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Paul Gross, Health Group Strategies Pty Ltd, Australia & Greater China

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  • 1. Slide 1 Why national IQ drops 20 points when we debate Medicare & health insurance reform: an ‘Afternoon of the Faun’ moment is nigh Paul Gross PhD Director, Health Group Strategies Pty Ltd Australia and Greater China Invited address, Annual Health Congress, Sydney, 22 March 2014
  • 2. Slide 2 MY FOCUS 1.  Quick fixes & baby elephant hay: the May budget as an ‘Afternoon of the Faun’ moment 2.  Mural dyslexia: four short-term efficiency gains 3.  LTCI and longer-term funding of care of an ageing society with more disability
  • 3. Slide 3 Lots more money, no real reform, uncertainty in big spending, overlaps, new gaps 1.Too many quick fixes , little reform: we must reassess outlays
  • 4. Slide 4 1.  Is this a health policy debate? NO 2.  Is this a health financing debate? NO 3.  Is today’s Medicare relevant ? NO 4.  Is today’s PHI relevant? NO 5.  The quotes suggest consensus? NO “Doctor visit co- payments are a healthy price signal not a tax”2 “Medicare Select is not the solution to improving Australian health care system”5 “Abbott told line DSP up with mental health episodes”8 “Standard pricing for insurers inevitable”12 “Health insurance unfair to younger clients”4 “Medicare architect calls for doubling of levy”3 “TPD policies run risk of becoming too expensive [because definition of disability is too vague]”10 “Hospitals could save $1 billion a year”13 “Medibank and IPN trial to give members more access to GPs at no cost”1e “Abolish [PHI] rebate would save $3b”6 “Clawback: government largesse with pensions falls”14 “Ramsay looks to more acquisitions as profit climbs”11 “Disability red tape threatens to cripple the choices of those in need”9 “Disability scheme facing cap or cuts”7
  • 5. Slide 5 Access gaps caused by cost in 2010 (1st box) and 2013(2nd box)Units 0 5 10 15 20 25 30 35 40 45 Missdoc10 Missdoc13 NofillRx10 NofillRx13 Eitherprob10 Eitherprob13 Probpaybill10 Probpaybill13 $1000+OOP10 $1000+OOP13 Percent reporting five cost problems Australia Germany Netherlands Switzerland USA AUSTRALIA: some improvement in first 3 measures NETHERLANDS: Worsening
  • 6. Slide 6 The copayment fiasco: more gaps, retarded access, lower super, PHI role? §  Safety nets for Medicare, PBS: not for allied health services §  New kids dental benefit Jan 2014: 3.5m,$1000 every 2 years but 20% < average fee = copays §  OECD 2011 data: income differences in access to GP and drugs §  Commonwealth Fund Nov 2013: access with chronic conditions worse §  CHF report Feb 2014:17% copays, 75% delayed Tx, 23% spent $1000-$2000, 23% no PHI, 14K sought access to super, 8K got it §  MPL Jan 2014: IPN trial to give members more access to GPs at no cost: two-tier access to GPs?
