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The Uninsured and the The Uninsured and the Health Care Safety NetHealth Care Safety Net
Grace-Marie Turner, Ph.D. Grace-Marie Turner, