1. THE COMMONWEALTH FUND Presidential Candidates Health Care Plans: A First Look Karen Davis President, The Commonwealth Fund National Press Foundation November 11, 2007 kd@cmwf.org www.commonwealthfund.org

2. 2 THE COMMONWEALTH FUND What Are the Problems? Costs of Care Quality of Care Chasm Uninsured Rates Administrative Complexity

3. 3 THE COMMONWEALTH FUND US Scorecard: Why Not the Best? Commonwealth Fund Commission National Scorecard Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 20063 37+ Indicators U.S. compared to benchmarks

4. 4 THE COMMONWEALTH FUND Health Care is Top Domestic Issue for 2008 Presidential Race Percent of Americans who think issue is the most important problem for government to address Source: Kaiser Health Tracking Poll: Election 2008, Issue 3, August 2007

5. 5 THE COMMONWEALTH FUND Uninsured Top Priority for Congress According to Health Care Opinion Leaders Source: The Commonwealth Fund Health Care Opinion Leaders Survey, Jan 2007. “How important do you think the following health care issues are for Congress to address in the next five years?” Top 10 issues: Percent responding “absolutely essential” or “very important” 9 9 8 7 6 5 3 3 2 1 Rank Note: Based on a list of 17 issues.

6. Health Insurance Coverage Getting Worse for Adults, Better for Children Data: Two-year averages 1999–2000, updated with 2007 CPS correction, and 2005–2006 from the Census Bureau’s March 2000, 2001 and 2006, 2007 Current Population Surveys. WA OR ID MT ND WY NV CA UT AZNM KS NE MN MO WI TX IA IL IN AR LA AL SC TN NC KY FL VA OH MI WV PA NY AK MD ME VT NH MA RI CT DE DC HI CO GAMS OK NJ SD WA OR ID MT ND WY NV CA UT AZ NM KS NE MN MO WI TX IA IL IN AR LA AL SC TN NC KY FL VA OH MI WV PA NY AK ME DE DC HI CO GAMS OK NJ SD MA RI CT VT NH MD Percent change between 1999-2000 and 2005-2006 in uninsured adults ages 18-64 Percent change between 1999-2000 and 2005-2006 in uninsured children under 18 Increased 4.1% to 7% Decreased –2.4 to 0% Increased 0.1% to 4% Decreased -7% to -2.5% Increased 4.1% to 7% Decreased –2.4 to 0% Increased 0.1% to 4% Decreased -7% to -2.5%

7. 7 THE COMMONWEALTH FUND Adults With No or Unstable Insurance Are Less Likely to Get Preventive Screening Tests Percent Note: Pap test in past year for females ages 19–29, past three years age 30+; colon cancer screening in past five years for adults age 50–64; and mammogram in past two years for females age 50–64. Source: S.R. Collins et al., Gaps in Health Insurance: An All-American Problem, Findings from the Commonwealth Fund Biennial Health Insurance Survey, The Commonwealth Fund, April 2006.

8. 8 THE COMMONWEALTH FUND Adults Without Insurance Are Less Likely to Be Able to Manage Chronic Conditions Percent of adults ages 19–64 with at least one chronic condition* *Hypertension, high blood pressure, or stroke; heart attack or heart disease; diabetes; asthma, emphysema, or lung disease. Source: S. R. Collins, K. Davis, M. M. Doty, J. L. Kriss, A. L. Holmgren, Gaps in Health Insurance: An All-American Problem, Findings from the Commonwealth Fund Biennial Health Insurance Survey (New York: The Commonwealth Fund, Apr. 2006).

9. 9 THE COMMONWEALTH FUND Figure 12.

