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HEALTH CARE SPENDING OUT OF CONTROL? IT’S THE INCENTIVES—STUPID!. SIEPR-FACS CONFERENCE STANFORD UNIVERSITY SEPTEMBER 10, 2003 ALAIN ENTHOVEN. DEFINITION OF TERMS. PPO HMO CARRIER HMO PREPAID GROUP PRACTICE POS. EMPLOYER A PAYS 90% (2003 FAMILY MONTHLY PREMIUMS). EMPLOYER B PAYS 100%. - PowerPoint PPT Presentation
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HEALTH CARE SPENDING OUT OF CONTROL?
IT’S THE INCENTIVES—STUPID!
SIEPR-FACS CONFERENCESIEPR-FACS CONFERENCE
STANFORD UNIVERSITYSTANFORD UNIVERSITY
SEPTEMBER 10, 2003SEPTEMBER 10, 2003
ALAIN ENTHOVENALAIN ENTHOVEN
DEFINITION OF TERMS
PPOPPO HMOHMO CARRIER HMOCARRIER HMO PREPAID GROUP PRACTICEPREPAID GROUP PRACTICE POSPOS
EMPLOYER A PAYS 90%(2003 FAMILY MONTHLY PREMIUMS)
H PLANH PLAN PREMIUMPREMIUM ER PAYSER PAYS EE PAYSEE PAYS
PPOPPO $1050$1050 $945$945 $105$105
PACCAREPACCARE 750750 675675 7575
BLS CABLS CA 680680 612612 6868
KAISER KAISER 610610 549549 6161
EMPLOYER B PAYS 100%
H PLANH PLAN PREMIUMPREMIUM ER PAYSER PAYS EE PAYSEE PAYS
PPOPPO $1050$1050 $1050$1050 00
PACCAREPACCARE 750750 750750 00
BLS CABLS CA 680680 680680 00
KAISERKAISER 610610 610610 00
EMPLOYER C PAYS 80%
H PLANH PLAN PREMIUMPREMIUM ER PAYSER PAYS EE PAYSEE PAYS
PPOPPO $1050$1050 $840$840 210210
PACCAREPACCARE 750750 600600 150150
BLS CABLS CA 680680 544544 136136
KAISERKAISER 610610 488488 122122
EMPLOYER D DROPPED THE HMOsH PLANH PLAN PREMIUMPREMIUM ER PAYSER PAYS EE PAYSEE PAYS
PPOPPO $1050$1050 840-1050840-1050 0-2100-210
EMPLOYER E PAYS ALL BUT $100H PLANH PLAN PREMIUMPREMIUM ER PAYSER PAYS EE PAYSEE PAYS
PPOPPO $1050$1050 $950$950 $100$100
PACCAREPACCARE 750750 650650 100100
BLS CABLS CA 680680 580580 100100
KAISERKAISER 610610 510510 100100
EMPLOYER F HIRES ONE CARRIER TO OFFER 3 PLANSH PLANH PLAN PREMIUMPREMIUM ER PAYS ER PAYS
80%80%EE PAYS EE PAYS 20%20%
PPOPPO $1050$1050 $840$840 210210
POSPOS 950950 760760 190190
HMOHMO 850850 680680 170170
STANFORD, WELLS FARGO, U.C. AND H-P FIXED AMTH PLANH PLAN PREMIUMPREMIUM ER PAYSER PAYS EE PAYSEE PAYS
PPOPPO $1050$1050 $520$520 $530$530
PACCAREPACCARE 750750 520520 230230
BLS CABLS CA 680680 520520 160160
KAISERKAISER 610610 520520 9090
HOW MANY EMPLOYEES IN EACH?D OR F (SINGLE D OR F (SINGLE CARRIER)CARRIER)
77%77%
A,B,C (HIGH FLAT %)A,B,C (HIGH FLAT %) 99
E (FIXED EE PMT)E (FIXED EE PMT) 11
STANFORD ET ALSTANFORD ET AL 5%5%
OTHER DON’T KNOWOTHER DON’T KNOW 88
FORTUNE 500FORTUNE 500 9.6% w/choice+fixed $9.6% w/choice+fixed $
STANFORD et.al. AFTER TAX
H PLANH PLAN PREMPREM ER PAYER PAY EE PAYEE PAY EE NATEE NAT
POSPOS $1050$1050 520520 530530 318318
PACPAC 750750 520520 230230 138138
BLSBLS 680680 520520 160160 9696
KAISERKAISER 610610 520520 9090 5454
WHY A SINGLE CARRIER?
