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Barry Scholl, MSJ Sr. Vice President, Communications and Publishing The Commonwealth Fund

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1 Barry Scholl, MSJ Sr. Vice President, Communications and Publishing The Commonwealth Fund Twitter: @barryscholl April 18, 2013 Talking About the U.S. Health Care System

2 2 Overview of the Commonwealth Fund Established in 1918 by Anna Harkness Broad charge to “enhance the common good” Today we accomplish this by creating and funding independent research on health policy and delivery

3 3 3 COVERAGE 52 million uninsured; many more underinsured QUALITY Despite rapid advances, thousands of patients die each year from medical error COST Billions in unnecessary and wasteful spending Overuse puts patients at risk, drains resources, and makes healthcare less accessible and less effective A B ROKEN S YSTEM

4 4 International Comparison of Spending on Health, 1980–2010 Note: $US PPP = purchasing power parity. Source: Organization for Economic Cooperation and Development, OECD Health Data, 2012 (Paris: OECD, Nov. 2012). Total expenditures on health as percent of GDP $8,233 $3,022 17.6% 9.1% Average spending on health per capita ($US PPP)

5 5

6 6 Health Spending is a Problem Not Only for Government, But Also for Businesses and Families Note: GDP = gross domestic product. Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. NHE in $ billions % GDP: 17.9% 18.7% 20.5%

7 7 SOURCE: KCMU/Urban Institute analysis of the 2012 ASEC supplement to the CPS 307.9 million people total Health Insurance Coverage in the U.S., 2011

8 8 52 Million Adults Under Age 65 Uninsured, 81 Million Either Underinsured or Uninsured Uninsured during year 52 million (28%) Insured, not underinsured 102 million (56%) Underinsured* 29 million (16%) 2010 Adults 19–64 (184 million) Uninsured during year 45.5 million (26%) Insured, not underinsured 110.9 million (65%) Underinsured* 15.6 million (9%) 2003 Adults 19–64 (172 million) * Underinsured defined as insured all year but experienced one of the following: medical expenses equaled 10% or more of income; medical expenses equaled 5% or more of income if low income (<200% of poverty); or deductibles equaled 5% or more of income. Source: C. Schoen, M. Doty, R. Robertson, S. Collins, “Affordable Care Act Reforms Could Reduce the Number of Underinsured U.S. Adults by 70 Percent,” Health Affairs, Sept. 2011. Data: 2003 and 2010 Commonwealth Fund Biennial Health Insurance Surveys.

9 9 Percent Uninsured In Other Wealthy Nations

10 10 Deaths per 100,000 population* * Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. Analysis of World Health Organization mortality files and CDC mortality data for U.S. U.S. Lags Other Countries: Mortality Amenable to Health Care Source: Adapted from E. Nolte and M. McKee, “Variations in Amenable Mortality—Trends in 16 High-Income Nations,” Health Policy, published online Sept. 12, 2011.

11 11 *Age-standardized deaths before age 75 from select causes; includes ischemic heart disease. **Excludes District of Columbia. DATA: Analysis of 2001–02 and 2004–05 CDC Multiple Cause-of-Death data files using Nolte and McKee methodology, BMJ 2003 SOURCE: Commonwealth Fund State Scorecard on Health System Performance, 2009

12 12 Why?

13 13 Hospital Discharges per 1,000 Population, 2008 Source: The Organisation for Economic Co-operation and Development (OECD) Health Data 2010 (Oct. 2010). * 2007. ** 2006.

14 14 Average Length of Stay for Acute Care, 2008 Days Source: OECD Health Data 2010 (Oct. 2010). * 2007. ** 2006.

15 15 Hospital Spending per Discharge, 2008 Adjusted for Differences in Cost of Living * 2007. ** 2006. Source: OECD Health Data 2010 (Oct. 2010). Dollars

16 16 Percentage of National Health Expenditures Spent on Administration, 2008 Net costs of administration as percent of current expenditure on health a a 1999 b 2007 Source: OECD Health Data 2010, October 2010. b b b

17 17 Source: M.J. Laugesen, S.A. Glied, “Higher Fees Paid To US Physicians Drive Higher Spending For Physician Services Compared To Other Countries,” Health Affairs, September 2011 vol. 30 no. 9 1647-1656. Physician Incomes, 2008 Adjusted for Differences in Cost of Living Primary Care DoctorsOrthopedic Surgeons

18 18 Computer Tomography (CT) Exams per 1,000 Population, 2008 Source: OECD Health Data 2010 (Oct. 2010). * 2007.