10. 10 THE COMMONWEALTH FUND International Comparison of Spending on Health, 1980–2005 Source: OECD Health Data 2007. Average spending on health per capita ($US PPP) Total expenditures on health as percent of GDP 10

11. 11 THE COMMONWEALTH FUND Cumulative Annual Changes in National Health Expenditures Growth, 2000-2007 Note: Data on premium increases reflect the cost of health insurance premiums for a family of four/ The average premium increase is weighted by covered workers. *2006 and 2007 private insurance administration and personal health care spending growth rates are projections. SOURCE: A. Catlin, “National health Spending in 2005: The Slowdown Continues,” Health Affairs, January/February 2007, 143-153; J. A. Poisal, et al. “Health Spending Projections Through 2016: Modest Changes Obscure Part D’s Impact,” Health Affairs, February 2007, w242-w253; 2000-2007 Kaiser Employer Benefits Survey 109% 65% 91% 24%

12. 12 THE COMMONWEALTH FUND Percentage of National Health Expenditures Spent on Health Administration and Insurance, 2003 Net costs of health administration and health insurance as percent of national health expenditures abc * a 2002 b 1999 c 2001 *Includes claims administration, underwriting, marketing, profits, and other administrative costs; based on premiums minus claims expenses for private insurance. Data: OECD Health Data 2005. Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006.

13. 13 THE COMMONWEALTH FUND Why Does the Current Health Insurance System Fail to Promote High Performance? Access to care is unequal Poor access to care is linked to poor quality Care delivery is inefficient Fragmented health insurance system makes it difficult to control costs Financing of care for uninsured and underinsured families is inefficient Positive incentives in benefit design and insurance markets are lacking

14. 14 THE COMMONWEALTH FUND Roadmap to Health Insurance for All: Principles for Reform Builds an essential foundation for quality and efficiency as well as access Benefits cover essential services with financial protection Premiums/deductibles/out of pocket costs affordable Coverage is automatic, stable, seamless Choice of health plans or care systems Broad health risk pools; competition based on performance not risk or cost shift Simple to administer: lowers overhead costs providers/payers Minimizes dislocation Financing adequate/fair/shared across stakeholders

15. 15 THE COMMONWEALTH FUND What are the Options for Health Insurance Reform? Principles for Reform Tax Incentives and Individual Insurance Markets Mixed Private-Public Group Insurance with Shared Responsibility for FinancingPublic Insurance Covers Everyone 0 ++ Minimum Standard Benefit Floor –++ Premium/Deductible/ Out-of-Pocket Costs Affordable Relative to Income –++ Easy, Seamless Enrollment 0 +++ Choice +++ Pool Health Care Risks Broadly –+++ Minimize Dislocation, Ability to Keep Current Coverage +++– Administratively Simple –+++ Work to Improve Health Care Quality and Efficiency 0 ++ 0 = Minimal or no change from current system; – = Worse than current system; + = Better than current system; ++ = Much better than current system Source: S.R. Collins, et al., A Roadmap to Health Insurance for All: Principles for Reform, Commission on a High Performance Health System, The Commonwealth Fund, October 2007.

16. 16 THE COMMONWEALTH FUND Medicare for All, Private Insurance Exchanges, Tax Incentive Proposals Cause Major Shifts in Coverage, 2007 Current Law Healthy Americans Act (Wyden) Total population = 295.1 million Uninsured 47.8 (16%) Private Non-Employer 9.5 (3%) Employer 153.7 (52%) Medicaid/ SCHIP 37.5 (13%) Medicare 31.9 (11%) CHAMPUS 3.4 (1%) Dual Eligible 8.0 (3%) Uninsured 2.5 (1%) HAA Coverage 248.8 (84%) Medicare 31.9 (11%) CHAMPUS 3.9 (1%) Dual Eligible 8.0 (3%) Note: Average monthly coverage. Primary payer is determined on basis of current prevailing coordination of benefits practices. Source: The Lewin Group for The Commonwealth Fund. Employer Retiree 3.3 (1%) Uninsured 38.8 (13%) Private Non-Employer 29.3 (10%) Employer 145.2 (49%) Medicaid/ SCHIP 38.5 (13%) Medicare 39.9 (14%) CHAMPUS 3.4 (1%) President Bush’s Proposal Medicare 31.9 (11%) Employer 5.0 (2%) AmeriCare 246.8 (83%) CHAMPUS 3.4 (1%) Dual Eligible 8.0 (3%) AmeriCare (Stark)

