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The National View of Health Insurance Cathy Schoen Senior Vice President, The Commonwealth Fund Alaska Work Shop Panel: National Overview and State Strategies Anchorage, Alaska December 7, 2006 Overview: Health Insurance, Costs and Health System Performance

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The national view of health insurance l.jpg

The National View of Health Insurance

Cathy Schoen

Senior Vice President, The Commonwealth Fund

Alaska Work Shop Panel: National Overview and State Strategies

Anchorage, Alaska

December 7, 2006


Overview health insurance costs and health system performance l.jpg
Overview: Health Insurance, Costs and Health System Performance

  • Triple threats to health and economic security

    • High rates uninsured, unstably insured and under-insured

    • Rising health care costs outpacing incomes

    • Low value for high $ investment: inefficient insurance and care systems with wide variations in quality

  • Consequences of inadequate and fragmented insurance coverage

    • Health and financial risks for uninsured and under-insured

    • Less healthy, productive workforce

    • Inefficient health care system

    • Barrier to achieving a high performance system

  • National and state insurance reform strategies: national proposals and recent state action

  • Health insurance as critical element to improving overall care system performance


U s healthcare system falls short need for policy action l.jpg
U.S. Healthcare System Falls Short - Need for Policy Action Performance

  • Highest costs in the world

    • Increasing much faster than wages or incomes

    • Average family premium exceeds minimum wage worker annual income

  • Rising numbers uninsured and underinsured

  • Public programs + employer base under stress

  • Quality widely variable

  • National scorecard score of 66 reflects wide gaps on access, quality and efficiency*

    • US evidence – little relationship between quality and efficiency. Opportunity for net gains

    • International evidence – not getting value for money

    • Lack of 21st Century Infrastructure

*Commonwealth Fund Commission on a High Performance Health System, Why Not the Best?

Results from a National Scorecard on U.S. Health System Performance, Sept. 2006



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47 Million Uninsured in 2005 PerformanceIncreasing Steadily Since 2000

Millions uninsured

47

46

2013

Projected

*1999–2005 reflect effect of verification question and implementation of Census 2000-based population controls.

Note: Projected estimates for 2005–2013 are for non-elderly uninsured based on T. Gilmer and R. Kronick, “It’s the Premiums, Stupid: Projections of the Uninsured Through 2013,” Health Affairs Web Exclusive, April 5, 2005.

Source: U.S. Census Bureau, March CPS Surveys 1988 to March 2006.


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One in Five Adults Uninsured: Up 7 Million in 5 Years PerformancePopulation Under Age 65 Uninsured

Percent uninsured

Millions uninsured

46

45

45

43

41

40

39

Data: Analysis of Current Population Survey, March 2000–2006 supplements; EBRI Sources of Health Insurance and Characteristics of the Uninsured, Current Population Survey March 2006.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

6


Rising rates of adults uninsured across states percent of adults ages 18 64 uninsured l.jpg
Rising Rates of Adults Uninsured Across States: Percent of Adults Ages 18–64 Uninsured

1999–2000

2004–2005

NH

NH

ME

WA

NH

VT

ME

WA

VT

ND

MT

ND

MT

MN

MN

OR

NY

MA

WI

OR

MA

NY

ID

SD

WI

RI

MI

ID

SD

RI

WY

MI

CT

PA

WY

NJ

CT

IA

PA

NJ

NE

IA

OH

DE

IN

NE

OH

NV

DE

IN

IL

MD

NV

WV

UT

VA

IL

MD

CO

DC

WV

UT

VA

KS

MO

KY

CA

CO

DC

KS

MO

KY

CA

NC

NC

TN

TN

OK

SC

AR

OK

AZ

NM

SC

AR

AZ

NM

MS

GA

AL

MS

GA

AL

TX

LA

TX

LA

FL

FL

AK

AK

23% or more

HI

HI

19%–22.9%

14%–18.9%

Less than 14%

Data: Two-year averages 1999–2000 and 2004–2005 from the Census Bureau’s March 2000, 2001 and 2005, 2006 Current Population Surveys. Estimates by the Employee Benefit Research Institute.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

7


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International Comparison of Spending on Health, 1980–2004 Adults Ages 18–64 Uninsured

Average spending on healthper capita ($US PPP)

Total expenditures on healthas percent of GDP

Data: OECD Health Data 2005 and 2006.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

8


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U.S. National Health Expenditures as a Percent of National Income (GDP): Total Projected to Double from $2 trillion to $4 Trillion in 10 Years

Projected

Percent

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196; Smith et al., “Health Spending Projections Through 2015: Changes On The Horizon,” Health Affairs Web Exclusive (February 22, 2006): W61-73.