HISTORYHISTORY ADMINISTRATIVE COSTADMINISTRATIVE COST ADVERSE SELECTIONADVERSE SELECTION EFFECTIVE MANAGED CARE MAY EFFECTIVE MANAGED CARE MAY
NOT EXIST IN THEIR AREANOT EXIST IN THEIR AREA
WHY CHOICE OFFERING EMPLOYERS SUBSIDIZE MORE COSTLY CARE? HISTORYHISTORY ““GIVEAWAY-TAKEAWAY” DILEMMAGIVEAWAY-TAKEAWAY” DILEMMA FEAR NEGATIVE EMPLOYEE FEAR NEGATIVE EMPLOYEE
REACTIONREACTION
CUTTING COST w/o CUTTING QUALITY OF CARE I REGIONAL CONCENTRATION OF REGIONAL CONCENTRATION OF
COMPLEX SURGERYCOMPLEX SURGERY DISEASE PREVENTION, EARLY DISEASE PREVENTION, EARLY
DETECTIONDETECTION CHRONIC DISEASE MANAGEMENTCHRONIC DISEASE MANAGEMENT PROCESS RE-ENGINEERINGPROCESS RE-ENGINEERING
CUTTING COST w/o CUTTING THE QUALITY OF CARE II TOTAL VALUE DRUG SELECTION TOTAL VALUE DRUG SELECTION
AND PURCHASINGAND PURCHASING EVIDENCE-BASED PRACTICE EVIDENCE-BASED PRACTICE
GUIDELINESGUIDELINES ELECTRONIC MEDICAL RECORDSELECTRONIC MEDICAL RECORDS CQI: MISTAKES COST MONEYCQI: MISTAKES COST MONEY
CUTTING COST w/o CUTTING THE QUALITY OF CARE III SAFETY CULTURE & ERROR SAFETY CULTURE & ERROR
REDUCTIONREDUCTION ALLIED HEALTH PROFESSIONALSALLIED HEALTH PROFESSIONALS MATCH RESOURCES TO NEEDSMATCH RESOURCES TO NEEDS STANDARDIZE EQUIPMENT, etc.STANDARDIZE EQUIPMENT, etc.
EFFECTIVE MANAGED CARE
COHESIVE GROUPS OF MDs UNDER COHESIVE GROUPS OF MDs UNDER COMMON MANAGEMENTCOMMON MANAGEMENT
SELECT PHYSICIANS FOR QUALITY, SELECT PHYSICIANS FOR QUALITY, EFFICIENCY AND TEAMWORKEFFICIENCY AND TEAMWORK
PHYSICIANS AND PATIENTS THERE PHYSICIANS AND PATIENTS THERE BY CHOICEBY CHOICE
INTEGRATE FINANCING AND INTEGRATE FINANCING AND DELIVERYDELIVERY
EFFECTIVE MANAGED CARE
INTEGRATE FULL SPECTRUM OF INTEGRATE FULL SPECTRUM OF CARECARE
EVIDENCE-BASED GUIDELINESEVIDENCE-BASED GUIDELINES SHARED COMPREHENSIVE MEDICAL SHARED COMPREHENSIVE MEDICAL
RECORDRECORD CQI/TQM: PROCESS IMPROVEMENTCQI/TQM: PROCESS IMPROVEMENT
EFFECTIVE MANAGED CARE MUST BE A MATTER OF CHOICE FOR DOCTORS AND PATIENTS
WHAT MUST BE DONE? EVERYONE IN: WIDE CHOICEWIDE CHOICE RESPONSIBLE CHOICERESPONSIBLE CHOICE INDIVIDUAL CHOICEINDIVIDUAL CHOICE INFORMED CHOICEINFORMED CHOICE MULTIPLE CHOICEMULTIPLE CHOICE
EXCHANGES ARRANGE MULTIPLE CHOICE CalPERSCalPERS CALIFORNIA CHOICECALIFORNIA CHOICE PacADVANTAGEPacADVANTAGE
PUBLIC POLICY
INCENTIVES FOR EMPLOYERS TO INCENTIVES FOR EMPLOYERS TO CREATE EXCHANGES AND OFFER CREATE EXCHANGES AND OFFER MULTIPLE CHOICEMULTIPLE CHOICE
ERISA EXEMPTION FOR EXCHANGESERISA EXEMPTION FOR EXCHANGES REQUIRE FIXED DOLLAR REQUIRE FIXED DOLLAR
CONTRIBUTIONSCONTRIBUTIONS LIMIT THE TAX BREAKLIMIT THE TAX BREAK
IMPLICATIONS FOR MEDICARE COST BURDEN WILL BECOME COST BURDEN WILL BECOME
INTOLERABLEINTOLERABLE MEDICARE IS LOCKED INTO FFS MEDICARE IS LOCKED INTO FFS
COSTSCOSTS MUST BE TRANSFORMED INTO A MUST BE TRANSFORMED INTO A
MARKET DRIVEN MODELMARKET DRIVEN MODEL
IMPLICATIONS FOR MEDICARE TRANSITION A LOT EASIER IF TRANSITION A LOT EASIER IF
PRIVATE SECTOR WERE THEREPRIVATE SECTOR WERE THERE TAX BREAK SUBSIDIZES ABILITY OF TAX BREAK SUBSIDIZES ABILITY OF
PRIVATE SECTOR TO COMPETE WITH PRIVATE SECTOR TO COMPETE WITH MEDICAREMEDICARE
WE NEED BOTH PUBLIC AND WE NEED BOTH PUBLIC AND PRIVATE SECTORS IN A MANAGED PRIVATE SECTORS IN A MANAGED COMPETITION MODELCOMPETITION MODEL