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National Health
Care Reform Overview
Daniel B. McLaughlin
Center for Health and Medical Affairs
The Best Health Care System
in the World
The Best
• Medical Research
• Drug and Device Development
• Innovative Care Delivery
– Minute Clinic
– Electronic Health Record
– Health 2.0
• Health Services Research
• Passionate and skilled caregivers
• Engaged Consumers and Patients
Paradox
• Geographic
Practice disparity
• Quality: over use,
under use, misuse
and safety
• Acute care model
for Chronic disability
• Professions
shortage
– Primary care
– Nursing
• Emerging public health
problems
• Access problems:
uninsured,
underinsured,
bankruptcy
• Insurance: pre existing
conditions, deductibles
& co-pays, lifetime limits
• Welfare payment for
aged and disabled
• Most costly system in
the World – 17% of
GDP
Federal Reform 2010
Reduce cost growth,
Improve access, and
Improve quality and
safety
In a way that is
acceptable to the
American Public
With Liberty
and Justice for All
Health Care – A Systems
View
Professional - Patient
Health System – Core
Consumer Behavior
Tools – Dx & Rx
Professional - Patient
Knowledge
Illness Burden
Health System – Tools
Facilities
Reform
Health
Care
Workers
Medical
Technology
Information
Technology
- Improved payment for
primary care services
- More funding for training
primary care providers
Tools – Dx & Rx
Professional - Patient
Reform
- $80 Billion in discounts over 10 years
from drug companies + Medicaid rebates
Reform
$18 Billion for Health
Information Technology
(Stimulus bill)
The tradeoff – no direct negotiations with
Medicare, extended patent protection
- Transparency on drug/device company
relationships with providers
Reform: structure
Accountable Care
Organizations
Health System – Consumer
Information
Market/Clinical
Financial
resources &
goals
Past
Experience –
Personal,
networks
Consumer Behavior
Tools – Dx & Rx
Environment:
- Air, food,
water
Professional - Patient
-Economic
- Cultural
Knowledge
Illness Burden
Genetics of
the Individual
Consumer Behavior and Illness
• Reform – Illness Burden
– New funds and coverage for prevention
– Payment for Chronic
Disease Management
– Payment for Medical home
– Payment for Health IT
to track chronic patients
• Reform – Consumer behavior
– Increased payment for health
promotion and disease prevention
– Medicare recipients get “health risk assessment”
– Grants and tax incentives to employers for wellness
programs (Safeway model)
– Tort reform pilots (Malpractice)
Health System – Education & Research
Consumer Behavior
Tools – Dx & Rx
Professional - Patient
Knowledge
Primary
Education
Continuing
Education
Research
Illness Burden
Education and Research
• Reform - Education
– Revised Medicare funding for training to
emphasize primary care
– Increased funding for nursing education
• Reform - Research
– Funding for Comparative
Effectiveness Research (Stimulus)
– Cannot be used to direct
payment policy
Health System – Financing
Financial
resources &
goals
Consumer Behavior
Tools – Dx & Rx
Financing
Sources &
Structure
Professional - Patient
Government
Knowledge
Employers
Individuals
Illness Burden
Total Health System Model
Health
Care
Workers
Facilities
Medical
Technology
Information
Market/Clinical
Information
Technology
Past
Experience –
Personal,
networks
Consumer Behavior
Tools – Dx & Rx
Financing
Sources &
Structure
Financial
resources &
goals
Environment:
- Air, food,
water
Professional - Patient
-Economic
Government
Knowledge
Continuing
Education
- Cultural
Illness Burden
Employers
Individuals
Primary
Education
Research
Genetics of
the Individual
Employers Remain Primary Sponsor of Coverage
Distribution of 307 Million People by Primary Source of Coverage
Employer
Direct
55m
18%
Uninsured
49m
16%
Medicaid
42m
14%
Employer
Direct
164m
53%
Medicare
41m
13%
Medicare
39m
13%
Individual
Direct
14m
5%
Total Employer 164m (53%)
Total Individual 14m (5%)
Source: The Lewin Group, The Path to a High Performance U.S. Health System: Technical Documentation
(Washington, D.C.: The Lewin Group, 2009).