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Growth in National Health Expenditures: Private, Public, and Total Expenditures, 1980–2004

Average percent growth in health expenditures

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196.


Health expenditure growth 1980 2004 for selected categories of expenditures l.jpg
Health Expenditure Growth 1980–2004 Total Expenditures, 1980–2004for Selected Categories of Expenditures

Average annual percent growth in health expenditures

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196.


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Percent of National Health Expenditures Total Expenditures, 1980–2004on Health Insurance Administration, 2003

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

a

b

c

*

a 2002 b 1999 c 2001

* Includes claims administration, underwriting, marketing, profits, and other administrative costs; based on premiums minus claims expenses for private insurance.

Data: OECD Health Data 2005.

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

12


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Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2005

Percent

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 2005.

Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Historical estimates of

workers’ earnings have been updated to reflect new industry classifications .


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Deductibles Rise Sharply, Especially in Small Firms, Over 2000–2005*

PPO in-network and out-of-network deductibles

In-network

Out-network

In-network

Out-network

Small Firms,

3-199 Employees

Large Firms,

200+ Employees

*Out-of-network deductibles are for 2000 and 2004.

Source: J. Gabel and J. Pickreign, Risky Business: When Mom and Pop Buy Health Insurance for Their Employees (Commonwealth Fund, April 2004); KFF/HRET Employer Health Benefits 2005 Annual Survey.


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Greater Out-of-Pocket Costs Not Associated with Lower Spending in Cross-National Comparisons

National Health Expenditures per Capita, US$

United States

Canada

Germany

Australia

Netherlands

France

OECD Median

Japana

New

Zealand

a

Out-of-Pocket Health Care Spending per Capita, US$

a2002

Note: Adjusted for Differences in the Cost of Living, 2003.

Source: B. Frogner and G. Anderson, “Multinational Comparisons of Health Systems Data, 2005,” The Commonwealth Fund, April 2006.


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Insurance Dynamics: Gaps in Coverage Spending in Cross-National Comparisons

  • Annual uninsured estimates undercount the uninsured

  • An estimated one third of total under 65 population has had a time uninsured during past 2 years – 80 million people

  • Change in family or job status can trigger part-year or longer loss of coverage

    • Low wage families and seasonal workers at highest risk for moving in and out of private

    • High rates of “churning” in public programs

  • Negative consequences

    • Undermines health access and financial security

    • Inefficient and lower quality of care

    • High insurance administrative overhead for programs and providers


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Uninsured Rates Rising Among Adults with Low and Moderate Incomes, 2001–2005

Percent of adults ages 19–64

53

52

49

41

35

28

28

26

24

18

16

13

7

4

4

2001

2003

2005

2001

2003

2005

2001

2003

2005

2001

2003

2005

2001

2003

2005

Total

Low income

Moderate income

Middle income

High income

Note: Income refers to annual income. In 2001 and 2003, low income is <$20,000, moderate income is $20,000–$34,999, middle income is $35,000–$59,999, and high income is $60,000 or more. In 2005, low income is <$20,000, moderate income is $20,000–$39,999, middle income is $40,000–$59,999, and high income is $60,000 or more.

Source: S.R. Collins et al., Gaps in Health Insurance Coverage: An All-American Problem, Findings from The Commonwealth Fund Biennial Health Insurance Survey, The Commonwealth Fund, April 2006.


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Lacking Health Insurance for Any Period Threatens Access to Care

Percent of adults ages 19–64 reporting the following problems in the past year because of cost:

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).


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Adults Without Insurance Are Less Likely to Be Able to Manage Chronic Conditions

Percent of adults 19–64 with at least one chronic condition*

*Hypertension, high blood pressure, or stroke; heart attack or heart disease; diabetes; asthma, emphysema, or lung disease.

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).


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Adults Without Insurance Are Less Likely to Get Preventive Screening Tests

Percent of adults

Note: Pap test in past year for females ages 19-29, past three years age 30+; colon cancer screening in past five years for adults age 50+; and mammogram in past two years for females age 50+.

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).


