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 ,4 8 3 $4,500 $ 4 ,2 0 5 $ 3 ,9 4 5 $4,000 $ 3 ,7 0 0 $ 3 ,4 7 1 $3,500 $ 3 ,2 2 5 $ 3 ,0 6 9 $ 2 ,8 9 3 $3,000 $ 2 ,7 2 6 $ 2 ,5 7 0 $2,500 $2,000 $1,500 $1,000 $500 $0 1 2010 2 11 3 12 4 13 5 14 6 15 7 16 8 17 9 18 10 2019 Source: Projected from Health Spending Projections, Health Affairs, March 2010 U.S. Switzerland Germany US spends far more than other countries Canada Luxembourg Netherlands Norway Denmark Iceland Australia Belgium France Austria Italy Japan on health care per capita Sweden Ireland United Findland New OECD, Health Expenditures per capita, 1998 Portugal Greece Spain Czech Korea Hungary Poland Mexico Turkey $500 $0 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 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 Republicans – Signature Issue for – Plan is too big Obama – Government takeover – It will influence the midterm election and maybe the presidency Qui ckTi me™ and a decompresso r are ne eded to see th is pi cture. Government or the “free market”? Government is the Government is the answer problem Private insurance cannot Private insurance be trusted “works” for 160 million Americans Choosing a pathway for reform? Government Private – Expand Medicare for – Require everyone to everyone 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%) 24 M (9%) Uninsured Exchanges 54 M (Private Plans) (19%) 16 M (6%) 16 M (6%) Uninsured 162 M Other 159 M Other (57%) (56%) 10 M (4%) 15 M (5%) ESI ESI Nongroup Nongroup 51 M 35 M (18%) (12%) Medicaid 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 Dollars in billions 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, –$117 and Wage Effects 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 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 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 QuickTime™ an d a H.264 de compressor are need ed to see this picture . US Bureau of Labor Statistics 2010 US Debt - $13.2 Trillion! 91% of GDP Gross Debt QuickTime™ and a decompressor are need ed to see this picture. 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 Taiwan – $7,300 per capita on – $800 per capita on health care in 2007 health care in 2007 – Administrative – Administrative overhead 31% * overhead 1.6% * – Per capita income – Per capita income $46,000 $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) QuickTime™ an d a H.264 de compressor are need ed to see this p icture . Frontline, April 2008 How Tough Are Our Choices? Bankrupt Private Health Insurers? QuickTime™ and a QuickTime™ and a decompress or decompressor are needed to see this picture. are needed to see this picture. QuickTime™ and a decompressor are needed to see this picture. Bankrupt America? Quic kTime™ and a decom pres sor are needed to s ee this picture. David Walker, former US Comptroller General QuickTime™ and a H.264 de compressor are need ed to see this picture. 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 QuickTime™ an d a H.264 de compressor are need ed to see this p icture . C-SPAN, June 10, 2010 Overall 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?