National Health Care Reform 2009

National Health Care Reform 2009 Daniel B. McLaughlin

A New Healthy America

The heavy hand of Government

Health Care Town Halls

Outline
Issues in American health care today
A systems view of health care
Health Reform proposals
Potential impact on:
Consumers, patients
Providers of Care
Health Plans
Government
Questions and Discussion throughout
Goal – How can I successfully participate in, and contribute to, this new system

The Best Health Care System in the World

The Best
Medical Research
Drug and Device Development
Innovative Care Delivery
Minute Clinic
Electronic Health Record
Health 2.0
Health Services Research
Passionate and skilled caregivers
Engaged Consumers and Patients

Paradox
Geographic Practice disparity
Quality: over use, under use, misuse and safety
Acute care model for Chronic disability
Professions shortage
Primary care
Nursing
Emerging public health problems
Access problems: uninsured, underinsured, bankruptcy
Insurance: pre existing conditions, deductibles & co-pays, lifetime limits
Welfare payment for aged and disabled
Most costly system in the World – 17% of GDP

Total National Health Expenditures (NHE), 2009–2020 Current Projection and Alternative Scenarios NHE in trillions Cumulative reduction in NHE through 2020: $3 trillion Note: GDP = Gross Domestic Product. Data: Estimates by The Lewin Group for The Commonwealth Fund. Source: Commonwealth Fund Commission on a High Performance Health System, The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way (New York: The Commonwealth Fund, Feb. 2009).

Editorial, Minneapolis Star Tribune , March 31, 2002

An Estimated 116 Million Adults Were Uninsured, Underinsured, Reported a Medical Bill Problem, and/or Did Not Access Needed Health Care Because of Cost, 2007 Medical bill/debt problem 17.7 million 10% Cost-related access problem 25.9 million 15% Source: S. R. Collins, J. L. Kriss, M. M. Doty, and S. D. Rustgi, Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families—Findings from the Commonwealth Fund Biennial Health Insurance Surveys, 2001–2007 (New York: The Commonwealth Fund, Aug. 2008). Adequate coverage and no bill or access problem 61.4 million 35% Uninsured anytime during the year or underinsured 17.6 million 10% Medical bill/debt and cost-related access problem 54.4 million 31% 177 million adults, ages 19–64

The Uninsured Source: NY Times 8-23-2009 Category Description Number (millions) Working Poor Income < $44,000 per year – family of 4 30 Better Off Income < $88,000 per year – family of 4 4.7 Young Adults Age 16 – 19, 50% from families with income < $16,000 13 Already Eligible Eligible for Medicaid, CHIP but don’t know or enrollment issues 11 Underinsured High deductibles, restrictions 25 Non Citizens Receive care in ERs 9.7 (6 estimated to be illegal)

Market Share of Two Largest Health Plans, by State, 2006 Note: Market shares are for the combined HMO+PPO product market. For MS and PA, shading represents shares of top three insurers in 2002–2003. Source: American Medical Association, Competition in Health Insurance: A Comprehensive Study of U.S. Markets, 2008 Update ; J. Robinson, “Consolidation and the Transformation of Competition in Health Insurance,” Health Affairs , Nov./Dec. 2004 23(6):11–24; D. McCarthy et al., The North Dakota Experience: Achieving High-Performance Health Care Through Rural Innovation and Cooperation (New York: The Commonwealth Fund, May 2008). AK HI 70% – 79% Less than 50% 50% – 69% 80% – 100% WA OR ID MT ND WY NV CA UT AZ NM KS NE MN MO WI TX IA IL IN AR LA AL SC TN NC KY FL VA OH MI WV PA NY MD ME VT NH MA RI CT DE DC CO GA MS OK NJ SD

Health Care Costs Concentrated in Sick Few— Sickest 10 Percent Account for 64 Percent of Expenses 1% 5% 10% 49% 64% 24% Source: The Commonwealth Fund. Data from S. H. Zuvekas and J. W. Cohen, “Prescription Drugs and the Changing Concentration of Health Care Expenditures,” Health Affairs , Jan./Feb. 2007 26(1):249–57. 50% 97% $36,280 $12,046 $6,992 $715 Distribution of health expenditures for the U.S. population, by magnitude of expenditure, 2003 Expenditure threshold (2003 dollars)

Figure 19. Variation in Per Capita Medicare Spending by Hospital Referral Region, 2000 Source: The Commonwealth Fund, from Eliot Fisher, presentation at Academy Health Annual Research Meeting, June 2006.

