Transcript Document

Cost Containment and State Health
Care Reform
NAIC Health Innovations Working Group
March 29, 2008
Isabel Friedenzohn
Deputy Director, State Coverage Initiatives
State Coverage Initiatives (SCI )
• An Initiative of The Robert Wood Johnson
Foundation
• Direct technical assistance to states
– State specific help, research on state policy
makers’ questions
– Convening state officials
– Web site: http://statecoverage.net
– Coverage Matrix
– Publications
• Grant funding
State Coverage Initiatives
Health Care Costs – The Dilemma
• Per person spending expected to increase
from $7,026 (’06) to $13,101 (’07)
• Projections that national health care
spending will reach $4.3 trillion by 2017 (20%
GDP)
Keehan, S., et al., ‘Health Spending Projections through 2017: The
Baby-Boom Generation is Coming to Medicare,” Health Affairs
Exclusive, February 26, 2008, W-145.
Percent of Median Family Income Required
to Buy Family Health Insurance
18
18
16
14
12
10
8
8
6
4
2
0
1987
Source: Calculations by Len Nichols, using KFF and
AHRQ premium data, CPS income data.
2004
Labor Market Realities
Occupation
Physician
Family premium/Median wage
7.3%
History professor
15.8%
Secretary
29.1%
Carpenter
24.2%
Cook
49.8%
.
Source: KFF premium and BLS wage data
Increases in Health Insurance Premiums Compared
to Other Indicators, 1988-2007
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2007; KPMG Survey of
Employer- Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America
(HIAA), 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of
Annual Inflation (April to April), 1988-2007; Bureau of Labor Statistics, Seasonally Adjusted Data
rom the Current Employment Statistics Survey, 1988-2007 (April to April).
Root Problems
• Inappropriate and/or overutilization of medical care/
good new technologies
• Regional variation in services and spending
• Administrative inefficiency associated with
payer/provider/patient interface
• Growing uninsured population
• Insufficient preventive services
• Patients’ lack of price sensitivity
• Incentive mis-alignment
• Under-application of current evidence base
• Too small an evidence base
• Poor lifestyle choices
Nichols, L. “Financing Health Reform: Share Responsibility IS the American Way.”,
Financing Health Care Reform in New Jersey Forum, March 18, 2008.
HCFO Hot Topics on Health Care Costs.
Distribution of Health Spending
Adults Ages 18-64, 2001
$40,000
Average Cost Per Person
or higher
$30,000
20% of population
that accounts for
80% of spending
Average Cost =
$2,454
$20,000
$10,000
$0
0%
10%
20%
30%
40%
50%
60%
Percent of Population
Source: Employee Benefit Research Institute estimates
from the 2001 Medical Expenditure Panel Survey.
70%
80%
90%
100%
More than 80% of Health Care Spending on
Behalf of People with Chronic Conditions
5+ Chronic
Conditions,
16%
O Chronic
Conditions,
17%
4 Chronic
Conditions,
12%
1 Chronic
Condition,
21%
3 Chronic
Conditions,
16%
Thorpe, Kenneth E, PhD. What Accounts for the High and Rising Costs of Health
Care? Slides presented at the State Coverage Initiatives National Meeting,
Washington, DC, February 23-24, 2006
2 Chronic
Conditions,
18%
Challenges of Cost-Containment
• One person’s cost is another’s income
• System savings are not necessarily
payer’s or state’s
• Cost-shifts have multiple participants
and time horizons
Nichols, L. “Financing Health Reform: Share Responsibility IS the American Way.”,
Financing Health Care Reform in New Jersey Forum, March 18, 2008.
