Introduction to Health Care Introduction to Health Care PolicyPolicy

Mark A. Peterson, PhDDepartment of Public Policy

UCLA School of Public Affairs

Markets, Patients, and Providers:Partnership for Reform 2008

The 12th Annual Healthcare Symposium at UCLAFebruary 2, 2008

OverviewOverview• Why health care is a public issue• Design issues—the special challenges of health care• Standard alternative approaches to system design• The problems in the U.S. (& California) to be addressed

– Coverage/Access– Cost– Consequences/Quality

• The imperative to act• Options for universal public-private partnerships• Massachusetts and California

When you consider the best way to think about health care services (provided by doctors, nurses, other health professionals, clinics, hospitals, etc.), which one of the following three statements comes closest to your own opinion? Health care services are “private goods” that people should buy somewhat like cars and televisions, and based on what they can afford; Basic health care services that should be available to everyone, like public education, but people who can afford to should be able to buy more or better care, similar to paying for private schools; or All effective health care services should be universally available, provided to everyone as a right of citizenship and based on the services they need. (Pre-Election Survey)

11

34

50

5

0

10

20

30

40

50

60

Private Goods Basic Servicesfor All

Provided as aRight

Don't Know

Perc

ent

Source: Blue Sky module, UCLA Team, 2006 Cooperative Congressional Election Survey, N=1,000

Design IssuesDesign Issues——The Special Challenges of Health The Special Challenges of Health CareCare

• Distribution of Risks– The 20/80 “law” of health care—fragmented pools and “cherry

picking”– “Guaranteed issue” and the problem of “adverse selection”– “premium caps” without cost containment– Insurance “death spiral”

• Equity in Financing– “Actuarially fair” premiums– “Head-tax” premiums/contributions– “Ability-to-pay” contributions (closest to the international standard)

• Administrative Efficiency– Underwriting, marketing, utilization review, unstandardized

payments

• Cost Management– Budgets and fee schedules (closest to the international standard)– Competition: Among comparable health plans– Competition: Patients as “price-conscious consumers” at point of

service

• Adoption of Information Technology– Problem of who invests vs. who receives the gains—value of a

“closed system”Cannot address risk, equity, administrative efficiency, cost

management, and IT issues without:

• Universal Coverage—Requires Compulsion– Through tax payment– Through employer mandate– Through individual mandate– Or some combination

Alternative Approaches to Universal Alternative Approaches to Universal CoverageCoverage

Approach Financing(Dominant)

Delivery(Dominant)

International Example U.S. Example

National Health Service

Public(e.g., gen’l taxes) Public United Kingdom VA/DoD

(U.S. President)

Single-Payer Public(e.g., payroll tax) Private Canada Medicare

All-PayerPrivate,

Publicly Defined(payroll %)

Private Germany [Employer Mandate+]

StructuredCompeting Plans

Private,Publicly Defined

(premium?)Private Netherlands FEHBS/

CalPers

Individual Mandate

Private,Publicly Defined(premium “head tax” w/ subsidy)

Private Singapore(sort of) Massachusetts

Percent of U.S. Population Covered by Various Percent of U.S. Population Covered by Various Types of Health Insurance, 1940Types of Health Insurance, 1940--20052005

Source: Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,” book manuscript, Chapter 4, Figure 14.

Chart IChart I--8. Significant Percentage of Underinsured Adults 8. Significant Percentage of Underinsured Adults Indicates Access to Care Not Just Issue for UninsuredIndicates Access to Care Not Just Issue for Uninsured

Insured All Year, Not Underinsured65%

Underinsured9%

Uninsured All Year13%

Uninsured Part Year13%

Source: C. Schoen et al., "Insured But Not Protected: How Many Adults Are Underinsured?" Health Affairs, June 2005, based on The Commonwealth Fund 2003 Biennial Health Insurance Survey.

Uninsured is defined as uninsured for some time during the past year.

