Health Care Reform: Minnesota and the Nation

Health Care Reform: Minnesota and the Nation Julie Sonier Director, Health Economics Program Minnesota Department of Health September 22, 2009

Objectives
How are health reforms in Minnesota similar to and different from national efforts?
Describe Minnesota’s recent reform activities and goals

Minnesota starts from a reasonably good place
Insurance coverage:
Among the nation’s lowest uninsurance rates
Strong employer base
MinnesotaCare subsidized insurance program (since 1992, pre-SCHIP)
Subsidized coverage for parents and kids to 275% FPG
Single adults and childless couples to 250% FPG (effective July 2009)

Minnesota starts from a reasonably good place
Consistently ranked as one of the healthiest states
History of collaboration and innovation to improve health care
Largely non-profit environment
Collaboration around best practices, quality measurement

The Context for Health Reform Discussions in Minnesota
In spite of our relatively good starting point:
Rising health care costs in the state are unsustainable
Our health care system has misaligned incentives
Large variations in quality – inversely related to cost
We pay for volume, not value
Private insurance has eroded, and the number of uninsured has increased
Unhealthy behaviors have created high and rising costs of preventable disease
Similar problems exist at the national level

Total health care spending in Minnesota up nearly 70% between 2000 and 2007 Source: Minnesota Department of Health, Health Economics Program

Health insurance cost growth far exceeds growth in incomes and wages Note: Health care cost is MN privately insured spending on health care services per person, and does not include enrollee out of pocket spending for deductibles, copayments/coinsurance, and services not covered by insurance.. Sources: Minnesota Department of Health, Health Economics Program; U.S. Department of Commerce, Bureau of Economic Analysis; U.S. Bureau of Labor Statistics, Minnesota Department of Employment and Economic Development

Historical Perspective: Health Care Spending Growth is Not a New Problem

U.S. Health Care Spending as a Share of Gross Domestic Product *Projected. Source: Centers for Medicare and Medicaid Services. Historical spending estimates as of January 2009; projections as of February 2009.

Misaligned Incentives: Higher Payment for Lower Quality

Minnesota Diabetes Care: Improving but only 1 in 7 receive optimal care Source: MN Community Measurement Health Care Quality Report

Sources of Insurance Coverage in Minnesota, 2001 and 2007 Source: Minnesota Health Access Surveys, 2001 and 2007

Minnesota Uninsurance Rates by Income Source: Minnesota Health Access Surveys, 2001 to 2007

Minnesota Uninsurance Rates by Age Source: Minnesota Health Access Surveys, 2001 to 2007

Minnesota Uninsurance Rates by Race and Ethnicity Source: Minnesota Health Access Surveys, 2001 to 2007

Trends in Overweight/Obesity in Minnesota Normal Weight Overweight Obese Source: Behavioral Risk Factor Surveillance Survey

Obesity Trends* Among U.S. Adults BRFSS, 1990 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

Obesity Trends* Among U.S. Adults BRFSS, 1994 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

Obesity Trends* Among U.S. Adults BRFSS, 1998 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20

Obesity Trends* Among U.S. Adults BRFSS, 2004 No Data <10% 10%–14% 15%–19% 20%–24% ≥25% (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person)

Impact of Rising Obesity on Health Care Costs
Increasing prevalence
Widening gap between health care spending for obese vs normal weight population
One national study found that obesity-related health spending accounted for 27% of inflation-adjusted per capita health spending increases from 1987 to 2001
41% of the rise in heart disease spending
38% of the rise in diabetes-related spending
Source: Thorpe et al., “The Impact of Obesity on Rising Medical Spending,” Health Affairs, October 2004.

Public and Private Cost Pressures
Cost of private coverage rising faster than incomes, inflation
Likely a contributing factor to recent erosion in private insurance coverage
Public programs face dual sources of cost pressure:
Rising enrollment
Rising cost per person
So, in addition to cost and access problems, we have a sustainability problem
Which problem to address first?

Approaches to Health Reform
Massachusetts approach: address coverage first, cost later
Minnesota: expanded coverage too, but greater focus on reforms that improve quality/cost to ensure sustainability
National debate: mostly focusing on coverage

2007-2008 Minnesota Health Reform Plans
Health Care Transformation Task Force (Governor appointed)
Charge from legislature included reducing health care expenditures by 20%
Health Care Access Commission (Legislative)
Both reports included recommendations for comprehensive reform, with much common ground

Overview of Health Reform Bill Key Elements
Public health improvement
Health care coverage/affordability
Chronic care management
Payment reform and price/quality transparency
Administrative efficiency
Health care cost measurement

Public Health Improvement
Invests in community-based efforts to reduce rates of obesity and tobacco use
Builds on current CDC-funded pilots
Total of $47 million in grants to communities

Health Care Coverage and Affordability
Expanded eligibility for MinnesotaCare for adults without children to 250% of the poverty level
Outreach efforts, streamlined enrollment
Tax credits for uninsured to purchase private coverage
Employers with more than 10 employees required to establish “section 125” plans if they don’t offer health insurance coverage to employees

Payment Reform: Why Is It Needed?
Current system: based on individual services
Few incentives for prevention, care coordination/management, quality improvement, innovation, or value
Few consumer incentives to choose provider based on quality or cost
Limited information on price and quality of care
Provider incentives to invest in profitable services and to avoid unprofitable services

Payment Reform: Chronic Care Management
Promotes use of “health care homes” to coordinate care for people with complex/chronic conditions
MDH and DHS to develop standards of certification for health care homes
Care coordination payments to health care homes
Public and private purchasers, beginning July 2010

Other Payment Reforms and Price/Quality Transparency
Establish a set of common quality measures and incentive payments for quality
“ Peer grouping” of providers on relative cost, quality, and resource use
Public and private purchasers will use this tool to strengthen member incentives to use high-quality, low-cost providers
Promotes transparency and innovation by establishing bundled pricing for 7 commonly defined “baskets of care”

Administrative Simplification
Health care providers must have electronic health records by 2015, and they must be interoperable
Electronic prescribing by 2011
Study of ways to reducing claims adjudication costs for health plans and providers

Concluding Thoughts
Expanding coverage:
Relatively easy to explain why this is important
Given political will (and money), path is fairly straightforward
Quality/cost/value:
Much more complex – difficult to engage policymakers and the public
No magic answers to the problem, but some promising ideas
All of these issues must be addressed to make the system more equitable and sustainable

Contact Information: Julie Sonier [email_address] (651) 201-3561 Health Reform Website: www.health.state.mn.us/healthreform

Health Care Reform: Minnesota and the Nation

by Center for Health & Medical Affairs, University of St. Thomas on Sep 30, 2009

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Health Care Reform: Minnesota and the Nation — Presentation Transcript