  • 7. Slide 7 Baby elephants with hay: MH & disability 1. MH direct costs = $14 billion è $50 billion in 2025 with today’s payment models 2. Non-pension disability support NOW NDIS Feds: $3 billion è $22 billion è Feds: $8 billion è States: $5 billion ê States: $5 billion 3.  NDIS levy up to 65 years: what happens after 65? 4.  MH/NDIS interface: Feb 2014 Senate: unclear? Cut DSP if work >30 hrs? 5.  DSP and carer subsidies: fastest growing outlays 1996-2012, cuts May? 6. TPD insurance under Super July 2014: rising costs, definition of disability? 7. Fixing this mess: Audit Commission, Fels, McLure BUT likely cost $29 billion $9 billion shortfall
  • 8. Slide 8 MBS subsidies and FFS Fixing the mental health-disability mess PHI product regulation and risk equalisation Reduce visible waste in hospital care 2. Mural dyslexia: four priorities for short-term efficiency gains on the tax expenditure side
  • 9. Slide 9 Need 43% in HC efficiency gains by 2059/60 so start with 6% efficiency gains by 2023 Expenditure 2011/12 % GDP 2059/60 % GDP Increase % GDP Healthcare Feds States 4.1 2.4 7.0 3.8 2.9 1.4 Aged pension Feds States 2.7 - 3.7 - 1.0 - Aged care Feds States 0.8 - 2.6 - 1.8 - Disability Feds States 11.2 0.2 10.2 0.5 -1.0 0.3 Totals (non-education) All Gov 21.4 27.8 6.4 If each 1% increase in Tax/GDP causes a loss of 1% of real per capita GDP If each 5% improvement in healthcare efficiency reduces pressure on ALL governments by 0.5 percentage points in 2059/60 Estimated loss of real per capita GDP in 2059/60 = 6.4% Efficiency gains needed by 2059/60 = 43%
  • 10. Slide 10 Fix the MBS copay and FFS mess
  • 11. Slide 11 MBS: FLAT COPAY FIVE BETTER IDEAS TODAY MBS bulk billing + safety net + copayments all untied to ability to pay AND with no regard to value of any tests or appropriate use of drugs MBS copay $6 per visit Hospital ER charge $6 per visit 3. MBS with lower copays if doctor uses PCEHR 1. MBS with a means- tested safety net 2. MBS with means- tested copayment ceilings 5. Restrict bulk-billing by means-testing 4. MBS with lower copayments for effective (i.e., validated) interventions 6. Gap insurance: NOT a good idea
  • 12. Slide 12 Fix the mental health – disability mess
  • 13. Slide 13 Health/social care : disability loading in PHI Economic downturn Aging + chronic illness + disability ↓ Health and social care financing problem Focus responsibility and most of limited goverment budgets on those with substantial and complex needsand needing help →  additional social support →  personal care budgets Support rest of care-demanding population and their carers by facilitating self-care, with budget limited funding that complements people’s own resources -> PHI REP disability adjuster -> additional LTCI (+ HSA?) LT budget costs driven by complex medical care and multi- problem social care Growth of healthcare demand: slow by private funding? RATIONALE: basis for expanded LTCI or single national payer
  • 14. Slide 14 Deregulate PHI products, fix community rating, trial of prospective equalisation with new risk adjusters
  • 15. Slide 15 PHI regulation Australia 2014 Regulation Impact on insurer costs, product innovation or patients 1. Overlaps of PHIAC with ASIC, ACCC, APRA, ATO, state regs Compliance costs Risk-averse behaviour 2. Restrictions on FEDs Increased copays by patients-> OOPs up 3. Hospital benefits paid Regulated second tier at 85% of state rates Hospitals can pass on differences as copays -> OOPs up 4. Product differentiation Regulated, innovation retarded 5. CR requirement on hospital policies to carry REP contribution Floor price for every HP -> product price 6. Community rating in current form Sustains more small funds than needed 7. Risk adjustment Restricts affordable stop-loss products Restricts loyalty bonusus and member incentives for better health behaviour
  • 16. Slide 16 Medicare Select: Dutch version 2006-14 §  Dutch NHE grew at same rate pre-2006 §  PHI funds concentration ratio: 93% in 4 funds §  PHI margins: increased §  Hospital efficiency: more elective surgery §  Doctors: small gains in transparency §  Member churning initially: now defaulters §  Drugs: some efficiency gains §  Prospective risk equalisation formula: generous, stopped in 2012 §  Germany rejected Dutch approach
  • 17. Slide 17 Funding issues Insurance issues What should be uniform (basic) public care? What should be income- related and preference- related care? 1.What is the preferred method of redistribution of the healthcare cost burden? Taxes NOT Expenditures 2.What type of risk-adjusted subsidy? 1.  What form of insurance is efficient if higher benefits require higher individual payments? 2.  What REP? 3. What mix of insurance and incentives? Reform of PHI: two core issues Key questions AND