Types of Possible Remedies (1)
• Purchasing to Improve Quality/Patient Safety
– Pay for performance
– Tiered networks
– Strengthening primary care and care coordination (medical
homes)
– Improve Efficiency (i.e., appropriate care settings)
• Purchasing Strategies to Reduce Costs
– Pooled purchasing, rebates, etc
• Promoting Health and Disease Prevention
– Wellness Programs
– Disease Management
– Reducing Obesity/Tobacco Use
– Positive incentives for Health
• Producing and Using Better Information
– Information Technology
• Evidence-Based Medicine
Commonwealth Foundation. Bending the Curve: Options
for Achieving Savings and Improving Value in U.S. Health
Spending. 2008
Types of Possible Remedies (2)
• Consumer-Related Strategies
Changes to Consumer Cost Sharing
Consumer Education (Performance Guides, Cost
Transparency)
Consumer-Directed Health Care
• Supply Controls
Ration Services, CON, professional supply, technology
diffusion
• Price Controls
Public Program Payment Formulae (Medicaid/Medicare)
Use Buying Power of State (Medicaid/State Employees)
State Efforts: Councils focus on
Cost and Quality
•
•
•
•
•
•
•
•
MA – Health Care Quality and Cost Council
WV – Interagency Health Council
ME – Maine Hospital Cost Commission
LA – Health Care Quality Forum
MD – Maryland Health Quality and Cost Council
OH - Office of Health Ohio
CO - Center for Improving Value in Health Care
OR – Oregon Quality Institute
State efforts: RI HEALTHpact
• “wellness health benefit plans” for small
businesses (<50 employees)
• Benefit design encourages wellness
programs
• Insurers (2) required to offer
• Premiums must be equal to more than
10% of average annual state wages.
• Tiered provider networks
CA reform proposal: Cost Containment
– Requirement that employers establish Section 125
plans
– Individuals also able to make pre-tax contributions
to HSAs
– Work with both providers and insurers to improve
efficiency and reduce overall health care costs
– Implement health information technology
(stipulates goal of achieving 100 percent
electronic health data exchange in the next 10
years)
– Increases Medi-Cal reimbursement rates to
reduce cost-shifting (‘hidden tax’ on private
payers).
Prescription for Pennsylvania
Prescription for Pennsylvania is a set of integrated practical
strategies for improving the health care of all Pennsylvanians,
making the health care system more efficient and containing its cost.
Source: Presentation by Ann S. Torregrossa, Deputy
Director & Director of Policy GOHCR. NGA meeting on
Benefit Design.March 26, 2008
Pennsylvania Proposed Reforms:
Prescription for Pennsylvania
Rx for Affordability
Rx for Access
Rx for Quality
Cover All Pennsylvanians
Health Care Workforce
Hospital-Acquired Infections
Coverage for College
Students and Young Adults
Removing Practice Barriers
Quality Outcomes
Community Benefit
Requirements
Cost-Effective Sites
Pay for Performance
Uniform Admission Criteria
Co-Occurring Disorders
Chronic Care
Fair Billing and Collection
Practices
Governor may consider
individual mandate if number
of uninsured does not
decline over next few years
Health Disparities
Capital Expenditures
Child Wellness
Small Group Insurance
Reform
Adult Wellness
Transparency of Cost and
Quality Data
Long Term Living
End of Life and Palliative
Care
Source: Presentation by Ann S. Torregrossa, Deputy
Director & Director of Policy GOHCR. Alliance for
Health Reform Briefing, October 26, 2007
Pennsylvania: “Every day that passes without meaningful
change increases the cost to our health care system.”
Inefficiencies Drive Cost in Pennsylvania's Health
Care System
8.000
7.000
$1.4 Billion
6.000
Cost of the Uninsured
5.000
$3.5 Billion
4.000
Health Acquired
Infections
3.000
Chronic Care
Hospitalizations
2.000
Readmissions and
Errors
$1.7 Billion
1.000
$965 Million
0.000
1
Lessons learned in state reform efforts
•
•
Little success so far in addressing
underlying cost of health care but a new
focus on chronic care management
holds potential
Address access, systems improvement,
cost containment simultaneously—
concern about long-term sustainability of
programs and improved population
health
State Coverage Initiatives