To Your Health!2007/07/25  · 5 Described in the following pages is Aetna’s proposal to transform the U.S. health care system. It is intended to serve as a framework for sensible

To Your Health!

Aetna’s Proposal for Health Care System Transformation

00.02.928.1(12/08)

I am pleased to share with you To Your Health! Aetna’s Proposal for Health Care System Transformation. This proposal presents a framework for health care reform, addressing the interrelated issues of access, cost and quality.

We at Aetna believe that every American should have access to affordable health care that produces quality outcomes and facilitates prevention, wellness and care coordination. This goal is as ambitious as it is vital to the well-being of our nation’s citizens. And it is an achievable goal if the private and public sectors work together to build upon the strengths of our current system. It is important that we ensure a vigorous marketplace and an effective public health system while empowering consumers with the information, tools and options necessary for achieving optimal health.

All of us have a stake in the future of our health care system. Aetna is committed to playing a leadership role in transforming the system into one that we and generations to come can be proud of. I encourage you to join us in being a positive force for change.

Ronald A. Williams Chairman and Chief Executive Officer Aetna Inc.

The U.S. health care system remains the world’s pioneer in research and medical technology, leading treatment breakthroughs that benefit Americans and people across the globe. The presence of first-rate physicians, hospitals, drugs and treatments are due, in large measure, to the competition inherent in our market-based system. While an impressive 85 percent of people in America — over 250 million people — have some form of health insurance, there are also real and severe deficiencies within the U.S. health care system.

The crisis of the uninsured:

Therearenownearly46millionuninsuredintheUnitedStates,whichrepresentsastaggeringoneinsixadultsundertheageof65.Over8millionoftheseuninsuredarechildren.Theuninsuredcomefromavarietyofages,householdincomesandworkstatuses—buttheyshareacommonplight.Arobustbodyofresearchconcludesthattheuninsuredobtainlesscare,receivefewerpreventiveservicesandfailtoadheretorecommendedtreatments.Additionally,tensofbillionsofdollarsarespenteachyeartreatingthosewithouthealthinsurance,ofteninexpensiveemergencyroomsettingsforillnessesorchronicconditionsthatcouldhavebeenpreventedortreatedearlierhadtheybeenpartofacourseofcareassociatedwithhavinghealthinsurance.

Escalating health care costs and affordability problems:

Therearemanyreasonswhypeopleareuninsured,butrisinghealthcarecostsandtheirattendanteffectsonaffordabilityofcoveragearewidelyviewedasthefundamentalproblems.Indeed,thepricethenationpaysfortheseproblemscomesintheformof46millionuninsured.Healthcareisexpensive—andcostscontinuetoriseatarapidpace,whichisreflectedintheformofhigherpremiumsforhealthinsurance.Premiumincreasesaredrivenprimarilybythreefactors:generalinflation,healthcarepriceincreasesinexcessofinflation(forexample,cost-shiftingandhigher-pricedtechnologies)

andincreasedutilization(forexample,agingpopulation,lifestylechangesandnewtreatments).1Theserisingpremiums,inturn,havemadeitincreasinglydifficultforemployerstooffercoveragetotheirworkers.Today,approximately63percentoffirmsofferhealthbenefits—downfrom69percentasrecentlyas2000—whichisofconcerngiventhevitalroleemployersplayinthehealthcaresystem.Risingpremiumsalsohavemadeitincreasinglydifficultforpeopletopurchasecoverage.Withtheaveragepremiumforemployer-sponsoredfamilycoveragenowexceeding$12,000,participatinginthehealthinsurancemarketplaceisafinancialstrainforagrowingnumberofAmericans.2Atthenationallevel,healthcarenowrepresentsmorethan16percentofthegrossdomesticproduct,andthetraditionalfundingsourcesandmechanismsusedtosupporthealthcarecannotkeeppacewithcostsacceleratingatapproximatelytwicetherateofinflation.

Pervasive quality problems:

QualityproblemsintheU.S.healthcaresystemcameintofocusinthelate1990swhentheInstituteofMedicinedocumentedpersistent,systemicshortcomingsinquality,includingpreventablemedicalerrorsandwidespreadoveruse,underuseandmisuse.Hugegapsexistbetweenthelevelsofcaredeliveredbyhealthcareorganizationsindifferentregionsandsettings.Thesequalitygapsresultin35,000to75,000avoidabledeathseachyearandbetween$2.7billionand$3.7billioninavoidablemedicalcosts.3Numerousstudieshavefoundthat,overall,Americanadultsreceiveonlyabouthalfofrecommendedcare.4

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AsoneoftheoldestandlargestinsurersinAmerica,webelieveAetnahasbothanopportunityandanobligationtobeakeypartofthesolution.Ourcommitmenttoadvancingthepublicgoodisengrainedinthecompany’s155-yearheritageandisreflectedinAetna’scorevaluesofintegrity,qualityserviceandvalue,excellenceandaccountability,andemployeeengagement.Webelievethatbeingaleaderinhealthcaremeansnotonlymeetingbusinessexpectations,butalsoexercisingethicalbusinessprinciplesandsocialresponsibilityineverythingwedo.Wealsobelievethatourconsiderableintellectualresourcesandexperiencecanbeleveragedtobuildastrongerandmoreeffectivehealthcaresystem—astancethatisembodiedbyAetna’sleadershiponavarietyofpublicpolicyissues,includingracialandethnicdisparities,end-of-lifecare,genetictesting,pricetransparency,andhealthandbenefitsliteracy.

Aetnahasbeenactiveinbothdevelopingandsupportingproposalsforchange.Forexample,thecompanyplayedanintegralroleincreatingthecomprehensivehealthcareaccessproposalputforwardbyAmerica’sHealthInsurancePlans(AHIP)inNovember2006.TitledA Vision for Reform,theAHIPproposalarticulatesasetofpolicyrecommendationsaimedatachievingnear-universalcoverageforallchildrenwithinthreeyearsandadultswithintenyears.Inadditiontoendorsingthiscomprehensiveaccessproposal,AetnawasthefirstnationalhealthinsurertopubliclyannounceitssupportofPresidentBush’sExecutiveOrderonhealthcaretransparencyandwasoneofthefirstFortune100employerstosigntheStatementofSupportforthe Four Cornerstones of Value-Driven Health Care.

What Aetna believes

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DescribedinthefollowingpagesisAetna’sproposaltotransformtheU.S.healthcaresystem.Itisintendedtoserveasaframeworkforsensiblepolicyaction,andreflectsAetna’scommitmenttobeingpartofthesolutionandourwillingnesstoserveasaresourceinthehealthcarediscourse.Thetenpointshighlightedareorganizedintofourpillars,ortenets,forhealthcarereform:

■Get and keep everyone covered;

■ Maintain the employer-based system and export its strengths to make the individual market function better;

■ Reorient the system toward prevention, value and quality of care; and

■ Use market incentives to improve coverage, drive down costs and make the system more consumer-oriented.

Whenconsideringthisproposal,itisimportanttorecognizetheconsiderableinterplaybetweenvariouspolicyinterventions.Aetnabelievesthathealthcarereformshouldidentifyandtakeadvantageofcompanionsolutions.Companionsolutionsrefertothepairingofcomplementarypublicpolicies.Whenimplementedtogether,companionsolutionsresultinanoutcomethatgreatlyexceedstheimpactofanyisolatedreformcomponent.Agoodexampleofacompanionsolutionisthepairingofanindividualcoveragerequirementwithbothstrongenforcementmechanismsandbroadlyfundedsubsidiestoincreasetheaffordabilityofcoverageforlower-incomeAmericans.Anotheriscouplingreasonablepublicprogramexpansionwitheffortstoenrollindividualswhoarecurrentlyeligiblebutnotparticipatingintheseprograms,aswellasimplementingtargetedtaxcreditsforlow-tomoderate-incomehouseholds,whichcontrolsagainsttheriskofcrowd-out(thatis,individualswhowouldhavepurchasedprivatecoveragechoosingtoutilizepubliccoverageinstead).

Aetna’s proposal for health care system transformation

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Get and keep everyone covered

Point 1: Transform health insurance into a civic responsibility

Aperson’scoveragestatushassystem-wideimplications.Whenindividualskeepuptheirinsurancecoverage,regardlessoftheirhealthstatus,theymakeinsurancemoreaffordableforeveryonebycontributingtothegeneralpool.Transforminghealthinsuranceintoacivicresponsibilityrequiresviewinginsuranceasamechanismformutualaid,andnotjustasameansforself-protection.Importantly,thereisgrowingconsensusthat,withoutdismantlingtheentiresystem,anindividualcoveragerequirementistheonlywaytoachieveuniversalcoverage.5

Require all Americans to possess health insurance coverage — an individual coverage requirement — as a common-sense approach for achieving universal coverage through universal participation.