17. 17 THE COMMONWEALTH FUND Some Reform Proposals Reduce Total Health System Spending, But Federal Government Outlays Require Feasible Financing (Change in Health Spending by Stakeholder Group, Billions of Dollars, 2007) President Bush’s Proposal Healthy Americans Act 2 (Wyden) AmeriCare (Stark) Total Uninsured Covered, Millions 9.045.347.8 Federal Government$70.4$24.3$154.5 State and Local Government ($0.3)($10.2)($57.4) Private Employers($50.8)$60.2($15.2) Households($31.0)($78.8)($142.6) Net Health System Cost in 2007 (in billions) ($11.7)($4.5)($60.7) Total Uninsured Not Covered 1, Millions 38.82.50 1 Out of an estimated total uninsured in 2007 of 47.8 million. 2 Estimates reflect a mandatory cash-out of benefits on the part of employers that currently offer coverage. Source: S. R. Collins, K. Davis, and J. L. Kriss, An Analysis of Leading Congressional Health Care Bills, 2005-2007: Part I Insurance Coverage, The Commonwealth Fund, March 2007

18. 18 THE COMMONWEALTH FUND Creating Consensus: Minimal Disruption in Current Coverage, 2004 Medicaid/ CHIP 10% Employer 58% Non-group 4% CURRENT INDIVIDUAL MANDATE CHAMPUS/ Others 1% Uninsured 15% Medicare 12% Non-group 1% CHAMPUS/ Others 1% Uninsured 1% Medicaid/ CHIP/FHIP 15% Medicare 14% Employer 59% Congressional Health Plan 9% Source: K. Davis and C. Schoen, “Creating Consensus on Coverage Choices,” Health Affairs (Web Exclusive April 23, 2003). Lewin Group estimates using the Health Benefits Simulation Model.

19. 19 THE COMMONWEALTH FUND New Coverage for Currently Uninsured Congressional Health Plan TOTAL = 24 m Medicare TOTAL = 38 m 11m13m CHIP/FHIP TOTAL = 43 m Employer Group Coverage TOTAL = 165 m 14m1m Improved Coverage for Underinsured 3m 1m3m11m Source: K. Davis and C. Schoen, “Creating Consensus on Coverage Choices,” Health Affairs (Web Exclusive April 23, 2003). Creating Consensus: Choice between Private Insurance and Public Program Coverage

20. 20 THE COMMONWEALTH FUND Health Reform and the Presidential Candidates Leading Democrats: –Mixed private-public insurance –Shared financial responsibility (government, employers, households), individual mandate –FEHBP or Medicare national insurance connector –IT, prevention, chronic care management, comparative effectiveness, pay for performance, transparency –Finance with system reforms and repeal/expiration of high- income tax breaks Leading Republicans: –Tax incentives for purchase of individual insurance –Make employer health insurance contributions taxable income to employee –Buy insurance from any state –Greater state flexibility to reallocate Medicaid/SCHIP dollars –Tort reform, transparency, IT

21. 21 THE COMMONWEALTH FUND Features of Candidates’ Approaches to Health Care Reform Senator Clinton Senator Edwards Senator Obama Mayor Giuliani Senator McCain Governor Romney Individual Mandate XXChildren onlyNo Employer Shared Responsibility TK% of payroll, small businesses exempt6% of payrollTK% of payrollNo Subsidies for Low-income Uninsured Tax credit for premium >TK% of income Refundable tax credit on sliding scale Sliding scale premium subsidies Health insurance credit for low- income Tax credit $2,500 for individuals, $5,000 for families Premium subsidies Medicaid/ SCHIP expansion X Parents/ children up to 250% FPL; childless adults up to 100% FPLXNo Risk pooling Private Health Choices Menu through FEHBP & public insurance plan option modeled after Medicare Regional health markets with private & public plan options National Health Insurance Exchange with private & public plan options Purchase private insurance in any state Emphasis on private markets Quality and Efficiency Measures HIT, Transparency, P4P, Prevention, Comparative effectiveness, Chronic disease management, Disparities, Malpractice reform HIT, Transparency, Prevention, Malpractice reform HIT, Transparency, P4P, Prevention, Chronic disease management, Malpractice reform HIT, Transparency, Malpractice reform

