HEALTH REFORM ISSUES FACING THE NEXT PRESIDENT

1. HEALTH REFORM ISSUES FACING THE NEXT PRESIDENT Brian Biles, MD MPH Department of Health Policy George Washington University February 21, 2008

2. HEALTH REFORM ISSUES IN 2009 Health insurance coverage/uninsured Health care costs/increases in costs Effectiveness/quality of health care

3. HEALTH INSURANCE COVERAGEChildren and Nonelderly Adults, 2006 Children Adults under 65 Total: 78.2 million Total: 181.8 million Note Medicaid also includes S-CHIP, other state programs, Medicare, and military-related coverage. SOURCE: KCMU and Urban Institute estimates based on March 2007 Current Population Survey.

4. NUMBER OF UNINSURED AMERICANS IS HIGH & INCREASING Uninsured in Millions 46.5 44.4 43.0 SOURCE: KCMU/Urban Institute analysis of March CPS for each year.

5. PERCENTAGE OF FIRMS OFFERING HEALTH BENEFITS IS DECREASING 2000–2007 *Tests found no statistical difference from estimate for the previous year shown (p<.05). Note: As noted in the Survey Design and Methods section, estimates presented in this exhibit are based on the sample of both firms that completed the entire survey and those that answered just one question about whether they offer health benefits. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2007.

6. THE UNINSURED ARE LOW-INCOME WORKERS AND THEIR FAMILIES 2006 Family Work Status Family Income Age Part-Time Workers 11% 55-64 9% 0-18 20% No Workers 18% 35-54 32% 19-34 39% 1 or More Full-Time Workers 71% Total =46.5 million uninsured The federal poverty level was $20,614 for a family of four in 2006.SOURCE: KCMU/Urban Institute analysis of March 2007 CPS.

7. >20% (10 states) 18%-20% (9 states) 13-17% (18 states & DC) < 13% (13 states) UNINSURED ARE HEAVILY LOCATED IN SOUTHERN AND WESTERN STATES 2005-2006 NH VT ME WA MT ND MN MA OR NY ID SD WI RI MI CT WY PA NJ IA NE OH NE IN NV DE IL WV UT VA MD CO KY CA KS MO NC DC TN OK SC AR AZ NM GA MS AL TX LA AK FL HI US Average = 18% SOURCE: Urban Institute and KCMU analysis of the March 2006 and 2007 Current Population Survey. Two-year pooled estimates for states and the US (2005-2006).

8. HEALTH INSURANCE MATTERSBARRIERS TO HEALTH CARE By Insurance Status 2006 Percent of adults (age 19 – 64) reporting in past 12 months: NOTE: Respondents who said usual source of care was the emergency room were included among those not having a usual source of care. SOURCE: KCMU analysis of 2006 NHIS data.

9. HEALTH CARE COSTS • US health care costs substantially exceed those of other major OECD nations • US costs now average $7,500 per person while Germany, Canada, Britain and other major nations spend under $4,000 • US spends 16% of its GDP on health care while the major European nations spend less than 12% • US spending in 2018 is now projected to exceed $12,500 per person and 19.5% of GDP

10. HEALTH COSTS CONTINUE TO INCREASE 5.2% 7.2% 9.1% 12.3% 13.7% 13.7% 13.6% 13.6% 13.7% 13.8% 14.5% 15.3% 15.8% 15.9% 16.0% Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData (see Historical; NHE summary including share of GDP, CY 1960-2005; file nhegdp05.zip).

11. ANNUAL PREMIUM COSTS FOR COVERED WORKERS INCREASE: 2000 and 2007 $12,106 $6,438 $4,479 $2,471 Single Coverage Family Coverage Note: Family coverage is defined as health coverage for a family of four. Data represents average for all types of plans. SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2007.

12. EFFECTIVENESS/QUALITY OF HEALTH CARE • IOM’s To Err is Human and Quality Chasm reports document in great detail the quality shortcomings of US health care • National longevity and mortality rates trail almost all other OECD nations • Detailed health services outcomes research indicates that much US health care fails to address conditions amenable to health care

16. OPPORTUNITY FOR HEALTH REFORM IN 2009 Percent naming HEALTH CARE as one of the top two issues they’d most like to hear presidential candidates talk about, by political party self-identification: Source: Kaiser Health Tracking Poll: Election 2008

17. WHAT THE PUBLIC WANTS Proposals from 2008 Candidates: A new health plan that would provide insurance for nearly all of the uninsured and would involve a substantial increase in spending A new health plan that is more limited and would cover only some uninsured groups, but would involve less spending A health plan that would keep things basically as they are SOURCE: Kaiser Health Tracking Poll: Election 2008, Volume 3, October 2007.