Between2000and2006,165,000people,including27,000in2006,diedsimplybecausetheylackedhealthinsurance.6In2005,theaveragefamilypremiumforemployer-sponsoredinsuranceincludedanextra$922asaresultofuncompensatedcarefortheuninsured.7Underasystemofsharedresponsibility,thosewhocanaffordcoveragecouldnolongershifttherisksandcostsofremaininguninsuredontoothers.Moreover,theriskprofileoftheoverallhealthinsurancepoolwouldbeimprovedwiththeadditionofyoung,healthyAmericanswhocurrentlycompriseasubstantialproportionoftheuninsuredpopulation(forexample,18millionofthe46millionuninsuredarebetweentheagesof18and34).8

Aetnawasthefirstnationalinsurertoendorsetheconceptofanindividualcoveragerequirement,recognizingthatuniversalcoverageispossibleonlywhenthereisuniversalparticipation.9Qualifyingcoveragecould,forexample,taketheformofabasicandessentialproductthatincludespreventivecoverage.Enforcementoftherequirementshouldbephasedintothetaxsystem;forinstance,eligibilityforthepersonaltaxexemptionand/orchildtaxcreditcouldbeconditioneduponproofofcoverage.

Pair an individual coverage requirement with government assistance for low-income Americans who are ineligible for public programs to enter the health insurance marketplace.

Today,28millionuninsuredpeople—nearlytwo-thirdsoftheuninsured—comefromhouseholdswithincomesunder$50,000ayear,andabout13millionoftheseindividualscomefromhouseholdswithincomesunder$25,000peryear.Manyoftheseindividuals(forexample,childlessadults)donotqualifyforpubliccoverage,yettheyneedahelpinghand.

Aetnasupportstargetedpublicsubsidiesforcertainlow-incomeindividualsandfamiliesintheformofadvanceable,refundabletaxcreditstohelpfinancethepurchaseofprivatehealthinsurancecoverage.Subsidiesshouldbestructuredonaslidingscale,sothatindividualsandfamilieswithlowerhouseholdincomeswouldreceiveproportionatelygreaterassistancethanthosewithhigherincomes.

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Create or improve broadly funded safety net programs, such as reinsurance mechanisms or state high-risk pools, to ensure that the most vulnerable Americans have health insurance. Public-private collaboration is critical to the success of these safety nets.

Thedistributionofthenation’shealthcarespendingishighlyskewed,withthetop5percentofthepopulationwiththehighestexpendituresaccountingforabouthalfofallhealthcarespending.10Theelevatedriskofhigh-costindividualsyieldshighpremiumsfor theminmedicallyunderwrittenmarkets,whiletheirhighcostsyieldhigherpremiums for allinguaranteedissuemarkets.

Aetnabelievesastrongsafetynetisoneofthemostvitalfactorsinincreasingtheaffordabilityofinsurancewhilestillensuringthehealthandfinancialsecurityofthenation’sleasthealthycitizens.Tworisk-transfermechanisms—high-riskpoolsandpublicreinsurance—operatebyseparatingthecostsofparticularlyhigh-costenrolleesfromtherestofaninsurancemarket.Theyaimtostabilizeinsurancemarketsandincreasepremiumaffordability;increasecoverageavailabilityfortheuninsured;andprovideaffordableoptionsforhigh-riskindividualswhowouldotherwisebeunabletosecurecoverage.Thefuturesuccessofeithermechanismdependsonsufficientpublicfundingandthedesignofprogramincentivesandstructure.

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Point 2: Strengthen public programs and the safety net for those most in need

Almost68percentofU.S.residentsaccesstheirinsurancethroughtheprivatemarket.Whilelargesegmentsoftheuninsuredshouldbeabletoaccesscoveragethroughthismarket(forexample,thoseuninsuredwithhouseholdincomesaboveareasonablethreshold),therearealsosegmentsoftheuninsuredpopulationforwhomtheprivatesectorcannotrespondadequately.Forthem,strengthenedpublicprogramsandarobustsafetynetarecriticalfeaturesofhealthcarereform.

Strengthen public programs to ensure certain populations have access to quality health care. The federal government should expand State Children’s Health Insurance Program (SCHIP) funding to ensure all states can, at a minimum, fully cover children from low-income households. Medicaid eligibility should be expanded to cover all adults up to 100 percent of the Federal Poverty Level, including single adults. Public programs should not, however, displace those who would otherwise participate in the private health insurance marketplace.

About83millionAmericansreceivegovernmentcoverageforhealthcare,11andMedicaidandSCHIP,inparticular,provideapathwaytoinsuranceforlow-incomeAmericansforwhomaffordabilitychallengesmakeitdifficulttoobtaincoverageintheprivatemarket.Atpresent,however,MedicaidandSCHIPreachfewerpeoplethanneeded,asmanyindividualswhoareunabletoaffordprivatecoveragearealsoineligibleforpublicprograms.

AetnabelievesMedicaidshouldbeexpandedtocoveralllow-incomeadultsuptoaminimumof100percentoftheFederalPovertyLevel,regardlessofparentalstatus.SCHIPshouldalsobeexpandedtocover,ataminimum,allchildrenupto200percentoftheFederalPovertyLevel,whilebearinginmindtheimportanceofpreventingcrowd-out(thatis,peoplewhocanaffordprivatecoverageavoidpurchasingitbecauseofpubliccoverageavailability).Atthesametime,itiscriticaltoaddresstheproblemofthe11millionuninsuredpeoplewhoareeligibleforpublicprogramsbutnotenrolledinthem,byusingoutreachandauto-enrollmentprogramstofacilitatecontinuouscoverage.12

Health insurers, the federal and state governments, and employers should come together to explore new ways of working together to ensure no American lacks affordable health insurance options.

Manyofthechallengesassociatedwithdesigningastrongsafetynetrestinfunding,andvariousstakeholdersneedtocometogethertoaddressthischallenge.Therearemanycreativepossibilitiesthatshouldbeexplored,includingthepotentialcreationofaFederalCatastrophicHealthCostGrantsprogramtodefrayorcoverthecostsofextremelyexpensivecases.

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Distribution of uninsured children by eligibility for Medicaid/SCHIPTotal uninsured children in 2006: 8.7 million

Source:JohnHolahan,AllisonCook,andLisaDubay.“CharacteristicsoftheUninsured:WhoisEligibleforPublicCoverageandWhoNeedsHelpAffordingCoverage?”KaiserCommissiononMedicaidandtheUninsured,HenryJ.KaiserFamilyFoundation,February2007;U.S.CensusBureau.“Income,Poverty,andHealthInsuranceCoverageintheUnitedStates:2006.”IssuedAugust2007.

Eligible for Medicaid or SCHIP 6.4 million

Not eligible 2.3 million

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74%

26%

Maintain the employer-based system and export its strengths to make the individual market function better

Point 3: Leverage the strengths of the current health care system, which already covers nearly 85 percent of the U.S. population, to advance the goal of achieving universal coverage

Nearly85percentofpeoplelivingintheUnitedStateshavehealthinsurance.13Amongthosewithhealthinsurancecoverage,morethan177million—or60percentoftheentireU.S.population—receivecoveragethroughanemployer.Whileshortcomingsinthecurrentsystemhaveleft46millionpeoplewithouthealthinsurance,14Aetnabelievesthenationmustbuilduponthecurrentsystem’ssuccessestofillthisunacceptablegapandensureuniversalcoverage.

Encourage public-private coordination and collaboration. It is imperative that government and the private sector work together to expand access, increase affordability and improve quality. A competitive marketplace and a strong public health system are not mutually exclusive.

Thecountry’suninsuredpopulationisheterogeneous,whichmeansthereisnosinglesolutionforgettingthemcovered.Forexample,uninsuredindividualsfromhouseholdsaboveamoderateincomethresholdwouldlikelybebetterservedbyaprivatesolution,whilethosecomingfromlower-incomehouseholdswouldundoubtedlybenefitfromenrollmentinapublicprogram.

Aetnabelievesthatthepublicandprivatesectorsmustshareresponsibilityforclosingthecoveragegaponbothendsofthefinancialspectrum.Onthepublicside,expansionofpublicprogramstoincludealargersetoflow-incomeindividuals—forexample,uptoastandardofatleast200percentoftheFederalPovertyLevel—wouldofferaccesstouninsuredpersonswithlimitedfinancialmeanstopurchasecoverageontheirown.Atthesametime,itisimportanttoensurethosewhocanaffordtopurchasecoveragetakeadvantageofprivatesectorsolutionsnowavailable.

Theprivatesectorcanalsoplayavitalroleinexpandingaccessbydevelopingaffordableanddiversecoverageoptions.Creatinginsuranceproductsthatappealtotheneedsandfinancialcapabilitiesofthosewithhouseholdincomesover200percentto300percentoftheFederalPovertyLevelwouldenablethissegmenttosecuretheirowncoverage,especiallywhencoupledwithanindividualcoveragerequirementandtargetedsubsidies.Expandingpublic-privatecollaborationalsoinvolvesprivatesectoradministrationofgovernmentprograms.ExamplesofsuchcollaborationincludeMedicaid,MedicarePartDandMedicareAdvantage—programsinwhichAetnaparticipates.

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Continue to support the existing employer-based system, which is responsible for covering 60 percent of the non-elderly population in the United States (177 million people). At the same time, support policies that promote affordable health insurance options for individuals and small employers not participating in the employer-based system.

