THE COMMONWEALTH

FUND

Health Care Reform Proposals of Health Care Reform Proposals of the 2008 Presidential Electionthe 2008 Presidential Election

Sara R. Collins, Ph.D. Sara R. Collins, Ph.D. Assistant Vice PresidentAssistant Vice President

The Commonwealth FundThe Commonwealth FundThe National Congress on the Un and Under InsuredThe National Congress on the Un and Under Insured

Washington, D.C.Washington, D.C.December 11, 2007December 11, 2007

THE

COMMONWEALTH FUND

2Why Does the Current Health Insurance System Why Does the Current Health Insurance System Fail to Promote High Performance? Fail to Promote High Performance?

• Access to care is unequal• Poor access to care is linked to poor

quality• Care delivery is inefficient• Fragmented health insurance system

makes it difficult to control costs• Financing of care for uninsured and

underinsured families is inefficient• Positive incentives in benefit design and

insurance markets are lacking

THE

COMMONWEALTH FUND

3Employers Provide Health Benefits to More than Employers Provide Health Benefits to More than 160 Million Working Americans and Family Members160 Million Working Americans and Family Members

Source: S. R. Collins, C. White, and J. L. Kriss, Whither Employer-Based Health Insurance? The Current and Future Role of U.S. Companies in the Provision and Financing of Health Insurance (New York: The Commonwealth Fund, Sept. 2007).Data: Current Population Survey, Mar. 2007.

Uninsured47.0

(16%) Employer 163.3(55%)

Numbers in millions, 2006

Medicaid27.9(9%)

Medicare39.1

(13%)

Total population = 296.7 Under-65 population = 260.7

Employer 160.8(62%)

Uninsured46.4

(18%)

Medicaid27.9

(11%)

Medicare6.4

(2%)

Military3.4

(1%)Military

3.4(1%)

Individual16.0(5%) Individual

15.8(6%)

THE

COMMONWEALTH FUND

4Employer-Provided Health Insurance, Employer-Provided Health Insurance, by Income Quintile, 2000–2006by Income Quintile, 2000–2006

88% 88% 87% 87% 87% 87% 86%86% 85% 84% 84% 83% 82% 82%77% 77% 75% 74% 74% 72% 72%

62% 60% 57% 55% 54% 54% 53%

22%29% 26% 25% 23% 23% 22%

0%10%20%30%40%50%60%70%80%90%

100%

2000 2001 2002 2003 2004 2005 2006

HighestQuintile

Fourth

Third

Second

Lowestquintile

Percent of population under age 65 with health benefits from employer

Source: E. Gould, The Erosion of Employment-Based Insurance: More Working Families Left Uninsured,EPI Briefing Paper No. 203 (Washington, D.C.: Economic Policy Institute, Nov. 2007).

THE

COMMONWEALTH FUND

5

0

50

100

150

200

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States’* Medicaid/SCHIP eligibility levels for children (% of federal poverty level)

Source: Kaiser Family Foundation, “Income Eligibility Levels for Children’s Separate SCHIP Programs, 2006” available online at http://www.statehealthfactsonline.org, accessed on February 9, 2007.

States’ Income Eligibility Levels for Medicaid/SCHIP States’ Income Eligibility Levels for Medicaid/SCHIP for Childrenfor Children

THE

COMMONWEALTH FUND

6

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50

100

150

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250

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are

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trict

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olum

bia

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neM

inne

sota

Mas

sach

uset

ts

States’* Medicaid/SCHIP eligibility levels for parents (% of federal poverty level)

Source: Kaiser Family Foundation, “Income Eligibility for Parents applying for Medicaid, 2006” available online at http://www.statehealthfactsonline.org, accessed on February 9, 2007.

States’ Income Eligibility Levels for Medicaid/SCHIP States’ Income Eligibility Levels for Medicaid/SCHIP for Parentsfor Parents

THE

COMMONWEALTH FUND

7

050

100150200250300350

Alab

ama

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assa

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etts

States’* Medicaid/SCHIP eligibility levels for non-parent adults (% of federal poverty level)

Source: State Coverage Initiatives, current as of October 2006.

States’ Income Eligibility Levels for Medicaid/SCHIP States’ Income Eligibility Levels for Medicaid/SCHIP for Non-Parent Adultsfor Non-Parent Adults

THE

COMMONWEALTH FUND

8

Adults ages 19–64 with individual coverage or who thought about or tried to buy it in past 3 years who: Total

Health Problem

No Health

Problem<200% Poverty

200%+ Poverty

Found it very difficult or impossible to find coverage they needed

34% 48% 24% 43% 29%

Found it very difficult or impossible to find affordable coverage

58 71 48 72 50

Were turned down or charged a higher price because of a pre-existing condition

21 33 12 26 18

Never bought a plan 89 92 86 93 86

Individual Market Is Not an Affordable Option Individual Market Is Not an Affordable Option for Many Peoplefor Many People

Source: S.R. Collins, J.L. Kriss, K. Davis, M.M. Doty, A.L. Holmgren, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Well-being of American Families, The Commonwealth Fund, September 2006.