19 19 U.S. Prices Often Exceed International: Wide Spread in U.S. Scans and Imaging Fees: MRI Scan (US$) Source: International Federation of Health Plans, 2010 Comparative Price Report, Medical and Hospital Fees by County, November 2010. (Average)

20 20 Drug Prices for 30 Most Commonly Prescribed Drugs, 2006–07, Brand-Name and Generic US is set at 1.0 Source: IMS Health. AUSCANFRGERNETHNZSWITZUKUS Brand-Name Drugs 0.400.640.320.430.390.330.510.461.00 Generic Drugs 2.571.782.853.991.960.903.111.751.00

21 21 Health Policy at a Fork in the Road Cut payments, reduce benefits, and restrict eligibility for public programs Re-engineer health care and improve health markets Regardless of how you envision the role of government, health care and the markets in which it’s purchased need to be improved OR

22 22 Health Care Reform and the Federal Budget Deficit: What Are the Choices? Cutting Benefits –Cover fewer people, fewer services, or pay for a smaller fraction of total spending for services (i.e. increased patient cost-sharing or premiums) –Or, restructure current patient out-of-pocket costs to shape better care choices Trim Payment Rates –Across the board cuts or selective cuts of over- priced services –Or, use purchasing leverage and pay smarter Ensuring the Right Care –Restrict use of effective services, i.e. ration care –Or, reduce misuse, overuse, and underuse through payment and delivery system reforms, apply comparative-effectiveness research Source: K. Davis and S. Guterman, Achieving Medicare and Medicaid Savings: Cutting Eligibility and Benefits, Trimming Payments, or Ensuring the Right Care?, (New York: The Commonwealth Fund, July 2011).

23 23 Need to Engage and Inform Consumers The sickest 5% account for the majority of health spending, and need better choices and the information to choose wisely Source: Agency for Healthcare Research and Quality analysis of 2009 Medical Expenditure Panel Survey. Distribution of health expenditures for the U.S. population, by magnitude of expenditure, 2009 1% 5% 10% 50% 65% 22% 50% 97% $90,061 $40,682 $26,767 $7,978 Annual mean expenditure

24 24 the ACA is helping to make it easier to do the right thing… Simply stated,

25 25 Ongoing ACA Implementation… Hundreds of provisions in two big buckets: coverage expansion health system reform

26 26 Coverage Extension Medicaid expansions (16 million) Subsidies for uninsured to buy private insurance (20 million) private markets: Insurance mandate Children to 26 No limits on lifetime coverage and no discrimination against sick State health insurance exchanges Regulate administrative costs

27 27 Health Reform Reduces Numbers of Uninsured Percent of Adults 19–64 Uninsured by State Data: U.S. Census Bureau, 2009–10 Current Population Survey ASEC Supplement; estimates for 2019 by Jonathan Gruber and Ian Perry of MIT using the Gruber Microsimulation Model for The Commonwealth Fund. SOURCE: Commonwealth Fund State Scorecard on Child Health System Performance, 2010

28 28 10 M (4%) Nongroup 32 Million Uninsured Covered Under Affordable Care Act, Employers Remain Primary Source, 2019 * Employees whose employers provide coverage through the exchange are shown as covered by their employers (5 million), thus about 29 million people would be enrolled through plans in the exchange. Note: ESI is Employer-Sponsored Insurance. Source: K. Davis, S. Guterman, S. R. Collins, K. Stremikis, S. Rustgi, and R. Nuzum, Starting On the Path to a High Performance Health System: Analysis of the Payment and System Reform Provisions in the Patient Protection and Affordable Care Act of 2010, (New York: The Commonwealth Fund, September 2010). Among 282 million people under age 65 Pre-Reform 162 M (57%) ESI 35 M (12%) Medicaid 54 M (19%) Uninsured 16 M (6%) Other 15 M (5%) Nongroup 159 M (56%) ESI 51 M (18%) Medicaid 24 M (9%) Exchanges (Private Plans) 16 M (6%) Other 23 M (8%) Uninsured Affordable Care Act

29 29 Health Reform Slows Growth in Total National Health Expenditures (NHE), 2009–2019 NHE in trillions Notes: * Estimate of pre-reform national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010). $2.5 $4.3 5.7% annual growth 6.3% annual growth $4.6

30 30 Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010). Health Reform Lowers Insurance Premiums, 2019 9.2%

31 31 The ACA aims to reduce percent of families with high medical care expenses compared to income (by state, 2009) Note: Households under 65 years old. Expenses are family out-of-pocket for medical care as a share of annual income, not including premiums. 5% threshold applies to incomes below 200% of poverty. Source: Analysis of the 2010 Current Population Survey by N. Tilipman and B. Sampat of Columbia University for The Commonwealth Fund. Percent of families who spent 10% or more of income on out-of-pocket medical care expenses or 5% if low income

32 32 Note: * Estimate. Expenditures shown in $US PPP (purchasing power parity). Source: Calculated by The Commonwealth Fund based on 2007 International Health Policy Survey; 2008 International Health Policy Survey of Sicker Adults; 2009 International Health Policy Survey of Primary Care Physicians; Commonwealth Fund Commission on a High Performance Health System National Scorecard; and Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009). AUSCANGERNETHNZUKUS OVERALL RANKING (2010)3641527 Quality Care4752136 Effective Care2763514 Safe Care6531427 Coordinated Care4572136 Patient-Centered Care2536174 Access6.553142 Cost-Related Problem63.5 2517 Timeliness of Care6721345 Efficiency2653417 Equity4531627 Long, Healthy, Productive Lives1234567 Health Expenditures/Capita, 2007$3,357$3,895$3,558$3,837*$2,454$2,992$7,290 Country Rankings 1.00–2.33 2.34–4.66 4.67–7.00 Health Reform Will Improve U.S. Health System Performance