Theemployer-basedsystemprovidesnotonlyamediumforcoverageofAmericanworkersandtheirfamilies,butalsoaddedvalueintheformofdiverseriskpools,administrativesavingsandactualdollars.Employers’premiumcontributionstotaled$420billionin2005.15In2008,employercontributionscovered84percentand73percentofpremiumcostsforsinglesandfamilies,respectively.16Administrativeoverheadforgroupcoveragerestsat10percent,significantlylowerthanadministrativecostsintheindividualmarket,17andthesesavingsarepassedontoconsumersaswell.Finally,becauseemployeegroupsarediversifiedintermsofrisk,noworkersaredeclinedcoveragebecauseofhealthstatusorage.18

Aetnaalsobelievesitiscriticaltoexpandopportunitiesforlower-wageworkersandemployeesofsmallfirms.Only49percentofthesmallestfirmsoffertheiremployeesinsuranceoptions,19andofthoseemployeesnotofferedcoverage,45percentareuninsured.20Enhancedopportunitiesfortheseworkerscouldcomeintheformofpoolingstructuresforsmallbusinesses,consumer-directedhealthplans,mandate-liteproductsandtaxincentives.

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Point 4: Use the tax system to expand access and increase affordability

ThetaxsystemintheUnitedStatesoffersincentivestostimulatevariousbehaviors,includingcharitablegiving,homeownershipandevenemployerprovisionofhealthbenefits.Although26millionpeoplepurchaseprivateinsurancecoveragedirectly—outsideofthepurviewoftheemployer-basedsystem—therearefewincentivesdesignedtogivetaxrelieftotheseindividuals,aswellastothemanyuninsuredwhocouldpotentiallypurchaseinsuranceinthismarket.21AetnabelievesthetaxsystemshouldplayavitalroleinadvancingeffortstoachieveuniversalhealthinsurancecoveragebymakingcoverageaffordableformoreAmericans.

Equalize the tax treatment of health insurance for those who obtain coverage through their employer and those who purchase it directly in the individual market by extending favorable tax treatment to both sets of individuals, without changing the favorable tax treatment employers currently receive for offering benefits.

Currently,healthinsurance-relatedtaxbenefitsexistalmostexclusivelywithintheemployer-basedsystem,withbothemployeesandemployerspayingpremiumswithpretaxincome.22Usingthesepretaxdollars,manyemployeespurchasebenefitsthataremoregenerousthantheyneed,distortingthesystemandraisingoverallcosts.23Suchtaxbenefitsarenotreadilyavailableforthosewhoarelimitedtopurchasinginsuranceontheindividualmarket.Thisnotonlyburdensindividualsalreadywithinthismarket,butalsoproducesamarketthatissmallerthanitcouldbeiftaxincentivesforpurchasinginsuranceexisted.

Aetnabelievesthatindividualsshouldbeabletousepretaxdollarstopurchasecoverage.Favorabletaxtreatment(forexample,taxcredits)forhealthinsuranceexpenditurescanserveasastrongincentiveforinsurancepurchase.Infact,taxchangescouldresultinanetincreaseof3millionto9.2millioninsuredindividuals.24Suchanincreasewouldexpandthesizeofthemarketandreducetheranksoftheuninsured,ultimatelyloweringpremiumsforeveryone.

Create tax-based incentives for employers — especially small firms — to offer or continue offering health benefits to their employees in order to preserve and strengthen the employer-based system. Employers should be encouraged to offer, at a minimum, Section 125 cafeteria plans.

Relativetosmallemployers,largeemployersenjoyvariousbenefitsbyvirtueoftheirsize,includingtheabilitytomaintainalargeriskpool,theoptiontoself-insure(throughERISA),andtheorganizationalcapacitytoresearchandselectthebestinsuranceoptionsfortheiremployees.Theeffectivetaxbenefitforlargeemployersprovidinghealthinsuranceismuchgreaterthanthatenjoyedbysmallemployers,makingitunsurprisingthatonly62percentofsmallfirms(3–199workers)and49percentofthenation’ssmallestfirms(3–9workers)offerhealthinsurancecoveragetotheiremployees,ascomparedto99percentoflargeemployers(200+workers).25

Aetnabelievesthetaxsystemshouldencouragesmallemployerstoofferhealthbenefitstotheirworkersbyprovidingtaxdeductionstoemployerswhooffersuchbenefits.Statescouldprovide,forexample,ataxcredittoemployerstohelppayforaportionoftheiremployees’premiumsorgivepremiumsubsidiestoemployersoffering

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employer-sponsoredcoverage.Attheveryleast,employersshouldbeencouragedtoprovideSection125cafeteriaplanssothatemployeesofsmallfirmsmaypurchasehealthinsuranceonapretaxbasis.

Use tax credits as a tool to encourage and enable target populations (e.g., lower-income adults and children) to enter the health insurance marketplace. Tax credits should be administered on a sliding scale according to income and should be broadly financed.

Thetaxsystemisanimportantvehicleforfacilitatingtheentranceofindividualsintotheinsurancemarketplace.Targetedtaxcreditsforindividualstopurchasecoveragecouldhaveasignificantimpactontherateofuninsurance.Unliketaxdeductions,whichareincreasinglybeneficialasanindividual’sincomeincreases,ataxcreditcanbeadministeredinaprogressive—asopposedtoregressive—manner,usingaslidingscaleaccordingtohouseholdincome.

Aetnabelievestaxcreditsshouldbeadvanceable(thatis,availablebeforetaxfiling)sothatindividualscanactuallyusethecredittopurchaseinsurance,andrefundable,allowingindividualstoreceivethefullamountofthecredit,evenifitisgreaterthanwhattheyoweintaxes.Itisprojectedthattaxcredits,dependingontheirdesign,couldreducethenumberofuninsuredchildrenby1.3million,therebycoveringhalfofthe2.7millionuninsuredchildrencurrentlyeligibleforbutnotenrolledinapublicprogram.26Carefuldesignofataxcreditprogramisvital,asboththesizeandadministrationoftaxcreditscanhaveasubstantialimpactontheirabilitytoreduceuninsurance.

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Percentage of firms offering health benefits by firm size, 2008Only 13 states offer tax credits or deductions for small employers.

Sources:GaryClaxton,SamanthaHawkins,JeremyPickreign,etal.“EmployerHealthBenefits:2008AnnualSurvey,”KaiserFamilyFoundationandHealthResearchandEducationTrust,September2008.Accessedonline:http://ehbs.kff.org/images/abstract/7791.pdf;KaiserFamilyFoundation,http://statehealthfacts.org.

Firm size (number of workers)

Perc

enta

ge

of

firm

s o

ffer

ing

cov

erag

e

49%

62%

99%

3 – 9

3 – 199200 or more

Point 5: Promote greater portability of health insurance

Thereisanimportantopportunitytoenhancehealthinsurancecoveragethroughexpandedportability.While60percentofAmericansareinsuredthroughtheemployer-basedsystem,thelimitedavailabilityandaffordabilityofportableinsuranceoptionsmakesitchallengingforworkerstomaintainandfinanceinsurancecoverageinbetweenjobs.27Andyet,theaverageAmericanworkerwillhave10to12jobsoverthecourseofalifetime.Manyoftheseworkersarechallengedtofindnewsourcesofcoverage,whichcanbebothcostlyandfrustrating.Collegegraduatesandearlyretireesalsoexperiencesimilarchallenges.Fearsaboutlosinginsurance,beingunabletopayforhealthcare,andtheinabilitytosecurecoverageforpre-existingconditionsdeterpeoplefrommakingnecessaryjobchangesanddecreaseconfidenceinthehealthcaresystem.

Facilitate the growth of consumer-directed health plans with Health Savings Accounts, which allow people to save for future medical needs by investing in tax-favored accounts that are portable. Consumer-directed health plans should include first-dollar coverage for the most common chronic conditions to ensure people benefit from disease management and care coordination.

HealthSavingsAccounts(HSAs)offerpeopleauniqueopportunitytomakeaportableandlong-terminvestmentintheirfuturehealth.HSAplansincludethreemajorcomponents:aportablesavingsaccount,high-deductiblemedicalcoverageandaccesstoinformationtoolstohelpmakeinformeddecisions.ContributionstoHSAsaretax-freeandearntax-freeinvestmentincome.AnHSAisownedbytheemployee,canberolledoverfromyeartoyear,andisportablefromjobtojob.Whilethecost-sharinginherentinHSAplansencouragesmemberstobecomemoreinvolvedintheirownhealthcaredecisions,mostplansalsoprovide100percentcoverageofpreventivecare.HSAshavebecomeincreasinglypopular,buttheystillrepresentasmallproportionofthemarketplace—about6.1millionpeopleasofJanuary2008.28About11percentofallemployersofferedHSA-qualifiedhigh-deductiblehealthplansin2008.29

AetnabelievesHealthSavingsAccountsrepresentanimportanttoolforexpandingtheportabilityofhealthinsuranceandthefinancingofhealthcare.PeoplecoveredbyHSAsenjoytheuniquebenefitofhavingagrowingfundoftax-freedollarsfromwhichtofinancefuturehealthcareneeds,nomatterwhereorwhethertheyareemployed.Onasystem-widelevel,widespreadadoptionofhigh-deductiblehealthplansisprojectedtoresultinaone-timecostreductionof4percentto15percent.30

Permit the purchase of health insurance across state borders (that is, rather than having to purchase in one’s home state) so consumers can buy (over phone, mail, Internet, etc.) coverage in states with legislative and regulatory environments that facilitate the existence of affordable health insurance options.

