THE COMMONWEALTH FUND

1. THE COMMONWEALTH FUND U.S. Health Reform, Health Spending, and the Federal Deficit Sara R. Collins, Ph.D. Vice President, Affordable Health Insurance The Commonwealth Fund Faithful Reform in Health Care Conference Call May 4, 2011

2. Exhibit 1. International Comparison of Spending on Health, 1980–2008 Total expenditures on healthas percent of GDP Average spending on healthper capita ($US PPP) 16% $7,538 8.7% $2,685 Note: $US PPP = purchasing power parity. Source: Organization for Economic Cooperation and Development, OECD Health Data 2010 (Paris: OECD, October 2010).

3. Exhibit 2. Overall Ranking 3 Note: * Estimate. Expenditures shown in $US PPP (purchasing power parity). Source: K. Davis, C. Schoen, and K. Stremikis, How the Performance of the U.S. Health Care System Compares Internationally 2010 Update, (New York: The Commonwealth Fund, June 2010).

4. Exhibit 3. Nearly Three of Five Adults Who Lost a Job with Health Benefits in Past Two Years Became Uninsured Percent of adults ages 19–64 Note: FPL refers to Federal Poverty Level. *Respondent , their spouse/partner, or both lost their jobs in the past 2 years. **Base: Respondent ,their spouse/partner, or both lost jobs in past 2 years. ***Base: Respondents who lost their job and had health insurance through that job. ^ Includes respondents who did not state their income level. Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

5. Exhibit 4. The Individual Insurance Market Is Not an Affordable Option for Many People Note: FPL refers to Federal Poverty Level. *Bought in the past three years. **Respondent rated their health status as fair or poor, has a disability or chronic disease that keeps them from working full time or limits housework/other daily activities, or has any of the following chronic conditions: hypertension or high blood pressure; heart disease, including heart attack; diabetes; asthma, emphysema, or lung disease; high cholesterol. Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

6. Exhibit 5. High Out-of-Pocket Spending Climbs Across Income Groups, 2001–2010 Percent of adults ages 19–64 who spent 10% or more of household income annually on out-of-pocket costs and premiums* Note: FPL refers to Federal Poverty Level. *Base: Respondents who specified income level and private insurance premium/out-of-pocket costs for combined individual/family medical expenses. Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

7. Exhibit 6. Problems with Medical Bills or Accrued Medical Debt Highest for Adults with Low and Moderate Incomes Percent of adults ages 19–64 with medical bill problems or accrued medical debt* Note: FPL refers to Federal Poverty Level. *Had problems paying medical bills, contacted by a collection agency for unpaid bills, had to change way of life in order to pay medical bills, or has outstanding medical debt. Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

8. Exhibit 7. Adults with Low Incomes More Likely to Be Unable to Pay for Basic Necessities Because of Medical Bill or Debt Problems Percent of adults ages 19–64 with medical bill problems or accrued medical debt* *Base: Had problems paying medical bills, contacted by a collection agency for unpaid bills, had to change way of life in order to pay medical bills, or has outstanding medical debt. Note: FPL refers to Federal Poverty Level. Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

9. Exhibit 8. Adults with Low and Moderate Incomes Experienced the Greatest Increase in Cost-Related Problems Getting Needed Care Percent of adults ages 19–64 who had any of four access problems*in past year because of cost Note: FPL Refers to Federal Poverty Level. *Did not fill a prescription; did not see a specialist when needed; skipped recommended medical test, treatment, or follow-up; had a medical problem but did not visit doctor or clinic. Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

10. Exhibit 9. Only Half of Adults Up to Date with Preventive Care Percent of adults ages 19–64* Note: FPL refers to Federal Poverty Level. *Pap test in past year for females ages 19–29, past three years ages 30+; colon cancer screening in past five years for adults ages 50–64; and mammogram in past two years for females ages 50–64; Blood pressure checked in past year; cholesterol checked in past five years (in past year if has hypertension or heart disease). Source: S. R. Collins, M. M. Doty, R. Robertson, and T. Garber, Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief—Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010, The Commonwealth Fund, March 2011.

12. Exhibit 11. Premium and Cost-Sharing Tax Credits Under the Affordable Care Act Note: FPL refers to Federal Poverty Level. OOP refers to out-of-pocket costs. Actuarial values are the average percent of medical costs covered by a health plan. Premium and cost-sharing credits are for silver plan. Source: Federal poverty levels are for 2010; Commonwealth Fund Health Reform Resource Center: What’s in the Affordable Care Act? (PL 111-148 and 111-152), http://www.commonwealthfund.org/Health-Reform/Health-Reform-Resource.aspx.

