Barry Scholl, MSJSr. Vice President, Communications and Publishing

The Commonwealth Fund

bscholl@commonwealthfund.orgTwitter: @barryscholl

www.commonwealthfund.org

April 18, 2013Talking About the U.S. Health

Care System

2

Overview of the Commonwealth Fund• Established in 1918 by Anna Harkness

• Broad charge to “enhance the common good”

• Today we accomplish this by creating and funding independent research on health policy and deliveryMission

To promote a high performing health care system that achieves better access,

improved quality, and greater efficiency, particularly for society’s most vulnerable

3 3

COVERAGE

52 million

uninsured; many

more underinsured

QUALITYDespite rapid

advances, thousands of

patients die each year

from medical error

COST

Billions in unnecessary

and wasteful spending

Overuse puts patients at

risk, drains resources,

and makes healthcare

less accessible and less

effective

A BROKEN SYSTEM

4

0

1000

2000

3000

4000

5000

6000

7000

8000

9000 USNORSWIZNETHCANGERFRASWEAUSUKNZ

80 82 84 86 88 90 92 94 96 9836

52637

25937

99138

72439

456 10

0

2

4

6

8

10

12

14

16

18

20 USNETHFRAGERCANSWIZNZUKSWENORAUS

International Comparison of Spending on Health, 1980–2010

Note: $US PPP = purchasing power parity.Source: Organization for Economic Cooperation and Development, OECD Health Data, 2012 (Paris: OECD, Nov. 2012).

Total expenditures on healthas percent of GDP

$8,233

$3,022

17.6%

9.1%

Average spending on health per capita ($US PPP)

5

6

Health Spending is a Problem Not Only for Government,But Also for Businesses and Families

Note: GDP = gross domestic product.Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund.

NHE in $ billions

% GDP: 17.9% 18.7% 20.5%

7

5%

13%

18%

16%

49%

Private Non-GroupMedicareMedicaid/Other PublicUninsuredEmployer-Sponsored Insurance

SOURCE: KCMU/Urban Institute analysis of the 2012 ASEC supplement to the CPS

307.9 million people total

Health Insurance Coverage in the U.S., 2011

8

52 Million Adults Under Age 65 Uninsured, 81 Million Either Underinsured or Uninsured

Uninsuredduring year52 million

(28%) Insured, notunderinsured102 million

(56%)

Underinsured*29 million

(16%)

2010 Adults 19–64(184 million)

Uninsuredduring year45.5 million

(26%)Insured, notunderinsured110.9 million

(65%)

Underinsured*15.6 million

(9%) 2003 Adults 19–64(172 million)

* Underinsured defined as insured all year but experienced one of the following: medical expenses equaled 10% or more of income; medical expenses equaled 5% or more of income if low income (<200% of poverty); or deductibles equaled 5% or more of income.Source: C. Schoen, M. Doty, R. Robertson, S. Collins, “Affordable Care Act Reforms Could Reduce the Number of Underinsured U.S. Adults by 70 Percent,” Health Affairs, Sept. 2011. Data: 2003 and 2010 Commonwealth Fund Biennial Health Insurance Surveys.

9

Percent Uninsured In Other Wealthy Nations

10

76

88 8981

8899 97

109116

10697

134

115 113

127120

55 57 60 61 61 64 66 67 74 76 77 78 79 80 8396

0

50

100

150 1997–98 2006–07

Deaths per 100,000 population*

* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. Analysis of World Health Organization mortality files and CDC mortality data for U.S.

U.S. Lags Other Countries: Mortality Amenable to Health Care

Source: Adapted from E. Nolte and M. McKee, “Variations in Amenable Mortality—Trends in 16 High-Income Nations,” Health Policy, published online Sept. 12, 2011.

11

*Age-standardized deaths before age 75 from select causes; includes ischemic heart disease.**Excludes District of Columbia.DATA: Analysis of 2001–02 and 2004–05 CDC Multiple Cause-of-Death data files using Nolte and McKee methodology, BMJ 2003SOURCE: Commonwealth Fund State Scorecard on Health System Performance, 2009

12

Why?

13

Hospital Discharges per 1,000 Population, 2008

84

113130136140

159161163165169172

232

264

0

50

100

150

200

250

300

FR GER NOR SWIZ SWE* AUS* OECDMedian

DEN NZ UK US** NETH CAN*

Source: The Organisation for Economic Co-operation and Development (OECD) Health Data 2010 (Oct. 2010).

* 2007. ** 2006.

14

Average Length of Stay for Acute Care, 2008

SWIZ GER CAN* UK OECD Median

AUS** NETH US FR NOR SWE*0

2

4

6

8 7.7 7.6 7.57.1

6.0 5.9 5.95.5

5.24.8

4.5

Days

Source: OECD Health Data 2010 (Oct. 2010).

