Health Reform 2010 The Affordable Care Act Matt Hendrickson, MD MPH PNHP California
Health Reform 2010The Affordable Care Act
Matt Hendrickson, MD MPHPNHP California
DisclosuresFinancial
• Dr. Matt Hendrickson has no relevant financial relationships with commercial interests.
www.pnhp.org
Outline
1. 1. History of U.S. Health Reform1. 2. Challenges facing U.S. Health
Care System1. 3. Health Economics2. 4. Policy options: ACA and Single
Payer
Patients
• Mother of two presents to the ED with a lump in her neck.
• Husband had no insurance with his work. Family couldn’t afford $1100 monthly premium.
• Paid for biopsy with a credit card.
• Diagnosis: Stage IV Melanoma.
Before Health Insurance Before 1936
• Health care 1% or less of GDP• Out-of-pocket payment for
physician care• Charity and public hospital
care
Private Employ-based1936-1964
• BC formed in 1936 by MDs & hospitals in response to falling income during recession
• WW II: health benefits linked to employment
• IRS rules employer contributions tax deductible
• Commercial life insurance companies enter the health insurance industry
Limited Gov’t Insurance1965-1997
• Medicare for those over 65 years
• Medicaid for the poor. • U.S. remains the only
industrialized nation without universal access to health care
• COBRA passed in 1986• HMO Act 1973
Beginning of HMOs1965-1997
For-Profit Privatization1997-Present
• Medicare+Choice and Medicare Advantage
• Medicare Part D limited to private insurers
• Experience-rated premiums (the sick pay more) dominate the market
• Non-profit Blues convert to for-profit
Medicare Part D- Pharma Bonanza
Originally passed in 2004 at a projected cost of $400B over 10 years, some estimates suggest it will cost over $900 Billion.
Passed by a GOP controlled house and senate led by then Rep. Billy Tauzin (R-La) who left immediately after its passage to become the head of PhRMA.
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
Medicare HMOs:A Cautionary Tale About
Competition Between Public and Private Plans
(AKA Public Plan Option)
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
Despite Medicare’s Lower Overhead, Enrollment of Medicare Patients in
Private Plans Has Grown
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
Private Medicare Plans Have Prospered by Cherry Picking
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
For-Profit Privatization1997-Present
U.S. Health SystemChallenges
Access to Care
Cost Containment Quality of Care
2009
U.S. Challenges- Access51 Million Uninsured
U.S. Challenges- Access Universal Access!
“I mean, people have access to health care in America. After all, you just go to an emergency room.”
U.S. Challenges- Access Uninsured kills
•1% of uninsured die annually due to lack of insurance.•40% higher risk of death.•NHANES tracked respondents
from 1983 to 2000. Adjusted for race, education, health behaviors.
American Journal Public Health, Wilper et al, Dec 2009
Jenny Fritts
THE COMMONWEALTH FUND
Exhibit 4. Underinsured and Uninsured Adults at High Risk of Going Without Needed Care and Financial Stress
0
25
50
75
Went without needed care due to costs* Have medical bill problem or outstanding debt**
51
68
4553
2131
Insured, not underinsured Underinsured Uninsured during yearPercent of adults (ages 19–64)
* Did not fill prescription; skipped recommended medical test, treatment, or follow-up; had a medical problem but did not visit doctor; or did not get needed specialist care because of costs. **Had problems paying medical bills; changed way of life to pay medical bills; or contacted by a collection agency for inability to pay medical bills.Source: C. Schoen, S. Collins, J. Kriss, M. Doty, “How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007,” Health Affairs Web Exclusive, June 10, 2008. Data: 2007 Commonwealth Fund Biennial Health Insurance Survey.
