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					    THE
COMMONWEALTH
    FUND




         The Building Blocks of
        Health Reform: Achieving
         Universal Coverage and
         Health System Savings
                     Cathy Schoen
   Senior Vice President, The Commonwealth Fund
              Alliance for Health Reform
                     June 6, 2008
                  Key Findings                                      2


• Under Building Blocks approach, 44 million people would
  gain coverage out of an estimated 48 million uninsured in
  2008
• National Insurance Connector would offer new health
  insurance choices to individuals and small businesses for 30
  percent less than what employers currently pay
• New choices improve coverage or reduce premiums for 49
  million currently insured people
• Building Blocks would cause minimal disruption for people
  satisfied with their current coverage; any decisions to switch
  to the new coverage would be voluntary
• The plan would result in only a marginal increase in total
  national health spending.
• Coupling insurance with broad reforms - payment reforms,
  HIT, evidence-based medicine and public health -- could
  result in health system savings of $1.6 trillion over 10 years.
     Key Elements of the Building Blocks
                                                                 3


• New national insurance “connector”
   – Offer individual and small businesses a choice of private
     plans or a Medicare-Extra plan
   – Medicare-Extra would be nation-wide, self-insured with
     low administrative costs
• Insurance market reform: premiums would not vary by
  health status
• Tax credits to make sure premiums are affordable
• Expansion of Medicaid/SCHIP to 150% of poverty for all
  adults and children
• Require everyone to have insurance – automatic enrollment
• Employer provide or contribute in insurance fund
• Medicare: buy-in age 60 or older,, eliminate 2-year wait for
  disabled, Medicare-Extra benefit option
          Building Blocks for Automatic and Affordable                                                                           4

                    Health Insurance For All
             New Coverage for 44 Million Uninsured in 2008

                        11m                      22m                         10m                      1m



                                             National                      Medicaid/
            Employer                                                                                     Medicare
                                            Insurance                        SCHIP
         Group Coverage                                                                                TOTAL = 43 m
                                            Connector                       TOTAL =
            TOTAL =
                                             TOTAL =                          42 m
             142 m
                                               60 m



                                                                                 2m                     2m
                           7m                     38 m


    Improved or More Affordable Coverage for 49 Million Insured
Source: Based on analysis in C. Schoen, K. Davis, and S.R. Collins, "Building Blocks for Reform: Achieving Universal Coverage
With Private and Public Group Health Insurance," Health Affairs 27, no. 3 (2008): 646-657 from Lewin Group modeling estimates.
    Distribution of People by Primary Source of Coverage Under                                                                   5

         Current Law and Building Blocks Framework, 2008
                Current Law (millions)                                   Building Blocks (millions)

                                                                                          Other
                                                                                           7.3         Uninsured
                      Uninsured
                                                                                          (2%)            3.7
                         48.3                    Employer                                                (1%)
                        (16%)                     157.9
     Other                                        (53%)                 Medicaid/                                    Employer
     13.5                                                                SCHIP                                        141.5
     (4%)                                                                 42.1                                        (48%)
                                                                         (14%)


    Medicaid/                                                      Medicare
     SCHIP                                                            43
      37.8                                                          (16%)
     (13%)



                                                                     New National
                                                                      Connector
              Medicare                                                   60.3
                40.3                                                    (20%)
               (14%)


                                        Total population = 297.8 million

Source: Based on analysis in C. Schoen, K. Davis, and S.R. Collins, "Building Blocks for Reform: Achieving Universal Coverage
With Private and Public Group Health Insurance," Health Affairs 27, no. 3 (2008): 646-657 from Lewin Group modeling estimates.
                    Cumulative Impact on National Health Expenditures                                                       6
                         (NHE) of Building Blocks Approach Plus
                        Selected Health System Reform Options

     Dollars in billions


                    $2,000
                                            Cumulative impact                                                      $1,554
                                            Annual net impact
                    $1,600                                                                            $1,258
   Savings to NHE




                                                                                              $997
                    $1,200
                                                                                   $770

                     $800                                                 $573
                                                                $407
                                                       $272
                     $400                   $163
                                    $84
                             $31
                       $0
                             2008   2009      2010     2011      2012      2013      2014      2015         2016    2017

Note: Selected individual options include improved information, payment reform, and public health.
Source: Schoen et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health
Spending, The Commonwealth Fund, December 2007.
    Savings Can Offset Federal Costs of Insurance For
                                                                                                                      7

       All: Federal Spending Under Two Scenarios
   Dollars in billions
                                          Federal spending under Building Blocks alone
   $250                                   Net federal with Building Blocks plus savings options*

                                                                                                 $205
   $200


   $150
                                                           $122

   $100               $82


     $50                           $31
                                                                        $13                                    $10
       $0
                            2008                                  2012                                   2017
* Selected options include improved information, payment reform, and public health.
Data: Lewin Group estimates of combination options compared with projected federal spending under current policy..
Source: Schoen et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending,
The Commonwealth Fund, December 2007.
      Total National Health Expenditures, 2008–2017                                                         8

             Projected and Various Scenarios
   Dollars in trillions




*Selected individual options include improved information, payment reform, and public health.
Source: Schoen et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health
Spending, The Commonwealth Fund, December 2007.
                                                           9
 Building Blocks for Insurance and Health
System Reform: Access, Quality and Costs
• Insurance foundation essential: connector
  with public and private options offers base
  for more integrated, efficient coverage
• Potential for positive competitive dynamic
• Coupled with system reforms could achieve
  savings and value
  – Payment reform
  – Information systems
  – Population health
• Important to start now and build consensus
  with focus on national gain.
  – Time to set up. Savings accumulate.             THE
                                                COMMONWEALTH
                                                    FUND
                                                                                10

                       References
•   C. Schoen, K. Davis. S. Collins, “Building Blocks for Reform:
    Achieving Universal Coverage with Private and Public Group Health
    Insurance,” Health Affairs, May/June 2008.

•   K. Davis, C. Schoen, S. Collins, The Building Blocks of Health Reform:
    Achieving Universal Coverage and Health System Savings, The
    Commonwealth Fund, May 2008

•   Schoen, Guterman, Shih, et al., Bending the Curve: Options for
    Achieving Savings and Improving Value in U.S. Health Spending,
    Commonwealth Fund, December 2007




       Reports Available at www.commonwealthfund.org
                                                                           THE
                                                                       COMMONWEALTH
                                                                           FUND

				
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