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  • 1. Health Care Reform: Minnesota and the Nation Julie Sonier Director, Health Economics Program Minnesota Department of Health September 22, 2009
  • 2. Objectives
    • How are health reforms in Minnesota similar to and different from national efforts?
    • Describe Minnesota’s recent reform activities and goals
  • 3. 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)
  • 4. 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
  • 5. 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
  • 6. Total health care spending in Minnesota up nearly 70% between 2000 and 2007 Source: Minnesota Department of Health, Health Economics Program
  • 7. 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
  • 8. Historical Perspective: Health Care Spending Growth is Not a New Problem
  • 9. 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.
  • 10. Misaligned Incentives: Higher Payment for Lower Quality
  • 11. Minnesota Diabetes Care: Improving but only 1 in 7 receive optimal care Source: MN Community Measurement Health Care Quality Report
  • 12. Sources of Insurance Coverage in Minnesota, 2001 and 2007 Source: Minnesota Health Access Surveys, 2001 and 2007
  • 13. Minnesota Uninsurance Rates by Income Source: Minnesota Health Access Surveys, 2001 to 2007
  • 14. Minnesota Uninsurance Rates by Age Source: Minnesota Health Access Surveys, 2001 to 2007
  • 15. Minnesota Uninsurance Rates by Race and Ethnicity Source: Minnesota Health Access Surveys, 2001 to 2007
  • 16. Trends in Overweight/Obesity in Minnesota Normal Weight Overweight Obese Source: Behavioral Risk Factor Surveillance Survey
  • 17. Obesity Trends* Among U.S. Adults BRFSS, 1990 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%
  • 18. 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%
  • 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
  • 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)
  • 21. 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.
  • 22. 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?
  • 23. 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
  • 24. 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
  • 25. 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
  • 26. 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
  • 27. 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
  • 28. 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
  • 29. 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
  • 30. 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”
  • 31. 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
  • 32. 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
  • 33. Contact Information: Julie Sonier [email_address] (651) 201-3561 Health Reform Website: www.health.state.mn.us/healthreform