Americansarebecomingincreasinglymobile:In2007alone,morethan1.4millionAmericansmovedtoanewstate.31Thehealthinsurancesystemhasbeenslowtoadapttothistrend,withnogeographicportabilityinthepurchaseofhealthcare.Premiumsconsumerspayforcoveragedepend,toalargeextent,onwheretheylive.In2006,theaverageannualpremiumforemployer-sponsoredfamilycoveragewas$10,060inNorthDakota,whileitwasonly$7,085inneighboringSouthDakota.32

Aetnasupportspoliciesthatwouldmakeiteasierforconsumerstopurchaseaffordablecoverage.Oneproposalwouldallowhealthinsurancecompaniesbasedinonestatetosellinsuranceproductstoconsumersinanyotherstate,undertheregulatoryrulesoftheprimarystate.Inotherwords,peoplewouldbeabletoaccessthehealthinsurancecoveragethatisbestsuitedtotheirneeds,withoutgeographiclimitations.

Cross-statesellingofinsurancewouldstimulatepricecompetitionamonginsurerstoattractmembers,whilestimulatingcompetitionamongstatestoattractandkeepinsurers.Publicpoliciesaddressingcross-statesellingshouldbeimplementedcarefullyinordertopreventa“deathspiral,”whereininsurancemarketsincertainstatesbecomeattractivetoonlythesickestindividuals.33Aetnabelievesinleveragingthecompetitivebenefitsofthefreemarket,butalsorecognizestheneedforuniversalaccesstohealthcare.

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Inordertoupholdbothoftheseprinciples,itisessentialtoexpandthecompetitivenessofthemarket,therebyloweringpricesforthepublic,whilealsoensuringthatthesickestarenotleftwithoutthemutualaidthatrestsasacentralcomponentofhealthinsurance.Ratherthansimplyraisingcostsacrosstheboardandlimitingtheefficienciesgeneratedbyacompetitivemarketplace,policymakersandothersshouldpromotethefreemarketwhilemaintainingarobustpublichealthsystemthataddressesanypotentialmarketfailures.

Explore new mechanisms for portability, such as developing new pooling arrangements, reforming COBRA and creating new products designed for people in transition.

PuttingforwardsensibleandaffordablecoveragesolutionsforAmericansintransitionwillrequirepartnershipbetweenthepublicandprivatesectorstoensurethatchangingjobs,enteringtheworkforceupongraduation,retiringearlyormovingtoanotherstatedoesnotresultindisruptionsofhealthinsurancecoverage.Itisimportantthatpolicymakersandtheprivatesectorworktogethertoidentifyanddevelopnewmechanismsforportability.Amongtheideasthatdeserveconsiderationarecreatingnewpoolingarrangementsforworkersnotparticipatingintheemployer-basedsystemandtheworkinguninsured;increasingtheaffordabilityofCOBRAcoverageforworkerswholeavetheirjobs;andgivingtheprivatesectorgreaterleveragetocreateinnovativetransitionalorshort-termcoverageoptions.

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Reorient the system toward prevention, value and quality of care

Point 6: Promote preventive care and wellness

Diseasepreventionprogramsarethecornerstoneofpublichealthpracticeandhavelongservedaseffectivetoolsforreducingtheburdenofdiseaseonsociety.WhiletheUnitedStateshascontinuedtomakesubstantialpublichealthimprovementsoverthepastcentury,thereisconsiderableroomforgrowth.Today,morethanhalfofAmericansarelivingwithatleastonechronicdisease.34Smokingaloneaccountsfor440,000annualdeaths,35andobesityisassociatedwithmorethan111,000excessdeathseachyear.36Thesepublichealth-relatedissuespresentsevereeconomicconsequencesaswell;accordingtoarecentreport,thenationspent$217.6billionondirectcostsintreatingchronicdiseasewhileexperiencinganadded$905billioninlossesassociatedwithadeclineinworkerproductivity,presenteeismandoverallreductionsinthelaborsupply.37Aetnabelievespreventivecare,earlydetection,wellnessandchronicdiseasemanagementmustbefeaturedprominentlyinanyhealthcarereformeffort.

Create incentives for individuals to achieve optimal health status by making healthy choices, participating in wellness, chronic care and disease management programs and obtaining routine preventive care.

Themostcommoncausesofdisease,disabilityandprematuredeathintheUnitedStatesarefourvoluntarybehaviors:smoking,unhealthydiet,physicalinactivityandriskyalcoholuse.38Withwell-structuredincentives,individualscanimprovetheirlifestyles,yieldingbenefitsnotonlyforthemselvesbutalsoforthepublicatlarge.

Aetnaiscommittedtohelpingpeopleachievetheiroptimalhealthstatus—beingashealthyastheycanbe,giventheirmedicalcircumstances—andbelievestheuseofincentivescomplementsthetrendofconsumerengagement.Incentivescantakevariousforms,rangingfromdiscountsonthepurchaseofcertaingoodsandservicestorewardsforengaginginhealthybehaviors.

Preventive care should receive first-dollar coverage and public and private health insurers should promote wellness vigorously in member and provider services. All Americans should have access to wellness tools, such as health risk assessments, weight management and smoking cessation programs.

Historically,onlyabout5percentofU.S.healthcarespendinghasbeendedicatedtopopulation-wideapproachestohealthimprovement.Yetinvestmentsinpreventioncanhavelargepayoffs;forinstance,fluvaccinationscanpreventbetween50percentand60percentofflu-relatedhospitalizations.39

Aetnacontendsthatahigh-performancehealthsystemisonethatnotonlyexhibitsleadershipinthetreatmentofdisease,butalsoonethatemphasizeswellness,preventivehealthandearlydetectionandintervention.Inadditiontosupportingfirst-dollarcoverageforpreventivecare,Aetnaisencouragedbyinnovativereimbursementarrangementsthatpromotepreventivecare.ThecompanyalsobelieveswellnesstoolsshouldbemadeavailabletoallAmericans.However,Aetnabelievespromotingpreventivecareandwellnessshouldremainahealthinsurerresponsibilityratherthananewformofmandatedcoverage.

Achieve greater integration among medical, behavioral and dental health services to facilitate total wellness and improve patient outcomes.

Researchershavedocumentedthestrongconnectionamongallaspectsofanindividual’shealth.Forexample,poordentalhealthcanbeanimportantindicatorofpoorphysicalhealth,withoraldiseaselinkedtomultipleillnesses,includingdiabetesandheartandlungdisease.40Peoplewithmentalillnessarefivetimesmorelikelythanthegeneralpopulationtoexperienceaco-occurringmedicalcondition.41

Consistentwiththecompany’semphasisonholisticapproachestohealthcare,Aetnawasthefirsthealthinsurertosupportthe2007MentalHealthParityAct.Thismeasurerequiresequalcoverageformentalandphysicalillnesses,whichresearchhasshowntobejustifiedbecauseoftheattendantcomprehensivehealthbenefits.

14

Percentage of care in accordance with clinical quality standardsOverall, about one-half of recommended care is received.

Source:ElizabethA.McGlynn,StevenM.Asch,JohnAdams,JoanKeesey,JenniferHicks,AlisonDeCristofaro,andEveA.Kerr.“TheQualityofHealthCareDeliveredtoAdultsintheUnitedStates,”New England Journal of Medicine,Vol.348,No.26,June26,2003,2635-2645.

Care that meets quality standards

15

Point 7: Improve health care quality and patient safety

Qualityinhealthcaremeansdoingtherightthingattherighttimeintherightsettingfortherightperson,yieldingthebestresultspossible.42Andyet,a2003RANDstudyfoundthatadultsreceiveonlyabouthalfofrecommendedcare.43Quality-relatedchallengesincludetremendousvariationinhowpatientswiththesameconditionsaretreated,discrepanciesbetweenactualandevidence-basedrecommendedclinicalpractices,preventablemedicalerrorsandinadequatetransparencythroughoutthesystem.Aetnasupportsvariousinitiativestoenhancehealthcarequalityandimprovepatientsafety.

Support rigorous analysis and research about clinical best practices, including analysis of cost-effectiveness data to determine which medical technologies, protocols and drugs are most effective.

AnestimatedhalfofAmericanadultsdonotreceivecareinaccordancewithclinicalbestpractices.44Thereisalsoalargebodyofstudiesshowingthathigherhealthcarespendingdoesnotequatetobetterhealthoutcomes.45

ModernizingtheU.S.healthcaresystemrequiresstrengtheningtheuseofscientificevidencetoimprovehealthcarequalityandsafety.46In2007,AetnajoinedwithourindustrypeersinAHIPtodevelopSetting a Higher Bar,aproposaltoimprovehealthcarequalityandsafety.Oneofthekeyrecommendationsistheestablishmentofanewnational,public-privateentitytoevaluatenewandexistinghealthcareservicesandtechnologies.Thisentitywouldcomparetheclinicalandcost-effectivenessofdrugs,proceduresandotherservices;assessalternativeusesoftreatmentscurrentlyinpractice;anddistributeinformationsopatientsandclinicianscanmakeinformedhealthcaredecisions.AetnaalsosupportsAHIP’srecommendationtoreinforcetheFDA’scapacitytoassessthelong-termsafetyandeffectivenessofnewdrugs,aswellasthe

recommendationtocoordinatehealthservicesresearchacrosstheAgencyforHealthcareResearchandQuality(AHRQ),NationalInstitutesofHealth(NIH),CentersforDiseaseControlandPrevention(CDC)andotherfederalagencies.