47 Million Uninsured in 2006, Increase of 8.6 Million Since 2000, Adults Under-65 Accounted for Most of the Increase

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVTNH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DE

DC

HI

CO

GAMS

OK

NJ

SD

19%–22.9%

Less than 14%14%–18.9%

23% or more

1999–2000 2005–2006

MARI

CT

VTNH

MD

NH

Source: J. C. Cantor, C. Schoen, D. Belloff, S. K. H. How, and D. McCarthy, Aiming Higher: Results from a State Scorecard on Health System Performance (New York: The Commonwealth Fund, June 2007).Updated Data: Two-year averages 1999–2000, updated with 2007 CPS correction, and 2005–2006 from the Census Bureau’s March 2000, 2001 and 2006, 2007 Current Population Surveys.

U.S. Average: 20.1%U.S. Average: 17.3%

Source: J. C. Cantor, C. Schoen, D. Belloff, S. K. H. How, and D. McCarthy, Aiming Higher: Results from a State Scorecard on Health System Performance (New York: The Commonwealth Fund, June 2007).Updated Data: Two-year averages 1999–2000, updated with 2007 CPS correction, and 2005–2006 from the Census Bureau’s March 2000, 2001 and 2006, 2007 Current Population Surveys.

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVTNH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

10%–15.9%

Less than 7%7%–9.9%

16% or more

1999–2000

DE

MARI

WA

ORID

MT ND

WY

NVUT

KS

NE

MN

MO

WI

TX

IA

ILIN

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DC

HI

CO

GAMS

NJ

SD

2005–2006

CT

VTNH

MD

AR

CA

AZ NMOK

U.S. Average: 11.3%U.S. Average: 12.0%

Percent of Uninsured Children DeclinedSince Implementation of SCHIP, But Gaps Remain

THE

COMMONWEALTH FUND

12Adults Without Insurance Are Less LikelyAdults Without Insurance Are Less Likelyto Be Able to Manage Chronic Conditions to Be Able to Manage Chronic Conditions

161827

58

35

59

0

25

50

75

Skipped doses or did not fillprescription for chronic condition

because of cost

Visited ER, hospital, or both for chroniccondition

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

Percent of adults ages 19–64 with at least one chronic condition*

*Hypertension, high blood pressure, or stroke; heart attack or heart disease; diabetes; asthma, emphysema, or lung disease. Source: S. R. Collins, K. Davis, M. M. Doty, J. L. Kriss, A. L. Holmgren, Gaps in Health Insurance: An All-American Problem, Findings from the Commonwealth Fund Biennial Health Insurance Survey (New York: The Commonwealth Fund) Apr. 2006.

THE

COMMONWEALTH FUND

13Previously Uninsured Medicare Beneficiaries With History of Previously Uninsured Medicare Beneficiaries With History of Cardiovascular Disease or Diabetes Have Much Higher Self-Reported Cardiovascular Disease or Diabetes Have Much Higher Self-Reported Hospital Admissions After Entering Medicare Than Previously InsuredHospital Admissions After Entering Medicare Than Previously Insured

Source: J. M. McWilliams, et al., “Use of Health Services by Previously Uninsured Medicare Beneficiaries,” NEJM 357;2, Jul 12 2007.

Number of hospital admissions per 2-year period

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

58 60 62 64 66 68 70 72

Uninsured before age 65 Continuously insured before age 65

THE

COMMONWEALTH FUND

14Cost-Related Access Problems, by DeductibleCost-Related Access Problems, by Deductible

168 11 12

252212

17 19

312719

26 24

44

0

25

50

75

Did not fill aprescription

Did not seespecialist when

needed

Skippedrecommended

test, treatment,or follow-up

Had medicalproblem, did not

see doctor orclinic

Any of the fouraccess

problems

<$500 $500–$999 $1,000+

Percent of adults ages 19–64 insured all year with private insurance

Source: S.R. Collins, et al., Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Well-being of American Families, The Commonwealth Fund, September 2006.