* 2007. ** 2006.

15

Hospital Spending per Discharge, 2008Adjusted for Differences in Cost of Living

US** CAN* NETH SWIZ* DEN* NOR** SWE* AUS* NZ OECD Median

FR GER0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,00016,708

12,66912,200

9,422 9,230 9,118 9,064

7,7297,174

5,949

4,762 4,566

* 2007. ** 2006.Source: OECD Health Data 2010 (Oct. 2010).

Dollars

16

Percentage of National Health ExpendituresSpent on Administration, 2008

Net costs of administration as percent of current expenditure on health

Norway

Denmark

Australi

a

United Kingdom

Canad

a

Switzerl

and

German

y

Netherl

ands

New Zeal

and

United Stat

es0

2

4

6

8

10

0.8 1.2

2.83.6 3.8

5.0 5.4 5.5

7.2 7.3

a

a 1999 b 2007Source: OECD Health Data 2010, October 2010.

b b b

17 Source: M.J. Laugesen, S.A. Glied, “Higher Fees Paid To US Physicians Drive Higher Spending For Physician Services Compared To Other Countries,” Health Affairs, September 2011 vol. 30 no. 9 1647-1656.

Physician Incomes, 2008Adjusted for Differences in Cost of Living

US UK GER CAN FR AUS

$186,582$159,532

$131,809$125,104

$95,585$92,844

US UK CAN GER AUS FR$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000 $442,450

$324,138

$208,634$202,771

$187,609$154,380

Primary Care DoctorsOrthopedic Surgeons

18

Computer Tomography (CT) Exams per 1,000 Population, 2008

228

130122

9484

60

0

50

100

150

200

250

US* FR CAN AUS DEN NETH

Source: OECD Health Data 2010 (Oct. 2010).* 2007.

19

U.S. Prices Often Exceed International: Wide Spread in U.S.

Scans and Imaging Fees: MRI Scan (US$)

UK Spain Canada France Germany Switzerland USA fee range

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$187 $234 $304$398

$632$874

$509

$1,009

$2,590

Source: International Federation of Health Plans, 2010 Comparative Price Report, Medical and Hospital Fees by County, November 2010.

(Average)

20

Drug Prices for 30 Most Commonly Prescribed Drugs, 2006–07,

Brand-Name and GenericUS is set at 1.0

Source: IMS Health.

AUS CAN FR GER NETH NZ SWITZ UK US

Brand-Name Drugs

0.40

0.64

0.32

0.43

0.39

0.33 0.51 0.4

61.00

Generic Drugs

2.57

1.78

2.85

3.99

1.96

0.90 3.11 1.7

51.00

21

Health Policy at a Fork in the Road

Cut payments,

reduce benefits,

and restrict

eligibility for public programs

Re-engineer

health care and improve health

markets

Regardless of how you envision the role of government, health care and the markets in which it’s purchased need to be improved

OR

22

Health Care Reform and the Federal Budget Deficit: What Are the Choices?

• Cutting Benefits– Cover fewer people, fewer services, or pay

for a smaller fraction of total spending for services (i.e. increased patient cost-sharing or premiums)

– Or, restructure current patient out-of-pocket costs to shape better care choices

• Trim Payment Rates– Across the board cuts or selective cuts of

over-priced services– Or, use purchasing leverage and pay

smarter• Ensuring the Right Care

– Restrict use of effective services, i.e. ration care

– Or, reduce misuse, overuse, and underuse through payment and delivery system reforms, apply comparative-effectiveness research

Source: K. Davis and S. Guterman, Achieving Medicare and Medicaid Savings: Cutting Eligibility and Benefits, Trimming Payments, or Ensuring the Right Care?, (New York: The Commonwealth Fund, July 2011).

23

Need to Engage and Inform ConsumersThe sickest 5% account for the majority of health spending, and

need better choices and the information to choose wisely

Source: Agency for Healthcare Research and Quality analysis of 2009 Medical Expenditure Panel Survey.