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Adults With Any Time Uninsured Receive Less Efficient Care: Duplicate tests and delays

Percent of adults ages 19–64 reporting the following problemsin past two years:

Source: S.R. Collins et al., Gaps in Health Insurance Coverage: An All-American Problem, Findings from The Commonwealth Fund Biennial Health Insurance Survey, The Commonwealth Fund, April 2006.


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Medical Bill Problems or Accrued Medical Debt for Insured and Uninsured, 2005

Percent of adults (ages 19–64) with any medical bill problem or outstanding debt*

By income and insurance status

By race/ethnicity and income

* Problems paying or unable to pay medical bills, contacted by a collection agency for inability to pay medical bills ), had to change way of life to pay bills, or has medical debt being paid off over time.

Data: Analysis of 2005 Commonwealth Fund Biennial Health Insurance Survey

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

22


Insurance design shift market trends and policy increase patient cost sharing l.jpg
Insurance Design Shift: Market Trends and Policy Increase Patient Cost Sharing

  • Double digit premium increases triggering shift in insurance design

    • Increased patient cost sharing & benefit limits

    • Move away from spreading costs through premiums to shift to sicker patients and their families

    • Current federal tax policies for health savings accounts encourage high deductible plans

  • Risk to basic goals of insurance

    • facilitate timely access to medical care

    • financial protection

  • Deductibles and cost sharing limits rarely adjust for income

  • Underinsured emerging concern


One third of all adults underinsured or uninsured 61 million adults 2003 l.jpg
One-Third of All Adults Underinsured or Uninsured: 61 Million Adults, 2003

Uninsured During Year

26%

Insured All Year,

Not Underinsured

65%

Underinsured

9%

Source: C. Schoen, et al., “Insured But Not Protected: How Many Adults Are Underinsured?” Health Affairs Web Exclusive, June 14, 2005. Underinsured=insured all year but had out of pocket costs of 10% of income or 5% if low income or deductible equal to 5% of more of income.


Underinsured and uninsured adults at high risk of access problems and financial stress l.jpg
Underinsured and Uninsured Adults At High Risk of Access Problems and Financial Stress

Percent adults 19-64

* Did not fill a prescription; did not see a specialist; skipped recommended care; or did not see doctor when sick because of costs.

Source: C. Schoen, et al., “Insured But Not Protected: How Many Adults Are Underinsured?” Health Affairs Web Exclusive, June 14, 2005.


Privately insured adults with high deductibles report higher rates of medical bill problems l.jpg
Privately Insured Adults with High Deductibles Report Higher Rates of Medical Bill Problems

Percent of adults ages 19–64 privately insured all year

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).


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Cost-Sharing Reduces Use of Both Essential and Less Essential Drugs and Increases Risk of Adverse Events

Percent reduction in drugs per day

Percent increase in incidence per 10,000

Source: R. Tamblyn et al., “Adverse Events Associated With Prescription Drug Cost-Sharing Among Poor and Elderly Person,” JAMA 285, no. 4 (2001): 421–429.


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Tiered Prescription Drug Cost-Sharing Essential Drugs and Increases Risk of Adverse EventsLeads to People Not Filling Prescriptions

Percent of enrollees discontinuing use of all drugs in class

Source: H.A. Huskamp et al., “The Effect of Incentive-Based Formularies on Prescription-Drug Utilization and Spending,” New England Journal of Medicine (December 4, 2003): 2224–32.


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Health Care Costs Highly Concentrated: Sickest 10% = 70% Total Expenditures

Distribution of Health Expenditures for the U.S. Population, By Magnitude of Expenditure, 1997

Expenditure Threshold (1997 Dollars)

1%

5%

10%

$27,914

27%

50%

$7,995

55%

$4,115

69%

$351

97%

Source: A.C. Monheit, “Persistence in Health Expenditures in the Short Run: Prevalence and Consequences,” Medical Care 41, supplement 7 (2003): III53–III64.


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Summary of Trends and Implications Total Expenditures

  • Trends point to increase in under-insured as well as uninsured

    • Affordability and access concerns make it harder to distinguish from uninsured

  • Insurance design matters for access to effective care and financial protection

    • Low and modest income and chronic ill at risk

    • Need for attention to costs relative to income and benefit designs that encourage essential and effective care

  • Design of insurance expansions need to target affordability and access for insured as well as uninsured


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Public Support for Policy Action Total Expenditures

  • Broad and increasing public support for action on coverage and costs – but no clear consensus

    • Rising concern among middle income families

    • Employers?