13. Exhibit 12. Source of Insurance Coverage Pre-Reform and Under Affordable Care Act, 2020 23 M (8%) Uninsured 24 M (8%) Exchanges (Private Plans) 56 M (20%) Uninsured 15 M (5%) Other 15 M (5%) Other 163 M (57%) ESI 162 M (57%) ESI 8 M (3%) Nongroup 14 M (5%) Nongroup 52 M (18%) Medicaid 36 M (13%) Medicaid Under Prior Law Affordable Care Act Among 284 million people under age 65 * Employees whose employers provide coverage through the exchange are shown as covered by their employers. Note: ESI is employer-sponsored insurance; “Other” includes Medicare. Source: Testimony Statement of Douglas W. Elmendorf, Director, before the Subcommittee on Health Committee on Energy and Commerce U.S. House of Representatives, CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010, March 30, 2011. http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCareLegislation.pdf

14. Exhibit 13. System Improvement Provisions of Affordable Care Act of 2010 Note: ACO = accountable care organization; PCP = primary care physician; AHRQ = Agency for Healthcare Research and Quality. HHS = Department of Health and Human Services Source: Commonwealth Fund analysis.

15. Exhibit 14. The President’s Health Budget Framework • Saving $480 billion over 12 years in Medicare and Medicaid and $1 trillion in subsequent decade while ensuring adequate payment to physician and hospitals and reducing the deficit. • IPAB, charged with holding Medicare spending to the growth rate of GDP per capita plus 1 percentage point under the ACA, must hold spending to GDP plus 0.5 percentage points. • Innovative payment methods for hospitals and physicians including incentive to enhance patient safety, reduce avoidable complications, and improve results. • Saving $50 billion in Medicare over the nest 10 years by improving patient safety • Improve the quality, safety, and affordability of health care by reducing hospital patients’ injuries and infections while allowing them to recover without preventable complications • Saving $100 billion in Medicaid over 10 years • Single matching rate for coverage under Medcaid & CHIP, rewarding states for efficiency and automatically increase rate if a recession forces increased enrollment and state costs. • Saving $200 billion in Medicare prescription drugs over 10 years • Speed up availability of generic biologics and prohibit brand name companies from entering into “pay-for-delay” agreements • Saving money by clamping down on fraud and abuse • Clamp down on states’ use of provider taxes & recover erroneous Medicare Advantage payments • Adjusting Physician Payment • Portion of savings used to adjust payment rates of physicians’ services under Medicare 162 M (57%) ESI Source: K Davis, Stark Choices: The Health Care Budget Proposals from the President and the House of Representatives, The Commonwealth Fund Blog, April 29, 2011. http://www.commonwealthfund.org/Content/Blog/2011/Apr/Stark-Choices.aspx

16. Exhibit 15. CBO Estimated Effects of ACA on the Federal Budget February 2011 estimated effects on the federal budget deficit, in billions of dollars 162 M (57%) ESI Source: Testimony Statement of Douglas W. Elmendorf, Director, before the Subcommittee on Health Committee on Energy and Commerce U.S. House of Representatives, CBO’s Analysis of the Major Health Care Legislation Enacted in March 2010, March 30, 2011. http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCareLegislation.pdf

17. Exhibit 16. House of Representatives Budget Proposal • Medicare voucher starting in 2011 • Medicare benefits replaced with voucher program for those currently under 55 • Voucher would vary with health status and income and would rise each year with the CPI, estimated by CBO to increase 3 percentage points less than the rise in health care costs each year. • CBO estimates that by 2022, new enrollees would have to pay at least $6,400 more out of pocket to buy coverage comparable to traditional Medicare. • Medicare eligibility age raised to 67, saving $125 billion over 10 years starting in 2022 • Medicare eligibility age would rise two months year beginning in 2022, to reach 67 in 2033. • Convert Medicaid to block grant to states in 2013, saving $771 billion over next decade • Fixed block grant indexed to CPI and population growth. • Fixed-dollar contribution toward medical savings account would replace acute care benefit supplemental coverage of low income Medicare beneficiaries • Repeal of most insurance provisions in health reform • Repealed provisions would include: individual mandate; insurance exchanges; premium and cost-sharing subsidies for working individuals and families who would purchase insurance through the exchanges; Medicaid expansion; small employer tax credits; CLASS; Part D “doughnut hole” subsidies; IPAB. • Medical malpractice with limits on noneconomic and punitive damages • Changes to laws governing medical malpractice 162 M (57%) ESI Source: K Davis, Stark Choices: The Health Care Budget Proposals from the President and the House of Representatives, The Commonwealth Fund Blog, April 29, 2011. http://www.commonwealthfund.org/Content/Blog/2011/Apr/Stark-Choices.aspx