1. 1 Why We Must Start Comprehensive Health Reform, Now Len Nichols, Ph.D. Director, Center For Health Policy Research and Ethics College of Health And Human Services George Mason University UC Irvine Paul Merage School of Business February 25, 2010 Irvine, CA

2. Medicare is unsustainable now (percent of GDP, projected) 2 Source: Medicare Trustees Report:, 2009.

3. 3 Source: Council of Economic Advisors, CBO.

4. Delivery System Parts of Reform Business as usual will end (we can’t afford it) –MA to bidding + bonus payments –Market basket update reductions –Address mis-priced procedures –Independent Payment Advisory Board –Patient Centered Outcomes Research Institute –Quality and accountability throughout Change incentives where Fed govt has jurisdiction –Center for payment innovation –Payment pilots Incentives to adopt “pay for value” systems of future Secretary can expand duration and scope –Excise tax on high cost plans

5. Hospital Margin Facts (MEDPAC) High Pressure Medium Pressure Low Pressure Medicare margins 3.7%-3.3%-10.8% Non- Medicare margin -1.1%6.3%13.6% Share of all Hs 32%15%53% Share of major teaching Hs 61%19%20% 5

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