THE

COMMONWEALTH FUND

15Many Americans Have Problems Many Americans Have Problems Paying Medical Bills or Are Paying Off Medical DebtPaying Medical Bills or Are Paying Off Medical Debt

3421

141323 26

1898

16

53

292626

42

0

25

50

75

Not able to paymedical bills

Contacted bycollectionagency*

Had to changeway of life to pay

medical bills

Medicalbills/debt being

paid off overtime

Any medical billproblem or

outstanding debt

Total Insured all year Uninsured during the year

Percent of adults ages 19–64 who had the following problems in past year:

*Includes only those who had a bill sent to a collection agency when they were unable to pay it.Source: S. R. Collins, K. Davis, M. M. Doty, J. L. Kriss, and A. L. Holmgren, Gaps in Health Insurance: An All-American Problem, The Commonwealth Fund, April 2006.

THE

COMMONWEALTH FUND

16

Percent of adults reporting: Total Insured all year

Insured now, time uninsured

during yearUninsured

now

Unable to pay for basic necessities (food, heat or rent) because of medical bills

26% 19% 28% 40%

Used up all of savings 39 33 42 49Took out a mortgage against your home or took out a loan

11 10 12 11

Took on credit card debt 26 27 31 23

One-Quarter of Adults With Medical Bill Burdens One-Quarter of Adults With Medical Bill Burdens and Debt Were Unable to Pay for Basic Necessitiesand Debt Were Unable to Pay for Basic Necessities

Source: S. R. Collins, K. Davis, M. M. Doty, J. L. Kriss, and A. L. Holmgren, Gaps in Health Insurance: An All-American Problem, The Commonwealth Fund, April 2006.

Percent of adults ages 19–64 with medical bill problems or accrued medical debt:

Americans Spend More Out-of-Pocket on Health Care Expenses

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900

a2003b2003 Total Health Care Spending, 2002 OOP Spending

ba

United States

OECD Median

New Zealand

Netherlands

Japan

GermanyFrance Canada Australia

a

Source: The Commonwealth Fund, calculated from OECD Health Data 2006.

Total health care spending per capita

Out-of-pocket spending per capita

18

THE COMMONWEALTH

FUND

16 Million Adults Under Age 65 16 Million Adults Under Age 65 Were Underinsured in 2005Were Underinsured in 2005

Uninsuredduring the year

47.8(28%)

Insured, notunderinsured

108.6(63%)

Underinsured16.1(9%)

Adults 19–64

Note: Underinsured defined as having any of three conditions: 1) annual out-of-pocket medical expenses are 10% or more of income; 2) among low-income adults, out-of-pocket medical expenses are 5% or more of income; 3) health plan deductibles are 5% or more of income.Source: Michelle M. Doty, Analysis of the Commonwealth Fund Biennial Health Insurance Survey (2005).

19

THE COMMONWEALTH

FUND

Roadmap to Health Insurance for All: Principles for Reform

• Builds an essential foundation for quality and efficiency as well as access

• Benefits cover essential services with financial protection• Premiums/deductibles/out of pocket costs affordable• Coverage is automatic, stable, seamless• Choice of health plans or care systems• Broad health risk pools; competition based on

performance, not risk or cost shift• Simple to administer: lowers overhead costs

providers/payers• Minimizes dislocation• Financing adequate/fair/shared across stakeholders

20

THE COMMONWEALTH

FUND

Health Reform and the Presidential Candidates• Leading Democrats:

– Mixed private-public group insurance– Shared financial responsibility (government, employers, households),

employer & individual mandate– Medicaid/SCHIP expansion– New group insurance “connectors” with private & public plan options

like Medicare– Insurance market regulations against risk selection– HIT, prevention, chronic care management, comparative

effectiveness, pay for performance, transparency– Finance with repeal/expiration of high-income tax breaks and system

reforms

• Leading Republicans:– Tax incentives for purchase of individual insurance– Make employer health insurance contributions taxable income to

employee– Buy insurance from any state– Greater state flexibility to reallocate Medicaid/SCHIP dollars– Tort reform, transparency, IT, pay for performance, prevention

21Features of Candidates’ Approaches to Health Care ReformFeatures of Candidates’ Approaches to Health Care ReformSenator Clinton

