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U.S. Health Care Reform: Challenges and Opportunities. Karen Davis President The Commonwealth Fund www.commonwealthfund.org kd@cmwf.org Toledo Rotary Club September 17, 2012. U.S. Health Reform: Challenges and Opportunities. Why Health Reform is Needed Early Evidence on Impact

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u s health care reform challenges and opportunities

U.S. Health Care Reform: Challenges and Opportunities

Karen Davis

President

The Commonwealth Fund

www.commonwealthfund.org

kd@cmwf.org

Toledo Rotary Club

September 17, 2012

u s health reform challenges and opportunities
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
why health reform is needed
Why Health Reform is Needed

Uninsured Rates

Costs of Care

Administrative

Complexity

Quality of Care Chasm

signs and symptoms of a sick health care system
Signs and Symptoms of a Sick Health Care System

High Costs

Suboptimal and Variable Quality

Poor Population Outcomes

overall health system performance
Overall Health System Performance

1. St. Paul, MN

96. Ann Arbor, MI

124. Toledo, OH

306. Monroe, LA

Top : St. Paul MN, Dubuque IA, Rochester MN

Bottom: Shreveport LA, Jackson MS, Texarkana AR, Alexandria LA, Beaumont TX, Oxford MS, Hattiesburg MS, Monroe LA

Source: Commonwealth Fund Scorecard on Local Health System Performance, 2012

slide7
2012 Local Scorecard on Health System Performance, Ohio and Michigan HRRs

Source: Commonwealth Fund Scorecard on Local Health System Performance, 2012

percent of adults ages 18 64 uninsured 2009 2010
Percent of Adults Ages 18-64 Uninsured, 2009-2010

Ann Arbor, MI

16.9%

Toledo, OH

17.0%

Worcester, MA

5%

McAllen TX

53%

HRR = hospital referral region

DATA: U.S. Census Bureau, 2009-10 American Community Survey

Source: Commonwealth Fund Scorecard on Local Health System Performance, 2012

health reform game changers
Health Reform “Game Changers”
  • 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

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

slide10
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.

slide11

By 2019 Health Reform Will Reverse the Deterioration of Health Insurance Coverage for Working Age Adults over the Last Decade and Achieve Near Universal Coverage

2009-2010

Avg = 21.8%

1999-2000

Avg = 16.6%

2019 (estimated)

Avg = 9.4%

14%–18.9%

23% or more

19%–22.9%

7.1%–13.9%

7% or less

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.

slide12

Percent of the Non-Elderly Population in the Toledo Area Who Could Benefit From the ACA Coverage Expansions

19%

25%

18%

12%

11%

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.

number of uninsured dropped by 1 3 million people in 2011
Number of Uninsured Dropped by 1.3 Million People in 2011

Millions of uninsured

Source: Income, Poverty, and Health Insurance Coverage in the United States: 2011. United States Census Bureau, September 2012.

reform has dramatically reduced the number of young adults without health insurance coverage
Reform Has Dramatically Reduced the Number of Young Adults Without Health Insurance Coverage

Percentage of Young Adults Without Health Insurance

  • 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

September 2010: Health Reform Allows Children to Remain on Parents’ Plans Until Age 26

2009

2010

2011

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.

slide15
Projected Health Spending in 2020 $275 Billion Lower Than Pre-Reform PredictionsCumulative Reduction of $1.7 Trillion over 2011-2020
  • 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

−5.6%

19.9% of GDP

21.1% of GDP

19.8% of GDP

Source: K. Davis, Bending the Health Care Cost Curve: New Era in American Health Care?, (New York: The Commonwealth Fund Blog, January 2012).

health insurance premium trends
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
the health system is responding to challenge to provide better care
The 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
improved prevention and health promotion
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
supreme court decision
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
what states are saying about aca medicaid expansion
What States Are Saying About ACA Medicaid Expansion

Participating (11)

Leaning Toward Participating (3)

Undecided/No comment (26)

Will Not Participate (5)

Leaning Toward Not Participating (5)

Source: American HealthLine, August 27, 2012.

slide21

State Action to Establish Exchanges,

As of July 2012

NH

WA

VT

ME

MT

ND

AK

MN

OR

NY

WI

ID

MA

SD

RI

WY

MI

CT

PA

IA

NJ

OH

NE

NV

DE

IN

IL

MD

UT

WV

IA

VA

CO

DC

CA

KS

MO

KY

IL

NC

WV

VA

TN

SC

OK

AZ

AR

NM

GA

AL

MS

HI

LA

TX

FL

State exchange in existence prior to passage of ACA

No active exchange legislation or executive order, but received federal level one grant, studying exchange establishment, or governor pursuing alternative options

Exchange established through signed legislation

Exchange established through executive order

Will not pursue state-run exchange

Legislation passed one or both houses or pending

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.

what s next presidential election
What’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
president obama
President Obama

Implement 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%
governor romney
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
thank you
Thank You!

Robin Osborn,

Vice President and Director,

International Program

ro@cmwf.org

Tony Shih,

Executive Vice President for Programs, ts@cmwf.org

Cathy Schoen, Senior Vice President for Research and Evaluation, cs@cmwf.org

Sara Collins,

Vice President,

Affordable Health Insurance

src@cmwf.org

Stu Guterman,

Vice President,

Payment Reform

sxg@cmwf.org

Kristof Stremikis, Senior Research Associate, ks@cmwf.org

For more information, please visit:

www.commonwealthfund.org