Talking about the U.s. health care system

TALKING ABOUT THE U.S. HEALTH CARE SYSTEM

May 1, 2014

Barry SchollSenior Vice President for Communications and Publishing

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 delivery

Mission To promote a high performing

health care system that achieves better access,

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

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COVERAGE

47 million

uninsured;

31 million

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

International Comparison of Spending on Health, 1980–2011

Note: $US PPP = purchasing power parity.Source: Organization for Economic Cooperation and Development, OECD Health Data, 2013

Total expenditures on healthas percent of GDP

Average spending on health per capita ($US PPP thru 2011)

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

1000

2000

3000

4000

5000

6000

7000

8000

9000 USNORSWIZNETHCANDEN*GERFRSWEAUS*UKJPN*

$8,508

$3,182

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

4

6

8

10

12

14

16

18

20 USNETHFR GER CAN DEN*SWIZ NZ JPN*SWE UK NOR AUS*

17%

8.9%

Total Premiums for Employer-Sponsored Insurance Rise Sharply as Share of Median Income

Less than 17% 17%–19% 20%–22% 23%–28%

2003 2012

Note: Premiums include employer and employee shares.Data sources: 2003, 2012 Medical Expenditure Panel Survey–Insurance Component; March 2004 and March 2013 Current Population Surveys for median income.

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

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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.

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Percent Uninsured In Other Wealthy Nations

10

7688 89

8188

99 97109

116106

97

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 2006–07Deaths 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.

New State Scorecard Released Yesterday: Pockets of Improvement; Widespread Stagnation and Decline

No meaningful change or decline in the majority of states for 2/3 of indicators with trends

13 states where as many or more indicators declined as improved

Most states improved on indicators with national and state attention: immunizations for children safe prescribing of medications for

the elderly patient-centered care avoidable hospital admissions cancer-related deaths

States lost ground in insurance for adults and affordability of care

11

9

241

Majority ImprovedMajority No Change or DeclineNo Majority

34 Indicators with TrendsIndicators where the majority of states improved, or did not change/declined over 5 years

up to 2011/12

Notes: Trend data are available for 34 of 42 total indicators. Trends generally reflect the 5-year period ending in 2011 or 2012. Improvement or decline refers to a change from baseline to current time of at least 0.5 standard deviations. See Exhibit 1 for indicators.

Overall State Health System Performance: Scorecard Ranking, 2014

12

Top quartile (13 states)Second quartile (11 states + D.C.)Third quartile (14 states)Bottom quartile (12 states)

Overall performance, 2014

Source: Commonwealth Fund Scorecard on State Health Performance, 2014

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Why?

14

Hospital Discharges per 1,000 Population, 2011

Source: Organization for Economic Cooperation and Development, OECD Health Data, 2013*2010

GER NOR* DEN* SWIZ FR SWE* AUS* OECD Me-dian

NZ UK US* NETH JPN CAN*0

50

100

150

200

250

300

244

175 172 170 169 163 159 159147 136 125 122 111

82

15

Hospital Spending per Discharge, 2011Adjusted for Differences in Cost of Living

*2010Source: Organization for Economic Cooperation and Development, OECD Health Data, 2013

US* CAN* NETH SWIZ DEN* NOR* SWE* AUS* NZ FR OECD Me-dian

GER0

4,000

8,000

12,000

16,000

20,000

24,00021,018

15,43313,025

11,96811,37411,3069,894 9,611

8,478 8,363 7,842

5,339

US

$

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

Switzerla

nd

German

y

Netherlands

New Zealand

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

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Notes: US refers to the commercial average. MRI refers to magnetic resonance imaging; CT refers to computed tomography.Source: Organization for Economic Cooperation and Development, OECD Health Data, 2013

CAN UK FR NETH NZ SWIZ US$0

$100

$200

$300

$400

$500

$600

$124$175$183

$252$310$328

$566

Diagnostic Image Prices, 2012

NETH UK FR NZ SWIZ US$0

$200

$400

$600

$800

$1,000

$1,200

$319 $335 $363

$554

$928

$1,121MRI scanning and imaging fees CT scanning and imaging fees

(head)

Retail Price Indexes for Basket of In-Patent Pharmaceuticals, 2010

US is set at 100

US GER SWIZ FR CAN AUS UK0

20

40

60

80

100 100 9588

6150 49 46

Note: Calculations weighted relative to U.S. consumption patterns. U.S. retail prices were discounted from manufacturer prices according to the rebates obtained by the Medicaid program.Source: P. Kanavos, A. Ferrario, S. Vandoros et al., "Higher U.S. Branded Drug Prices and Spending Compared to Other Countries May Stem Partly from Quick Uptake of New Drugs," Health Affairs, April 2013 32(4):753–61.

Price level

Health Policy at a Fork in the Road

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

OR

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Cut payments,

reduce benefits, and

restrict eligibility for

public programs

Re-engineer

health care, cover

more people, and

improve health

markets

the Affordable Care Act tackle the problem?

