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Health Reform and Cost Control
 

Health Reform and Cost Control

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Presented at the National Academy for State Health Policy's 20th Annual State Health Policy Conference in Denver, Colorado. Author: John Shiels

Presented at the National Academy for State Health Policy's 20th Annual State Health Policy Conference in Denver, Colorado. Author: John Shiels

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    Health Reform and Cost Control Health Reform and Cost Control Presentation Transcript

    • Health Reform and Cost Control To: National Academy for State Health Policy By: John Sheils October 16, 2008
    • Limits on Family Premium Payments as a Percentage of Income – Massachusetts Model 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 2.3% 3.7% 4.5% 5.5% 6.5% 7.5% 2.8% 4.3% 5.3% 6.3% 7.5% 8.6% Annual Income in Thousands Individuals Families 3+ No Limit No Limit 0% 0%
    • Cost of Capping Premium Payments as a Percentage of Income Under a Mandate for All to Have Coverage $8,165 One Parent $10,824 Married with Children $8,794 Married Couple $4,397 Single Premiums at 50 th Percentile Health Plan 20.8 million Families Receiving Subsidies in 2008 $109.1 billion Program Costs 2008 Impact of Limiting Premiums as a Percent of Income in 2008
    • Projected Rates of Growth in Health Spending and Wages Based Upon OACT Projections Health Spending Growth Wage Growth a/ Wage growth assumed to be equal to CPI + 1.0 percent. See: National Health Expenditures Accounts; Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS).
    • Federal Cost of Limiting Family Premium Payments to a Percentage of Family Income Using Massachusetts Limits $109.1 $119.0 $129.8 $141.5 $154.2 $167.9 $182.9 $199.2 $216.9 $236.1 Ten Year Cost: $1.66 Trillion
    • Cost of Limiting Family Health Insurance Premiums to a Percentage of Income Under Alternative Cost Growth Assumptions Ten Year at 8.3% Growth: $1.78 Trillion Ten Year at 7.3% Growth: $1.66 Trillion Ten Year at 6.3% Growth: $1.54 Trillion $109.1 $119.0 $129.8 $141.5 $154.2 $167.9 $182.9 $199.2 $216.9 $236.1 $107.8 $116.2 $125.2 $134.9 $145.4 $156.6 $168.6 $181.6 $195.5 $210.4 $110.5 $121.2 $134.5 $148.2 $163.4 $180.0 $198.2 $218.1 $240.0 $263.9 $100 $140 $180 $220 $260 $300 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
    • Estimated Factors Driving Health Spending Growth: 2001-2005 Percent of Total Growth Volume and Intensity Excess Medical Inflation (provider prices) a/ Utilization/ Intensity a/ Demographics General Inflation Population Growth 39.0% 61.0% 49.7% 32.7% 12.8% 4.8% Average Annual Rate of Growth = 7.8% a/ Estimated split by excess medical inflation and utilization/intensity is based upon data published by OACT of CMS. Source: The Lewin Group analysis of data from the Centers for Medicare and Medicaid Services, Office of the Actuary. Volume and Intensity
    • The Health Savings Account (HSA) Model for Wisconsin $500 HSA Contribution $1,200 High Deductible Plan All Residents Enrolled in HSA Except Medicare and Medicaid 37.5% $10,000 40.1% $9,000 42.9% $8,000 46.2% $7,000 49.9% $6,000 54.3% $5,000 59.4% $4,000 65.5% $3,000 73.3% $2,000 81.7% $1,200 WHP 83.8% $1,000 Percentage Over Deductible Amount Deductible Amount Percentage of Total Health Spending in Excess of Selected Deductible Amounts for Non-Aged $403 million Estimated Heath Expenditure Savings of 2.1 percent $19.5 billion Spending for Covered Group Impact on Spending
    • Quality of Care: Over Use and Under Use of Health Services Utilization Cost Under Users of Care Over Users of Care Mode of Medical Practice
    • Health Expenditures for 11 Conditions Suitable for Patient Decision AIDS (PtDA) for Medicare Beneficiaries Potential Savings: $3.8 billion Per Year 2.1% 0.2% $11.1 Breast Cancer 11.9% 1.2% $12.2 Angina 20.3% 18.4% $53.0 Lower Back 0.7% 3.1% $1.0 Benign Prostate Hyperplasia 16.1% 18.7% $3.1 Hysterectomy 8.9% 14.7% $11.9 Prostate Cancer 41.0% 23.4% $8.2 Colon/Rectal Cancer 19.2% 0.2% $6.6 Chronic Obstructed Pulmonary Disease 39.0% 4.1% $10.7 Tube Feeding in Dementia 5.4% 38.2% $30.4 Hypertension -29.4% 4.4% $21.7 Atrial Fibrillation Estimated Percent Savings from PtDA Share of Care Subject to PtDA Total in Spending 2008 (billions) Condition
    • Impact of Clinical Guidelines Research with Financial Incentives to use Evidence-Based Annual Funding for Research: $450 million Patient Incentive: Lower Co-pays for Evidence Based Care Provider Incentive: Lower Payment where Care is not Indicated Chronic Care Management Savings: $10 - $20 billion Per Year 2.3% 58.8% 49.0% $1,834.0 2017 1.6% 41.4% 37.0% $1,316.2 2012 1.1% 28.2% 27.4% $1,004.1 2008 With Increased Research Current Law Savings from Chronic Disease Management Percent of Care With Evidence Based Research Spending on Chronic Conditions Year
    • Health Information Technology
      • Electronic Medical Records (EMR) – Access to all patient care
      • Computer Assisted Clinical Decision Support – Evidence Based Medicine
      • Computerized Practitioner Order Entry (CPOE) Systems – Reduced errors
      • Interoperable EMR – access to EMR across patient caregivers
      Savings Under Current Trends (i.e., in baseline) Percent Penetration $77 billion in annual savings Adoption rate base on Bower (2005), “Diffusion and Value of Healthcare Information Technology”, Rand corporation 2005, MG-272.
    • Medical Home with Primary Care Case Management a/ Based on IPA HMO utilization savings. b/ E.T. Moriany et al., “A Cost Analysis of the Iowa Medicaid Primary Care Case Management Program”, HSR, August 2006. Decile Ranking of Beneficiaries from Least Costly to Most Costly Source: The Lewin Group estimates using the Health Benefits Simulation Model (HBSM). 4% Primary Care Case Management b / 4% Higher copay for specialty services without referral a/ None Required to declare Medical Home: no gate keeping incentives Savings Medical Home Model
    • International Comparison of Spending on Health, 1980 - 2004