1. 1 Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits 1999 to 2007, KPMG Survey of Employer-Sponsored Health Benefits 1993 to 1996, The Health Insurance Association of America 1988 to 1990, Bureau of Labor Statistics, CPI U.S. City Average of Annual Inflation 1988 to 2007; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1988 to 2007. Increase in Health Insurance Premiums Compared to Other Indicators, 1988 - 2007

2. 2 PAID vs. GROSS TRENDS GROSS TREND = the true underlying increase in medical costs PAID TREND = the net increase in insurance claims reflecting any buy downs in benefits. If the consumer continues to buy lower benefits, the paid trend understates the real trend.

3. 3 Employer-based Health Insurance Benefit Design A basic flaw is that health benefits are not related to income levels. Other employee benefits e.g. life insurance, disability insurance, pensions are all related to income. Underlying purpose of insurance is to prepare for & protect against the consequences of a major change in life circumstances.

4. 4 GOAL Common Goal: -Hope for long, healthy and happy lives WHO Ideal Definition of Health: -A state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.

5. 5 Health Measures Health attainment is measured as disability adjusted life expectancy (DALE) = life expectancy reduced by years lost to disability and infirmity. Source: WHO

6. 6 Source: World Health Organization, World Health Report 2005

7. 7 * Countries listed have healthy life expectancies greater than the USA and generally an older population. Source: World Health Organization, World Health Report 2007 Health Care Spending as % of GDP, 2004*

8. 8 National Health Expenditures as a Percent of GDP 1960 – 2016* * Projected Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://cms.hhs.gov/NationalHealthExpendData (see Historical; NHE summary including share of GDP, CY 1960-2004; file nhegdp04.zip).http://cms.hhs.gov/NationalHealthExpendData Publication: Health Spending Projections Through 2016: Modest Changes Obscure Part D’s Impact, Health Affairs Web Exclusive, February 21, 2007

9. 9 Fundamentals Quality – quality of care, quality of health, quality years of life Access – universality of access, prompt attention, choice of provider, amenities of facilities Cost – system wide cost, fairness of financial contribution by income level Inherent conflict among these goals—need balance

10. 10 Results CountryLevel of HealthDALEResponsivenessCostFairnessOverall Japan9161381 Switzerland26822382 Norway181571683 Sweden214107124 Luxemburg5183525 France43164266 Canada3512310177 Netherlands191399208 UK241426 89 Austria1517126 10 USA 7229115515 QUALITY ACCESS COST

11. 11 All Healthcare Systems Receive Strong Criticism Source: Blendon, R.J., et.al., Health Affairs, May/June 2002

12. 12 Private VS. Public & The Uninsured Country Private % of Health Expenditures Insurance % of Private ExpendituresUninsured Cost % Japan18.7%1.9%16.8% Switzerland41.5%21.1%32.7% Norway16.5%0%16.5% Sweden15.1%1.9%13.6% Luxemburg9.6%17.6%7.9% France21.6%57.3%9.2% Canada30.2%42.3%17.4% Netherlands37.6%50.6%18.6% UK13.7%8.2%12.6% Austria24.4%33.6%16.2% USA50.3%66.4%16.9% SOURCE: WHO and OECD HEALTH DATA (2003 report).

13. 13 The Uninsured Approximately 15% of population is uninsured. Approximately 65% of the uninsured have incomes below 200% of the Federal poverty level. Approximately 25% of the uninsured are eligible for Medicaid programs but have not enrolled. Source: NHIS 1997-2006, US Census Bureau; Urban Institute/Johns Hopkins 2004

14. 14 Why The Higher Spending USA ranks #1 in access which adds approximately 10% to healthcare costs. USA has fewer physicians per 1,000, fewer hospital beds per 1,000 and fewer nurses per 1,000 than OECD countries on average. Price of care is much higher – physician earnings, amenities, greater use of technology, prescription drug costs. Source: Health Affairs, Volume 24, Number 4. (2005)

15. 15 Physician Earnings CountryRange of Averages (2002) USA136 – 268 K Canada81 – 154 K Netherlands57 – 175 K UK103 – 128 K France57 - 116 K Sweden57 – 61 K USA is approximately 80% higher. Source: NERA Economic Consulting

16. 16 Technology Sources: Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey ad Varduhi, Petrosyan, "It's the Prices, Stupid: Why the United States is So Different From Other Countries," Health Affairs, Vol. 22, No 3 May/June 2003, Exhibit 5, p.97: and Stephen Pollard, "European Health Care Consensus Group Paper," Centre for the New Europe, January 4, 2001.

17. 17 TECHNOLOGY Source: Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey and Varduhi Petrosyan, "It's the Prices, Stupid: Why the United Stats Is So Different from Other Countries, "Health Affairs, Vol. 22, No. 3, May/June 2003: 89 - 105.

18. 18 752 599 559 520 494 477 434429425424421 407 400393377375364 348344 321318315308 299 270261 238 138 USD PPP (1) 2003, (2) 2002 Source: OECD Health Data October 2006

19. 19 (1) 2003; (2) 2002 Source: OECD Health Data October 2006

20. 20 Percentage Change in Sales and Number of Prescriptions, 1999 - 2000 Sales Number of Prescriptions Sales and Number of Prescriptions

21. 21 Lifestyle vs. DALE USA UK CANADA NETHERLANDS NORWAY SWEDEN SWITZERLAND FRANCE JAPAN Source: OECD Health Data 2004, WHO Data 66.3%32.2% 63.0%22.7% 57.5%14.9% 46.5% NA 42.7% 6.2% 42.6%10.0% 37.1% 7.7% 34.6% NA 24.9% 3.1% Overweight: BMI > 25 BMI>30

22. 22 Disease Trends / Lifestyle Diseases related to overweight: Diabetes Heart Disease Back and Joint Problems Digestive Disorders Cancers

23. 23 INDUSTRY DATA Source: NC Prevention Partners Lifestyle Healthcare Costs

24. 24 Lifestyle Not Smoking Healthy Weight 5 Servings of Fruit & Vegetables 30 Minutes of Exercise, 5 Times a Week Source: 2005 Behavioral Risk Factor Surveillance System Survey, National Center for Chronic Disease Prevention and Health Promotion

25. 25 Non-Medical Factors Social Ethics Distinction between social solidarity and personal autonomy. Family ethic of loose intergenerational family bonds leads to demands for non-medical support from medical care system. Economics Free-market economics versus more socialistic economics.