Transcript Future Directions for Health Care Reform in Vermont

Future Directions for
Health Care Reform in
Vermont
Kenneth E. Thorpe, Ph.D.
Robert W. Woodruff Professor and Chair
Department of Health Policy and Management
Rollins School of Public Health
Emory University
[email protected]
The Vermont Health Care Commission 2005
Overview
•
•
Crafting effective health reform solutions
and providing universal access requires a
clear understanding of what accounts for
the growth in spending
Key “facts” from the US and Vermont context
1.
2.
3.
4.
80% of total health care spending linked to
chronically ill patients
Chronically ill receive approximately 50% of all
clinically recommended medical care
Rise in “treated disease prevalence” accounts
for nearly two-thirds of the growth in health care
spending
Rise in obesity prevalence in US accounted for
27% of the growth in health spending over the
past 20 years.
The Vermont Health Care Commission 2005
Percent of Private Firms offering Health
Insurance in Vermont, 2003 Only 55% of the
19, 236 Firms Currently Offer Health
Insurance
% Offering Health Insurance
120%
100%
100%
100-999
1000+
88.20%
78.30%
80%
60%
98.70%
54.96%
36.80%
40%
20%
0%
All
Source: MEPS-IC
1-9
10-24
25-99
Firm Size
The Vermont Health Care Commission 2005
Per Capita Spending is Lower
in Vermont Yet Private
Insurance is More Expensive!
Per Capita Spending 1998
$4,000
$3,760
$3,472
$3,500
$3,000
Source: CMS
US
The Vermont Health Care Commission 2005
VT
$
Single Premiums, Vermont and US
Totals, 1999 and 2003: Vermont is
3.3% Higher than National Average
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
$3,596
$2,419
$2,324
1999
Source: MEPS-IC
$3,481
VT
The Vermont Health Care Commission 2005
2003
US
Family Health Insurance Premiums
Are Higher in Vermont Compared to
the National Average
$10,000
$9,249
$9,483
$8,000
$6,358
$6,000
$6,058
$4,000
$2,000
$0
1999
Source: MEPS-IC
VT
The Vermont Health Care Commission 2005
2003
US
Where Does Vermont’s Health Care
Dollar Go? 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%
3 Chronic
Conditions,
16%
1 Chronic
Condition,
21%
2 Chronic
Conditions,
18%
Source: MEPS
The Vermont Health Care Commission 2005
Distribution of Medical Care
Spending by Number of Chronic
Health Care Conditions, 2001
Number of Chronic
Health Care
Conditions
0
1
2
3
4
5
Total All Chronic Care
Percent of Total
Health Care
Spending
Percent of
Population
17%
21%
18%
16%
12%
16%
83%
Source: MEPS
The Vermont Health Care Commission 2005
55%
24%
11%
5%
4%
1%
45%
Issue: Level vs. Trends in
Spending
Level: US and Vermont Spends approximately
50% more per capita than European
countries
• Traced to higher clinical and administrative expenses,
fragmented purchases, and ultimately higher prices
Trends: Growth in spending in US and Vermont
has risen faster that 19 of 23 OECD
countries between 1980 and 2003.
The Vermont Health Care Commission 2005
Why Does Real Per Capita
Health Spending Rise Over
Time?
1. Rise in Treated Disease Prevalence
2. Rise in Spending Per Treated Case
3. Both
The Vermont Health Care Commission 2005
Obesity Has Doubled Among
Adults in Vermont and US,
1990-2003
23.5%
25%
19.9%
% Obese
20%
15%
10.9%
11.6%
10%
5%
0%
Source: BRFSS
1990
2003
VT
US
The Vermont Health Care Commission 2005
Increase in Treated Disease
Prevalence in Vermont, Key Factor
Driving the Growth in Health Care
Spending
35%
28.8%
30%
25%
18.5%
20%
17.3%
15%
10%
5%
2.8%
13.7%
4.6%
0%
Diabetes
Source: BRFSS
Hypertension
1990
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Hyperlipidemia
2003
What Accounts for The Rise in
Treated Disease Prevalence?
1. Rise in Population Disease Prevalence –
fueled by obesity and other risk factors
2. Changes in threshold for treating
asymptomatic patients (hypertension,
hyperlipidemia, the metabolic syndrome)
3. Innovation (SSRI, statins, medical devices)
The Vermont Health Care Commission 2005
Rise in Treated Disease Prevalence Linked
to the Rise in Obesity Key Single Largest
Driver of Health Care Spending Over Time
% Change in Spending Over Time, 1987-2002
Rise in Obesity Prevalence Holding
Technology Constant
= 11%
Rise in Additional Cost Of Treating
= 16%
Obese vs. Normal Weighted Patients
TOTAL
= 27%
Source: Kenneth E. Thorpe, PhD
The Vermont Health Care Commission 2005
Implications for Reform
1.
2.
3.
Universal Coverage will need assurance that we
have the ability to control spending- need policy
options address both level and growth.
Policy options for reform need to attack the key
drivers of cost—rising disease prevalence.
Reforms need to result in better value care
provided to all patients, but in particular to
chronically ill patients.
Need options reducing excess clinical costs (i.e.
additional costs linked to medical errors/events)
and administrative costs.
The Vermont Health Care Commission 2005
Implications for Reform
Potential Options for Restructuring Care
Change how plans are paid and compete.
1.
Consider encouraging competition around specific chronic
diseases that accounts for the most spending, most of the
growth in spending. Ability to effectively treat multiple chronic
conditions.
2.
Develop captitated payment based on
•
Annual cost of providing all clinically recommended care for
patients with single or multiple chronic illnesses (starting to
occur in the market today—Medicare already has the
methodology for risk adjusting payments.
3.
Compete on value (quality of care per dollar spent)
•
Best clinical outcomes at lowest cost
•
No co-pays or deductibles for clinically recommended
services.
•
Promote access to state-of-the-art care by most vulnerable
patients.
4.
Green Mountain Health. Universal health wellness, promotion,
disease prevention benefits. What constitutes a best practice
program?
The Vermont Health Care Commission 2005
Implications – Slowing the
Growth in Spending
1. Key Issues: Slow rise in treated disease
prevalence through,
•
Slowing the rise in obesity prevalence
2. Policy Tools
•
•
•
School Based Interventions
New and effective health promotion, wellness,
disease prevention programs available for all
adults
Financial incentives to participate
The Vermont Health Care Commission 2005
Summary
• Changes outlined above requires fundamental
restructuring of Vermont’s payment and delivery
health care systems
• Explore competition among health plans and
provider groups around key chronic conditions
• Develop state strategy for addressing rise in treated
disease prevalence
• Develop options for reducing the level of spending
(lower clinical and administrative costs)
• Devote resources to developing effective health
promotion, wellness programs for use in schools,
and the worksite.
The Vermont Health Care Commission 2005
Options for Financing Health
Care Expansions
• Evaluate options for financing health care
for all Vermont residents through the
following approaches:
– Savings in existing programs
– Premium assessments on health plans
– Innovative uses of global commitment
– Others
The Vermont Health Care Commission 2005
Summary/Workplan
Workplan
– What questions can we address by January 15th
(i.e. financing, economic impact, etc.)
– What approaches can be outlined/evaluated for
the upcoming session (short-term changes)?
– What approaches can be outlined/evaluated for
the future—long term changes?
The Vermont Health Care Commission 2005