Slide from: “A Need to Transform the U.S. Health Care System: Improving Access, Quality, and Efficiency, A Chartbook,” Compiled by Anne Gauthier and Michelle Serber, The Commonwealth Fund.

15–17.9%

Less than 12%12–14.9%

18% or more

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

Chart IChart I--6. Percent of Nonelderly Uninsured6. Percent of Nonelderly UninsuredPopulation Varies Widely by State, 2001Population Varies Widely by State, 2001––20032003

Source: Health Insurance Coverage in America: 2003 Data Update Highlights,Kaiser Commission on Medicaid and Uninsured/Urban Institute, September 27, 2004.Uninsured rates are two year averages, 2001-2003.

Slide from: “A Need to Transform the U.S. Health Care System: Improving Access, Quality, and Efficiency, A Chartbook,” Compiled by Anne Gauthier and Michelle Serber, The Commonwealth Fund.

Chart IChart I--14. Percent of Population Uninsured All Year or Part14. Percent of Population Uninsured All Year or Part--Year Year Varies by Race and Ethnicity, 2000Varies by Race and Ethnicity, 2000

9 7 917 15 11

213414

1320

16

14

111413

0

25

50

75

Total White AfricanAmerican

Hispanic Total White AfricanAmerican

Hispanic

Uninsured Part YearUninsured All Year

23 20 23

37

2822

35

50

Adults ages 19–64

Percent of population uninsured all year or part-year, 2000

Source: M. M. Doty. Insurance, Access, and Quality of Care Among Hispanic Populations:2003 Chartpack, The Commonwealth Fund, October 2003. Data: MEPS 2000.

Children ages 0–18

Slide from: “A Need to Transform the U.S. Health Care System: Improving Access, Quality, and Efficiency, A Chartbook,” Compiled by Anne Gauthier and Michelle Serber, The Commonwealth Fund.

12 13

2940

51

918

57

3935

18

40

61

2737

0

25

50

75

Did not fill aprescription

Did not seespecialist when

needed

Skipped medicaltest, treatment, or

follow-up

Had medicalproblem, did not

see doctor orclinic

Any of the fouraccess problems

Insured all year Insured now, time uninsured in past year Uninsured now

Chart IChart I--9. Gaps in Insurance Coverage9. Gaps in Insurance CoverageHinder Access to CareHinder Access to Care

Source: S. R. Collins, M. M. Doty, K. Davis et al., The Affordability Crisis inU.S. Health Care: Findings From The Commonwealth Fund Biennial HealthInsurance Survey, The Commonwealth Fund, March 2004.

Percent of adults ages 19–64 reporting the following problems because of cost:

Slide from: “A Need to Transform the U.S. Health Care System: Improving Access, Quality, and Efficiency, A Chartbook,” Compiled by Anne Gauthier and Michelle Serber, The Commonwealth Fund.

Chart IChart I--10. Being Uninsured Is a10. Being Uninsured Is aLeading Cause of DeathLeading Cause of Death

Deaths of Adults Ages 25–64, 1999

1. Cancer – 156,4852. Heart disease – 115,8273. Injuries – 46,0454. Suicide – 19,5495. Cerebrovascular disease – 18,3696. Uninsured – 18,0007. Diabetes – 16,1568. Respiratory disease – 15,8099. Chronic liver disease and cirrhosis – 15,71410. HIV/AIDS – 14,017

Sources: U.S. Department of Health and Human Services, National Center for Health Statistics, Health, United States, 2002, Table 33, p. 132 – deaths for causes other than uninsured; Institute of Medicine, Care Without Coverage, Appendix D, p. 162, deaths attributable to higher risks of uninsured adults 25–54.

Slide from: “A Need to Transform the U.S. Health Care System: Improving Access, Quality, and Efficiency, A Chartbook,” Compiled by Anne Gauthier and Michelle Serber, The Commonwealth Fund.

