Catamount Health and Health Care Reform in Vermont

1. Catamount Health and Health Care Reform in Vermont Kenneth E. ThorpeEmory University

2. Context for Reform • High and Rising Cost of Health Care--Growth in Vermont has exceeded the national average • Without reform, the rise in health care costs will absorb 25% of the total growth in payroll over the next 5 years. • Approximately 10 percent of Vermonters –65,000 –remain uninsured. • We face gaps in the quality and safety of health care in the state • Vermonters receive approximately 60 to 70 percent of clinically recommended health care (e.g. only half of Vermont diabetics routinely monitor their blood glucose).

3. Context for Health Care Reform in Vermont • To address these problems health care reform must transcend a simple debate over insurance! • Reform must by SYSTEMIC, impact all Vermonters and address: • The high and rising cost of health care • Gap between ideal and actual practice of care, particularly among the chronically ill • The uninsured

4. Context for Health Care Reform: Key Facts • About 80 percent of healthcare spending in Vermont is traced to patients with a chronic health condition. This is not an insurance issue it is a care management, delivery system and payment issue. 2. Chronically ill patients in the state do not receive all, or in many cases most, clinically recommended care. This includes patients in the single payer Medicare program, those with private insurance, Medicaid and the uninsured. This increases costs and produces substandard medical outcomes.

5. Context for Reform: Key Facts of What Really Is Driving the Rise in Healthcare Spending 3. Two-thirds of the rise in the cost of private health insurance is traced to a rise in the share of adults and kids treated for chronic illness and innovations in medical treatment—largely new drugs. 4. About 30 percent of the rise in spending is associated with the rise in obesity prevalence over the past 15-20 years

6. The “urban (and rural)-myth” of hospital- generated increases in health care spending

7. Continued Dramatic Declines in Hospital Occupancy Rates Associated with Changing Technology and Patient Characteristics, Vermont and US, 1970-2003

8. Trends in Hospital Capacity, US and Vermont 1970-2003; Beds per 1,000 Resident Population: Impact of Technology and the Rise in Chronic Illness Continues to Reduce the Overall Share of Hospital Spending

9. Context for Reform—Aligning Reform with the Underlying Problems in the System • Systemic reform of Vermont’s health care will require • A major focus on the chronically ill that account for 80 percent of health care spending and most of the growth in spending • A redesigned delivery system to improve quality and outcomes • Changes in the way physicians are paid to care for patients

10. Context for Reform • Systemic reform will require: • Efforts to reduce administrative complexity and reduce excess clinical spending • Investments in information technology, patient safety and error reduction • Major expansions of coverage with universal insurance the ultimate target

11. Catamount Health • Will: • Enroll uninsured and eligible VHAP adults, Medicaid and Dr. Dynasaur children • Provide the ability to purchase comprehensive, affordable health insurance for all uninsured Vermonters. Premiums reduced by up to 90%. • Have low administrative costs—about 4%. • Improve the quality of care delivered to all chronically ill patients, and improve the value of care purchased • Reduce the administrative burdens facing physicians • Lower health insurance premiums paid by workers and employers by 4 to 6 percent when the plan is fully implemented by reducing the cost shift, and reducing administrative costs and additional spending linked to medical errors and events.

12. Impacts of Catamount Health • Will reduce the level and growth in health care spending • Throughstatewide use of the chronic care model for all Vermonters • Through reduction in the existing cost shift built into premiums • Through simplified administration and lower administrative costs • Common claims forms • Health information technology initiative (health record) • Electronic billing • Administrative costs of Catamount health about 4%!

13. Catamount Health • Combination of VHAP policies and Catamount health initially enroll about 20,000 uninsured • Lowers private health insurance spending through use of chronic care management, reduction in medical errors, administrative costs and reduction in cost shift

14. Catamount Health • Places Vermont as the national leader in treatment of chronic disease through an innovative new delivery model, lower administrative and clinical costs. Improves the value of the dollar spent on health care. Provides the state a clear market advantage in attracting and retaining business. • Provides business community short and long term answer to high and rising health care spending. • Places Vermont as the national leader in focus on population health, primary and preventive care

15. Private Insurance Spending (Millions of Dollars), Currently Insured: Reform vs. No Reform—Spending Falls by $550 Million Over the Next Ten Years.

16. Financing Choices • Total spending on Catamount health and the Governor’s plan are similar. • Approaches for financing the costs of the two proposals differ however. • The Governor’s plan is financed by increasing employer spending on health care by $45 to $50 million. • Catamount health is funded primarily by the federal government and the GC.

17. Conclusions • Catamount health builds on and expands the governor’s chronic care initiative. We cannot control the growth in spending without a focus on chronic illness and population health initiatives, period. • It assures the chronic care infrastructure will be available to all chronically ill patients in the state, not just the privately insured • It reduces administrative and clinical costs. • It reduces substantially the number of uninsured in the state and provides them affordable comprehensive insurance • It generates about $550 million in savings to employers and insured working families over the next ten years • It will improve the quality of care, and provide better value for each health care dollar spent.