Questions - Comments

Why is change so Hard?
Medicine
Most intense science of all
10,000 new articles a year
17 years from research to practice (AHRQ)
Business
Predominately privately owned and operated
Still cottage industry in many places
Many interests don’t want change
Market failures abound
Compassion
Hippocratic oath
Technological Imperative
It’s Personal
Everyone is part of the system
Strong feelings about my health, my family’s health, my doctor

Federal Reform 2009 Reduce cost growth, Improve access, and Improve quality and safety In a way that is acceptable to the American Public

The legislative process House Energy & Commerce House Ways & Means House Education & Labor Senate HELP Senate Finance Full Senate Full House Conference Committee Old & New Agencies

House Energy and Commerce Committee Final Mark up SEC. 411. ELECTION TO SATISFY HEALTH COVERAGE PARTICIPATION REQUIREMENTS EXCISE TAX WITH RESPECT TO FAILURE TO MEET HEALTH COVERAGE PARTICIPATION REQUIREMENTS.— ‘‘ (1) IN GENERAL.—In the case of any employer who fails (during any period with respect to which the election under subsection (a) is in effect) to satisfy the health coverage participation requirements with respect to any employee to whom such election applies, there is hereby imposed on each such failure with respect to each such employee a tax of $100 for each day in the period beginning on the date such failure first occurs and ending on the date such failure is corrected.”

Health Care – A Systems View Professional - Patient

Health System – Core Professional - Patient Illness Burden Consumer Behavior Knowledge Tools – Dx & Rx

Health System – Tools Professional - Patient Illness Burden Consumer Behavior Knowledge Tools – Dx & Rx Facilities Medical Technology Health Care Workers Information Technology

Medical Technology
Drugs
Possible for rapid step advances – genomics
Challenge of “me too drugs”
High cost of research and development
The rise of generics – 70% of prescriptions filled today
Devices
Continued improvement in materials and electronics
Higher levels of information technology.
Remote care soon possible
End of the office visit?
Reform
$80 Billion in discounts over 10 years from drug companies
The tradeoff – no direct negotiations with Medicare, extended patent protection
Transparency on drug/device company relationships with providers

Facilities
High capital investments
Initial
Ongoing upgrades
Hospitals and LTC - highly regulated and inspected
Lack of ease of movement of facilities makes markets non competitive
Niche hospitals - Cardiac, orthopedics
Reform – no change

Workforce
Over 400 health professions
Licensure, credentialing, scope of practice
Continuing education
Current and predicted shortages
Reform
Improved payment for primary care services
More funding for training primary care providers

Information Technology
Large opportunity
Much of health care is information gathering or exchange
Provides opportunities for use of Business intelligence tools
Chronic Disease Management
Reform
$18 Billion for Health Information Technology (Stimulus bill)
Poorly deployed compared to other industries
Standards and Interoperability
Electronic medical record
High cost
Implementation challenges
15% of MDs nationally now using

Structure
Midwest Integrated systems
Mayo, Cleveland Clinic, Marshfield Clinic
Most care in US provided by small groups of MDs, stand alone hospitals
Quality/cost inversely related to size
Reform
Accountable Care Organizations

Health System – Consumer Professional - Patient Illness Burden Consumer Behavior Tools – Dx & Rx Past Experience – Personal, networks Information Market/Clinical Financial resources & goals Knowledge

The Consumer
Has historically been passive – “doctor knows best”
Healthy Lifestyle opportunity
Weight control, exercise, diet, safety, smoking, alcohol
Chronic disease management – patient role
Understanding costs and prices
Direct to Consumer advertising
Consumer Directed Health Care
Shared decision making
Reform
Increased payment for health promotion and disease prevention
Financial incentives to employers for wellness programs
Payment for voluntary end of life counseling (living wills, advanced directives)

Health System – Illness Burden Professional - Patient Illness Burden Consumer Behavior Tools – Dx & Rx Genetics of the Individual
Environment:- Air, food, water
Economic
Cultural
Knowledge

Illness Burden
Chronic Disease is the most expensive segment of the system
Obesity leading to diabetes and many other chronic diseases
Positive results from demonstrations on chronic disease management
Reform
New funds for prevention research
Payment for Chronic Disease Management
Payment for Medical home
Payment for Health IT to track chronic patients

Health System – Education & Research Professional - Patient Illness Burden Consumer Behavior Knowledge Tools – Dx & Rx Primary Education Continuing Education Research

Education
Workforce planning is a challenge
125 Academic Medical Centers in the United States
Much of the funding comes through Medicare
Many physicians leave medical school with debts over $100K – hence pressure to go to high paying specialties
Reform
Revised Medicare funding for training to emphasize primary care
Increased funding for nursing education

Research
More medical research done in US than the rest of the world combined
Challenge of moving new discoveries into practice
NIH has agenda set by interest groups
Very little funding or prestige for research on existing practices
Evidence Based Medicine – Use of best practices could save 30 – 40%
Reform
Funding for Comparative Effectiveness Research (Stimulus)
Cannot be used to direct payment policy

Health System – Financing Professional - Patient Illness Burden Consumer Behavior Knowledge Tools – Dx & Rx Financing Sources & Structure Individuals Employers Government Financial resources & goals

Employers Remain Primary Sponsor of Coverage Distribution of 307 Million People by Primary Source of Coverage Employer Direct 164m 53% Uninsured 49m 16% Medicare 39m 13% Medicaid 42m 14% Medicare 41m 13% Individual Direct 14m 5% Employer Direct 55m 18% Total Employer 164m (53%) Total Individual 14m (5%) Source: The Lewin Group, The Path to a High Performance U.S. Health System: Technical Documentation (Washington, D.C.: The Lewin Group, 2009).

