Download Iron Triangle of Health Policy”

Health Care Reform:
We’re Still Waiting for It
Walter Tsou, MD, MPH
PNHP California
Los Angeles, CA
July 17, 2010
Outline of Talk

A Brief Health Policy 101
 Health Care Reform
 Lessons for America
“Iron Triangle of Health Policy”
Access to Care
Cost Containment
Quality of Care
Looking at Costs
Health Care Costs at $2.6 Tr in 2010 and almost
doubles in 9 years. Total for Decade? $34 Trillion!!
$5,000
$4,483
$4,500
$4,000
$3,500
$3,000
$4,205
$3,945
$3,700
$3,471
$3,225
$3,069
$2,893
$2,726
$2,570
$2,500
$2,000
$1,500
$1,000
$500
$0
1
2010
2
11
3
12
4
13
145
156
7
16
8
17
9
18
10
2019
Source: Projected from Health Spending Projections, Health Affairs, March 2010
US spends far more than other countries
on health care per capita
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
U.S.
Switzerland
Germany
Canada
Luxembourg
Netherlands
Norway
Denmark
Iceland
Australia
Belgium
France
Austria
Italy
Japan
Sweden
Ireland
United
Findland
New
Portugal
Greece
Spain
Czech
Korea
Hungary
Poland
Mexico
Turkey
OECD, Health Expenditures per capita, 1998
Looking at Quality
2009 National Healthcare Quality
Report

“We find that health
care quality in
America is
suboptimal”
Agency for Healthcare Quality and Research, March 2010
Looking at Access
46.3 Million
Uninsured
Source: US Census, 2009
Rex Morgan, MD on Personal
Bankruptcy
45,000 Adult Deaths Annually Due to
Lack of health insurance
NY Times, Sept. 18, 2009
Health Care Reform: Which Direction?
No domestic issue is more divided than
health care
Major Stakes for Both Parties

Democrats
– Signature Issue for
Obama

Republicans
– Plan is too big
– Government takeover
– It will influence the
midterm election and
maybe the presidency
QuickTime™ and a
d eco mpres sor
are nee ded to s ee this picture.
Government or the “free market”?


Government is the
answer
Private insurance cannot
be trusted


Government is the
problem
Private insurance
“works” for 160
million Americans
Choosing a pathway for reform?

Government
– Expand Medicare for
everyone

Private
– Require everyone to
buy private insurance
– Insurers must be
regulated
The greatest lobbying effort in history
June 29, 2009
$1.2 Billion Spent on Health Care Lobbying!
Center for Public Integrity, March 26, 2010
Health Care Reform: Which Direction?
What are the key elements of reform?








You will keep your insurance, whether you like it or not
You will be required to have private health insurance or pay a fine
There will be subsidies for the poor.
There will be a state insurance exchange which will be open to
small businesses, self employed, and those not offered employer
sponsored insurance starting in 2014
Changes to Medicare
CLASS act - voluntary purchase long term care insurance?
New regulations on insurers
Immigrants are restricted or banned
You will be required to buy private
health insurance or pay a fine

Bronze (60% of the cost of care)
 Silver (70% of the cost of care)
 Gold (80% of the cost of care)
 Platinum (90% of the cost of care)

The better the plan, the more it costs
 We don’t know the price (several thousand)
How much is the fine?

The greater of:
– 2014 - $95 or 1% of income
– 2015 - $350 or 2% of income
– 2016 - $650 or 2.5% of income ($2,085 max)
“I am poor, how can I afford this?”

Medicaid up to 133% of poverty paid by
the federal govt up to 2017
 Sliding scale cost sharing of 94 - 70% from
133% - 400% of poverty
 $5 billion put in state run high risk pools for
those with preexisting conditions
This is too confusing, who can help me?

Pick employer plan for those employed
 Self employed, small businesses, uninsured
can go to a state insurance exchange
beginning in 2014
 Very poor get on Medicaid
Mass Connector, family of three, cheapest plan
Enormous Price Increases
Marketwatch, Feb 19, 2010
LA Times, April 13, 2010
New insurance regulations







No exclusions for preexisting conditions
No medical underwriting
No recissions
No lifetime caps on claims
Children can stay on plan until age 26
Must pay 80% of income toward claims if small plan, 85%
if large plan
Insurers disclose payment policies, ratings
Some Republican ideas

Purchase of private insurance
 Health Savings Accounts sold in exchanges
 State demonstrations on malpractice reform
 Restrictions on abortion
How to pay for it?



