The Affordable Care Act and Health Care Costs: What’s · PDF fileThe Affordable Care Act and Health Care Costs: What’s Next? ... Kaiser/HRET Survey of Employer -Sponsored Health

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Art Kellermann, MD, MPH, FACEP

The Affordable Care Act and Health Care Costs: What’s Next?

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• An independent, non-partisan, non-profit research organization devoted to objective policy analysis

• Advisors to senior decision-makers in the U.S. and around the world

• A center for education and training (PRGS, fellows)

What Is RAND?

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The Affordable Care Act, also known as “Obamacare”

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3 Paths to Repeal

• Supreme Court Strikes Down the entire ACA

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3 Paths to Repeal

• Supreme Court Strikes Down the entire ACA

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3 Paths to Repeal

• Supreme Court Strikes Down the entire ACA

• Rs recapture the White House, but fail to take the Senate. ACA is weakened from above (state waivers HHS appts) and hollowed out from below (appropriations)

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3 Paths to Repeal

• Supreme Court Strikes Down the entire ACA

• Rs recapture the White House, but fail to take the Senate. ACA is weakened from above (state waivers HHS appts) and hollowed out from below (appropriations)

• Rs capture the White House and the Senate; Ds can’t muster enough votes to filibuster repeal

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International Comparison of Spending on Health, 1980–2009

Average spending on health per capita ($US PPP)

Total expenditures on health as percent of GDP

Source: OECD Health Data 2011 (June 2011).

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$1,543 $3,354

$4,247

$9,325

1998 2008 Employer contribution Worker contribution

Average Health Insurance Premiums and Worker Contributions for Family Coverage, 1999-2008

NOTE: The average worker contribution and the average employer contribution do not add to the average total premium due to rounding.

SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008.

$5,791

$12,680

117% Increas e

119% Increas e

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Americans Don’t Realize How Much They Already Pay for Health Care…

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• In 2011, RAND analyzed the impact of a decade of health care cost growth on the finances of a median-income family of 4 with employer-sponsored health insurance

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Families see their premium payments and out-of-pocket spending…

1999

Out-of-pocket spending $135

Family insurance premium $85

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They don’t see their employer’s share of premiums, and how much of their

Taxes are spent on health care

Out-of-pocket spending $135

Family insurance premium $85

1999

Taxes to health care $345

Employer insurance premium

$240

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Taxes to health care $345

Employer insurance premium

$240

Out-of-pocket spending $135

Family insurance premium $85

Over the past decade, both visible and invisible health expenditures

grew dramatically 2009

1999

Deficit spending $390

$440

$550

$235

$195

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It Didn’t Have to Be This Way…

2009: If health care cost growth had matched inflation $545

2009: If health care costs had grown at GDP + 1% $335

($ 4 0 0 ) ($ 2 0 0 ) $0 $200 $400 $600

2009: net gain in family income

$955 $295

If deficit spending was included

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If growth of healthcare costs had tracked general inflation over the decade, this family would have had nearly $5,400 more to spend

on other priorities in 2009 alone.

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What Could This Family Have Done with That Money?

• Make two extra mortgage payments

• Pay for four-and-a-half months of child care for a 4-year-old

• Paid down 18% of their credit card debt

• Enroll for a year of full-time community college classes

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What Did Our Extra Spending Buy?

Compared to 10 years earlier, we got: • 10% more MD office visits

• Same number of overnight hospital stays

• 84% more MRI scans and twice the rate of CTs (w/ associated radiation dosage)

• Adult life expectancy grew by about one year— (roughly half the average gain in life expectancy achieved by other OECD countries [+2.2 years]

SOURCE: “The State of Health Care Quality 2003: Industry Trends and Analysis,” NCQA. November 2003.

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Are We Getting Our Money’s Worth?

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In 2003, RAND Measured the Quality of Healthcare in 12 Communities

ORANGE COUNTY PHOENIX

LITTLE ROCK

INDIANAPOLIS •

CLEVELAND •

GREENVILLE

MIAMI •

NEWARK •

• BOSTON •

SYRACUSE

• • • •

•

LANSING •

SOURCE: McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States,” New England Journal of Medicine. 2003;348(26).

SEATTLE

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We Found That American Adults Get Recommended Care About

55% of the Time

Care that meets quality standards

SOURCE: McGlynn et al., NEJM (2003).

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You Aren’t Safe Anywhere…

30 40 50 60 70 80 90 100

Overall Boston

Greenville Indianapolis

Syracuse

Little Rock

Newark Orange Co

% of recommended care received

Preventive

Acute

Chronic

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But We’re Still #1, Right?

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Rate of Deaths from Treatable Conditions

SOURCE: Nolte and C.M. McKee, “Variations in Amenable Mortality—Trends in 16 High-Income Nations,” Health Affairs, published on line Sept 12, 2011.

Deaths per 100,000 population: 2006-2007*

0

20

40

60

80

100

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Between 1999 and 2008, the Ra te of Unins ured , None lderly Adults Ros e from 17% to 20%

Ros e from 17% to 20%

WA

OR ID

MT ND

WY

NV

CA UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

IL IN

AR

LA

AL

SC TN

NC KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

ME VT NH

MA RI

CT

DE

DC

HI

CO

GA MS

OK

NJ

SD

WA

OR ID

MT ND

WY

NV

CA UT

AZ NM

KS

NE

MN

MO

WI

TX

IA

IL IN

AR

LA

AL

SC TN

NC KY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DE

DC

HI

CO

GA MS

OK

NJ

SD

19%–22.9%

Less than 14% 14%–18.9%

23% or more

1999–2000 2005–2006

MA RI

CT

VT NH

MD

SOURCES: Commonwealth Fund State Scorecard on Health System Performance, 2007. Updated data: Two-year averages 1999–2000, updated with 2007 CPS correction, and 2005–2006 from the Census Bureau’s March 2000, 2001 and 2006, 2007 Current Population Surveys.

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SOURCE: Kellermann, AL. Waiting Room Medicine: Has It Really Come to This? Annals of Emergency Medicine. 2010;56(5):468-471.

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So, is more medical care the answer?

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SOURCE: Institute of Medicine. The Healthcare Imperative: Lowering Costs and Improving Outcomes: Workshop Series Summary. Washington, DC: National Academies Press, 2010.

The United States wastes $750 billion per year on unnecessary or inefficient services, excessive administrative costs, high prices, medical fraud, and missed opportunities for prevention.

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A System Without Brakes… • Patients

– “More expensive = better” – “My doctor knows best”

• Doctors – “The more I do, the more I make” – “The less I do, the more risks I take”

• Vendors – “Newer products = higher prices” – “We can always make them pay”

• Hospitals – “Fill every bed” (with an elective admission) – “Perform as many procedures as possible”

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Dodging the Bill • Federal Government:

– Shift Medicaid to block grants – Shift Medicare to “defined contribution”

• State Governments: – Push M’caid costs to the feds (recycling) – Cut M’caid enrollment or pay providers less

• Employers: – Boost copays & deductibles – Cut the number of covered workers

• Insurers: – Delay – Deny – Drop

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No One Is Dealing with the Underlying Problem – Costs!

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There Are 4 Basic Ways to Lower Costs.

2. Demand the same care, but pay less for it

Two are bad ideas.

1. Provide less care through blunt rationing

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The 3rd Approach—Reducing Wasteful Care—Looks Promising

a) Encourage patients to think like consumers by giving them “skin in the game”

b) Encourage providers to make wiser choices by paying for value rather than volume

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The 4th Approach—Reducing the Need for Costly Care—Is Not Getting

the Attention it Deserves

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