Can We Afford Our Health Care? New Directions and Solutions
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1 Can We Afford Our Health Care? New Directions and Solutions NCSL Legislative Summit Jeanne M. Lambrew, PhD Associate Professor LBJ School of Public Affairs, University of Texas Senior Fellow, Center for American Progress July 24, 2008 Challenges OUTLINE Options Key Questions 2
2 25% CHALLENGES Health in State Budgets Spending as a Percent of Gross State Product 20% 15% 10% 5% 0% WV MS KY AL VT MO FL OH OK NE KS LA NY IA MI MD OR WA HI IL UT TX CO NV DE 3 Health Spending and the Economy Projected Health Spending as Percent of Gross Domestic Product, % 40% 30% 20% Other Health Spending 10% Federal Health Spending 0% Source: Congressional Budget Office, November
3 Health In The Federal Budget Federal Spending as Percent of Gross Domestic Product, Percent of Gross Domestic Product 40 Actual Projected Medicare and Medicaid 10 Social Security Other Spending (Excluding debt service) Source: Congressional Budget Office, 2008 Health Premiums Rising Cumulative Growth in Health Premiums, Wages, & Inflation % 80% 60% 40% 20% Health Premiums Wages Inflation 0% Source: Kaiser / HRET Health Benefits Survey
4 Fewer Small Firms Offering Health Benefits 80% 60% 40% 20% All Small Businesses (< 200 Workers) Smallest Businesses (1 9 Workers) 0% Source: Kaiser / HRET Health Benefits Survey Dissatisfaction with Costs Four Times As Many People Dissatisfied as Satisfied with Health Costs, % 18% Satisfied Source: Kaiser Family Foundation, March 2007; New York Times, March 2007 Dissatisfied 8
5 Growing Under-Insurance Problem Unmet Needs or Delayed Care Among Insured Americans 11.1% 17.3% Source: P.J. Cunningham, L.E. Felland, Falling Behind: Americans Access to Medical Care Deteriorates, Center for Studying Health System Change, Tracking Report No. 19,, June Uninsured Population Rising Rapidly Cumulative Growth, % 6% 3% Uninsured Population Overall Population Jobs Source: Misc. data as presented by Better Health Care Together, Better Health Care Together, Health-Cost Crossroad: Why American Businesses Urgently Need Health System Reform, May,
6 Health Coverage Gaps Nearly One-Third Have Gap in Coverage, Continuously Insured 68% Uninsured 32% Uninsured At Some Point: 82 Million Always Uninsured: 26 Million Temporarily Uninsured: 56 Million Source: Rhoades and Cohen. (August 2007). U.S. DHHS, AHRQ, Statistical Brief # Not Getting What We Pay For Recommended Services Provided Only About Half of the Time 55% 68% 65% 54% 45% OVERALL Coronary Artery Disease Hypertension Asthma Diabetes Source: McGlynn et al., The Quality of Health Care Delivery to Adults in the U.S, NEJM, , June 26,
7 Prices Cost Drivers Labor intensive and specialized Evidence of price collusion Use of Health Care Higher use when greater uncertainty Incentives toward more care, not better care Chronic disease epidemic Administrative Costs 13 Growth in Private Health Spending By Service Average Annual Growth Rate, 1998 to % 7.9% 8.7% 9.6% Doctors Hosptials Drugs Administrative Costs 14 Source: CMS National Health Expenditures
8 Elements for Improving Value in Health Seamless System with Sustainable Financing 15 OPTIONS High-Value Health Care Standards Comparative effectiveness information Best practices and performance measures Health information technology Electronic: Websites, electronic health records Human: Provider networks, quality forums Incentives for use Pay for performance System prompts and defaults: making it easy 16
9 Reducing Coverage Cost Pools and competition Providing small firms and individuals with access to group coverage and rates Fostering competition on fewer, more important dimensions Public plan option Removing risk and reducing marketing and underwriting Premium rate review and regulation 17 Promoting Prevention Setting priorities Pooling funding Extending health care workforce Making prevention easy 18
10 QUESTIONS How to Share Risk and Responsibility High deductibles v. targeted cost sharing Individual responsibility to be insured Employer responsibility to offer and/or finance coverage Government responsibility for poor and sick 19 What Comes First: Affordability or Access Can t cover all until coverage is affordable Can t achieve affordability until all are covered Ensuring adequate coverage for all Americans is, a precondition for effective measures to limit overall health care spending. 20
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