have slightly lower premiums ($5,588 vs. $5,628 for
single coverage) but higher cost-sharing and deductibles• Premiums lower in firms with low-wages, younger workers• Premiums lower in HMO and high-deductible plans; highest in PPO
plans• U.S. Department of Health and Human Services estimates $2.1
billion health insurance savings in 2012 from ACA provisions – review of premiums for “reasonableness” and medical loss ratio rebates
17The Health System is Responding to
Challenge to Provide Better Care• Meaningful use of health IT –
• physicians with Electronic Health Records doubled from 17 to 34 percent in last three years
• half of all hospitals have registered for a Medicare or Medicaid EHR Incentive Payment; $2.5 billion in EHR incentive payments
• 154 ACOs with broad responsibility for quality and cost of patient care; Pioneer ACOs; Shared Savings Plans; cover 5% of Medicare beneficiaries
• Bundled payment – 4 Medicare pilots for hospital and post-acute care; various bundles of hospital inpatient, physician inpatient, post-acute care
• Primary care and Medical homes – Comprehensive Primary Care Initiative (multi-payer initiative in 7 areas with 75 primary care practices per area; blended FFS and care management fee per beneficiary per month; shared savings); community health centers; Medicare; 41 state Medicaid programs
• Community-based Transitions Program – 7 communities in Arizona; Atlanta; Akron; Merrimack Valley (MA), Southern Maine, and Chicago selected as of January 2012; aims to improve post-hospital discharge care transitions and reduce hospital readmissions
• Partnership for Patients – 6,900 hospitals and organizations pledged their commitment to a national campaign to improve the safety and coordination of care
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Improved Prevention and Health Promotion
• 32.5 million Medicare beneficiaries received free preventive services through May 2012
• 3.6 million seniors who reached the Medicare Part D “doughnut hole” received 50% discount on prescription drugs saving $2.1 billion through May 2012
• An additional 54 million policyholders under age 65 with private insurance have coverage for preventive services with no cost sharing
• Employers mounting health promotion programs and introducing incentives for health risk assessment and healthier lifestyles
• Hospitals have incentives to reduce hospital-acquired infections, improve patient safety, reduce hospital readmissions
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Supreme Court Decision– Upholds constitutionality of the requirement to have health insurance
on grounds that the associated penalties are taxes– Changes rules for state participation in the law’s Medicaid expansion
for people earning up to 133 percent of poverty, estimated to cover up to 17 million uninsured people by 2020
• Federal government provides 100 percent financing for most states through 2016, phasing down to 90 percent for all states by 2020
• Decision permits but does not require states to expand their Medicaid programs under the conditions of the law and receive federal funds
• States that choose not to participate in the expansion can maintain existing federal Medicaid funds
• People with incomes between 100 and 400% poverty without affordable employer or public insurance are eligible for subsidized private plans through insurance exchanges; only legal immigrants under 100% poverty.
– States and federal government can move forward in implementation; substantial federal financing of the Medicaid expansion will be a strong incentive for states but not all states likely to participate
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What States Are Saying About ACA Medicaid Expansion
Source: American HealthLine, August 27, 2012.
Leaning Toward Participating (3) Undecided/No comment (26)Participating (11)
Leaning Toward Not Participating (5) Will Not Participate (5)
21
TX
FL
NMGA
AZ
CA
WY
NV
AK
OK
MSLA
MT
State Action to Establish Exchanges,As of July 2012
Source: National Conference of State Legislatures, Federal Health Reform: State Legislative Tracking Database. http://www.ncsl.org/default.aspx?TabId=22122; Politico.com; Commonwealth Fund Analysis.
WA
OR ID SD
ND
MNWI
MI
IA
AR
IL
OH
WV VA
AL
PA
NY
ME
MA
NHVT
HI
Exchange established through signed legislation
Legislation passed one or both houses or pending
Exchange established through executive order
No active exchange legislation or executive order, but received federal level one grant, studying exchange establishment, or governor pursuing alternative options
UTCO KS
NEIA
MO
IL IN
KY
WV VA
NC
SC
DCMD
DENJ
CTRI
State exchange in existence prior to passage of ACA
Will not pursue state-run exchange
TN
22What’s Next?: Presidential Election
• President Obama– Implementation of
Affordable Care Act– Medicare/Federal
budget savings through payment and delivery system reform, movement to pay for value instead of pay for volume
• Governor Romney– Repeal Affordable Care
Act and replace with targeted market-based measures
– Medicare/Medicaid budget savings through Medicare premium support and and Medicaid block grants to states
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President ObamaImplement Affordable Care Act
– Expansion of coverage to 32 million uninsured
– Insurance market rules– Improved prescription drug coverage under
Medicare– Payment and delivery system innovation– Prevention and health promotion
Medicare Savings– Independent Payment Advisory Board
(IPAB) recommendations on Medicare payment and value-based insurance design
– Medicare spending target of GDP per capita + 0.5%
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Governor Romney• Repeal and Replace Affordable Care Act
– Equalize tax treatment of individual insurance with employer insurance
– Pre-existing condition protections for people with continuous coverage
– Sale of insurance across state lines– Coverage of young adults under parents’
policies?– Repeal IPAB and CMMI payment innovations
• Medicare premium support• Block grants for Medicaid
– State flexibility to cover uninsured including exchanges, high risk pools, reinsurance
• Malpractice reform
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Thank You!
Kristof Stremikis, Senior Research Associate, [email protected]
For more information, please visit:www.commonwealthfund.org
Tony Shih,Executive Vice President for Programs, [email protected]
Cathy Schoen, Senior Vice President for Research and Evaluation, [email protected]
Sara Collins, Vice President,Affordable Health [email protected]
Stu Guterman, Vice President,Payment [email protected]
Robin Osborn, Vice President and Director,International [email protected]