Reward health care providers who efficiently deliver evidence-based care through pay-for-performance (P4P) programs. Quality measures employed in P4P programs should be clinically important, credible to physicians, transparent to all stakeholders, consistent across health plans and other payers, understandable to consumers and useful to them in making choices. P4P programs should also equip providers with the information and tools necessary for improving practice outcomes and efficiencies.

Eachyear,44,000to98,000peopledieinhospitalsasaresultofpreventablemedicalerrors.47Theseerrorscorrespondtoestimatedtotalcostsofbetween$17billionand$29billion.Wasteaccountsfor34percentto50percentofallhealthcarespending.48

Aetnabelievespaymentstructuresshouldrewardphysiciansforqualityandvalue,usingaseriesofcrediblemeasures.Aetnajoinsvariousorganizations,includingtheLeapfrogGroup,theNationalQualityForum,andtheNationalCenterforQualityAssurance(NCQA),insupportingP4Pprogramsthatpromoteandrewardhigh-qualitycare.

Transform the medical liability system into one that focuses on the fair and timely resolution of medical disputes and promotes health care quality improvements. The medical liability system should encourage — not discourage — physicians to discuss and learn from mistakes and preventable errors. Patients experiencing medical injuries should be fairly compensated through an administrative system that draws upon independent medical expertise in the decision-making process.

16

Thecurrentmedicalliabilitysystemfailstofosterqualityimprovementortransparencyabouterrors.Medicalmalpracticetortcoststotaled$30.4billionin2007,49andthecostofdefensivemedicine—orderingunnecessarytestsandprocedurestoavoidaccusationsofmalpractice—hasbeenestimatedtobebetween$38billionand$100billionperyear.50Thesystemalsooftenfailstocompensatelegitimatevictimsofmedicalerrors;infact,oneinsixmalpracticeclaimsinvolvederrors,yetnopayment.51

Aetnasupportsfundamentalmedicalliabilityreformthatencouragestransparencyaboutmedicalerrorsandpromotesfaircompensationofvictimsofmedicalerrors.Aetnaendorsestheestablishmentofasystemof“healthcourts,”specializedadministrativecourtsdesignedtohandlemedicalinjurydisputes.Healthcourtsshouldengageneutralexperts,expeditetheclaimsresolutionprocess,provideforequityintreatmentofsimilarclaims,promoteanenvironmentinwhichhealthcareproviderscanlearnfrommistakes,andultimatelyimprovethequalityofpatientcareandenhancepatientsafety.

Invest in initiatives to reduce racial and ethnic disparities in health care, including the analysis of treatment and outcomes data to ensure sustained progress in eliminating disparities.

Suboptimalqualityassociatedwithracialandethnicdisparitiesleadstoapproximately84,000U.S.deathseveryyear.52AfricanAmericanmalesare1.4timesmorelikely,andAfricanAmericanfemalesare1.2timesmorelikely,todieofcancerthantheirwhitecounterparts.53AfricanAmericanandLatinawomenwhogetbreastcanceraremorelikelytobediagnosedatalaterstagethanwhitewomen.

Aetnahasimplementedandadvocatedforvariouseffortstocombatracialandethnicdisparities.Aetnacollectsvoluntarilyprovidedrace,ethnicityandlanguagepreferencedatafrommemberstotracktrendsincare;educatesemployeesandprovidersonculturalcompetencyissues;providesculturallyappropriatediseasemanagement

programs;andpromotesregularmammogramsforAfricanAmericanandLatinawomen.Aetnabelievesgovernmentandtheprivatesectorshouldpartnerincontinuedresearchontheprevalenceofspecifictypesofdisparitiesandindevelopingprogramstoeliminatethem.

Create public-private partnerships to ensure the availability of end-of-life care products that empower people facing end-of-life care decisions by offering access to curative care whether in a hospital, hospice or home.

Although70percentofAmericanssayitistheirwishtodieathome,only24.9percentdoso.54Intheadvancedstagesofillness,individualsandtheirfamiliestoooftenfacethechallengingall-or-nothingdecisionofchoosingbetweencurativecareinahospitalsettingandpalliativecareinahospiceorhomesetting.

Aetnabelievespeopleshouldbegiventheoptionsandinformationtheyneedtoliveouttheendoftheirlivesindignityandcomfort.Thepublicandprivatesegmentsofthehealthcarecommunityshouldworktogethertoofferpatientsnearingtheendoflifethechoiceofreceivingpalliativecareinahospiceorhomesettingwhileretainingtheoptiontoreceivecurativecare.Aetna’sCompassionateCareProgramprovidesthisoption,whilealsoofferingmembersnursecasemanagement,informationresourcesanddecision-makingtools,respitecareandbereavementcareservices.

17

Use market incentives to improve coverage, drive down costs and make the system more consumer-oriented

Point 8: Create a legislative and regulatory environment conducive to the development and availability of affordable health insurance options

Withtherightlegislativeandregulatoryenvironment,healthinsurancecompaniescanofferconsumersawiderangeofaffordableproductoptionsthatfitindividualneeds,preferencesandpocketbooks.Creatingsuchanenvironmentrequirespolicymakerstobalancemultipleinterventions.

Create new pooling mechanisms that facilitate affordable access to health insurance for individuals and small employers.

Peoplewithemployer-basedcoverageenjoythebenefitsofalargeriskpool—comparativelylowerpremiumsbasedongroupriskratherthanindividualriskandnegotiatedratesanddiscounts.Limitedrisk-poolingmechanismsintheindividualandsmall-groupmarketsputmembersatacomparativedisadvantage.AssociationHealthGroupsanddiscretionarygroupsareexamplesofpoolingmechanismsthateliminatethisdisadvantagebyenablingindividualsandsmallgroupstocreatetheirownpools.Suchgroupsbenefitbothindividualsandinsurancecompanies,spreadingriskeffectivelyandkeepingcostsdown.

Permit private health insurers to use transparent and fairly devised medical underwriting techniques, while preserving a strong safety net for all Americans.

AetnabelievesthatallAmericansshouldhaveaccesstoaffordablehealthcare,regardlessoftheirhealthstatus.However,individualinsurancemarketsareparticularlysusceptibletoadverseselection,whereinindividualsacquireinsuranceonlyaftertheyaresick.Theresultinginsurancepoolyieldshigherpremiumsforall.Guaranteedissueexacerbatesadverseselection,especiallyintheabsenceofanindividualcoveragerequirement.Instatesthathaveimplementedguaranteedissueinlieuofmedicalunderwriting,premiumshaveincreased30to60percent,andmanyinsurershaveabandonedtheindividualmarket.55

18

Medicalunderwritinghelpstopreventadverseselectionbygivingindividualsanincentivetopurchaseinsuranceevenwhentheydonotexpecttohavehighhealthcarecosts.Forthosewithextensivehealthproblemsaccompaniedbyextensivecosts,asafetynet,includingrisk-transfermechanisms(forexample,statehigh-riskpoolsorpublicreinsuranceprograms),shouldbeavailable.Aetnabelievesfairandtransparentunderwritingpracticesarecriticalformaintainingconsumerconfidence.Individualsmustknowthattheircontinuousparticipationinthesystemassuresthemcoverageiftheydobecomesick.

Improve the affordability of prescription drugs by removing barriers to generic competition and creating a regulatory pathway for generic biopharmaceutical medicines.

PrescriptiondrugspendingintheUnitedStatesrepresents10percentoftotalhealthcarecosts($228billionin2007).56Genericscomprise65percentofallprescriptionsdispensedinthenation,butonly20.5percentofalldollarsspentonprescriptiondrugs.57Savingsassociatedwithgenericsusageareextensive;foreach1percentincreaseintheuseofgenericdrugs,consumerssave$4billionannually.58Aetnasupportslegislationthatpavesthewayforenhancedgenericcompetitioninboththetraditionalandbiopharmaceuticalmarkets,sothatconsumerscanreapthebenefitsofthiscompetitionthroughequivalentmedicationandtreatmentatsignificantlylowercosts.

Promote the development and availability of mandate-lite and mandate-free products. Control the proliferation of costly benefit mandates by establishing independent review commissions.

Theaccumulationofmandatedbenefitshasasignificantimpactonthecostofhealthinsurance.Therearemorethan1,900mandatedbenefitsandservicesamongthestates,eachoneraisingthecostofpremiums,onaverage,1percentto2percent.59Together,thecumulativeeffectofbenefitmandatescanbesubstantial.Increasedcoststranslateintohigherpremiumsforallconsumersandapaucityofaffordableinsuranceoptions.

Aetnasupportsthecreationofmandatereviewlawsthatestablishindependent,thoroughandscientificallysoundprocessesforassessingthemedical,financialandpublichealthimpactofexistingandproposedbenefitmandates.Aetnaalsobelievesthatinsurersshouldbepermittedtooffermandate-liteormandate-freeproductdesigns(thatis,productsthatcover,ataminimum,preventiveandcatastrophiccare)toensurethatindividualshaveaccesstoaffordablecoverageoptions.

