The Case for A Better Health Care System

2 The United States spends more per capita on health care than any other country. Per Capita Health Care Spending (US$PPP) 2001 Source: Organization for Economic Cooperation and Development, OECD Health Data 2002

3 Costs are rising rapidly… National Health Expenditures (in billions) Inflation-adjusted (1) Source: Centers for Medicare & Medicaid Services, Office of the Actuary (1) Expressed in 1980 dollars; adjusted using the overall Consumer Price Index for Urban Consumers

4 …and are projected to consume an ever greater share of GDP. *Projected Source: Heffler et al., Health Spending Projections for 2004–2014, Health Affairs (February23, 2005). National Health Care Expenditures as a Percent of GDP Projected

5 Despite this level of spending, 45 million Americans are uninsuredand the number is again growing. Number of Uninsured Individuals Source: US Census Bureau Number of Uninsured in Millions

6 Uninsured people are less likely to get needed medical care… Percent of Individuals Not Receiving Selected Recommended Preventive Care Services *Among women 50–64. **Among adults 45–64. Source: J. Ayanian, et al. Unmet Health Needs of Uninsured Adults in the United States, JAMA 284 no 16 (2000): pp 2061–2069.

7 …and more likely to experience financial barriers to getting care. Source: The Commonwealth Fund 2003 Biennial Health Insurance Survey Financial Barriers to Care Insured vs. Uninsured Population

8 Rapid premium growth for employers raises fears more will lose coverage. Annual Percent Change in Health Insurance Premiums Source: The Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits 2000, 2001, 2002, 2003, 2004 Annual Surveys; KPMG Survey of Employer -Sponsored Health Benefits: 1988, 1993, 1996

9 Even so, needed change is about more than costs and coveragethe system is broken and must be fixed. Uneven coverage; unequal access No evidence base to address variations in practice patterns and spending levels Paperwork at the expense of patient care A tort system in need of reform Medical errors Payment systems that dont make sense; misaligned incentives A looming breaking point as need begins to surpass our capacity to provide care

The rich Health insurance coverage is a confusing patchwork. The poor The near poor The broad middle class The Young Working- age people People age 65 and over The 40 million or so uninsured tend to be near poor The federal-state Medicaid program for certain of the poor, the blind and the disabled The employed and their families who are typically covered through their jobs, although many small employers do not provide coverage. For the rich, Disneyland the sky-is- the limit policies without rationing of any sort (Boutique medicine) Near poor children may be temporarily covered by Medicaid and S-Chip, although 7-10 million are still uninsured. Persons over age 65, who are covered by the federal Medicare program, but not for drugs or long-term care. Often the elderly have private supplemental MediGap insurance The very poor elderly are also covered by Medicaid Source: Professor Uwe Reinhardt, Princeton University

11 Even those with coverage often lack access to certain services. Many with private insurance lack coverage for basic services like mental health, substance abuse, and dental care Medicare fails to cover long-term care Coverage doesnt guarantee access: 30 percent of physicians arent accepting new Medicaid patients Managed care practices restrict choice and access Increasing cost sharing requirements can provide barriers to care even for the insured

12 Racial and ethnic disparities exist in care for people with similar access to care. Percentage of Individuals receiving recommended Cancer Screening within the past 2 years, by Race/Ethnicity 2000 Source: American Cancer Society, Cancer Prevention & Early Detection: Facts & Figures Data: National Center for Health Statistics, National Health Interview Survey, 2000.

13 Use of services varies significantly for patients with the same outcome. Source: Medicare claims data, Variation in Inpatient Days per Decedent Selected Conditions Across Different Hospitals

14 Health care organizations face a regulatory morass…

15 …that takes time away from patient care and adds to cost.

16 Our tort system has spun out of control Malpractice Premiums by Specialty in Dade County, FL Source: Florida Physicians Insurance Company (Dade County, FL)

17 At the same time, we know medical errors occur. Institute of Medicine report on medical errors: To Err is Human, November, 1999 Faulty systems, processes, and conditions that lead to mistakes Loss of trust in the health care system Culture that impedes open discussion of errors and steps to prevent them

18 Private payers subsidize the costs of care for the publicly insured… Aggregate Hospital Payment-to-cost Ratios for Private Payers, Medicare and Medicaid Source: The Lewin Group analysis of American Hospital Association Annual Survey data, for community hospitals Private Payer Medicare Medicaid Payment equal to cost

19 …and cross subsidies also exist across types and levels of care. Medicare Hospital Margins by Service Type 2003 Source: *MedPAC, December 2004 public meeting, ** Clark and Lowry estimates of Medicare Cost Reports Inpatient Care*Hospital Outpatient* Home Health** Hospital-Based Skilled Nursing*

20 SOURCE: The Lewin Group analysis of American Hospital Association state survey data, 2004; state hospital associations; American Health Planning Association, National Directory of Health Planning, Policy and Regulatory Agencies, Fifteenth Edition: February 2004 *Weighted range is based on the number of medical services subject to CON review and their importance; facilities in development reported by state hospital associations, data may be incomplete Number of Limited-service Hospitals, by State, 2004 LA - 5 Open Limited Service Hospitals Limited Service Hospitals in Development Number of Limited Service Hospitals No CON CON Regulation By State Weighted Range of Services Reviewed* Distorted payment systems create incentives for cherry-picking patients and payers.

21 These problems will reach crisis proportions as the population continues to grow and age… Source: US Census Bureau US Population Trends and Projections by Age , , , , , , , , , Thousands and over

22 …placing increasing demands on our health care system. Hospital Days per 1000 by Age Group 2002 Hospital Days , , Under 18 yrs yrs yrs yrs75 yrs and over Source: National Center for Health Statistics, Health United States, 2002

23 More than half of Americans surveyed rate the health care system as fair to poor. Rating of Health Care System in America Today 2004 Source: Employee Benefit Research Institute and Matthew Greenwald & Associates, Inc., 2004 Health Confidence Survey. Poor Dont Know/Refused Excellent Very Good Good Fair

24 Nearly one in four Americans see health care as the most critical issue in America today… Most Critical Issue in America Today Percent of Respondents 2004 Source: Employee Benefits Research Institute, 2004 Health Confidence Survey

25 A majority of Americans are ready for change. To improve our health care system Americans* would… Give up a future wage increase Have a larger amount deducted for health insurance Dont know Refused Source: Kaiser Family Foundation, Health Insurance Survey, October 2004 *Based on those who have health insurance through their or their spouses employer.

26 Creating the outline for a better health care system will require broad input. We as a nation have a clear policy, a social contract for educationall children receive a free education through grade 12. What is the policy or social contract for health care? The public must engage in a discussion of the values and principles that should guide debate. The voice of the public and other stakeholders needs to be heard more clearly in the political debate.

27 Questions for Discussion What social contract for health care exists today? What should it be? Recognizing that our system is based on public/private collaboration, what are the attributes of a well-functioning system? What are the principles and values that should guide health care policy?