International Comparison of Health Care Expenditures, International Comparison of Health Care Expenditures, Percent GDP, 1960Percent GDP, 1960--2006, OECD2006, OECD

Sources: See Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,” book manuscript, Chapter 3, Figure 2, Part (a), derived from OECD.StatExtracts, Organisation for Economic Cooperation and Development, http://stats.oecd.org/wbos/; and for the U.S. in 2006: Cathy Catlin, et al., “National Spending in 2006: A Year of Change for Prescription Drugs,” Health Affairs 27 (January/February 2008)14.

U.S.U.S.--Canada Comparison, Percent GDP, 1960 to 2006, Canada Comparison, Percent GDP, 1960 to 2006, OECDOECD

Sources: See Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,” book manuscript, Chapter 3, Figure 3, Part (a), derived from OECD.StatExtracts, Organisation for Economic Cooperation and Development, http://stats.oecd.org/wbos/.

TwelveTwelve--Month Percent Change in Prices, PercentMonth Percent Change in Prices, Percent--Point Difference Point Difference Between All Items and Medical Care Services, 1936Between All Items and Medical Care Services, 1936--20072007

Sources: See Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,” book manuscript, Chapter 3, Figure 4, Part (b), calculated from the Bureau of Labor Statistics, U.S. Department of Labor, using the data retrieval for the Consumer Price Index for “All Urban Consumers” found at http://data.bls.gov/cgi-bin/surveymost?cu (accessed November 21, 2007), data sets “U.S. All items, 1982-84=100 - CUUR0000SA0”and “U.S. Medical Care Services, 1982-84=100 - CUUR0000SAM2” for 1935 to 2007.

Total State Medicaid Spending as a Percentage of Total Total State Medicaid Spending as a Percentage of Total State Spending, Fiscal 1992 to 2007State Spending, Fiscal 1992 to 2007

Source: See Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,”book manuscript, Chapter 3, Figure 10 (data from National Association of State Budget Officers).

PrivatePrivate-- and Publicand Public--Sector Employer Outlays as Percent of GDP and total Sector Employer Outlays as Percent of GDP and total Compensation, 1948Compensation, 1948--1997; and Private1997; and Private--Sector Employer Health Spending as Sector Employer Health Spending as

Percent of Wages & Salaries and Corporate AfterPercent of Wages & Salaries and Corporate After--Tax Profits, 1965Tax Profits, 1965--19891989

020406080100120

0

2

4

6

8

101

94

81

95

01

95

21

95

41

95

61

95

81

96

01

96

21

96

41

96

61

96

81

97

01

97

21

97

41

97

61

97

81

98

01

98

21

98

41

98

61

98

81

99

01

99

21

99

41

99

6

Perc

ent o

f Corp

ora

te A

fter-

Tax

Pro

fits

Perc

ent (

GD

P, T

ota

l Com

p, W

ages

& S

alar

ies)

% GDP % of Total Compensation

% of Wages & Salaries % of Corporate After-Tax Profits

Source: See Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,” book manuscript, Chapter 3, Figure 11, Part (b), from Ken McDonnell and Paul Fronstin, EBRI Health Benefits Databook, 1st Ed. (Washington, D.C.: Employee Benefit Research Institute, 1999), Table 3.1, p. 41; and Katharine R. Levit, et al., “Data Watch: National Health Care Spending, 1989” Health Affairs 10 (Spring 1991): Exhibit 8, p. 129

Percentage Changes in EmployerPercentage Changes in Employer--Sponsored Health Insurance Premiums Sponsored Health Insurance Premiums and Outand Out--ofof--Pocket Spending Compared to Inflation and WorkersPocket Spending Compared to Inflation and Workers’’

Earnings, 1988 to 2006Earnings, 1988 to 2006

-4-202468

101214161820

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Perc

ent

Health Insurance Premiums Out-of-Pocket Spending

Overall Inflation Workers' EarningsSources: See Mark A. Peterson, “Getting to Health Reform: Institutions, Politics, and Lessons from the Past,” book manuscript, Chapter 3, Figure 13, from For health insurance premiums, overall inflation, and workers’ earnings: “Employer Health Benefits: 2006 Summary of Findings,” Kaiser Family Foundation and Health Research and Education Trust, Washington, D.C., Exhibit A, p. 1 (data points are for 1988, 1989, 1990, 1993, 1996, and annual 1999 to 2006); for out-of-pocket spending: Cathy Cowan, Aaron Catlin, Cynthia Smith, and Arthur Sensening, “DataView: National Health Expenditures, 2002,” Health Care Financing Review 25 (Summer 2004): Figure 13, p. 156 (data points are for 1988 to 2002).

Infant Mortality Rate, 2002Infant Mortality Rate, 2002

* 2001.Data: International estimates—OECD Health Data 2005;State estimates—National Vital Statistics System, Linked Birth and Infant Death Data (AHRQ 2005a).

2.23.0 3.0 3.3 3.5

4.1 4.1 4.1 4.2 4.2 4.4 4.4 4.5 4.55.0 5.0 5.0 5.0 5.1 5.2 5.4 5.6

7.0

0

5

10

Icel

and

Japa

n

Finl

and

Swed

en

Nor

way

Spai

n

Fran

ce

Aus

tria

Cze

ch R

epub

lic

Ger

man

y

Bel

gium

Den

mar

k

Italy

Switz

erla

nd

Net

herla

nds

Aus

tral

ia

Portug

al

Irela

nd

Gre

ece

Uni

ted

Kin

gdom

Can

ada

New

Zea

land

*

Uni

ted

Stat

es

Infant deaths per 1,000 live births

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

19Slide from “Health System Performance in Selected Nations: A Chartpack,” compiled by Katherine K. Shea, Alyssa L. Holmgren, Robin Osborn, and Cathy Schoen, The Commonwealth Fund, May 2007.

Healthy Life Expectancy at Age 60, 2002Healthy Life Expectancy at Age 60, 2002

22 20 20 20 20 20 19 19 19 19 19 19 19 19 18 18 18 18 18 18 18 17 1718 17 17 16 17 17 16 16 16 16 16 1618

16 16 16 16 16 15 15 15 1514

0

10

20

30

Japa

n

Switz

erla

nd

Fran

ce

Spai

n

Swed

en

Aus

tralia

Italy

Aus

tria

Can

ada

Bel

gium

Ger

man

y

Nor

way

Icel

and

Finl

and

Net

herla

nds

New

Zea

land

Gre

ece

Uni

ted

Kin

gdom

Uni

ted

Stat

es

Portu

gal

Irela

nd

Den

mar

k

Cze

ch R

epub

lic

Women Men

Years

Data: The World Health Report 2003 (WHO 2003, Annex Table 4).

Developed by the World Health Organization, healthy life expectancy is based on life expectancy adjusted for time spent in poor health due to disease and/or injury

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006Slide from “Health System Performance in Selected Nations: A Chartpack,” compiled by Katherine K. Shea, Alyssa L. Holmgren, Robin Osborn, and Cathy Schoen, The Commonwealth Fund, May 2007.

Rankings Based on AgeRankings Based on Age--Standardized Death Rates (Standardized Death Rates (SDRsSDRs) Per ) Per 100,000 from 100,000 from Amenable Mortality Amenable Mortality (Both Sexes Combined) in (Both Sexes Combined) in

Nineteen OECD Countries, 1997Nineteen OECD Countries, 1997--98 and 200298 and 2002--0303

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150

United StatesPortugal

IrelandUnited kingdom

DenmarkNew Zealand

FinlandGermany

AustriaGreece

SwedenNetherlands

NorwayCanada

ItalySpain

AustraliaJapan

France

Age-StandardizedDeath Rates per 100,000

1997-982002-03

Source: Ellen Nolte and C. Martin McKee, “Measuring the Health of Nations: Updating an Earlier Analysis,” Health Affairs 27 (January/February 2008), Exhibit 5, p. 65.