Distribution of health expenditures for the U.S. population, by magnitude of expenditure, 2009

1%5%

10%

50%

65%

22%

50%

97%

$90,061

$40,682

$26,767

$7,978

Annual mean

expenditure

24

the ACA is helping to make it easier to do the right thing…

Simply stated,

25

Ongoing ACA Implementation…Hundreds of provisions in two big

buckets:

coverage expansion

health system reform

26

Coverage Extension

• Medicaid expansions (16 million)• Subsidies for uninsured to buy private

insurance (20 million)• private markets:• Insurance mandate• Children to 26• No limits on lifetime coverage and no

discrimination against sick• State health insurance exchanges• Regulate administrative costs

27

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVTNH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DE

DC

HI

CO

GAMS

OK

NJ

SD

19%–22.9%14%–18.9%

23% or more

2008-2009

MARI

CT

VTNH

MD

7.1%–13.9%

7% or less

2019 (estimated)

Health Reform Reduces Numbers of UninsuredPercent of Adults 19–64 Uninsured by State

Data: U.S. Census Bureau, 2009–10 Current Population Survey ASEC Supplement; estimates for 2019 by Jonathan Gruber and Ian Perry of MIT using the Gruber Microsimulation Model for The Commonwealth Fund. SOURCE: Commonwealth Fund State Scorecard on Child Health System Performance, 2010

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10 M (4%)Nongroup

32 Million Uninsured Covered Under Affordable Care Act, Employers Remain Primary Source, 2019

* Employees whose employers provide coverage through the exchange are shown as covered by their employers (5 million), thus about 29 million people would be enrolled through plans in the exchange. Note: ESI is Employer-Sponsored Insurance. Source: K. Davis, S. Guterman, S. R. Collins, K. Stremikis, S. Rustgi, and R. Nuzum, Starting On the Path to a High Performance Health System: Analysis of the Payment and System Reform Provisions in the Patient Protection and Affordable Care Act of 2010, (New York: The Commonwealth Fund, September 2010).

Among 282 million people under age 65

Pre-Reform

162 M(57%)

ESI35 M(12%)

Medicaid

54 M(19%)

Uninsured16 M (6%)Other

15 M (5%)Nongroup

159 M(56%)

ESI

51 M(18%)

Medicaid

24 M (9%)Exchanges

(Private Plans)

16 M (6%)Other

23 M (8%)Uninsured

Affordable Care Act

29

Health Reform Slows Growth in Total National Health Expenditures (NHE), 2009–2019

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0

$4,500.0

$5,000.0

Before Reform* After Reform

NHE in trillions

Notes: * Estimate of pre-reform national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010).

$2.5

$4.3

5.7% annual growth

6.3% annual growth $4.6

30

2010 Baseline 2019 Baseline After Reform$0

$5,000

$10,000

$15,000

$20,000

$25,000

$13,305

$21,458$19,490

Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010).

Health Reform Lowers Insurance Premiums, 2019

9.2%

31

The ACA aims to reduce percent of families with high medical care expenses compared to income

(by state, 2009)

TXFL

NMGA

AZ

CA

WY

NV

AK

OK

MS

LA

MT

TN

WA

ORID

UT CO

KS

NE

SD

ND MN

WIMI

IA

MO

AR

IL IN

OH

KY

WV V

ANCSC

AL

PA

NY

ME

DCMD

DENJ CT

RIMA

NHVT

HI

12-13%14-16%17-19%20-24%

Note: Households under 65 years old. Expenses are family out-of-pocket for medical care as a share of annual income, not including premiums. 5% threshold applies to incomes below 200% of poverty. Source: Analysis of the 2010 Current Population Survey by N. Tilipman and B. Sampat of Columbia University for The Commonwealth Fund.

Percent of families who spent 10% or more of

income on out-of-pocket medical care expenses or

5% if low income

32

Note: * Estimate. Expenditures shown in $US PPP (purchasing power parity).Source: Calculated by The Commonwealth Fund based on 2007 International Health Policy Survey; 2008 International Health Policy Survey of Sicker Adults; 2009 International Health Policy Survey of Primary Care Physicians; Commonwealth Fund Commission on a High Performance Health System National Scorecard; and Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009).

    AUS CAN GER NETH NZ UK USOVERALL RANKING (2010) 3 6 4 1 5 2 7Quality Care 4 7 5 2 1 3 6

Effective Care 2 7 6 3 5 1 4Safe Care 6 5 3 1 4 2 7Coordinated Care 4 5 7 2 1 3 6Patient-Centered Care 2 5 3 6 1 7 4

Access 6.5 5 3 1 4 2 6.5Cost-Related Problem 6 3.5 3.5 2 5 1 7Timeliness of Care 6 7 2 1 3 4 5

Efficiency 2 6 5 3 4 1 7Equity 4 5 3 1 6 2 7Long, Healthy, Productive Lives 1 2 3 4 5 6 7Health Expenditures/Capita, 2007 $3,357 $3,895 $3,558

$3,837* $2,454 $2,992 $7,290

Country Rankings

1.00–2.332.34–4.664.67–7.00

Health Reform Will Improve U.S. Health System Performance

33

Health Systems Reform

Information Availability• Comparative effectiveness research ($500

million/year)• Health information technology

Organizational Reforms• Accountable care

organizations• Patient centered medical

homes• Increased training and

payment for primary care

Payment Reforms: Pay for performance• Hospital and physician quality• Medicare readmissions• Hospital acquired conditions

34

Independent Payment Advisory Board (IPAB)Commission with power to promulgate changes designed to contain rate of growth of Medicare costs to GDP plus 0.5 percent.

