Health Care Reform: Health Care Reform: We’re Still Waiting for ItWe’re Still Waiting for It

Walter Tsou, MD, MPH

PNHP California

Los Angeles, CA

July 17, 2010

Outline of TalkOutline of Talk

A Brief Health Policy 101 Health Care Reform Lessons for America

“Iron Triangle of Health Policy”“Iron Triangle of Health Policy”

Access to Care

Cost Containment Quality of Care

Looking at CostsLooking at Costs

Health Care Costs at $2.6 Tr in 2010 and almost Health Care Costs at $2.6 Tr in 2010 and almost doubles in 9 years. Total for Decade? $34 Trillion!!doubles in 9 years. Total for Decade? $34 Trillion!!

Source: Projected from Health Spending Projections, Health Affairs, March 2010

2010 11 12 13 17161514 18 2019

US spends far more than other countries US spends far more than other countries on health care per capitaon health care per capita

OECD, Health Expenditures per capita, 1998

Looking at QualityLooking at Quality

2009 National Healthcare Quality 2009 National Healthcare Quality ReportReport

“We find that health care quality in America is suboptimal”

Agency for Healthcare Quality and Research, March 2010

Looking at AccessLooking at Access

46.3 MillionUninsured

Source: US Census, 2009

Rex Morgan, MD on Personal Rex Morgan, MD on Personal BankruptcyBankruptcy

45,000 Adult Deaths Annually Due to 45,000 Adult Deaths Annually Due to Lack of health insuranceLack of health insurance

NY Times, Sept. 18, 2009

Health Care Reform: Which Direction?Health Care Reform: Which Direction?

No domestic issue is more divided than No domestic issue is more divided than health carehealth care

Major Stakes for Both PartiesMajor 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

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Government or the “free market”?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?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 historyThe greatest lobbying effort in history

June 29, 2009

$1.2 Billion Spent on Health Care $1.2 Billion Spent on Health Care Lobbying!Lobbying!

Center for Public Integrity, March 26, 2010

Health Care Reform: Which Direction?Health Care Reform: Which Direction?

What are the key elements of reform?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 You will be required to buy private health insurance or pay a finehealth 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?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?”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?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

Marketwatch, Feb 19, 2010

Enormous Price IncreasesEnormous Price Increases

LA Times, April 13, 2010

New insurance regulationsNew 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 ideasSome 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?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

10 M (4%)Nongroup

Source of Insurance Coverage Pre-Reform and Source of Insurance Coverage Pre-Reform and Under Affordable Care Act, 2019Under Affordable Care Act, 2019

* 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).

Among 282 million people under age 65

Pre-Reform

162 M(57%)

ESI

35 M(12%)

Medicaid

54 M(19%)

Uninsured16 M (6%)Other

15 M (5%)Nongroup

159 M(56%)

ESI

51 M(18%)

Medicaid

24 M (9%)Exchanges

(Private Plans)

16 M (6%)Other

23 M (8%)Uninsured

Affordable Care Act

Health Care Will Become Even More Health Care Will Become Even More ExpensiveExpensive

NY Times, April 23, 2010

CBO estimate of Affordable Care Act of 2010

Total Net Impact on Federal Deficit, 2010–2019 –$143

Gross Cost of Coverage Provisions $938

Offsetting Revenues from Individual Mandate, Employers, and Wage Effects

–$117

Savings from Payment and System Reforms –$511

Productivity updates/provider payment changes –160

Medicare Advantage reform –204

Other improvements and savings –147

Education System Savings –$19

Total Revenues –$432

Major Sources of Cost, Savings and Revenues Compared with Projected Major Sources of Cost, Savings and Revenues Compared with Projected Spending, Net Cumulative Effect on Federal Deficit, 2010–2019Spending, Net Cumulative Effect on Federal Deficit, 2010–2019

Dollars in billions

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.

We have the MostExpensive Health CareSystem in the World

By far . . .

Yet we have lower lifeexpectancy than half ofthe world

National Geographic, OECD Health Data 2009

Jobless Recovery in a Global Economy?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 What Does It Mean When a Nation Stops Making Things Here?Stops Making Things Here?

Jobs, jobs, jobs . . . Health care are Jobs, jobs, jobs . . . Health care are linkedlinked

Employer sponsored insurance is a cost for every employer

In a global economy, jobs follow manufacturing

Dramatic Loss of Jobs That May Never Dramatic Loss of Jobs That May Never ReturnReturn

US Bureau of Labor Statistics

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2010 US Debt - $13.2 Trillion! 2010 US Debt - $13.2 Trillion! 91% of GDP91% of GDP

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Gross Debt

Debt as % GDP

Canada is First of G-7 Countries to Canada is First of G-7 Countries to Recover from RecessionRecover from Recession

Bloomberg News, July 9, 2010

Why US Manufacturers Move Overseas?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 technologyInformation 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 Health IT works when the health system works (Taiwan)works (Taiwan)

Frontline, April 2008

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NY Times, Feb 26, 2010

How Tough Are Our Choices?How Tough Are Our Choices?

Bankrupt Private Health Insurers?

Bankrupt America?

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David Walker, former US Comptroller David Walker, former US Comptroller GeneralGeneral

60 Minutes, March 4, 2007

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Making a decision on a tough choiceMaking 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

C-SPAN, June 10, 2010

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Overall ImpressionsOverall Impressions

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?Questions?