Senator Edwards

Senator Obama

Mayor Giuliani

Senator McCain

Governor Romney

Individual Mandate X X

Children up to age 25 only No No No

Employer Shared Responsibility

TK% of payroll, small

businesses exempt 6% of payroll TK% of payroll No No No

Subsidies for Low-income Uninsured

Tax credit for premium >TK%

of income

Refundable tax credit on sliding

scale

Sliding scale premium subsidies

Health insurance

credit for low-income

Tax credit $2,500 for

individuals, $5,000 for families

Premium subsidies

Medicaid/ SCHIP expansion X

Parents/ children up to 250% FPL; childless adults up to 100% FPL X No No No

Risk pooling

Private Health Choices Menu

through FEHBP & public

insurance plan option modeled after Medicare

Regional health markets with

private & public plan options

National Health Insurance

Exchange with private & public

plan options

Purchase private

insurance in any state

Purchase private

insurance in any state

Incentives to states to

deregulate private

insurance markets

Quality and Efficiency Measures

HIT, Transparency,

P4P, Prevention, Comparative effectiveness,

Chronic disease management, Disparities, Malpractice

reform

HIT, Transparency,

P4P, Prevention, Comparative effectiveness,

Chronic disease management, Disparities, Malpractice

reform

HIT, Transparency,

P4P, Prevention, Comparative effectiveness,

Chronic disease management, Disparities, Malpractice

reform

HIT, Transparency,

Prevention, Malpractice

reform

HIT, Transparency,

P4P, Prevention, Chronic disease

management, Malpractice

reform

HIT, Transparency,

Malpractice reform

22Candidates’ Agreement on Health Care Reform FeaturesCandidates’ Agreement on Health Care Reform FeaturesSenator Clinton

Senator Edwards

Senator Obama

Mayor Giuliani

Senator McCain

Governor Romney

Candidates From Both Parties Agree

Expanding coverage X X X X X X

Health IT X X X X X X

Transparency X X X X X X

Malpractice reform X X X X X X

Some Candidates Agree

Pay for performance X X X No X No

Prevention X X X X X No

Candidates DifferUniversal coverage X X X No No No

Individual mandate X X All children No No No

Employer pay or play X X X No No No

Changes to employer benefit tax exemption X No No X No Unclear

Regulation of insurance markets X X X No No No

THE

COMMONWEALTH FUND

23Design Matters: How Well Do Different StrategiesDesign Matters: How Well Do Different StrategiesMeet Principles for Health Insurance Reform?Meet Principles for Health Insurance Reform?

Principles for Reform

Tax Incentives and Individual Insurance

Markets

Mixed Private-Public Group Insurance with Shared Responsibility

for Financing Public Insurance

Covers Everyone 0 + +Minimum Standard Benefit Floor – + +Premium/Deductible/Out-of-Pocket CostsAffordable Relative to Income

– + +

Easy, Seamless Enrollment 0 + ++Choice + + +Pool Health Care Risks Broadly – + ++Minimize Dislocation, Ability to Keep Current Coverage + ++ –Administratively Simple – + ++Work to Improve Health Care Quality and Efficiency 0 + +

0 = Minimal or no change from current system; – = Worse than current system; + = Better than current system; ++ = Much better than current systemSource: S.R. Collins, et al., A Roadmap to Health Insurance for All: Principles for Reform, Commission on a High Performance Health System, The Commonwealth Fund, October 2007.

THE

COMMONWEALTH FUND

24Why Not the Best?Why Not the Best?

• Current directions absent policy change:– Costs expected to go to 20% of GDP and

uninsured to move up the economic ladder

• Aiming higher: Why not the best?– U.S. has the resources and technology– Facing facts can help build consensus

25

THE COMMONWEALTH

FUND

Related Commonwealth Fund Reports• A High Performance Health System for the United States: An Ambitious

Agenda for the Next President, The Commonwealth Fund Commission on a High Performance Health System, November 2007.

• S. R. Collins, C. Schoen, K. Davis, et al., A Roadmap to Health Insurance for All: Principles for Reform, The Commonwealth Fund Commission on a High Performance Health System, October 2007.

• C. Schoen, R. Osborn, M. M. Doty, et al., “Toward Higher-Performance Health Systems: Adults’ Health Care Experiences in Seven Countries, 2007,” Health Affairs Web Exclusive, October 31, 2007.

• S. R. Collins, C. White, and J. L. Kriss, Whither Employer-Based Health Insurance? The Current and Future Role of U.S. Companies in the Provision and Financing of Health Insurance, The Commonwealth Fund, September 2007.

• J. C. Cantor, D. Bellof, C. Schoen, et al., Aiming Higher: Results from a State Scorecard on Health System Performance, The Commonwealth Fund Commission on a High Performance Health System, June 2007.

Visit the Fund at: www.commonwealthfund.org

26

THE COMMONWEALTH

FUND

Acknowledgements

Jennifer L. Kriss,Program AssociateThe Commonwealth Fund

Karen Davis,PresidentThe Commonwealth Fund

Cathy Schoen,Senior Vice President for Research and EvaluationThe Commonwealth Fund