Financing Today
The world’s most complex system
Up to 4% of GDP in transaction processing
Non standard payment system by most payers with Medicare as the most common model
Payment for procedures not outcomes
Distorted payment incentives by disease – e.g. cardiac surgery vs. psychiatry
Price transparency and understanding is a challenge

Insurance Reform
Mandates insurance: both employers and individuals
Subsidies available for both low income individuals and small business
Expands Medicaid income limits – state match held harmless
Standardized benefit levels
Eliminates pre existing condition, lifetime caps, recissions and other insurance practices
Simplified and standardized billing

The Exchange

Exchange Issues
Benefit sets and pricing
Two Options beyond private insurance
The “Public Option”
Medicare clone?
Payment rates to providers
Lower overhead (marketing, profits)
Could crowd out private insurance due to lower rates and eventually become the “Single payer”
The Co-op Option
Membership elects board and selects managers
Health Partners, Group Health Co-op of Puget Sound
Can hire private insurance companies as managers

Financing Strategy Medicare Advantage –Health Plans Drug Discounts Hospital Inflation (-1.5%), Re- admits, DSH Income Taxes - > $500,000 ? Taxes – Cadillac Health plans ? Subsidies for individuals and small business Medicaid eligibility buy down MD fees – repeal SGR Fix 50% of donut hole $ One Trillion 4% of total NHE

Bending the cost curve Competition between Health Plans New payment systems Bundled payments Increased payment for primary care/prevention P4P and penalties for hospital readmissions Payment to ACOs Geographic Adjustment (?) Comparative effectiveness research MedPac on steroids - IMAC Less Likely Tort Reform (Pilots?) Consumer Directed Health Care Direct insurance rate regulation

Total Health System Model Professional - Patient Illness Burden Consumer Behavior Knowledge Tools – Dx & Rx Facilities Medical Technology Health Care Workers Financing Sources & Structure Information Technology Primary Education Individuals Employers Government Continuing Education Past Experience – Personal, networks Information Market/Clinical Genetics of the Individual
Environment:- Air, food, water
Economic
Cultural
Financial resources & goals Research

Reform’s Impact on Stakeholders

Insurance Companies
Gain 50 million new customers
Cease most underwriting practices
Participate in National insurance exchange
No change with large employers
Agree to standardization
Benefits
Payment systems
Competition
With Public Option or Co-ops (?)
To consumers in addition to empoyers

Government
Federal
Enforce Insurance mandate
Implement new Medicare payment policies (IMAC?)
Implement Insurance Exchange
Implement Public Option (?)
Continue to fund HIT, Comparative Effectiveness Research
Raise taxes
States
Expand Medicaid
Form Co-op health plans (?)

Direct providers of Care
Reduced uncompensated care
Bundled payments
Incentives to form larger groups and structures
Increased transparency and reporting
Reduction in growth of hospital payments
Remove SGR for physicians
Incentives to purchase HIT
Higher payment for primary care
Changes in payment due to geographic variation (?)

Consumers
Negatives
Insurance mandate
Higher taxes for some
Access issues to primary care
Positives
Improved access to health insurance
Lowering of health care inflation
50% reduction in Medicare donut hole
Improved information about system and provider performance

“ Americans always do what is right, but only after trying everything else.” Winston Churchill

The Best Health Care System in the World

Future Sessions
2. Sept 22 - Health care reform – Minnesota and the Nation
3. Sept 29 - Medicare, Medicaid and private insurance – unscrambling the web of complexity
4. Oct 6 - Why are costs so high and where does the money go?
5. Oct 13 – Health 2.0 – the next wave
6. Oct 20 – Assuring quality in health care – hospitals, long term care and home health
7. Oct 27 - Do it yourself healthcare – The Healthcare Saving Account
8. Nov 3 – No session
9. Nov 10 - The Politics of Health care
10. Nov 17 - Final Wrap up session. This will be a facilitated group dialogue with the goal of discussing and indentifying the consumer’s role in successful implementation of a new American healthcare system.

Thank You May the road rise up to meet you. May the wind be always at your back. May the sun shine warm upon your face; the rains fall soft upon your fields and until we meet again, may God hold you in the palm of His hand. Dan McLaughlin [email_address] 651-962-4143

National Health Care Reform 2009

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

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National Health Care Reform 2009 — Presentation Transcript