  • 18. Slide 18 Regulated PHI Impedes innovative PHI product design What role for health-based risk adjustment (HBRA) in prospective risk equalisation, and with what risk adjusters? Reinsurance pool Retrospective risk equalisation with little incentive to cover care outside hospitals Unconditional flat PHI rebate No incentive to PHI funds to improve the health outcomes of high risks Deregulated PHI: prospective risk equalisation HINT: Predictability of medical expenditures at the individual patient level using disability measures = 29-51% (Kronick et al 2000)
  • 19. Slide 19 HBRA Prospective risk-adjusted payment reflecting comorbidity AND disability of PHI enrollee CMS-HCC risk adjustment1 •  Age •  Gender •  Disability status of community residents who are disabled beneficiaries aged under 65 years •  Disease •  LTC community and institutional residents (LT>90 days) Original reason for entitlement * Age •  Disability •  ESRD •  Disability + current ESRD Frailty adjustment factor (organisational level) * Functional limitations based on 6 ADLs in community residents over 55 years)
  • 20. Slide 20 Get serious about visible, continuing waste in hospital use
  • 21. Slide 21 Reduce 33% hospital share of NHE by 10% in 3 years = $6 billion/year §  About 20% of all ACS admissions to acute hospitals are potentially preventable by better primary care §  About 10-15% of all readmissions to hospitals are potentially preventable by - pro-active care management in nursing homes and home care - IT-driven coordination of the transitions of care of the patient §  Of the 10% of patients admitted to hospital for an overnight stay who experience an adverse event, about 3-5 percentage points of those events (i.e., 50% of all AEs) are potentially preventable by best practice guidelines and incentives for better transparency.
  • 22. Slide 22 3. Sustaining carers and personal responsibility: medium term reforms using LTCI & super
  • 23. Slide 23 Efficiency gaps: home health care
  • 24. Slide 24 Carer burden Australia: NSPAC Dec 2013 Data: 2011–12 Barriers to Employment for Mature Age Australians Survey, 3,007 respondents aged between 45 and 74 years.
  • 25. Slide 25 Carer burden Australia: subsidy targets “[A]nalysis of data from all respondents showed that the carers who were most likely to have a current illness, injury or disability themselves were •  women, •  people aged 45–54 years, •  carers who were not working, and •  people earning less than $20,000 per year.”
  • 26. Slide 26 1. Sustain existing informal carers 2. Assist people to stay at home 3. Consumer directed choice 4. Expand funding sources in retirement Expand respite services, TCP Expand carer options for workforce participation Carer credits (12% SG) to carer super accounts1 NDIS support of permanent disability New Integrated Home Support Program Increased # Home Care packages Super-funded HRSA :home/NH/respite care Super-funded LTCI Expanded personal care budgets Increase IEC to enable self care and choice of high quality care Incentives for home care and carers, plus LTCI rebate
  • 27. Slide 27 Gaps that a new LTCI could fill GAP POTENTIAL SOLUTIONS 1. Minimal subacute care of aged & chronically ill leaves 50% in hospital beds New LTC insurance covering care outside hospital and NH, transitional care 2. Inadequate capital investment for high- care residential care New LTC insurance for such places, relieving Budget demands of $6 billion in 2022 (Hogan)
  • 28. Slide 28 In-home supportive LTCI: $240/year GOAL:“Humana developed Points of Caregiving with its LifeSynch subsidiary; the program is available for Humana members and non-members for $20 a month with a one-year agreement ($240 a year), a cost quickly offset by the time and energy saved by the caregiver. Collaborative and consultative process, SeniorBridge’s licensed, clinical professionals conduct an in- depth assessment of each individual’s needs, preferences, strengths, support system and resources in consultation with all concerned parties then present a recommended care plan. Some of the services in a care plan : Professional Oversight and Coordination by Care Managers: Regular home visits to monitor how your loved one is feeling, medications and the general environment Customized interventions for mood and behavioral problems Help managing health finances and advocacy for access to insurance benefits and community resources Coordination of home modifications or alternate housing Hourly and Live-In Caregiving by licensed home health aides: Companionship Meal preparation and light housekeeping Shopping, errands and transportation Personal care including bathing and hygiene assistance Help transferring Private Duty Nursing Licensed RNs, or LPNs/LVNs who provide skilled care including: Wound Care Injectable Medications, Tube Feeding and Tracheotomy Care, Ventilator, End of life Palliative Care
  • 29. Slide 29 The height of technical felicity is to combine sublime simplicity with just sufficient ingenuity to show how difficult it is to do. After Piet Hein How much of this conjecture is doable??