The Case for Health Reform in the U.S. Gerald F. Kominski, Ph.D. Professor, Department of Health Services UCLA School of Public Health Associate Director, UCLA Center for Health Policy Research October 7, 2009

The Growth of Private Insurance Source: Source Book of Health Insurance Data, 1965.

Where Do Most Americans Get Health Insurance Coverage? From Their Employer Note: Percentages exceed 100% because type of coverage is not mutually exclusive; individuals can have more than one category of coverage. Source: U.S. Census Bureau Analysis of March 2008 Current Population Survey

Employers Who Offer Health Insurance A Tale of Two Cities * Tests found no statistical differences from estimate for the previous year shown (p<.05). Note: 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,

How Much Financial Protection Does Health Insurance Currently Provide? Not Much, If You Buy Insurance on Your Own, and Have a Low Income Source: Jacobs K, Capozza K, Roby DH, Kominski GF, Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UCLA Center for Health Policy Research, September n n Among those who buy insurance on their own, those in the highest quartile of expenses spend 14% or more of their pre-tax income on health care expenses n n Among those who buy insurance on their own and have incomes from % FPL, those in the highest quartile of expenses spend 30.5% or more of their pre-tax income on health care expenses

The Probability of Being Uninsured Is Substantial Below 300% FPL NOTE: The federal poverty level (FPL) was $21,203 for a family of four in Data may not total 100% due to rounding. Nonelderly defined as age SOURCE: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of March 2008 CPS.

Decrease in Employer Sponsored Insurance (million) 4.6% National Unemployment Rate Increase since 2007 (from 4.9% in Dec-07 to 9.5% in June-09) = Medicaid /CHIP Enrollment Increase (million) Uninsured Increase (million) & 11.3 Note: Totals may not sum due to rounding and other coverage. Source: John Holahan and Bowen Garrett, Rising Unemployment, Medicaid, and the Uninsured, prepared for the Kaiser Commission on Medicaid and the Uninsured, January 2009.Rising Unemployment, Medicaid, and the Uninsured Impact of the Rise in Unemployment on Health Coverage, 2007 to 2009

Sources of Financing, 2007 Total Health Expenditures - $7,421 per Capita 16.2% of GDP Private 54% Public 46% Source: Hartman M, et al., National Health Spending in 2007: Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998, Health Affairs 2009;28(1):

Total = $484 billion NOTE: Does not include administrative expenses such as spending for implementation of the Medicare drug benefit and the Medicare Advantage program. Total is net of $9.4 billion in recoveries for SOURCE: Congressional Budget Office, Medicare Baseline, March Medicare Benefit Payments, by Type of Service, 2009 Part A Part B Part D Part A and B 19% 4% 23% 5% 28% 4% 6% 4% 5%

Average Payments to Medicare Advantage Plans Relative to Traditional Fee-for-Service Medicare, 2009 SOURCE: Medicare Payment Advisory Commission, March Medicare Advantage Plan Types Traditional Fee- for-Service Medicare = 100%

Medicaid Expenditures by Service, 2007 Total = $319.7 billion NOTE: Total may not add to 100% due to rounding. Excludes administrative spending, adjustments and payments to the territories. SOURCE: Urban Institute estimates based on data from CMS (Form 64), prepared for the Kaiser Commission on Medicaid and the Uninsured. Inpatient 15.0% Physician/ Lab/ X-ray 3.7% Outpatient/Clinic 7.4% Drugs 4.7% Other Acute 6.7% Payments to MCOs 19.0% Nursing Facilities 14.8% ICF/MR 3.9% Mental Health 1.5% Home Health and Personal Care 15.0% Payments to Medicare 3.5% DSH Payments 5.0% Acute Care 59.9% Long-Term Care 35.1%

Note: Population is the civilian noninstitutionalized population, including those with no spending. Health care spending is total payments from all sources, excluding health insurance premiums. Source: Kaiser Family Foundation calculations using data from Medical Expenditure Panel Survey (MEPS), % of the Population Accounts for 50% of Spending 20% Account for 80% Percent of Total Health Care Spending

The U.S. Spends More Than Any Other Nation, Largely Because of Private Insurance a Source: The Commonwealth Fund, calculated from OECD Health Data Adjusted for Differences in Cost of Living

International Comparison of Spending on Health, 1980–2006 Average spending on health per capita ($US PPP) Total expenditures on health as percent of GDP Data: OECD Health Data 2008, June 2008.

Deaths per 100,000 population* * Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. See report Appendix B for list of all conditions considered amenable to health care in the analysis. Data: E. Nolte and C. M. McKee, London School of Hygiene and Tropical Medicine analysis of World Health Organization mortality files (Nolte and McKee 2008). Mortality Amenable to Health Care Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008

Patients Reporting Access Problems Because of Costs * Did not get medical care because of cost of doctor’s visit, skipped medical test, treatment, or follow-up because of cost, or did not fill Rx or skipped doses because of cost. AUS=Australia; CAN=Canada; GER=Germany; NETH=Netherlands; NZ=New Zealand; UK=United Kingdom. Data: 2005 and 2007 Commonwealth Fund International Health Policy Survey United States Percent of adults who had any of three access problems* in past year because of costs Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008

Physicians’ Use of Electronic Medical Records AUS=Australia; CAN=Canada; GER=Germany; NETH=Netherlands; NZ=New Zealand; UK=United Kingdom. Data: 2001 and 2006 Commonwealth Fund International Health Policy Survey of Physicians. Percent of primary care physicians using electronic medical records United States Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008

Proposed Health Reform Key Elements of H.R. 3200: America’s Affordable Health Choices Act of 2009 n n Require all individuals to have health insurance - -Those without coverage pay a penalty of 2.5% of modified adjusted gross income - -Exceptions granted for dependents, religious objections, and financial hardship n n Require employers to provide coverage to employees or pay into a Health Insurance Exchange Trust Fund - -Employers who do not offer insurance pay up to 8% of payroll - -Exceptions for certain small employers, and credits for others to offset the costs of coverage n n Expand Medicaid to 133% of the Federal poverty level - -Federal government pays full cost of expanded eligibility for first 5 years

Proposed Health Reform Key Elements of H.R. 3200: America’s Affordable Health Choices Act of 2009 n n Create a Health Insurance Exchange for individuals and smaller employers to purchase health coverage - -Premium and cost-sharing credits available to individuals/families with incomes up to 400% of the federal poverty level - -Out-of-pocket premium expenses limited based on the following schedule: % FPL: % of income % FPL: % of income % FPL: % of income % FPL: % of income % FPL: % of income % FPL: % of income

Proposed Health Reform Key Elements of H.R. 3200: America’s Affordable Health Choices Act of 2009 n n Impose new regulations on plans participating in the Exchange and in the small group insurance market - -Guaranteed issue and renewal (no pre-existing condition exclusions) - -Limit premium variation to age, family status, and market area - -Limit non-medical care expenses (medical loss ratios) - -Prohibit rescissions, except in cases of clear fraud - -Limit annual OOP liability to $5,000 per individual, $10,000 per family - -No lifetime limits on benefits - -Create public option with payments based on Medicare payment rates to foster competition

“Public” Concerns About Health Reform 1. 1.I’m satisfied with my health coverage, so why is major reform necessary? 2. 2.Will it control costs? 3. 3.Is it socialized medicine? 4. 4.Does it create unfair competition with private insurers? 5. 5.Will it produce lower quality care and poorer general health? Will it ration care?