The Colorado Health Care Cooperative A Uniquely Colorado Solution

1. The Colorado Health Care CooperativeA Uniquely Colorado Solution Senator Irene Aguilar, MD SD 32, Denver

2. 2010: 49.9 Million Uninsured • Government Insurance • 4 Million CO Medicaid = 560,722 CHP + = 69,008 2011 Colorado: 829,000 uninsured 16% of population

3. Colorado: Only 57.6% Adequately Insured

4. Impact of the Recession on Colorado Medicaid 40% Colorado Department of Health Care Policy & Financing FY2011-12 Medical Premiums Expenditure and Caseload Report, August 2011

5. 2012 Federal Poverty Levels

6. Average Annual Premiums for Single and Family Coverage, 1999-2011 * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011.

7. Urban and Brookings Institute Tax Policy Center 50% $ 42,327 76% $ 88,317 90% $ 154,131 99% $ 506,553 May 12, 2011

8. Distribution of Health Plan Enrollment for Covered Workers, by Plan Type, 1988-2011 1% 1% 1% 1% * Distribution is statistically different from the previous year shown (p<.05). No statistical tests were conducted for years prior to 1999. No statistical tests are conducted between 2005 and 2006 due to the addition of HDHP/SO as a new plan type in 2006. Note: Information was not obtained for POS plans in 1988. A portion of the change in plan type enrollment for 2005 is likely attributable to incorporating more recent Census Bureau estimates of the number of state and local government workers and removing federal workers from the weights. See the Survey Design and Methods section from the 2005 Kaiser/HRET Survey of Employer-Sponsored Health Benefits for additional information. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988.

9. Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage, By Firm Size, 2006-2011 • * Estimate is statistically different from estimate for the previous year shown (p<.05). • Note: These estimates include workers enrolled in HDHP/SO and other plan types. Because we do not collect information on the attributes of conventional plans, to be conservative, we assumed that workers in conventional plans do not have a deductible of $1,000 or more. Because of the low enrollment in conventional plans, the impact of this assumption is minimal. Average general annual health plan deductibles for PPOs, POS plans, and HDHP/SOs are for in-network services. • Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2011.

10. Dr. Jonathan Gruber Presentation to Colorado Health Benefit Exchange Board 9/16/11

11. Table 2: Estimate of ACA Effect, 2016 → → Dr. Jonathan Gruber 9/16/11

12. Dr. Jonathan Gruber 9/16/11

14. Dollars Health Care Expenditure per Capita by Source of Funding, 2008Adjusted for Differences in Cost of Living 7,538 5,003 4,627 4,079 3,737 3,696 3,540 3,470 3,353 3,129 2,683 * 2007. Source: OECD Health Data 2010 (Oct. 2010).

15. Since 2006, the cost of the state’s insurance program has increased by 42 percent, or almost $600 million. According to an analysis by the Rand Corporation, “in the absence of policy change, health care spending in Massachusetts is projected to nearly double to $123 billion in 2020, increasing 8 percent faster than the state’s gross domestic product (GDP).”

16. US v. Other G7 Countries * * * 2006 data from the OECD website accessed 23 Sept 2009: http://stats.oecd.org/index.aspx The spending per capita numbers were converted from the currency of the country to US dollars by a PPP index. John A. Nyman, PhD University of Minnesota

17. APCDB

19. Insurance company profits First Half 2011 • Aetna 11% • Cigna 7.4% • Wellpoint 7.8% • United 7.7% • In the first quarter of 2011, the combined profits of the five companies which cover one-third of the U.S. population, surged 14% to $3.6 billion. • If the trend holds, they'll earn a record $14.4 billion in profits in 2011.

20. MRI Scan and Imaging Fees, 2010 US Dollars US 95th percentile US Average Source: International Federation of Health Plans, 2010 Healthcare Price Report, Medical and Hospital Fees by Country.

22. High U.S. Insurance Overhead: Insurance-Related Administrative Costs • Fragmented payers + complexity = high transaction costs and overhead costs • McKinsey estimates adds $90 billion per year* • Insurance and providers • Variation in benefits; lack of coherence in payment • Time and people expense for doctors/hospitals Spending on Health Insurance Administration per Capita, 2007 * 2006 Source: 2009 OECD Health Data (June 2009). * McKinsey Global Institute, Accounting for the Costs of U.S. Health Care: A New Look at Why Americans Spend More (New York: McKinsey, Nov. 2008).