Employer sponsored insurance
Tax “Cadillac” insurance plans after 2018?
Medicare income tax increased to 2.35%
– > $200K have to pay on investment income also (3.8%)




Employers > 50 workers fined if workers get insurance
through the insurance exchange
Fees on drug and insurance industry
Cuts to Medicare and Medicare Advantage
Independent Payment Advisory Board
33
Source of Insurance Coverage Pre-Reform and
Under Affordable Care Act, 2019
23 M (8%)
Uninsured
16 M (6%)
Other
15 M (5%)
Nongroup
54 M
(19%)
Uninsured
24 M (9%)
Exchanges
(Private Plans)
162 M
(57%)
ESI
16 M (6%)
Other
159 M
(56%)
ESI
10 M (4%)
Nongroup
51 M
(18%)
Medicaid
35 M
(12%)
Medicaid
Pre-Reform
Affordable Care Act
Among 282 million people under age 65
* Employees whose employers provide coverage through the exchange are shown as covered by their employers (5 million), thus about 29
million people would be enrolled through plans in the exchange. Note: ESI is Employer-Sponsored Insurance.
Source: S. R. Collins, K. Davis, J. L. Nicholson, S. D. Rustgi, and R. Nuzum, The Health Insurance Provisions of the Affordable Care Act:
Implications for Coverage, Affordability, and Costs, The Commonwealth Fund, (forthcoming).
Health Care Will Become Even More
Expensive
NY Times, April 23, 2010
Major Sources of Cost, Savings and Revenues Compared with Projected
Spending, Net Cumulative Effect on Federal Deficit, 2010–2019
CBO estimate of
Affordable Care Act of 2010
Dollars in billions
Total Net Impact on Federal Deficit, 2010–2019
Gross Cost of Coverage Provisions
–$143
$938
Offsetting Revenues from Individual Mandate, Employers,
and Wage Effects
–$117
Savings from Payment and System Reforms
–$511
Productivity
updates/provider payment changes
Medicare Advantage
Other
reform
improvements and savings
Education System Savings
Total Revenues
Note: Totals do not reflect net impact on deficit due to rounding.
Source: Congressional Budget Office, Letter to the Honorable Nancy Pelosi, Mar. 20, 2010.
–160
–204
–147
–$19
–$432
We have the Most
Expensive Health Care
System in the World
By far . . .
Yet we have lower life
expectancy than half of
the world
National Geographic, OECD Health Data 2009
Jobless Recovery in a Global Economy?

Why would we hire Americans when we
have the most expensive health care per
capita in the world?
 Other countries that provide universal
health care have either single payer or the
insurers act as a single payer
 A country that does not produce things will
soon be a second class country
What Does It Mean When a Nation
Stops Making Things Here?
Jobs, jobs, jobs . . . Health care are
linked

Employer sponsored insurance is a cost for
every employer
 In a global economy, jobs follow
manufacturing
Dramatic Loss of Jobs That May Never
Return
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US Bureau of Labor Statistics
2010 US Debt - $13.2 Trillion!
91% of GDP
Gross Debt
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decompressor
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Debt as % GDP
Canada is First of G-7 Countries to
Recover from Recession
Bloomberg News, July 9, 2010
Why US Manufacturers Move Overseas?

United States
– $7,300 per capita on
health care in 2007
– Administrative
overhead 31% *
– Per capita income
$46,000

Taiwan
– $800 per capita on
health care in 2007
– Administrative
overhead 1.6% *
– Per capita income
$30,100
* Sources: NEJM, August 21, 2003, Bureau of NHI, Taiwan
Information technology

Congress has $19 Billion in the economic
stimulus bill
 Can we do health IT with such a
dysfunctional fragmented system?
Health IT works when the health system
works (Taiwan)
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Frontline, April 2008
How Tough Are Our Choices?

Bankrupt Private Health Insurers?
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Bankrupt America?
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David Walker, former US Comptroller
General
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60 Minutes, March 4, 2007
Making a decision on a tough choice

Well, if you put it that way . . . . The choice
is clear
 We must control health care costs . . .
– For the sake of American jobs
– For the sake of our national deficit
– For our kids future
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C-SPAN, June 10, 2010
Overall Impressions
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Incredibly complex
Many good, bad, and ugly stuff
Embraces the principle of insurance reform
A strong prevention and public health agenda
Many will have difficulty affording this
My prediction: It will achieve mediocre, expensive health
care for some people, but may prevent illness in others
For those who want quality, affordable health care for all,
“No rest for the weary”
Questions?