33 33 Health Systems Reform Information Availability Comparative effectiveness research ($500 million/year) Health information technology Organizational Reforms Accountable care organizations Patient centered medical homes Increased training and payment for primary care Payment Reforms: Pay for performance Hospital and physician quality Medicare readmissions Hospital acquired conditions

34 34 Independent Payment Advisory Board (IPAB) Commission with power to promulgate changes designed to contain rate of growth of Medicare costs to GDP plus 0.5 percent. Health Systems Reform Center for Medicare and Medicaid Innovation (CMMI) $10 billion over ten years to undertake virtually unrestricted reform experiments and incorporate into routine Medicare and Medicaid practice.

35 35 Health System Reform: Early Signs of Overall Declines in Hospital Readmissions Monthly 30-day All-Cause Hospital Readmission Rate, January 2010 – September 2012 Source: CMS Office of Information Products and Data Analysis, Medicare Claims Analysis

36 36 Health System Reform: ACO Participation is Growing Rapidly All ACOs Assigned Beneficiaries by County (4.0 million total) Source: ACO Assignment Summary Reports (2012 for January starts and 2012Q3 for April/July Starts).

37 37 Coverage and Access Risks After Full Implementation of the Affordable Care Act Gaps in the Law 25-30 million people estimated to remain uninsured through 2022. Undocumented immigrants are ineligible for Medicaid, premium tax credits, and exchanges. Potential for unaffordable premiums, risk of underinsurance. Gaps in Implementation States that do not expand Medicaid programs. States that expand but use funds for private plans in exchanges. Poorly functioning IT systems and lack of coordination between Medicaid and exchanges. Insufficient outreach in some states, so many are eligible but uninsured. Insufficient network capacity in health plans sold through exchanges. Insufficient number of essential community providers in networks.

38 38 Characteristics of Estimated Uninsured Population in 2016, Assuming Full Expansion of Medicaid Source: Gruber MicroSimulation Model (GMSIM) Congressional Budget Office, 154 M (57%) ESI 13.3 M (53%) People not subject to individual mandate tax because of low income or plans not affordable 5.1 M (20%) Undocumented Immigrants 6.7 M (27%) People subject to individual mandate tax and choose to pay tax Among 25.3 million uninsured people under age 65

39 39 Legitimate Concerns Going Forward Will employers continue to provide coverage to employees? Will insurance markets lead to competition on value or adverse risk selection? Will innovation work gaining widespread voluntary participation of physicians, hospitals, and other providers, and lead to widespread change? Will the affordability provisions be adequate? Will the safety net hold together until coverage is expanded and improved? Will the incentives for primary care and care coordination generate a strong primary care foundation for the health system of the future? Will federal and state government agencies be up to the implementation task? Source: K. Davis, A New Era in American Healthcare, (New York: The Commonwealth Fund, June 2010).

40 40 Timing Mandate goes into effect Subsidies go into effect Medicaid expansions go into effect Anti-discrimination provisions for private insurance become effective Health Insurance Exchanges activated the year of decision

41 41 Next Steps: Synergistic Policies to Stabilize Costs and Improve Outcomes Goal: To create incentives for better care and to lower cost throughout the continuum of health care services Tools: Payment reforms to accelerate delivery system innovation Policies to expand and encourage high-value choices System-wide action to improve how health care markets function

42 42 Commonwealth Fund Resources

43 43 Third year of the fellowship saw dramatic increase in applicant pool Experienced reporters concentrate on performance of local, regional, national health care systems Examine policies, practices, outcomes, roles of stakeholders Association of Health Care Journalists 2013 Reporting Fellowships in Health Care Performance Supporting Health Care Reporting Rhiannon Meyers Corpus Christi Caller-Times Noam Levey LA Times/ Tribune Washington Bureau Lindy Washburn The Record/North Jersey Media Group Jeanne Erdmann Independent journalist, St. Louis, Mo. Alan Bavley Kansas City Star 43

44 44 Supporting Health Care Reporting

45 45 Supporting Health Care Reporting CUNY TV: Talking Health The series features notable experts in the world of health care policy and practice; topics have included: Patient-Centered Medical Homes Health Care Costs Long-Term Care SABEW Symposium January 17 & 18, 2013 New York Nebraska Press Association Pilot program for rural health news reporting ACA implementation state-based healthcare exchanges Medicare reform & Medicaid healthcare payment innovation and reform healthcare data healthcare bundling business insurance plans for employees

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