Health Systems Reform

Center for Medicare and Medicaid Innovation (CMMI)$10 billion over ten years to undertake virtually unrestricted reform experiments and incorporate into routine Medicare and Medicaid practice.

35

Health System Reform: Early Signs of Overall Declines in Hospital ReadmissionsMonthly 30-day All-Cause Hospital Readmission Rate, January 2010 – September 2012

Source: CMS Office of Information Products and Data Analysis, Medicare Claims Analysis

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10Jul-1

0

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10Jan

-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11Jul-1

1

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11Jan

-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12Jul-1

2

Aug-12

Sep-12

16.5%

17.0%

17.5%

18.0%

18.5%

19.0%

19.5%

20.0%

Note that point values are given for months where the data are complete. Point estimates and confidence in-tervals are provided for those months in which the data are not yet completed.

36

Health System Reform: ACO Participation is Growing Rapidly

All ACOs Assigned Beneficiaries by County (4.0 million total)

Source: ACO Assignment Summary Reports (2012 for January starts and 2012Q3 for April/July Starts).

37

Coverage and Access Risks After Full Implementation

of the Affordable Care ActGaps in the Law• 25-30 million people estimated to remain uninsured through

2022.• Undocumented immigrants are ineligible for Medicaid, premium

tax credits, and exchanges.• Potential for unaffordable premiums, risk of underinsurance.

Gaps in Implementation• States that do not expand Medicaid programs. • States that expand but use funds for private plans in exchanges. • Poorly functioning IT systems and lack of coordination between

Medicaid and exchanges.• Insufficient outreach in some states, so many are eligible but

uninsured.• Insufficient network capacity in health plans sold through

exchanges.• Insufficient number of essential community providers in networks.

38

Characteristics of Estimated Uninsured Population in 2016, Assuming Full Expansion of Medicaid

Source: Gruber MicroSimulation Model (GMSIM) Congressional Budget Office,

154 M (57%)ESI

13.3 M (53%)

People not subject to individual

mandate tax because of low

income or plans not affordable

5.1 M (20%)Undocumented

Immigrants

6.7 M (27%)

People subject to individual

mandate tax and choose to pay

tax

Among 25.3 million uninsured people under age 65

39

Legitimate Concerns Going Forward• Will employers continue to provide coverage to

employees?• Will insurance markets lead to competition on value or

adverse risk selection?• Will innovation work gaining widespread voluntary

participation of physicians, hospitals, and other providers, and lead to widespread change?

• Will the affordability provisions be adequate?• Will the safety net hold together until coverage is

expanded and improved?• Will the incentives for primary care and care coordination

generate a strong primary care foundation for the health system of the future?

• Will federal and state government agencies be up to the implementation task?

Source: K. Davis, A New Era in American Healthcare, (New York: The Commonwealth Fund, June 2010).

40

TimingMandate goes into effect

Subsidies go into effect

Medicaid expansions go into effect

Anti-discrimination provisions for private insurance become effective

Health Insurance Exchanges activated

the year ofdecision

41

Next Steps:Synergistic Policies to Stabilize Costs and Improve Outcomes

Goal: To create incentives for better care and to lower cost throughout the continuum of health care services

Tools:• Payment reforms to

accelerate delivery system innovation

• Policies to expand and encourage high-value choices

• System-wide action to improve how health care markets function

42

Commonwealth Fund Resources

43

• Third year of the fellowship saw dramatic increase in applicant pool

• Experienced reporters concentrate on performance of local, regional, national health care systems

• Examine policies, practices, outcomes, roles of stakeholders

Association of Health Care Journalists2013 Reporting Fellowships in Health Care

Performance

Supporting Health Care Reporting

Rhiannon Meyers

Corpus Christi Caller-Times

Noam LeveyLA Times/ Tribune

Washington Bureau

Lindy Washburn

The Record/North Jersey Media

Group

Jeanne Erdmann

Independent journalist,

St. Louis, Mo.

Alan BavleyKansas City Star

43

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Supporting Health Care Reporting

45

Supporting Health Care Reporting

CUNY TV: Talking HealthThe series features notable experts in the world of health care policy and practice; topics have included:• Patient-Centered Medical

Homes• Health Care Costs• Long-Term Care

SABEW SymposiumJanuary 17 & 18, 2013 New York

Nebraska Press Association

Pilot program for rural health news reporting

• ACA implementation• state-based healthcare exchanges• Medicare reform & Medicaid• healthcare payment innovation and

reform• healthcare data• healthcare bundling• business insurance plans for

employees