  • Surveys of public indicate willingness to relinquish some tax cuts to finance coverage expansions

  • Preferences for source of coverage varies by current source

  • Public view financing of coverage as a shared responsibility of citizens, employers, government



State children s health insurance program schip 2007 reauthorization l.jpg
State Children’s Health Insurance Program (SCHIP): 2007 Reauthorization

  • SCHIP widely popular and generally viewed as a success. 10th Anniversary requires action to extend

  • Critical component of national and state success in maintaining or improving children’s insurance

    • Has lowered % of low income uninsured

    • Yet 8 million children remain uninsured

    • Two-thirds of uninsured children income eligible

    • Medicaid and SCHIP program rules barrier to enrolment or staying covered


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Children’s Enrollment in Medicaid & SCHIP 1997-2005 Reauthorization

Of 6.1 Million in SCHIP in 2005:

- 1.7 million were in Medicaid

- 4.4 million were in separate

programs

34.0

32.3

30.8

27.2

25.2

23.5

22.3

21.0

Source: Jeanne Lambrew George Washington University Presentation, 10-31-06. Adapted from Georgetown Center for Children and Families and CRS. Based on children ever-enrolled over the course of a year.


Slide35 l.jpg

Rate of Low-Income Uninsured Children, Reauthorization1997-2005

22.3%

14.9%

Note: Beginning in 2004, the NHIS changed its methodology for counting the uninsured.

This results in the data for 2004 and later years not being directly comparable to the data for 1997 – 2003.

Source: J. Lambrew based on Georgetown Center for Children and Families, L. Dubay analysis of data from the National Health Interview Survey.


Slide36 l.jpg

Change in Rate of Uninsured Children by State Reauthorization

Percentage Decline From 1997-98 to 2003-04

National Average Decline:

– 20.5%

Note: No state experienced a statistically significant increase in their rate of uninsured children.

Source: Minnesota State Health Access Data Assistance Center, The State of Kids’ Coverage, August 9, 2006.


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SCHIP Reauthorization 2007: Policy Issues Reauthorization

  • Opportunity to reassess health coverage priorities and approaches

    • Sustain with minimal change would require increase of $12 to $14 billion over 5 years to keep up + reauthorization

    • Revise or expand?

  • Eligibility issues

    • Maintain focus on core, currently eligible children

      • Restrict or retarget funds on low income children

      • Eliminate current “crowd out” provisions

      • Extend to all income eligible – legal immigrants, children of state employees, Medicaid eligible

    • Expand eligibility

      • Increase age to include young adults

      • Raise income threshold to higher level, with buy-in option

      • Extend to parents – family care

  • Benefits and financing

    • State options to wrap-around employer coverage

    • Sicker and special needs children benefits

    • Align matching rates of Medicaid and SCHIP


109 th congress health insurance expansion bills federal support for expansion l.jpg
109 Reauthorizationth Congress Health Insurance Expansion Bills– Federal Support for Expansion

  • Public program expansions

    • Medicare related

      • Medicare for All with group insurance options

      • Medicare buy-in older adults

      • Eliminate 2 year waiting period for disabled in Medicare

    • Universal coverage for kids

      • Up to age 21. Public expansion to 300%; tax credits and buy-in options for higher income families

    • Medicaid expansions: Various proposals

      • Expand to young adults age 23

      • Family Care: expand to parents of low income children

  • Federal-State Partnership Approaches to Support Innovation


109 th congress national legislative proposals to facilitate state health insurance innovations l.jpg
109 Reauthorizationth Congress National Legislative Proposals to Facilitate State Health Insurance Innovations

  • Baldwin-Price: Health Partnership through Creative Federalism

    • State proposals for coverage, quality and efficiency and information technology. Statewide or multi-state

    • Commission to review

  • Voinovich-Bingaman: Health Partnership Act

    • State grants for innovation, priority to coverage and access

    • Commission to establish performance measures and goals and review proposals

  • Allen: Small Business Health Plans Act

    • Federal grants for states to establish small business health benefits program. Similar to federal employees benefit program

    • Federal reinsurance for coverage new programs

    • National program for employers in states without program


Health insurance expansion bills 109 th congress private market focus l.jpg
Health Insurance Expansion Bills Reauthorization 109th Congress – Private Market Focus

