The Building Blocks of Health Reform: Achieving Universal Coverage and Health System Savings

1. THE COMMONWEALTH FUND The Building Blocks of Health Reform: Achieving Universal Coverage and Health System Savings Cathy Schoen Senior Vice President, The Commonwealth Fund Alliance for Health Reform June 6, 2008

2. Key Findings • Under Building Blocks approach, 44 million people would gain coverage out of an estimated 48 million uninsured in 2008 • National Insurance Connector would offer new health insurance choices to individuals and small businesses for 30 percent less than what employers currently pay • New choices improve coverage or reduce premiums for 49 million currently insured people • Building Blocks would cause minimal disruption for people satisfied with their current coverage; any decisions to switch to the new coverage would be voluntary • The plan would result in only a marginal increase in total national health spending. • Coupling insurance with broad reforms - payment reforms, HIT, evidence-based medicine and public health -- could result in health system savings of $1.6 trillion over 10 years.

3. Key Elements of the Building Blocks • New national insurance “connector” • Offer individual and small businesses a choice of private plans or a Medicare-Extra plan • Medicare-Extra would be nation-wide, self-insured with low administrative costs • Insurance market reform: premiums would not vary by health status • Tax credits to make sure premiums are affordable • Expansion of Medicaid/SCHIP to 150% of poverty for all adults and children • Require everyone to have insurance – automatic enrollment • Employer provide or contribute in insurance fund • Medicare: buy-in age 60 or older,, eliminate 2-year wait for disabled, Medicare-Extra benefit option

4. Building Blocks for Automatic and Affordable Health Insurance For All New Coverage for 44 Million Uninsured in 2008 10m 11m 22m 1m National Insurance Connector TOTAL = 60 m Medicaid/ SCHIP TOTAL = 42 m Employer Group Coverage TOTAL = 142 m Medicare TOTAL = 43 m 2m 2m 7 m 38 m Improved or More Affordable Coverage for 49 Million Insured Source: Based on analysis in C. Schoen, K. Davis, and S.R. Collins, "Building Blocks for Reform: Achieving Universal Coverage With Private and Public Group Health Insurance," Health Affairs 27, no. 3 (2008): 646-657 from Lewin Group modeling estimates.

5. Distribution of People by Primary Source of Coverage Under Current Law and Building Blocks Framework, 2008 Current Law (millions) Building Blocks (millions) Other 7.3 (2%) Uninsured 3.7 (1%) Uninsured 48.3 (16%) Employer 157.9 (53%) Medicaid/ SCHIP 42.1 (14%) Employer 141.5 (48%) Other 13.5 (4%) Medicaid/ SCHIP 37.8 (13%) Medicare 43 (16%) New National Connector 60.3 (20%) Medicare 40.3 (14%) Total population = 297.8 million Source: Based on analysis in C. Schoen, K. Davis, and S.R. Collins, "Building Blocks for Reform: Achieving Universal Coverage With Private and Public Group Health Insurance," Health Affairs 27, no. 3 (2008): 646-657 from Lewin Group modeling estimates.

6. Cumulative Impact on National Health Expenditures (NHE) of Building Blocks Approach Plus Selected Health System Reform Options Dollars in billions Savings to NHE Note: Selected individual options include improved information, payment reform, and public health. Source: Schoen et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, The Commonwealth Fund, December 2007.

7. Savings Can Offset Federal Costs of Insurance For All: Federal Spending Under Two Scenarios Dollars in billions * Selected options include improved information, payment reform, and public health. Data: Lewin Group estimates of combination options compared with projected federal spending under current policy.. Source: Schoen et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, The Commonwealth Fund, December 2007.

8. 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: Schoen et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, The Commonwealth Fund, December 2007.

9. THE COMMONWEALTH FUND Building Blocks for Insurance and Health System Reform: Access, Quality and Costs • Insurance foundation essential: connector with public and private options offers base for more integrated, efficient coverage • Potential for positive competitive dynamic • Coupled with system reforms could achieve savings and value • Payment reform • Information systems • Population health • Important to start now and build consensus with focus on national gain. • Time to set up. Savings accumulate.

10. THE COMMONWEALTH FUND References • C. Schoen, K. Davis. S. Collins, “Building Blocks for Reform: Achieving Universal Coverage with Private and Public Group Health Insurance,” Health Affairs, May/June 2008. • K. Davis, C. Schoen, S. Collins, The Building Blocks of Health Reform: Achieving Universal Coverage and Health System Savings, The Commonwealth Fund, May 2008 • Schoen, Guterman, Shih, et al., Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, Commonwealth Fund, December 2007 Reports Available at www.commonwealthfund.org