Chart IIChart II--1. U.S. Adults Receive Half of Recommended Care, 1. U.S. Adults Receive Half of Recommended Care, and Quality Varies Significantly by Medical Conditionand Quality Varies Significantly by Medical Condition

Source: Elizabeth McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States," The New England Journal of Medicine (June 26, 2003): 2635–2645.

55

7665

5445

39

23

0

20

40

60

80

Overall Breast Cancer Hypertension Asthma Diabetes Pneumonia Hip Fracture

Percent of recommended care received

Dartmouth Atlas of Health Care, 1999Dartmouth Atlas of Health Care, 1999

“The Quality of Medical Care in the United States: A Report on the Medicare Program,” The Dartmouth Atlas of Health Care 1999, The Center for the Evaluative Clinical Sciences, Dartmouth Medical School, p. 19.

The World Health Organization’s

Ranking of 191 Health Systems

(The World Health Report 2000—Health Systems: Improving

Performance)

1 France2 Italy3 San Marino4 Andorra5 Malta6 Singapore7 Spain8 Oman9 Austria10 Japan11 Norway12 Portugal13 Monaco14 Greece15 Iceland16 Luxembourg17 Netherlands18 United Kingdom19 Ireland20 Switzerland21 Belgium22 Colombia23 Sweden24 Cyprus25 Germany26 Saudi Arabia27 United Arab Emirates28 Israel29 Morocco30 Canada31 Finland32 Australia33 Chile34 Denmark35 Dominica36 Costa Rica37 United States

Overall level of health

Distribution of health in the population

Overall level of responsiveness

Distribution of responsiveness

Equity of financial contribution

Commonwealth Fund Study: Overall RankingCommonwealth Fund Study: Overall Ranking

AUSTRALIA CANADA GERMANYNEW

ZEALANDUNITED

KINGDOMUNITEDSTATES

OVERALL RANKING (2007) 3.5 5 2 3.5 1 6

Quality Care 4 6 2.5 2.5 1 5

Right Care 5 6 3 4 2 1

Safe Care 4 5 1 3 2 6

Coordinated Care 3 6 4 2 1 5

Patient-Centered Care 3 6 2 1 4 5

Access 3 5 1 2 4 6

Efficiency 4 5 3 2 1 6

Equity 2 5 4 3 1 6

Long, Healthy, and Productive Lives 1 3 2 4.5 4.5 6

Health Expenditures per Capita, 2004 $2,876* $3,165 $3,005* $2,083 $2,546 $6,102

1.0-2.662.67-4.334.34-6.0

Country Rankings

* 2003 dataSource: Calculated by Commonwealth Fund based on the Commonwealth Fund 2004 International Health Policy Survey, the Commonwealth Fund 2005 International Health Policy Survey of Sicker Adults, the 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians, and the Commonwealth Fund Commission on a High Performance Health System National Scorecard.Slide from “Health System Performance in Selected Nations: A Chartpack,” compiled by Katherine K. Shea, Alyssa L. Holmgren, Robin Osborn, and Cathy Schoen, The Commonwealth Fund, May 2007.

58 56 49 4530 23

2313

1716

1713

0

50

100

NZ GER AUS UK US CAN

Next daySame day

Percent of adults

310 13 15

23

36

NZ AUS GER UK US CAN

Waiting Time to See Doctor When Sick or Need Medical Attention, Waiting Time to See Doctor When Sick or Need Medical Attention, Sicker Adults in Six Countries, 2005Sicker Adults in Six Countries, 2005

Data: 2005 Commonwealth Fund International Health Policy Survey of Sicker Adults (Schoen et al. 2005a).

Last time you were sick or needed medical attention,how quickly could you get an appointment to see a doctor?

