THE COMMONWEALTH FUND

Why Universal Health Insurance is Necessary for a High Performance Health System

Sara R. Collins, Ph.D. Assistant Vice President The Commonwealth Fund Alliance for Health Care Reform Briefing Washington, D.C.

October 26, 2007

Why Does the Current Health Insurance System Fail to Promote High Performance?

• Access to care is unequal • Poor access to care is linked to poor quality • Care delivery is inefficient • Fragmented health insurance system makes it difficult to control costs • Financing of care for uninsured and underinsured families is inefficient • Positive incentives in benefit design and insurance markets are lacking THE COMMONWEALTH FUND

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47 Million Uninsured in 2006, Increase of 8.6 Million Since 2000, Adults Under-65 Accounted for Most of the Increase CA OR WA NV ID UT AZ 1999–2000 U.S. Average: 17.3% MT WY CO NM VT ND SD NE KS OK MN IA MO AR WI IL MS NY MI PA OH IN TN KY WV VA NC SC AL GA TX LA ME RI NJ CT MA DE MD DC FL AK HI 23% or more 19%–22.9% 14%–18.9% Less than 14% CA OR WA NV ID UT AZ 2005–2006 U.S. Average: 20.0% MT WY CO NM VT NH ME ND SD NE KS OK MN IA MO AR WI IL MS NY MI PA OH IN TN KY WV VA NC SC AL GA NJ DE MD DC RI CT MA TX LA FL AK HI

Source: J. C. Cantor, C. Schoen, D. Belloff, S. K. H. How, and D. McCarthy,

Aiming Higher: Results from a State Scorecard on Health System Performance

(New York: The Commonwealth Fund, June 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.

Percent of Uninsured Children Declined Since Implementation of SCHIP, But Gaps Remain CA OR WA NV ID UT 1999–2000 U.S. Average: 12.0% VT NH ME ND MT MN WY CO SD NE KS IA MO WI IL IN MI OH KY PA NY WV VA RI NJ CT DE MD DC MA NC TN OK AZ NM AR SC MS GA AL TX LA FL AK HI 16% or more 10%–15.9% 7%–9.9% Less than 7% CA OR WA NV ID UT AZ 2005–2006 U.S. Average: 11.3% MT WY CO NM VT NH ME ND SD NE KS OK MN IA MO AR WI IL MS NY MI PA OH IN TN KY WV VA NC SC AL GA NJ DE MD DC RI MA CT TX LA FL AK HI

Source: J. C. Cantor, C. Schoen, D. Belloff, S. K. H. How, and D. McCarthy,

Aiming Higher: Results from a State Scorecard on Health System Performance

(New York: The Commonwealth Fund, June 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.

Previously Uninsured Medicare Beneficiaries With History of Cardiovascular Disease or Diabetes Have Much Higher Self Reported Hospital Admissions After Entering Medicare Than Previously Insured

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Number of hospital admissions per 2-year period Uninsured before age 65 Continuously insured before age 65 0.7

0.6

0.5

0.4

0.3

0.2

0.1

0 58 60 62 64 66 68 70 72 THE COMMONWEALTH FUND

Source: J. M. McWilliams, et al., “Use of Health Services by Previously Uninsured Medicare Beneficiaries,” NEJM 357;2, Jul 12 2007.

Roadmap to Health Insurance for All: Principles for Reform

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Builds an essential foundation for quality and efficiency as well as access Benefits cover essential services with financial protection Premiums/deductibles/out of pocket costs affordable Coverage is automatic, stable, seamless Choice of health plans or care systems Broad health risk pools; competition based on performance not risk or cost shift Simple to administer: lowers overhead costs providers/payers Minimizes dislocation Financing adequate/fair/shared across stakeholders

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Design Matters: How Well Do Different Strategies Meet Principles for Health Insurance Reform?

Principles for Reform Tax Incentives and Individual Insurance Markets Mixed Private-Public Group Insurance with Shared Responsibility for Financing Public Insurance

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Covers Everyone Minimum Standard Benefit Floor 0 – + + + + Premium/Deductible/ Out-of-Pocket Costs Affordable Relative to Income – + + Easy, Seamless Enrollment 0 + ++ Choice Pool Health Care Risks Broadly + – + + + ++ Minimize Dislocation, Ability to Keep Current Coverage + ++ – Administratively Simple – + ++ Work to Improve Health Care Quality and Efficiency 0 +

0 = Minimal or no change from current system; – = Worse than current system; + = Better than current system; ++ = Much better than current system Source: S.R. Collins, et al.,

A Roadmap to Health Insurance for All: Principles for Reform

, Commission on a High Performance Health System, The Commonwealth Fund, October 2007.

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Related Commonwealth Fund Reports

S. R. Collins, C. Schoen, K. Davis, et al., A Roadmap to Health Insurance for All: Principles for Reform, The Commonwealth Fund Commission on a High Performance Health System, October 2007.

A High Performance Health System for the United States: An Ambitious

Agenda for the Next President, The Commonwealth Fund Commission on a High Performance Health System, forthcoming.

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C. Schoen, R. Osborn, M. M. Doty, et al., “Toward Higher-Performance Health Systems: Adults’ Health Care Experiences in Seven Countries, 2007,” Health Affairs, forthcoming.

S. R. Collins, C. White, and J. L. Kriss, Whither Employer-Based Health

Insurance? The Current and Future Role of U.S. Companies in the

Provision and Financing of Health Insurance, The Commonwealth Fund, September 2007.

J.C. Cantor, D. Bellof, C. Schoen, et al., Aiming Higher: Results from a State Scorecard on Health System Performance, The Commonwealth Fund Commission on a High Performance Health System, June 2007

Visit the Fund at: www.commonwealthfund.org

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