1 Health Care Access, Cost, and Quality Health Care Access, Cost, and Quality (What we don’t know can hurt us) Doug Hall NH Center for Public Policy Studies New Hampshire Public Health Association October 29, 2004 With generous support from

2 All of our reports are available on the web: New Hampshire Center for Public Policy Studies Board of Directors Martin L. Gross, Chair John B. Andrews Cotton M. Cleveland John D. Crosier Todd I. Selig Donna Sytek Georgie A. Thomas James E. Tibbetts Kimon S. Zachos Co-Directors Douglas E. Hall Richard A. Minard, Jr. “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”

3 HYPOTHESIS: The employment-based health insurance system that has been relatively stable for decades, is approaching a “tipping point,” where it may become unstable and could collapse. 1.Rising costs of care lead to rising insurance premiums 2.Unable to pay increased premiums, employers increase % of premiums to be paid by employees or substitute high deductible plans. Some employers may drop coverage altogether. 3.Younger, healthier employees with low medical costs opt out of offered insurance coverage, knowing they are at low risk. 4.Through this adverse selection, older, less healthy employees constitute a larger part of the risk pool, causing average claims/person to rise yet further. 5.Back to step #1. (The positive feedback loop results in rapidly accelerating premiums and numbers of uninsured.)

4 Do you agree ? There is already sufficient money in the health care system to provide quality health care for all. Less medical care can mean better quality. Currently in health care, neither supply nor demand are subject to the market force of price.

5 Access, Cost, and Quality are Interrelated, but How? We don’t have all the pieces to the puzzle!

6 Access

7 Common View InsuredUninsured Realistic View  Insured for what? drug rehab, prescription drugs, mental health, “experimental” procedures, dental, …  How much annual deductible and out-of-pocket?  Pre-existing conditions

8 In NH, About 120,000 are Uninsured

9

10 6% chronically uninsured 13% transitionally insured

11

12 This slide from Financial Assistance Application Study September 2002

13 Who are Disproportionately Uninsured in NH ? Those between ages 18 and 30 Those who have household incomes of less than $30,000 Renters Self-employed persons Employees of small businesses (fewer than 50 employees) Workers in retail, food, or construction industries Workers who are unemployed, employed only part time, or employed seasonally African-Americans and those of Hispanic origin Adults who are not registered to vote Singles, living alone Residents of Coos, Grafton, Carroll, and Sullivan counties; Those with no education beyond high school or who did not complete high school

14 What We Don’t Know Can Hurt Us #1 If the number of people who are uninsured or underinsured begins to grow, how will we know it? What is our early warning system? What health effects will occur and how will we measure them? What will be the impact on those still insured through additional cost-shifting?

15 Cost

16

17

18

19

20

21

22

23

24

25

26 Source: Audited financial statements of the hospitals for 2001 and 2002 as provided in spreadsheet form by NH Hospital Association; 4 th Quarter, 2002 Trending Report, NH Hospital Association

27

28 Cost-Shifting The allocation of unpaid costs of care delivered to one patient population through above-cost revenue collected from other patient populations. For hospitals, nursing facilities and physicians, the historical cause of cost shifting has been below-cost reimbursement rates paid by public programs and uncompensated care losses due to charity care and bad debt. Source: “Cost Shifting: An Integral Aspect of U.S. Health Care Finance,” The Lewin Group, November 2002

29

30

31

32 Quantifying the 2001 Cost-Shift in 26 New Hampshire Hospitals

33 Rough estimate of the cost to provide the “missing” health care to those who are currently uninsured 2004 health care costs in NH: $7,000 million Uninsured are 10% of the population Their “need gap” is mostly for physicians, hospitals, and prescription drugs (75% of all services) They are disproportionately younger than the insured/Medicare population with costs about 67% of the average. Uninsured currently receive 60% of the health care of those who are fully insured (self-pay, cost-shifted, and subsidized). $140 million additional cost (By way of comparison, the State obtained $205 million net Medicaid enhancement revenue and recoveries in 2003.)