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

26

Percent of adults reporting 6 days or more

Slide from “Health System Performance in Selected Nations: A Chartpack,” compiled by Katherine K. Shea, Alyssa L. Holmgren, Robin Osborn, and Cathy Schoen, The Commonwealth Fund, May 2007.

73

14

25

5 312

2424

13

0

25

50

75

Australia NewZealand

UnitedKingdom

UnitedStates

Canada

Below average income Above average income

Access to Doctor When Sick orAccess to Doctor When Sick orNeed Medical Attention, by Income, 2004Need Medical Attention, by Income, 2004

Percent waited six days or more for appointment when sick

•Significant difference between below and above average income groups within country at p<.05.Data: 2004 Commonwealth Fund International Health Policy Survey of Adults’ Experiences with Primary Care (Schoen et al. 2004; Huynh et al. 2006). Slide from “Health System Performance in Selected Nations: A Chartpack,” compiled by Katherine K. Shea, Alyssa L. Holmgren, Robin Osborn, and Cathy Schoen, The Commonwealth Fund, May 2007.

*

Difficulty Getting Care on Nights, Weekends, Holidays Difficulty Getting Care on Nights, Weekends, Holidays Without Going to ER, 2004Without Going to ER, 2004

Percent saying “very” or “somewhat difficult”

5360

3242

56 59

3244

7060

0

25

50

75

100

Australia Canada NewZealand

UnitedKingdom

UnitedStates

Below average income Above average income

•Significant difference between below and above average income groups within country at p<.05.Data: 2004 Commonwealth Fund International Health Policy Survey of Adults’ Experiences with Primary Care (Schoen et al. 2004; Huynh et al. 2006). Slide from “Health System Performance in Selected Nations: A Chartpack,” compiled by Katherine K. Shea, Alyssa L. Holmgren, Robin Osborn, and Cathy Schoen, The Commonwealth Fund, May 2007.

*

Current Misallocation of Resources to Achieve Optimal Current Misallocation of Resources to Achieve Optimal HealthHealth

Factors Influencing Health National Health Expenditures

Health Behaviors

Genetics

Access to Care

Environment

Access to Care

Health BehaviorsOther

10%

20%

20%

50%

$1.2 Trillion

88%

8%

4%

Sources: Prepared by the Blue Sky Initiative, UCLA, based on information from the Centers for Disease Control and Prevention, University of California at San Francisco, Institute of the Future, 2000.

Source: David Leonhardt, “Health Care as If Costs Didn’t Matter,” New York Times, June 6, 2006, Business Section.

Two Models for Universal PublicTwo Models for Universal Public--Private Private PartnershipsPartnerships

Medicarewith

Medicare Advantage

“Medicare for All”with option to choose

Competing Private Plans

Private Planswith supplemental

Public Programs

Individual Mandatewith

Competing Plans(possibly including

Public Plan Option)

From Public Program Build Out to Include Private Plan Options

With Individual Mandate for Private Plans Build Out to Include Public Plan Option

Massachusetts and CaliforniaMassachusetts and California

Massachusetts California

Population 6.5 million 37 million

Percent Non-White 20% 57%

Percent Immigrant 15% 28%

Undocumented (#/%) 100,000+ / 2% 2.4 million / 6.3%

Budget Situation(at time of consideration) Structural Balance $14 billion deficit

Advantage / Disadvantage Existing $610 million“free care pool”

2/3 vote required in Legislature to raise

taxes

Health Insurance Coverage (non-elderly)

Uninsured 11% 21%

Employer-Sponsored 68% 54%

Demographics of Likely Voters and Not Demographics of Likely Voters and Not RegisteredRegistered

72%

14%

5%6% 3%

White Latino Black Asian Other

Mark Baldassare, California’s Exclusive Electorate. At Issue, Public Policy Institute of California, September 2006, p. 7.

Likely Voters

24%

63%

3%8% 2%

White Latino Black Asian Other

Not Registered to Vote(58% are Eligible to Register)