1. THE COMMONWEALTH FUND Making Care More Efficient: Promising Innovations and Policy Options Karen Davis President The Commonwealth Fund Bipartisan Health Policy Conference Miami, FL January 12-14, 2007

2. International Comparison of Spending on Health, 1980–2004 Data: OECD Health Data 2005 and 2006. Average spending on health per capita ($US PPP) Total expenditures on health as percent of GDP Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 EFFICIENCY 2

3. Health Expenditure Growth 2000–2005 for Selected Categories of Expenditures Average annual percent growth in health expenditures Source: A. Catlin et al., National Health Spending in 2005: The Slowdown Continues, Health Affairs, Jan./Feb. 2007 26(1):142-153.

4. Percentage of National Health Expenditures Spent on Health Administration and Insurance, 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 EFFICIENCY

5. THE COMMONWEALTH FUND Growth in National Health Expenditures (NHE) Under Various Scenarios Source: Based on Borger et al., Health Spending Projections Through 2015: Changes on the Horizon, Health Affairs Web Exclusive, February 22, 2006. NHE, in trillions of dollars $2.016 trillion in 2005 Cumulative savings projections, 2007–2015: One-time savings: $1.31 trillion Slowing trend: $1.39 trillion $3.710 T $3.849 T $4.037 T

6. THE COMMONWEALTH FUND Strategies for Achieving a More Efficient Health System Increasing the effectiveness of markets –Better information on provider quality, prices and total costs for episode of care –Better information on the cost-effectiveness of health care technology and procedures Providing payment incentives to promote efficient and effective care Changing the health care system to promote patient- centered primary care Investing in infrastructure such as health information technology and information exchange systems and technical assistance for quality and efficiency improvement Reducing insurance administrative overhead and achieving more competitive prices Investing strategically to improve access, affordability, and equity