25. Price Levels: Unequal and Incoherent • States all-payer systems reveal 3 to 6 fold variation in payment rates for same service • Dominant provider systems higher rates • Specialist rates up faster than primary care • Methods vary as well payment rates • Hospital per diems, case rates; occasional DRG • Pay for performance contract bonuses • Primary care: “medical home” member month in some • Apparent “chaos” behind a veil of secrecy • Medicaid and Medicare payment rates generally lower • Primary care in some markets the exception Cathy Schoen 9.25.11

26. Variations Among Academic Medical Centers

27. Massachusetts: Private, Medicare & Medicaid Payment for Professional Procedures Private Payer Payment Variation Source: Massachusetts Division of Health Care Finance and Policy, Massachusetts Health Care Cost Trends: Price Variation in Massachusetts Health Care Services, May 2011.

28. New HampshireInsurers Disparate Payments What is the Price? Range for What Insurance Pays to Health Care Provider Per Procedure Advanced primary care networks Source: CMWF analysis of data retrieved October 2010 from: http://www.nhhealthcost.org/costByProcedure.aspx

29. Costs and Health Care • Medical Providers are paid “fee for service” – paid more for doing more, not for outcomes The most expensive piece of medical equipment … is a physician’s pen • Provider, Hospital & Equipment supply often beget patient demand – without improved outcomes!

30. Research shows significant variation in health care spending. Chart 1: Medicare Spending per Beneficiary, by Hospital Referral Region, 2006 National Average = $8,304 < $7,000 $7,000 – $7,500 $7,500 – $8,000 $8,000 – $9,000 > $9,000 Not populated Source: The Dartmouth Atlas of Health Care. (2009). The Policy Implications of Variations in Medicare Spending Growth. Link: http://www.dartmouthatlas.org/atlases/Policy_Implications_Brief_022709.pdf. Note: Data adjusted for age, race, and sex but not price. Category definitions as in source document.

31. Total Hospital and Physician Costs for Select Surgeries – International Comparisons Source: International Federation of Health Plans, 2010 Healthcare Price Report, Medical and Hospital Fees by Country.

32. Paying for Health Care: Insurance is the Wrong Model • 1913: Few received medical care • Life Expectancy 59.7 years • 2008: Everyone receives medical care • Life Expectancy 78.0 years • Preconception, Prenatal, Perinatal • Childhood & Adolescence • Adulthood & Senior Care • Chronic Disease Management • Catastrophic illness • Disability • Death

33. Concentration of Health Care Spending in the U.S. Population, 2008 Percent of Total Health Care Spending (≥$44,338) (≥$16,336) (≥$9,148) (≥$6,074) (≥$4,374) (≥$825) (<$825) Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalized population, including those without any health care spending. Health care spending is total payments from all sources (including direct payments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers (including dental care), and pharmacies; health insurance premiums are not included. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008.

34. Distribution of Medicaid enrollment & expenditures by eligibility category, FY 2010-2011 SOURCE: CO Department of Health Care Policy & Financing, Executive Budget Request, Nov. 1, 2011

35. A Uniquely Colorado Solution:The Colorado Health Care Cooperative

36. What is a Health Care Cooperative? • A nongovernmental, nonprofit, member- owned and operated corporation • Residents of Colorado are the owner-members • The cooperative operates for the benefit of Coloradans—providing quality health care for all, while saving members’ money It’s not a farm or electric cooperative.

37. Design Principles UNIVERSAL A Colorado Plan that includes ALL Coloradans

38. Design Principles AFFORDABLE Everyone contributes No deductibles and modest copayments that can be waived based on income and health conditions

39. Design Principles ACCOUNTABLE & TRANSPARENT Publicly elected board of directors accountable for health spending & outcomes Engage & inform members on design, evaluation and revision of benefits Equitable and Consistent

40. Design Principles COMPREHENSIVE Provide comprehensive, essential health care benefits, emphasizing health and wellness Statewide emergency access

41. Design Principles CHOICE OF PROVIDER Patient Centered Medical Home Integrated Health Care System Accountable Care Collaborative

42. Design Principles INTEGRATED & COORDINATED CARE No incentives to delay or deny care Quality savings benefit all members Sensitive to value

44. Design Principles EFFICIENCY Simplified, centralized billing Dependable and simple reimbursements

45. Design Principles MARKET BASED Providers & Hospitals competing for member based on service and quality Negotiated pricing for medications & durable medical equipment

46. Drug Prices for 30 Most Commonly Prescribed Drugs, 2006–07US is set at 1.0 Source: IMS Health.

47. Design Principles CONTINUOUS, PORTABLE COVERAGE Provides access to health care independent of employment

48. Design Principles LETS BUSINESS FOCUS ON BUSINESS Eliminate administration of health benefits and provide predictable costs Evaluate possibility of 24 hour coverage

49. Design Principles MALPRACTICE REFORM Fast & fair compensation Control defensive medicine & cut costs Attract physicians to Colorado

50. Design Principles TECHNOLOGICALLY ADVANCED Smart card to ensure access to medical records, simplify billing, & prevent fraud Collect data to determine best practices Transparency of cooperative finances