So how does

22Two Main Ways:

coverage expansion

health system reform

23Coverage Expansion

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

insurance (20 million) Insurance mandate Children to 26 No limits on lifetime

coverage and no discrimination against sick

State health insurance exchanges

Regulate administrative costs

24

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

ALSC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVTNH

MARI

CT

DE

DC

HI

CO

GAMSOK

NJ

SD

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

ALSC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DE

DC

HI

CO

GAMSOK

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

Note: CMS has approved waivers for expansion with variation in Arkansas, Iowa, and Michigan. Pennsylvania’s waiver is currently under development by the state’s health department .**In New Mexico and Idaho, the federal government will operate the individual market in 2014. Source: National Conference of State Legislatures, Federal Health Reform: State Legislative Tracking Database. http://www.ncsl.org/default.aspx?TabId=22122; State Refor(u)m; K. Keith and K. W. Lucia, Implementing the Affordable Care Act: The State of the States, The Commonwealth Fund, January 2014, http://www.commonwealthfund.org/Publications/Fund-Reports/2014/Jan/Implementing-the-Affordable-Care-Act.aspx; Politico.com; Commonwealth Fund Analysis.

Medicaid Expansion

State Action on Establishing Health Insurance Marketplaces and Participation in Medicaid Expansion, As

of April 2014 Health Insurance

Marketplaces

Pursuing state-run exchange (16 + DC)

Pursuing state-federal partnership exchange^ (7)

Pursuing federally facilitated exchange , state will be responsible for the plan management functions (7)

Pursuing a state-run small business exchange and a federally run individual exchange (1)

Pursuing federally facilitated exchange (19)

Expanding (22 + DC)

Not expanding (19)Options under discussion (4)

Customized approaches (5)

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More than 20 Million People Have Insurance Under the Provisions of the Affordable Care Act, as of March 31,

2014

0

5

10

15

20

25

30

3.0

7.511.7

27.2

3 Million enrolled in Medicaid/CHIP

*May not include all eligibility determinations made through federally facilitated marketplaces.

Millions of people who have gained coverage or enrolled in a new plan under the Affordable Care Act

TXFL

NMGA

AZ

CA

WY

NV

AK

OK

MSLA

MTWA

OR ID SD

NDMN

WIMI

AR

OH

AL

PA

NY

ME

MA

NHVT

HI

UTCO KS

NEIA

MO

IL IN

KY WV V

ANC

SC

DCMD

DENJ

CTRI

TN

Percent of five month enrollment target reached by 3/1/2014

<50%

50%-<75%

75%-<100%

100%+

Source: Memo from Marilyn Tavenner, CMS Administrator, Projected Monthly Enrollment Targets for Health Insurance Marketplaces in 2014, September 5, 2013, http://waysandmeans.house.gov/uploadedfiles/enrolltargets_09052013_.pdf; Health Insurance Marketplace: March Enrollment Report, For the Period: October 1, 2013 – March 1, 2014, ASPE Issue Brief, U.S. Department of Health and Human Services, March 11, 2014, http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Mar2014/ib_2014mar_enrollment.pdf

Thirteen States Have Reached or Exceeded Their Five Month Marketplace Enrollment

Target as of March 1, 2014

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Commonwealth Fund Tracking Surveys find that more adults who visited the Marketplaces found it easy to compare plan benefits

and premiums from October 2013 to December 2013

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

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30

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

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 intervals are provided for those months in

which the data are not yet completed.

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

NH

E in

tri

llion

s

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

31

32 Gaps 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.

Coverage and Access Risks After Full Implementation

of the Affordable Care Act

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Characteristics of Estimated Uninsured Population in 2016, Assuming Full Expansion

of Medicaid

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

154 M (57%)

ESI13.3 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

2014-15 Policy Discussion: Key Issues Bubbling Up

Coverage of those in states not

expanding Medicaid

Coverage of undocumented

immigrants

Affordability of premiums and cost-

sharing

Employer mandateIndividual

mandate

Reinsurance and risk corridor

programs

Narrow networks

Churn

Court challenge to subsidies in federal

marketplaces

Jan. 1, 2017State option to open SHOPs to employers with 100+

March 31st

open enrollment closes for

marketplace

Nov. 2014-Feb. 20152015 open enrollment

Looking Ahead: Timeline and Key Delays for Health Reform Implementation

2014 2015 2016 2017

Nov. 2014Online enrollment for federal SHOPs begins

Ongoing:Medicaid enrollmentSpecial enrollment periods for marketplaces

Jan. 1, 2015Employer shared responsibility requirementSHOPS open to small employers up to 100 employees

Jan. 2014-Dec. 2016Phase out of reinsurance and risk corridor programs

Nov. 2013-Oct. 2016Transitional policy extension

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Commonwealth Fund Resources

• Fourth 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 Journalists2014 Reporting Fellowships in Health Care

Performance

Supporting Health Care Reporting

Karen BrownNew England Public Radio

David PittmanMedPage Today

Sarah GantzBaltimore

Business Journal

Michaela Gibson Morris

Northern Mississippi Daily

Journal

Lola J. ButcherIndependent

Journalist

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Supporting Health Care Reporting

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 SymposiumMarch 28 & 39, 2014 Phoenix

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

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40

Thank You!

Barry SchollSenior Vice President for Communications and

Publishing

[email protected]