22. 22 THE COMMONWEALTH FUND Candidates’ Agreement on Health Care Reform Features Senator Clinton Senator Edwards Senator Obama Mayor Giuliani Senator McCain Governor Romney Candidates From Both Parties Agree Expanding coverage XXXXXX Health IT XXXXXX Transparency XXXXXX Malpractice reform XXXXXX Some Candidates Agree Pay for performance XXXNoX Prevention XXXXXNo Candidates Differ Universal coverage XXXNo Individual mandate XXAll childrenNo Employer pay or play XXXNo Changes to employer benefit tax exemption XNo X Unclear Regulation of insurance markets XXXNo

23. 23 THE COMMONWEALTH FUND Judging the 2008 Presidential Candidates’ Health Plans Note: Scale is 1-10; 10 is the best Source: Marilyn Werber Serafini, "Judging the 2008 Health Plans," National Journal, October 26, 2007 ClintonEdwardsObamaGiulianiMcCainRomney Universal Coverage 997464 Use existing dollars 444666 Government gets value for money 666464 Spending constant percent of GDP 433464 Consumer informed choices 767464 Provider QI tools, best practices 877353 Providers compete on quality/price 666564 No adverse effect on coverage or patients 787564 Coverage affordable for sickest 898353 Patients seek value for money 545675 Patients have access to providers 888788 Employers help pay for coverage 888567 No financial hardship on employers 655998 TOTAL 868381658264

24. 24 THE COMMONWEALTH FUND Health Reform and the Presidential Campaign Health policy a top domestic issue Universal coverage is central to high performance health system –Needs to be combined with initiation of effective health system reforms Organize the health care system around the patient to ensure accessible and coordinated care Align financial incentives: payment reform and effective strategies for enhancing value and achieving savings Pursue and raise benchmark levels of high quality, efficient care and enhance capacity to innovate and improve including IT capacity Ensure national leadership and public/private collaboration

25. 25 THE COMMONWEALTH FUND Why Not the Best? Current directions absent policy change –Costs expected to go to 20% of GDP –More uninsured, affecting middle class families as well as low-income –More underinsured, bill problems, medical debt Aiming higher: Why not the best? –U.S. has the resources and expertise –Benchmarks for a high performance health system are achievable –Achieving consensus requires that everyone participate and be willing to come together for the greater good

26. 26 THE COMMONWEALTH FUND Visit the Fund’s website at www.commonwealthfund.org

27. 27 THE COMMONWEALTH FUND Thank You! Stephen C. Schoenbaum, M.D., Executive Vice President and Executive Director, Commission on a High Performance Health System, scs@cmwf.org Katherine Shea, Research Associate ks@cmwf.org Cathy Schoen, Senior Vice President for Research and Evaluation cs@cmwf.org Sara Collins, Assistant Vice President, src@cmwf.org

28. 28 THE COMMONWEALTH FUND Appendix: Presidential Candidate Plans

29. 29 THE COMMONWEALTH FUND Senator Clinton’s Health Plan Universal health coverage with mixed private-public coverage, individual mandate National insurance connector building on FEHBP, Medicare-like product option; keep current coverage if prefer Sliding scale premium assistance; expand Medicaid/SCHIP Shared financial responsibility; tax breaks for small business under 25 employees Require all health plans to cover prevention; coordinate public spending on prevention; create National Prevention Initiative End insurance discrimination to help reduce administrative costs Quality and Efficiency Reforms –Chronic care coordination models –Create “paperless” health information technology system –Create independent “Best Practices” Institute –Implement Smart Purchasing Initiatives to constrain excess expenditures on prescription drugs and managed care –Pay providers for coordinated care, bonuses for maintenance of physician specialty certification Revenue –$110 billion annual federal budget cost financed by system reforms and expiration of income-tax cuts for highest income

