1. Dr. Paul Keckley Paul H. Keckley, Ph.D. Deloitte Center for Health Solutions Washington, DC KEYNOTE: Health Reform – What does it mean for SE Michigan? What can we do?

2. The US health system: big, complex, fragmented, uneven… Deloitte Center for Health Solutions 2008 BIOTECH INNOVATORS ADMINISTRATORS/WATCHDOGS SERVICE PROVIDERS Physicians HCIT Pharma Device Hospitals Outpatient Facilities Insurers Regulators Long Term Care BioTech Professional Societies/ Special Interests Accrediting Agencies Disease Management Employers CAM Media Academic Medicine CONSUMERS Allied Health Professionals

3. Costs, access and quality are major issues! Deloitte Center for Health Solutions 2008 Lack of capital and resources Explosion in clinical knowledge Lack of political will, leadership Lack of consumer involvement Lack of appropriate technology Lack of trust among Key Players Lack of incentives for right behaviors Runaway Costs Uneven Access Poor Quality

5. The majority support reform: Two in five rate the system unfavorably 5 Unfavorable report card grades are more likely among Gen X and Boomers (4 in 10) than among Gen Y and Seniors (3 in 10)

6. Most do not understand the “system” and believe it is wasteful. Insecurity about health costs is high: Seniors “in public plan” most favorable. Total 1982 - 1993 (Gen Y) 1965 - 1981 (Gen X) 1946 - 1964 (Boomers) 1945 and earlier (Seniors) Overall performance of the U.S. health care system (% grade D/F) 37.3%30.9%40.6%41.4%28.9% Comprehension of how the U.S. health care system works (% who say they understand somewhat) 25.3%33.1%27.3%23.7%18.4% % who believe more than 50 percent of the U.S. health care system expenditures are wasted 50.5%49.8%57.0%51.4%37.3% Extent household is financially prepared to handle future health care costs (% who feel somewhat secure) 33.6%26.7%40.0%38.8%17.4% Source: 2009 Deloitte Survey of US Health Consumers, Deloitte Center for Health Solutions

7. Public opinion about health reform (Deloitte Pulse Survey, September 10-13, 2009)  54% of U.S. adults believe health care reform will not pass this year vs. 41% who do  48% believe the U.S. health system needs a major overhaul—among the uninsured (60%) and underinsured (55%)  73% of respondents believe it is important for every American to have health insurance but 55% do not believe coverage for the uninsured should be the sole focus of the debate  The most trusted sources to reform health care are providers (37%), the White House (21%), Congress (13%), employers (11%) and health insurance companies (7%)  61% believe that Congress is likely to make the health care situation worse than better  55% believe government solutions to health care will cost more and deliver less compared to private sector solutions.  51% believe health reform should not wait until the economy is better compared to  47% who thought it should wait.

8. White House #1 domestic issue: Reduce costs, cover everyone February 24, 2009 to joint session of Congress: Reform energy, education and health care. Pass bill in 2009. May 11, 2009 to major trade organizations: Cut CAGR to 4.7%, reduce costs by $2 trillion (2008 – 2018). June 3, 2009: Everything on the table— mandates, employer tax exclusion, employer mandate, public plan, etc. September 9, 2009: President Obama’s address to joint session of Congress, reiterating commitment. 8 White House messaging: Reform is necessary to create competition in the insurance market Reform is necessary to economic recovery Reform is a moral imperative Reform must be deficit neutral

9. Major elements of the “Kennedy” reform bill-- Access--Individual mandate, Medicaid expansion, employer mandate Quality—comparative effectiveness, episode- based payments, transparency Cost—insurance regulation, health exchanges Looking ahead…a bill in December 2009 (~$900 billion) Consumerism Focus: Self care Achieves $ TBD Comparative Effectiveness/EBM Focus: (1) Personalized medicine, (2) bundled based payments, (3) provider adherence/performance-based payments Achieves uo to $30B/yr savings 2 Health Care Information Technology Focus: (1) e-prescribing, (2) fraud detection (3) administrative cost reduction, (4) care coordination Achieves $33-70 B/ yr savings 1 3 4 Primary Care 2.0 Focus: Prevention, Chronic, LTC Achieves $24-57B/yr savings Major Sources of funding Medicare cuts Industry fees Cadillac plans Income taxes

10. As of October 15—40 proposals, 3 major bills Senate FinanceSenate HELPHouse Tri Committee 2019 Coverage, Cost 94% $829B 93% $1.2T 97% $1.182T Individual mandate Yes Penalty: $750/1500 Subsidy:to 400% FPL Yes Penalty: Subsidy to 400% FPL Yes Penalty: 2.5% AGI Subsidy: to 400% FPL Employer mandate Yes Size: 50+ employees Penalty: $400/employee if tax credits used Yes (Must pay 60% of premiums or $750/employee) Yes Size: 25+ employees Penalty: 2-8% of payroll Medicaid expansion Yes (133% FPL)Yes (150% FPL)Yes (133% FPL) Insurance reforms Yes Comparative effectiveness YesNo Liability reform No Performance- based payments Yes

11. In southeast Michigan, what if…  Every price for every healthcare transaction was known before the purchase?  Every treatment recommendation was based on evidence ?  Every dollar spent for facilities and technology necessary?  Every person knew as much about the industry as they know the auto industry?  Every person lived a healthier life and managed their own care? 11