U.S. Challenges- Access 2/3 of Adults Underinsured
• 1 France• 2 Italy• 3 San Marino• 4 Andorra• 5 Malta• 6 Singapore• 7 Spain• 8 Oman• 9 Austria• 10 Japan• 11 Norway• 12 Portugal• 13 Monaco• 14 Greece• 15 Iceland• 16 Luxembourg• 17 Netherlands• 18 United Kingdom19
• 19 Ireland• 20 Switzerland• 21 Belgium• 22 Colombia• 23 Sweden• 24 Cyprus• 25 Germany• 26 Saudi Arabia• 27 United Arab Emirates• 28 Israel• 29 Morocco• 30 Canada• 31 Finland• 32 Australia• 33 Chile• 34 Denmark• 35 Dominica• 36 Costa Rica• 37 United States
U.S. Challenges- QualityWHO Rankings 2000
U.S. Challenges- QualityRanked last among 7 nations
The Commonwealth Fund 6/23/10
U.S. Challenges- QualityLast in avoidable deaths
% ofGDP
2010 2020 2030 2040 2050 2060 2070 2080Based on rates from 1975 to 2004- www.cbo.gov Jan 31, 2008
All other healthcareMedicare
Medicaid
U.S. Challenges- CostHealthcare Consuming GDP
0
4750
9500
14250
19000
2004 2006 2008 2010
Milliman Medical Index
$11192$13382
$15609$18074
Avg. Spending Family of 4/PPO
U.S. Challenges- CostAverage Cost For Family
Household income
Insurance premiums
U.S. Challenges- CostPremiums will surpass income
David Walker, Former US Comptroller
U.S. Challenges- CostWill bankrupt America
Health EconomicsPaying for a NHP, without it
0
9.55
19.09
28.64
38.18
47.73
57.27
66.82
76.36
85.91
95.45
105.00
Unite
d Sta
tes
Austra
lia
Austri
a
Belgi
um
Canad
a
Czech
Rep
ublic
Denm
ark
Finl
and
Fran
ce
Germ
any
Greec
e
Hunga
ry
Icel
and
Irela
ndIta
ly
Japa
n
Korea
Luxe
mbo
urg
Mexic
o
Nethe
rland
s
New Z
eala
nd
Norway
Portu
gal
Slovak
Rep
ublic
Spain
Sweden
Switzer
land
Turk
ey
Unite
d Kin
gdom
Perc
ent
Population Covered by Public System
Source: F. Colombo and N. Tapay, Private Health Insurance in OECD Countries, OECD 2004
Health EconomicsPaying for a NHP, without it
Health EconomicsU.S. Is the Only Outlier
Uwe Reinhardt, Economix Blog, NYTimes, November 14, 2008
Health EconomicsWhy So Expensive?
1. Administrative overhead
2. Higher prices for same goods and services
3. More widespread use of high cost, high tech
4. Defensive medicine• Uwe Reinhardt, Economix Blog, NYTimes, November 14, 2008
31%
69%
AdministrativeCosts
Clinical Care
Source: Woolhandler et al, NEJM, 8/2003 & Intl. Jrnl. of Hlth. Services, 2004
Health EconomicsWhy So Expensive? Admin!
Source: Woolhandler, et al, New England Journal of Medicine, August 2003 & Int. Jrnl. Of Hlth. Services, 2004
0
7.5
15
22.5
30
Medicare Non-profit Blues Commercial Carriers For-profit Blues
Private Insurer’s High Overhead
3.1%
26.5%19.9%
16.3%
Health EconomicsWhy So Expensive? Admin!
Roy Williams – CEO Aetna - $ 24,300,122 H. Edward Hanway – Cigna - $ 12,236740 Angela Bray – Wellpoint - $ 9,844,212 Dale Wolf – Coventry Healthcare - $ 9,047,469 Michael Niedorff –Centene - $ 8,744, 483 James Carlson – Amerigroup - $ 5,292,546 Michael McAllister – Humana - $ 4,764,309 Jay Gellert – Health Net - $ 4,425,355 Steven Helmsley – United Health Group - $ 3,241,042
Billy Tauzin – CEO PhRMA - $2,000,000 Karen Ignani – Amer. Health Insurance Plans - $ 1,580,000
Health EconomicsAdmin- CEO Salaries
Health EconomicsAdministrative bureaucracy
Itʼs The Prices, Stupid: WhyThe United States Is SoDifferent From Other CountriesHigher health spending but lower use of health services adds up to much higher prices in the United States than in any other OECD country.
by Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan
HEALTH AFFAIRS ~ Volume 22, Number 3May/June 2003
Health EconomicsHigh Prices
Health EconomicsHigh Prices
Sager FDA Testimony 4/04
Health EconomicsHigher use of expensive procedures
Health EconomicsInternational Solutions
1. No administrative middleman- national insurance
2. Control prices- monopsony
3. Reduce overuse- global budgeting and planning, nonprofit hospitals.
4. Defensive medicine- national insurance, no fault fund.
Health Economics2X more than the average
Rampel, US Health Spending Breaks From the Pack, NYT 7/8/09
Health EconomicsSingle Payer
Additional costsCovering the uninsured and poorly-insured +6.4%Elimination of cost-sharing and co-pays +5.1%SavingsReduced insurance administrative costs -5.3%Reduced hospital billing costs -1.9%Reduced physician office costs -3.6%Bulk purchasing of drugs & equipment -2.8%Primary care emphasis & reduce fraud -2.2%
Total Savings -15.8% Net Savings - 4.3%
Source: Health Care for All Californians Plan, Lewin Group, January 2005
Health EconomicsSingle Payer
Health EconomicsPhysician Salaries
Specialty US CanadaFamily
Medicine $164,952 $167,064Internal Medicine $170,889 $248,721Ob/Gyn $253,160 $261,412GeneralSurgery $278,433 $247,375
Anesthesia $309,019 $205,441Urology $317,778 $279,982
Health EconomicsU.S. Salaries Down
Health ReformWhich Direction?
National Health
Program
Private Insurance
Public/Private Hybrid
Health Reform$1.2 Billion Spent on Reform
June 17, 2009 – As 22 Senators began hearings and work on healthcare reform, the room was full of registered healthcare Lobbyists.
52
ACAPublic and Private Expansion“The irony is that for all the apocalyptic rhetoric, the new health reform law is anything but radical.”
• Expands Private Insurance System
• Expands Public Safety Net for Elderly, Low Income, Disabled
Jonathan Oberlander, PhDProfessor, Social Medicine and Health Policy & Management, University of North Carolina–Chapel Hill
ACAPublic and Private Expansion
✤ 2010
✤ Insurance Reforms- Add Kids, Kids with preexisting cond., No rescissions, MLR
✤ 2012
✤ Encouraging integrated health systems (ACOs).
✤ 2013
✤ Bundled Payments.
✤ 2014
✤ No more Preexisting conditions, No more caps, Health insurance exchange starts
✤ Medicaid Expansion (incl. higher pay), Health Insurance Exchange Subsidies
✤ Quality Reporting;
ACAThe Good
• Advances the concept of comprehensive healthcare for all.
• Eliminates some harmful practices of private insurance:
• Preexisting conditions, Annual/lifetime caps, Rescissions
• Makes the Medical Loss Ratios more transparent.
• Expands Medicaid
• Increases funding for comparative effectiveness research and community clinics
• Ends the overpayment of Medicare Advantage plans
ACAThe Bad
• Middle class must buy expensive plans with high out of pocket costs or get fined.
• Complex inefficient administration grows.
• Health insecurity remains- if you lose your job, you lose your insurance.
• Lack of physician choice remains.
• Women's reproductive rights will be further eroded.
ACAThe Ugly
• 23 million still uninsured in 2019.
• Insurance firms will be handed at least $447 billion in taxpayer money.
• U.S. taxpayers will continue to subsidize pharmaceuticals for the entire world.
• Health care costs will continue to skyrocket.
Total National Health Expenditures (NHE), 2009–2019Current Projection and Alternative Scenarios
$0
$1,250
$2,500
$3,750
$5,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Modified current projection*Current projectionSenateLine 4Line 5Line 6
NHE in trillions
Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center for American Progress and The Commonwealth Fund, December 2009.
$2.5
$4.7$4.5
6.4% annual growth
6.6% annual growth
6.0% annual growth
$4.8
ACAEvidence Based Cost Controls
Cost Control
PPACA NHP• No more private insurance• No more for-profit hospitals• Global budgeting• Global planning• Negotiated prices• Malpractice settlements cut
Protection
PPACAGuaranteed coverage!• Unless you lose your job• Unless you donʼt pay yourpremium• Unless you donʼt pay yourcopay• Unless itʼs not included• Unless you donʼt pay yourdeductible• Unless youʼre undocumented
NHP• Everyone• First dollar full coverage• For Life
Quality
PPACA• No cost share for a fewpreventive services•Choice of insurance co.• Physician choice limitedby network• Copayment reduces basic care•Micromanage physicians bypay for performance
NHP• Free choice of MD• Free choice of hospital• No financial barrier tocare• No for profit hospital/surgicenters.