Encourage uniformity of state laws and regulations. Explore the development of an optional federal charter.

Whilestateshavelongbeenthesoleregulatorsofmostinsuranceproducts,thisdecentralizedsystemresultsinatangledwebofinconsistentinsuranceregulationsregardinglicensing,policyforms,ratesandmarketconductexams.Insurerswithamultistatepresencefacecostlyadministrativeburdenstocomplywithdivergentstatelawsandregulations,andthesehigheradministrativecostsarepassedontothemarketatlargethroughhigherinsurancepremiums.

Aetnabelievesitiscriticaltodevelopgreateruniformityofstatelawsandregulations.Oneprimeareaforreformispromptpaymentofclaims,forwhichAetnasupportstheadoptionofastrongnationalstandard,basedonfederalMedicarerules.Aetnaalsosupportsadvancingthecreationofanoptionalfederalcharter,whichwouldgiveinsurersthechoiceofbeingregulatedatthestateorfederallevel—similartothewaybankshavetheoptionofbeingstateorfederallychartered.

19

Point 9: Make the health care system more transparent and consumer-friendly

Transparencyentailsmakingclinicalperformance,efficiencyandpriceinformationavailabletothepublic.Witheasilyaccessiblequalityandpriceinformation,consumersarebetterabletomakedecisionsinsupportoftheirownhealthwhilemaintainingup-frontawarenessaboutthecostsoftheirtreatment.Aetnahaspioneered,andcontinuestopromote,transparencyinhealthcareinordertoensuretheproliferationofhigherqualityandlowercoststhroughoutthehealthcaresystem.

Provide consumers with meaningful information to allow them to make value-based health care decisions. Advance transparency in health care quality and pricing, giving consumers easy access to health care information, including cost and price information, and the ability to seek out hospitals and other health care providers that have a proven track record of high-quality care. Investments in transparency should be accompanied by rewards and other incentives for providers that efficiently deliver evidence-based care.

Inmostmarkets,consumersuseawealthofinformationtomakedecisionsonthepurchaseofproductsandservices,therebyencouragingproviderstoimprovequalityanddecreasecosts.60Healthcareconsumersoftenlackqualityandpriceinformationbeforetheyreceivecare,oftenleadingthemtopaytoomuchforcarewithoutbeingassuredofthestandardofcaretheyexpect.Conventionalwisdommighthavesuggestedthatmoreexpensivehealthcareisbettercare,butresearchershavefoundthatneitherqualityofcarenorpatientsatisfactioniscorrelatedwithcosts.61Advancesintransparency,coupledwithconsumer-drivenhealthplansthatgivepeople“skininthegame,”willhelpstemthetideofrisingcostsandinfuseacriticalformofcompetition—amongprovidersandamonghospitals—intothehealthcaresystem.62,63

Aetnabelieveshealthinsurersmustplayacriticalroleinprovidingconsumerswiththeinformationtheyneedtomaketherightdecisionsfortheirownhealthcare,asthey

possessawealthofdata,developprovidernetworksanddesignincentive-basedbenefitstructures.Inanefforttodisseminatetheseformsofvaluabledata,Aetnaprovidesmembersonlineaccesstophysician-specificcost,clinicalqualityandefficiencyinformation.Ensuringtransparencyonallthreelevelsmakescertainthatpriceinformationwillnotdisproportionatelydrivehealthcaredecisions.Inaddition,providingpriceinformationforan“episodeofcare,”ratherthanforuniqueservices,willallowconsumerstoaccuratelyassessprojectedcosts.64

Invest in efforts to improve health and benefits literacy, especially for the nearly half of adults in the nation who have difficulty locating, matching and integrating written information. Government and industry should partner with providers to improve health literacy and ensure that health information is easy to understand.

Lowhealthliteracyisthesinglebestpredictorofpoorhealthstatus,withpatientswhoaremarginallyhealthliteratebeingmorelikelytoreportpooreroverallhealthandlesslikelytomanagetheirhealthconditionseffectively.65Lowhealthliteracyalsoappearstoresultinexcessivehealthcareutilizationandhigherperpatientspending.Despitethesewell-knownimplications,mosthealthinformationtodayexceedsthereadingskillsofanaveragehighschoolgraduate,eventhoughthemajorityofU.S.adultsreadattheeighth-orninth-gradelevel.

Inordertoimprovehealthandbenefitsliteracy,Aetnabelieveshealthplansandprovidersshouldmakehealthinformationavailableatthefifth-gradelevelandusevisualaids,shortparagraphs,andterminologythatisunderstandabletonon-medicalprofessionals,asrecommendedbytheAmericanMedicalAssociationFoundation.Useoforalcommunicationanddevelopmentofplanmaterialsinmultiplelanguagesisalsocriticalinenhancinghealthliteracy.Amongotherhealthliteracyefforts,AetnahaspublishedNavigating Your Health Benefits for Dummies,whichincludeseasy-to-understandinformationaboutchoosingtherightcoverage,makingthemostofplan“extras”andpayingforbenefits.

20

21

Source:JRRaskinetal.“HealthInsuranceandConsumerism,”LehmanBrothers,May2006.

Consumer perceptions vs. reality of medical costs, 2006 Estimated average Average actual cost

Co

sts,

in U

.S. D

olla

rs

Hip Replacement Birth via C-Section Day/Night in Hospital

Ambulance Trip

$10,639

$25,000

$6,145

$13,500

$1,058

$3,600

$476 $500

Point 10: Harness the power of health information technology and research to reduce costs and improve quality

TheU.S.healthcaresectorlagsfarbehindotherindustriesandcountriesinitsinvestmentinanduseofinformationtechnology.Moreover,physiciansdonotalwayshaveeasyaccesstothebestinformationtochoosetreatmentsfortheirpatients,evidencedinpartbystudiesshowingthatanestimatedhalfofAmericanadultsdonotreceivecareinaccordancewithclinicalbestpractices.AetnabelievesitisessentialforthenationtomodernizetheU.S.healthcaresysteminawaythatpromotesqualityandimprovespatientsafetywhileenhancingvalueandfosteringinnovation.

Advance public-private partnerships to develop and implement health information technology (HIT), including personal health records and the development of an interoperable health record system that allows for the seamless and secure transmission of health information.

Justoverone-quarterofallphysiciansreportedusinganelectronichealthrecord(EHR)systemasrecentlyas2006.66YetwidespreadadoptionofEHRscouldsaveanestimated$80billionannuallybyimprovingthecoordinationofcare,eliminatingduplicationofservices,andreducingpaperworkandprescriptionerrors.Throughpersonalhealthrecords(PHRs),individualscanbenefitfromimprovedaccesstohealthinformation,improvedportabilityofrecordsandgreaterinvolvementintheirownhealthcare.

AetnabelievesallAmericansshouldhaveaccesstoasecure,interoperablehealthsystemthatprovidesadministrativeandconfidentialmedicalinformation.Healthinformationtechnology,coupledwithevidence-basedmedicine,translatesintofewererrors,improvedpatientsafetyandbetterdoctor-patientcommunication.InteroperabilityandhealthinformationprivacyandsecuritymustbetopprioritiesinanyHITinitiative.AetnacontendsthatallentitiesparticipatinginahealthinformationexchangeshouldberequiredtocomplywiththerobustprivacyandsecurityrulesestablishedundertheHealthInsurancePortabilityandAccountabilityAct(HIPAA),andthatstepsshouldbetakentoreconcilefederal,stateandlocallawsandregulationsgoverningthecollectionanddistributionofpersonalhealthinformation.

Create incentives for consumers, providers, employers and payers to adopt health information technology — accelerating the goal of replacing the outdated and costly paper-based medical records and billing systems.

SuccessfulHITimplementationrequiresconsiderablepublic-privatecollaboration,andmultiplesourcesoffundingareneededtounderwritethecostsofdevelopingandbuildinginteroperableHIT.

Aetnabelievesthatpayersshouldfundthedevelopmentofclaims-basedPHRsfortheirmembers.ThedevelopmentofinteroperableEHRs,however,requiresfinancialleadershipfromthefederalgovernment,andsupportcouldcomeintheformofinterest-freeloans,loanguaranteesorHill-Burton-typegrants.67Thissupportshouldbeaccompaniedbyincentivestoencouragerapidandwidespreadadoption.

22

23

Public investment per capita in health information technology, 2005

Source:TheCommonwealthFund.“HealthcareSpendingandUseofInformationTechnologyinOECDCountries”,Health Affairs,2006.

United Kingdom

Canada Germany Australia U.S.

$192.79

$31.85$21.20

$4.93 $0.43

24

Endnotes1PricewaterhouseCoopers,“TheFactorsFuelingRisingHealthcareCosts2008,”PreparedforAmerica’sHealthInsurancePlans,December2008.

2Ofthistotalpremiumcost,workerspayanaverage$3,354fromtheirpaychecks,withemployerscoveringtheremainingpremiumcosts.GaryClaxton,SamanthaHawkins,JeremyPickreign,etal.“EmployerHealthBenefits:2008AnnualSurvey,”KaiserFamilyFoundationandHealthResearchandEducationTrust,September2008.Accessedonline:http://ehbs.kff.org/images/abstract/7791.pdf.