  • Employer mandates

  • Individual market and small group markets

    • Tax credit and tax deductibility approaches

    • Small group association plans: override state regulations


What are the goals of more universal coverage insurance as foundation to improve system performance l.jpg
What Are the Goals of More Universal Coverage? ReauthorizationInsurance as Foundation to Improve System Performance

  • Meaningful, affordable, and equitable access

  • Broad risk pooling

    • Eliminate insurance market incentives that reward avoidance of health risk or cost shifting

  • Use insurance as foundation to facilitate system-wide -

    • Timely, appropriate and effective care

    • Enhanced primary, preventive and well-coordinated care

    • More effective chronic care

  • Lower insurance administrative costs by simplification and more efficient coverage

    • Stable coverage with seamless transitions

    • Reduce marketing, underwriting and overhead costs

    • Simplification and coordination

  • Use insurance expansions as a vehicle and foundation to achieve more integrated, high quality and efficient care


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State Strategies to Expand Coverage Reauthorizationto Provide a Foundation to Improve Access, Quality and Cost Performance

THE COMMONWEALTH

FUND

  • Develop blueprints toward more universal coverage

    • Coherent policies that maximize connection and minimize complexity

  • Expand public programs and “connect” with private

    • Provide financial assistance for affordability – premium assistance; “buy-in” provisions

    • Assure benefit designs cover primary, preventive and essential care

  • Pool risk and purchasing power, with multi-payer collaboration

    • More efficient insurance arrangements and simplification

    • Pool purchasing power

  • Develop reinsurance or other financing strategies to make coverage more affordable, pool risk and stabilize group rates

  • Shared responsibility: mandate that employers offer and/or individuals purchase coverage


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Acknowledgements Reauthorization

THE COMMONWEALTH

FUND

Karen Davis

President

Sara Collins

Assistant Vice President Future of Health Insurance Program

Anne Gauthier

Senior Policy Director, Commission of a High Performance Health System

Sabrina How

Research Associate

For Commonwealth Fund Publications

Visit the Fund at:www.cmwf.org


Slide44 l.jpg

CATEGORIES OF PEOPLE IN THE U.S. HEALTH INSURANCE SYSTEM Reauthorization

For the rich, “Disneyland” the sky-is-the limit policies without rationing of any sort (Boutique medicine)

The federal-state Medicaid program for certain of the poor, the blind and the disabled

The 47 million or so uninsured tend to be near poor

The employed and their families who are typically covered through their jobs, although many small employers do not provide coverage.

Near poor children may be temporarily covered by Medicaid and S-Chip, although 7-8 million are still uninsured.

The Young

Working-age people

QUIMBIES

SLIMBIES

Persons over age 65, who are covered by the federal Medicare program, but not for drugs or long-term care. Often the elderly have private supplemental MediGap insurance

People age 65 and over

The poor

The near poor

The broad middle class

The rich

The very poor elderly are also covered by Medicaid

Source: Professor Uwe Reinhardt, Princeton University


Making coverage more automatic employer vs public insurance l.jpg
Making Coverage More Automatic ReauthorizationEmployer vs. Public Insurance

EmployeeHealth

BenefitDecision

Low Income Public Program

Applicant Decision

Learn about programs

Take ajob

Obtain an application

Decide to participate;

choose plan

Apply and prove eligibility

Choose plan

Payroll deduction

Make regular

payments

by check or money order

Periodic proof

of eligibility

85%-90%

participation rates

40%-70%

participation rates

Source: Based on D. Remler, S. Glied “What Can the Take-Up of Other Programs Teach Us: Increasing Participation in Health Insurance Programs,” Am. J. of Public Health, January 2003.


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Health Expenditures for Selected Type of Services, 2000-2015 Reauthorization

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196; Smith et al., “Health Spending Projections Through 2015: Changes On The Horizon,” Health Affairs Web Exclusive (February 22, 2006): W61-73.


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Growth in National Health Expenditures (NHE) Under Various Scenarios

NHE, in trillions of dollars

Cumulative savings projections, 2007–2015:

One-time savings 5%: $1.3 trillion

Slowing trend 1%: $1.4 trillion

$4.0 T

$3.8 T

$3.7 T

$2.016 trillion in 2005

Source: Based on Borger et al., “Health Spending Projections through 2015: Changes on the Horizon,” Health Affairs Web Exclusive, February 22, 2006.

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