18. DEMOCRATIC VIEWS ON HEALTH REFORM • Presidential candidates: Obama, Clinton • Congressional leaders: Representatives Stark, Dingell, Waxman; Senators Baucus, Kennedy • Congressional leaders: Speaker Pelosi, Majority Leader Reid

19. DEMOCRATIC PROPOSALS TO EXPAND COVERAGE • Employers mandated to provide health insurance coverage • Or pay percentage of payroll towards costs of public plan • “Pay-or-play” approach to coverage • Subsidies to low-wage firms and individuals • Some proposals include individual mandate with subsidies to low-income individuals

20. DEMOCRATIC PROPOSALS TO EXPAND COVERAGE • National health insurance connector/FEHBP-type private health insurance options program • Uniform benefit packages • Risk adjustment system • Medicare-type public plan offered as option in connector program • Expansion of Medicaid and SCHIP • Some proposals include reinsurance for employer plans for catastrophic costs

21. DEMOCRATIC PROPOSALS TO LIMIT COSTS • Health insurance connector to reduce administrative costs • Medicare-type plan as option in connector with lower provider payments and administrative costs • National Health Information Technology system • Rx drug reforms in advertising and marketing • Elimination of over payment to Medicare MA plans

22. TOTAL NATIONAL HEALTH EXPENDITURES, 2008–2017 Projected and Various Scenarios Dollars in trillions * Selected individual options include improved information, payment reform, and public health. Source: Based on projected expenditures absent policy change and Lewin estimates.

23. DEMOCRATIC PROPOSALS TO IMPROVE QUALITY/HEALTH SYSTEM PERFORMANCE • National Health Information Technology system • Comparative effectiveness research and payments • Pay-for-quality payments system Medicare • Malpractice reform

24. CHALLENGES TO HEALTH REFORM • Costs of new health insurance for 45 million • Over $100 billion per year and $1 trillion over 10 yrs • Over $2 per hour for individual and $6 per hour for family employer coverage • Lack of experience with effective cost control programs in the US • Little effective public sector regulation • Little effective private sector competition

25. CHALLENGES TO HEALTH REFORM History of provider opposition to major changes Health care lobbying effort in Washington is huge: at $300 million per year it is larger than any other industry

26. OPPORTUNITIES FOR HEALTH REFORM LEGISLATION • Democratic president and increased majority in Senate • Health care widely discussed as major issue in Presidential campaign in 2008 • Democrats have settled public/private coverage divide with Medicare-type plan offered in health care connector and pay-or-play proposals • $100+ b a year isn’t really a lot in a $2/4 trillion health care system and a $14/21 t national economy • Providers are now beginning to support expanded coverage proposals: FAH, AMA, others

27. OPPORTUNITIES FOR HEALTH REFORM LEGISLATION • Priority legislation has been adopted in first year of term for the last four Presidents: • Bush II: Tax cuts in 2001 • Clinton: Deficit reduction reconciliation bill in 1993 • Bush I: Deficit reduction reconciliation bill in 1989 • Reagan: Tax cuts in first big reconciliation bill in 1981 • Major health legislation in third year of first term of Bush II • Medicare Modernization Act in 2003

28. 2009 COULD BE SECOND CHANCE AT 1993AND 1973-74 • It’s the economy stupid • And don’t forget about health care • With some lessons learned • It’s a one year window of opportunity • Let Congress do the work • Don’t let the perfect be the enemy of the good

29. INFORMATION AND ANALYSIS OF HEALTH REFORM ISSUES • The Commonwealth Fund: Commission on a High Performance Health System www.commonwealthfund.org • Kaiser Family Foundation: Commission on Medicaid and the Uninsured www.kff.org

31. Barack Obama Require children to have health coverage Expand Medicaid and SCHIP Require employers to offer or contribute a percentage of payroll to coverage Provide income-related subsidies for low-income families Create a national health insurance exchange with private plans and a public plan with benefits similar to those in FEHBP Regulations on insurers to prevent denials of coverage Estimated cost is $50-65 billion, funded by ending tax cuts for those with incomes over $250,000 and savings to health system

32. Hillary Clinton Require large employers to offer or contribute; tax credits for small employers that offer coverage Expand Medicaid and SCHIP Expansion of group insurance options through Health Choices Menu FEHBP buy-in with public plan option based on Medicare Premium subsidies through refundable tax credits, with limit on premiums as a percent of income Reinsurance for catastrophic retiree health costs Regulations on insurers to prevent insurance discrimination Individual mandate Estimated cost is $110 billion per year, funded by ending tax cuts for those with incomes over $250,000, health system savings and limiting the tax exclusion for ESI