34

35

36

37

38 Missing Pieces of the Cost Puzzle Amounts paid in claims for different service types by employers’ self-insured health benefit plans. #1

39 Missing Pieces of the Cost Puzzle List prices of all providers, including hospitals, physician practices, laboratories, outpatient clinics, surgery centers. #2

40 Actual payment amounts made by insurers to all types of providers under negotiated discounts and contracts. #3 Missing Pieces of the Cost Puzzle

41 Missing Pieces of the Cost Puzzle Aggregate costs of private medical practices broken down by standard line item costs and numbers of units of various codes billed that generate offsetting revenue. #4

42 Quality From work by Elliott Fisher, MD, MPH, and others. See a series of articles in Annals of Internal Medicine, Vol. 138, #4, February 18, 2003 and another series in Health Affairs, Web exclusive edition, October 7, 2004.

U.S. health care spending would decline by over 30%. The projected deficit in the Medicare Trust fund would be postponed by at least 25 years. We could send 30% of the U.S. health care workforce to Africa and -- in theory -- improve the health of both continents. If all regions of the US could adopt the Medicare medical care practice patterns of the lowest spending 1/5 of the US hospital catchment areas, which of the following statements would apply?

In a Veterans’ Administration study, less care was consistent with both better care and better outcomes Followed individuals with serious chronic diseases (6 medical conditions, 3 psychiatric conditions) Constrained VA hospital use to 50% of previous level Clinic visits increased 10% Visits for urgent care declined No compensating use of private hospitals resulted Survival rates not adversely affected (for 5 conditions improved significantly, for 4 conditions remained unchanged)

Physicians control or direct about 70% of all health care spending How soon will a patient return for follow-up? What drugs will be prescribed? What imaging should be performed? When is discharge from a hospital stay ordered? What diagnostic tests and procedures are ordered? What specialists are consulted and how often? Is the ICU required? For similar conditions across different regions, practice patterns appear to be driven by supply, not inherent need.

Supply-Sensitive Care : Highest vs Lowest Spending Regions Office Visits Initial Inpatient Specialist Consultations Inpatient Visits Physician Visits Electrocardiogram Tests and Procedures Lower in High Spending Regions Higher in High Spending Regions CT / MRI Brain Pulmonary Function Test Electroencephelogram (EEG) Discharges Inpatient Days in ICU or CCU Total Inpatient Days Hospital Utilization Feeding Tube Placement Emergency Intubation Procedures -- Last 6 months of life

Additional resources60% more spending per capita Content of careLess effective care No additional major surgery More supply-sensitive services Access to care, satisfactionSlightly worse access No greater satisfaction Health outcomesNo gain in function Mortality slightly higher Physician perceptionsQuality worse Lower career satisfaction What do higher spending hospital catchment areas of the country get compared to lower spending? This comparison is after having controlled for inherent regional price differences, average levels of illness, age, sex, race, and socioeconomic conditions.

Is spending more likely to make things better?

Law of Diminishing Returns

51 What We Don’t Know Can Hurt Us #2 Are these results regarding quality measures unique to the Medicare population or do they hold true for those with private insurance as well? What are the uniform quality-of-care measures and cost-of-care measures that are available for all providers in NH and where can I get them?

52 What We Don’t Know Can Hurt Us #3 What is the cost of this care/service? Is the potential benefit worth the cost? What is the quality of this care/service? Is the potential benefit worth the risk? What are the quality and cost of alternatives? Can I go elsewhere and get higher quality or lower cost?

53 The Important Link Between Policy & Practice: Information What are the costs and what is driving them? For whom is access limited, why, and what are the results? What prevention services and patterns of care are most effective? How are the answers to these questions related?

54

55

56

57

58

59 Potentially Misleading !! Is a hospital’s shortfall caused by reimbursement that is low or by a cost structure that is high? We don’t know!