Insurance Reform
• Mandates insurance: both
employers and individuals
• Subsidies available for
both low income individuals
and small business
• Expands Medicaid income limits
to 133% – state match held harmless
• Standardized benefit levels (Bronze – Platinum)
• Eliminates pre existing condition, lifetime caps,
recissions and other insurance practices
• HSAs still available
• Simplified and standardized billing
The Exchange
Financing
Medicare
Advantage –
Health Plans
Subsidies for
individuals and
small business
Hospital Inflation
(-1.5%), Readmits, DSH
Medicaid
eligibility buy
down
Drug Discounts
Personal Income
Taxes> $250,000,
3.8% on unearned
income
System taxes: health
plans, device
companies, tanning,
Cadillac Health plans
Fix Medicare
donut hole
$ One
Trillion
1099s for
purchases
> $600
X
4% of total NHE
MD fees –
repeal SGR
Bending the cost curve
Competition between
Health Plans
Delivery system
Substitution of lower priced care Inpatient, clinic, home
Increased availability and use of primary care
Improved chronic care (Medical home, ACO etc.)
Reduced system costs (billing, overhead)
Comparative effectiveness research
Medicare Innovations Center
Consumers
Prevention and Wellness and the Social
Determinates of Health
Tort Reform demonstrations
Consumer Directed Health Care
Reform’s Impact on
Stakeholders
Insurance Companies
• Gain 30 million new customers
• Cease most underwriting practices
• Participate in state based insurance
exchanges
• No change with large employers
• Agree to standardization
– Benefits
– Payment systems
• Overhead less than 20%, 15%
• Become more retail and consumer
oriented
Government
• Federal
– Enforce Insurance mandate
– Implement new Medicare payment policies
– Implement Insurance Exchange (states or feds)
– Continue to fund HIT, Comparative Effectiveness
Research
– Implement Medicare pilots (value purchasing, etc.)
– Raise taxes
– Implement fraud prevention
• States
– Expand Medicaid eligibility
– Operate Exchanges
Direct providers of Care
• Reduced uncompensated care
• Bundled payments – value
purchasing
• Incentives to form larger
groups and structures
• Increased transparency and
reporting
• Reduction in growth of hospital payments
• Incentives to purchase HIT
• Higher payment for primary care
• Changes in payment due to geographic variation
(?)
Consumers
• Negatives
– Short term insurance rate increases
– Insurance mandate
– Higher taxes for some
– Access issues to primary
care
• Positives
– Improved access to health insurance
– Lowering of health care inflation
– Elimination in Medicare donut hole
– Improved information about system and
provider performance
– Eliminates job lock for entrepreneurs
Current Issues
• Individual and employer mandate
to have health insurance
(State Attorney Generals)
• State’s ability to control health
insurance rate increases
• Temporary high risk pools
• No pre existing conditions for children
• Payment to firms for early retirement coverage
• Continuing health care inflation
Changes Possible
• Insurance Mandate Methods
– Open enrollment
– Part D penalties
•
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•
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Standard Benefits
State Medicaid funding increases
Comparative Effectiveness Research
Independent Payment Advisory Board
Malpractice reform
State Waivers (e.g. public option in Vermont)
Unlikely to change
• Health Insurance Exchanges
• Quality
• Workforce improvements
– primary care
• Fraud Prevention
• Prevention and Wellness
• Chronic Disease Management
– ACOs, bundled Payments, Medical home
• Total Repeal: due to provider/health plan
resistance
“Americans
always do
what is right,
but only
after trying
everything
else.”
Winston Churchill
The Best Health Care System
in the World
Additional Reading
Health Administration Press
Further Information at: HAPMclaughlin.com
Thank You
Dan McLaughlin
www.Stthomas.edu/chma  Resources
[email protected]
651-962-4143