30. 30 THE COMMONWEALTH FUND Senator Edwards’ Health Plan Individual mandate once insurance is affordable Shared responsibility –Employers provide coverage to workers or pay 6% of wages into pool Medicaid/SCHIP expansions –Parents and children up to 250% of poverty –Childless adults up to 100% of poverty Sliding scale premium subsidies (refundable tax credits) Regional Markets – insurance pools of competing private plans and a public plan like Medicare Quality and Efficiency Reforms –Insurance market; guaranteed issue and community rating –Coverage of preventive care and chronic care with minimal cost-sharing –Pay for results – reward quality and efficiency; reward primary care –Transparency – public reporting; IT –Patient safety; FDA device and drug safety –Quality benchmarks –Evidence-based medicine; health services research Revenues –$90 to $120 billion a year federal budget cost from eliminating waste in health system and repealing Bush tax breaks for those over $200,000 –Enforcement of capital gains tax –Employer 6% of payroll contribution

31. 31 THE COMMONWEALTH FUND Senator Obama’s Health Plan Shared responsibility - Employers provide coverage to workers or contribute a percentage of payroll toward the costs of the national plan Medicaid/SCHIP expansion; Sliding scale premium subsidies Public health insurance plan – based on FEHBP – available to small businesses, individuals who don’t have access to group coverage National Health Insurance Exchange to provide access to private coverage Mandate that all children have coverage; Young adults expansion – allow young people up to age 25 to continue coverage through their parents’ plans Reinsurance for employer health plans Quality and Efficiency Reforms –Disease management programs; implement medical homes –Require cost and quality reporting, including medical errors and disparities in care, from participating providers; Require health plans to report percent of premiums that goes to patient care –Support efforts to align reimbursement with quality of care –Increase investment in comparative effectiveness reviews and research –Invest $10 billion per year over 5 years for U.S.-wide adoption of standards-based health IT systems –Increase competition in insurance and drug markets –Promote disease prevention Revenues –$50 to $65 billion annual federal budget costs funded through expiration of high income tax breaks ($200,000 and above) –Employer contribution

32. 32 THE COMMONWEALTH FUND Mayor Giuliani’s Health Plan Tax incentives to buy health coverage – income-tax exclusion of up to $15,000 for families and $7,500 for individuals to buy private insurance and contribute to expanded health savings accounts Buy insurance out-of-state Block grants to states instead of Medicaid matching funds Tort reform – reasonable caps on non-economic damages, alternative dispute resolution Transparency of prices, provider qualifications, outcomes Pay Medicare doctors and hospitals more for better- quality care Public/private partnerships for IT standards State Medicaid payments tied to success in promoting preventive care, tracking obesity in children Reduce red tape in approval of medical devices

33. 33 THE COMMONWEALTH FUND Senator McCain’s Health Plan Keep employer tax incentives, but offer individuals tax incentives to buy insurance -- $2,500 refundable tax credit for individuals, $5,000 for families; if premium less, balance for health savings accounts Buy health insurance out-of-state Association health plans Medicare/Medicaid pay providers for good outcomes, coordinating care, preventive services Transparency about outcomes, quality of care, costs, and prices Innovative delivery forms, e.g. retail clinics Tort reform; protect doctors following clinical guidelines and patient-safety protocols National standards for electronic health information systems and data collection

34. 34 THE COMMONWEALTH FUND Governor Romney’s Health Plan Recommends “extending health insurance to all Americans, not through a government program or new taxes, but through market reforms” Would expand and deregulate the private health insurance market –Foster competitive health insurance markets in each state to bring down the cost of private health insurance –Reform tax code to make it cheaper for individuals to purchase private insurance, provide a deduction for the cost of health insurance and catastrophic medical expenses Premium assistance to help people purchase private health insurance plans –Redirect state and federal spending from “free care” payments to provide sliding scale premium assistance Insist that middle income individuals either purchase health insurance or pay for their own health care (reform state health insurance regulations to make health insurance more affordable) Encourage more Health Savings Accounts and co-insurance products Enhance the portability of private health insurance Slow the rate of inflation in health care spending by: –Instituting tax reforms to promote smart spending on health care –Creating incentives for states to reform their health insurance markets –Implementing medical liability reform (caps on non-economic and punitive damage awards) Federalist approach: –Facilitate and encourage reforms, don’t mandate them –States able to create reforms to match their unique needs –States as laboratories of innovation Encourage innovation in Medicaid by providing block grants to states Enhance the use of information technology Establish cost and quality transparency