3NationalCommitteeonQualityAssurance,“TheStateofHealthCareQuality2007.”Accessedonline:www.ncqa.org/Portals/0/Publications/Resource%20Library/SOHC/SOHC_07.pdf.

4RandHealth,“TheFirstNationalReportCardonQualityofHealthCareinAmerica,”Research Highlights,2006.Accessedonline:www.rand.org/pubs/research_briefs/2006/RAND_RB9053-2.pdf.

5LindaJ.BlumbergandJohnHolohan.“DoIndividualMandatesMatter?”Timely Analysis of Immediate Health Policy Issues,UrbanInstitute,January2008.

6StanDorn,“UninsuredandDyingBecauseofIt:UpdatingtheInstituteofMedicineAnalysisontheImpactofUninsuranceonMortality,”UrbanInstitute,January2008.Accessedonline:www.urban.org/UploadedPDF/411588_uninsured_dying.pdf.

7Theseextracostsaccountforoneoutofevery$12spentforemployer-sponsoredhealthinsurance.FamiliesUSA.“PayingaPremium:TheAddedCostofCarefortheUninsured,”June2005.

8Overone-quarter(28%)ofresidentsbetweentheagesof18and24—totaling8millionpeople—wereuninsuredin2007.Thisagegrouprepresented17.5%ofthetotaluninsuredpopulation.U.S.CensusBureau.“Income,Poverty,andHealthInsuranceCoverageintheUnitedStates:2007,”August2008.

9Aetna’sformerChairmanandCEO,Dr.JohnW.Rowe,firstarticulatedAetna’ssupportfortheconceptofanindividualcoveragerequirementatthecompany’sannualmeetinginApril2005.Thatsummer,RonaldA.Williams,Aetna’scurrentChairmanandCEO,co-authoredanop-edwithDr.JackLewin,PresidentoftheCaliforniaMedicalAssociation,titled“CoverYourself!”thatwaspublishedinThe Wall Street Journal onAugust19,2005.Inthefallof2005,Aetnaformalizedapolicystatementsupportinganindividualcoveragerequirement.

10LindaJ.BlumbergandJohnHolahan.“GovernmentasReinsurer:PotentialImpactsonPublicandPrivateSpending,”Inquiry41:130-143.(Summer2004).Accessedonline:www.inquiryjournalonline.org/i0046-9580-041-02-0130.pdf.

11U.S.CensusBureau.“Income,Poverty,andHealthInsuranceCoverageintheUnitedStates:2007.”IssuedAugust2008.

12JohnHolahan,AllisonCookandLisaDubay.“CharacteristicsoftheUninsured:WhoisEligibleforPublicCoverageandWhoNeedsHelpAffordingCoverage?”KaiserCommissiononMedicaidandtheUninsured,HenryJ.KaiserFamilyFoundation,February2007.Accessedonline:www.kff.org/uninsured/upload/7613.pdf.

13U.S.CensusBureau.“Income,Poverty,andHealthInsuranceCoverageintheUnitedStates:2007.”IssuedAugust2008.

14The47millionuninsuredrepresentpeoplewhoareuninsuredatagivenpointintimeduringtheyear.Thenumberofpeopleuninsuredfortheentireyearismuchsmaller,representingapproximately9-13%ofthenon-elderlypopulation,orbetween23.4and33.8millionpeoplein2006.See:CongressionalBudgetOffice,“HowManyPeopleLackHealthInsuranceandForHowLong?”May2003.Accessedonline:www.cbo.gov/ftpdoc.cfm?index=4210&type=0&sequence=2.

15SaraCollins,ChapinWhiteandJenniferKriss.“WhitherEmployer-BasedHealthInsurance?TheCurrentandFutureRoleofU.S.CompaniesintheProvisionandFinancingofHealthInsurance,”TheCommonwealthFund,September2007.Accessedonline:www.commonwealthfund.org/usr_doc/Collins_whitheremployer-basedhltins_1059.pdf?section=4039.

16GaryClaxton,SamanthaHawkins,JeremyPickreign,etal.“EmployerHealthBenefits:2008AnnualSurvey,”KaiserFamilyFoundationandHealthResearchandEducationTrust,September2008.Accessedonline:http://ehbs.kff.org/images/abstract/7791.pdf.

17JonGabel,KelleyDhontandJeremyPickreign.Are Tax Credits Alone the Solution to Affordable Health Insurance? Comparing Individual and Group Insurance Costs in 17 U.S. Markets(NewYork:TheCommonwealthFund,May2002).;MarkHall.“TheGeographyofHealthInsuranceRegulation,”HealthAffairs,March/April2000,19(2):173-84.

18Collins,etal.,2.19GaryClaxton,SamanthaHawkins,JeremyPickreign,etal.“Employer

HealthBenefits:2008AnnualSurvey,”KaiserFamilyFoundationandHealthResearchandEducationTrust,September2008.Accessedonline:http://ehbs.kff.org/images/abstract/7791.pdf

20Collins,etal.,4.21U.S.CensusBureau.“Income,Poverty,andHealthInsuranceCoverage

intheUnitedStates:2007.”IssuedAugust2008.22President’sAdvisoryPanelonFederalTaxReform.“Simple,Fair,

andPro-Growth:ProposalstoFixAmerica’sTaxSystem,”November2005.Accessedonline:www.taxreformpanel.gov/ final-report/TaxReform_Intro.pdf.

23Thetaxtreatmentofemployer-sponsoredhealthbenefits,infact,accountsforoneofthelargesttaxexpendituresintheU.S.budget,andestimatesforpersonalfederalforgonetaxrevenuein2006rangedfrom$91billion(JointCommitteeonTaxation)to$133billion(OfficeofManagementandtheBudget).PaulFronstin,“TheTaxTreatmentofHealthInsuranceandEmployment-BasedHealthBenefits,”EmployeeBenefitResearchInstitute,Issue BriefNo.294,June2006.

24PaulFronstinandDallasSalisbury.“HealthInsuranceandTaxes:CanChangingtheTaxTreatmentofHealthInsuranceFixOurHealthCareSystem?”EmployeeBenefitResearchInstitute,IssueBriefNo.309,September2007.

25GaryClaxton,SamanthaHawkins,JeremyPickreign,etal.“EmployerHealthBenefits:2008AnnualSurvey,”KaiserFamilyFoundationandHealthResearchandEducationTrust,September2008.Accessedonline:http://ehbs.kff.org/images/abstract/7791.pdf

26LisaDubay,JocelynGuyer,CindyMann,andMichaelOdeh.“MedicaidAtTheTen-YearAnniversaryOfSCHIP:LookingBackAndMovingForward,”Health Affairs,March/April2007;26(2):370-381;U.S.CensusBureau.“Income,Poverty,andHealthInsuranceCoverageintheUnitedStates:2006.”IssuedAugust2007.

27AlthoughCOBRAandHIPAAprovideanalternativetoworkersinbetweenjobs,theseoptionsmaybeprohibitivelyexpensive,andtypicallygreatlyexceedthecostsincurredbyworkersreceivingemployer-basedcoverage.

28America’sHealthInsurancePlans.“January2008CensusShows6.1MillionPeopleCoveredbyHSA/High-DeductibleHealthPlans,”April2008.Accessedonline:www.ahipresearch.org/pdfs/2008_HSA_Census.pdf.

29GaryClaxton,SamanthaHawkins,JeremyPickreign,etal.“EmployeeHealthBenefits2008SummaryofFindings.”KaiserFamilyFoundationandHealthResearchandEducationTrust,September2008.Accessedonline:http://ehbs.kff.org/images/abstract/7791.pdf

30CherylDamberg.“Consumer-DirectedHealthPlans:ResearchonImplicationsforHealthCareQualityandCost,”TestimonypresentedbeforetheCaliforniaDepartmentofInsuranceonSeptember20,2005,RAND.Accessedonline: www.rand.org/pubs/testimonies/2005/RAND_CT249.pdf.

31U.S.CensusBureau.“GeographicalMobility:2006to2007DetailedTables,”Table1.GeneralMobility,ByRegion,Sex,andAge:2006to2007,September4,2008.Accessedonline:www.census.gov/population/www/socdemo/migrate/cps2007.html.

32KaiserFamilyFoundationStateHealthFacts.“AverageFamilyPremiumperEnrolledEmployeeforEmployer-BasedHealthInsurance,2006.”

33Theterm“deathspiral”isusedtoexplainapotentialoutcomeofadverseselection.Whenacompany’sinsurancepoolbecomesincreasinglysicker,premiumsareraisedacrosstheboard.Thehealthiermembersofthepoolthenseekoutlessexpensivealternatives(cheaperinsurance,noinsurance,or,inthiscase,out-of-stateinsurance),therebyleavingbehindaprogressivelysickerriskpoolthateventuallybecomesuninsurable.

34RossDeVol,ArmenBedroussian,AnitaCharuworn,AnusuyaChatterjee,InKyuKim,SoojungKim,andKevinKlowden.An Unhealthy America: The Economic Burden of Chronic Disease Charting a New Course to Save Lives and Increase Productivity and Economic Growth,MilkenInstitute,October2007.Accessedonline:www.milkeninstitute.org/pdf/chronic_disease_report.pdf.

35NationalCommitteeforQualityAssurance.StateofHealthCareQuality2007,48.Accessedonline:www.ncqa.org/Portals/0/Publications/Resource%20Library/SOHC/SOHC_07.pdf.

36KatherineM.Flegal,BarryI.Graubard,DavidF.Williamson,andMitchellH.Gail.“ExcessDeathsAssociatedWithUnderweight,Overweight,andObesity,”JAMA,April20,2005,Vol.293,No.15,1861-1867.

25

37RossDeVol,ArmenBedroussian,AnitaCharuworm,AnusuyaChatterjee,InKyuKim,SoojungKim,andKevinKlowden.“AnUnhealthyAmerica:TheEconomicBurdenofChronicDiseaseChartingaNewCoursetoSaveLivesandIncreaseProductivityandEconomicGrowth,”MilkenInstitute,October2007.

38MaribelCifuentes,DouglasFernald,LarryGreen,et.al.,“PrescriptionforHealth:ChangingPrimaryCarePracticetoFosterHealthyBehaviors,”Annals of Family Medicine,Vol.3,Supplement2,July/August2005.

39Estimatedtotaldirecthospitalizationcostsofasevereinfluenzaepidemicexceed$3billion.NCQA,State of Health Care Quality,2007,40,citing:NationalFoundationforInfectiousDiseases.“FactsAboutInfluenzaforAdults.”LastaccessedJuly25,2007fromwww.nfid.org/pdf/factsheets/influadult.pdf.Updated:August2006.

40KaiserFamilyFoundation.“DentalCoverageandCareforLow-IncomeChildren: The Role of Medicaid and SCHIP,” August 2007. Accessed online: www.kff.org/medicaid/upload/7681.pdf.

41SurgeonGeneral’sOffice.“MentalHealth:AReportoftheSurgeonGeneral,”1999.Accessedonline:www.surgeongeneral.gov/library/mentalhealth/home.html.

42AgencyforHealthcareResearchandQuality.“NationalHealthcareQualityReport,”U.S.DepartmentofHealthandHumanServicesAgencyforHealthcareResearchandQuality,December2003.Accessedonline:www.ahrq.gov/qual/nhqr03/nhqr2003.pdf.

43ElizabethA.McGlynn,StevenM.Asch,JohnAdams,JoanKeesey,JenniferHicks,AlisonDeCristofaro,andEveA.Kerr.“TheQualityofHealthCareDeliveredtoAdultsintheUnitedStates,”New England Journal of Medicine,Vol.348,No.26,June26,2003,2635-2645.

44RANDResearchHighlights.“TheFirstNationalReportCardonQualityofHealthCareinAmerica,”2007.

45CathySchoen,StuartGuterman,AnthonyShih,JenniferLau,SophieKasimow,AnneGauthierandKarenDavis.“BendingtheCurve:OptionsforAchievingSavingsandImprovingValueinU.S.HealthCareSpending,”TheCommonwealthFundCommissiononaHigh-PerformanceHealthSystem,December2007.

46America’sHealthInsurancePlans.“SettingaHigherBar:Webelievethereismorethenationcandotoimprovequalityandsafetyinhealthcare,”April2007.Accessedonline:www.ahipbelieves.com/media/Setting%20A%20Higher%20Bar%20-%20Improve%20Quality%20and%20Safety%20in%20Health%20Care.pdf.

47LindaT.Kohn,JanetM.Corrigan,andMollaS.Donaldson.“ToErrisHuman:BuildingaSaferHealthSystem,”InstituteofMedicine,November1999.

48PricewaterhouseCoopersHealthResearchInstitute.“ThePriceofExcess:IdentifyingWasteinHealthcareSpending,”2008.

49Towers-PerrinTillinghast,“2008UpdateonU.S.TortCostTrends,”December2008.

50DavidM.Studdert.“TestimonyBeforetheSenateCommitteeonHealth,Education,Labor,andPensionsattheHearingEntitled‘MedicalLiability:NewIdeasforMakingtheSystemWorkBetterforPatients,’”June22,2006;Kessler,DanielandMarkMcClellan,“DoDoctorsPracticeDefensiveMedicine?”Quarterly Journal of Economics,Vol.3,No.2,May1996.

51DavidM.Studdert,MichelleM.Mello,AtulA.Gawande,TejalK.Gandhi,AllenKachalia,CatherineYoon,AnnLouisePuopoloandTroyenA.Brennan.“Claims,Errors,andCompensationPaymentsinMedicalMalpracticeLitigation,”New England Journal of Medicine,Vol.354,May11,2006.

52DavidSatcher,GeorgeE.Fryer,Jr.,JessicaMcCann,etal.“Trends:WhatifWeWereEqual?AComparisonoftheBlack-WhiteMortalityGapin1960and2000,”Health Affairs,March/April2005.

53African-AmericantoWhiteCancerMortalityRateRatios,U.S.,1997-2001,NationalCenterforHealthStatistics,CentersforDiseaseControlandPrevention.

54RobertWoodJohnsonFoundation.“MeanstoaBetterEnd:AReportonDyinginAmericaToday,”November2002.Accessedonline: www.rwjf.org/files/publications/other/meansbetterend.pdf.

55LeighWachenheimandHansLeida.“TheImpactofGuaranteedIssueandCommunityRatingReformsonIndividualInsuranceMarkets,”Milliman/AHIP,July10,2007.

56KaiserFamilyFoundation,“PrescriptionDrugTrends,”September2008.Accessedonline:http://wworg/rxdrugs/upload/3057_07.pdfw.kff.

57GenericPharmaceuticalAssociationWebsite.“IndustryStatistics,”2007.www.gphaonline.org/Content/NavigationMenu/AboutGenerics/Statistics/default.htm.

58GenericPharmaceuticalAssociationWebsite.“StatementfromGPhAPresidentandCEOKathleenJaegerontheGrowingUseofGenericMedicines,”September27,2007.www.gphaonline.org/AM/Template.cfm?Section=Press_Releases&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=3832

59JulietteCubanskiandHelenH.Schauffler.“MandatedHealthInsuranceBenefits:TradeoffsAmongBenefits,Coverage,andCosts?”CenterforHealthandPublicPolicyStudies,UniversityofCalifornia,Berkeley.Accessedonline:www.kff.org/insurance/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=13995.

60PaulB.Ginsburg.“ShoppingforPriceinMedicalCare,”Health Affairs,February6,2007,208-216.

61ElliotS.Fisher.“MoreMedicineisNotBetterMedicine,”The New York Times,December1,2003.

62Forinformationonconsumercontrolandcompetition,see:ReginaHerzlinger.“Let’sPutConsumersinChargeofHealthCare,”HarvardBusinessReview,July2002.Seealso:MichaelE.PorterandElizabethOlmsteadTeisberg.“RedefiningCompetitioninHealthCare,”HarvardBusinessReview,June2004.

63Researchersnotethepotentialriskoftransparencyleadingtocollusionamonghospitalsandprovidersonprices,aneventualitywhichcouldleadtohigherprices.Itisimportanttoexercisecautiontopreventthis.Aetnahascreatedbarrierstosuchprice-settingbylimitingtheavailabilityofpriceinformationtomembersandpreventingitsavailabilitytoproviders.See:MargaretK.KyleandDavidB.Ridley.“WouldGreaterTransparencyandUniformityofHealthCarePricesBenefitPoorPatients?”Health Affairs,September/October2007,1384-1391.

64AlexM.AzarII,ThomasP.Miller,DavidB.Kendall,andWaltonFrancis.“TransparencyinHealthCare:WhatConsumersNeedtoKnow,”Heritage Lectures,No.986,PublishedbytheHeritageFoundation,January22,2007.

65MichaelS.Wolf,JulieA.GazmararianandDavidW.Baker.“HealthLiteracyandFunctionalHealthStatusAmongOlderAdults,”Archives of Internal Medicine,Vol.165(Sept.26,2005),p.1946-52.

66CatherineW.Burt,EstherHing,andDavidWoodwell,“ElectronicMedicalRecordUsebyOffice-basedPhysicians:UnitedStates,2006,”October2007.

67In1946,CongresspassedP.L.79-725,theHospitalSurveyandConstructionAct,sponsoredbySenatorsListerHillandHaroldBurtonandwidelyknownastheHill-BurtonAct.ItwasdesignedtoprovideFederalgrantstomodernizehospitalsthathadbecomeobsoleteduetolackofcapitalinvestmentthroughouttheperiodoftheGreatDepressionandWorldWarII(1929to1945).Hill-Burtonhospitalswererequiredtoprovideuncompensatedservicesfor20yearsafterreceivingfunds.In1975,CongressenactedanamendmenttotheHill-BurtonProgram,TitleXVIofthePublicHealthServiceAct,whichestablishedFederalgrants,loanguaranteesandinterestsubsidiesforhealthfacilities.FacilitiesassistedunderTitleXVIwererequiredtoprovideuncompensatedservicesinperpetuity.

©2008AetnaInc.00.02.928.1(12/08)

Aetna’s Proposal for Health Care System Transformation

■ Get and keep everyone covered

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■ Reorient the system toward prevention, value and quality of care

■ Use market incentives to improve coverage, drive down costs and make the system more consumer-oriented

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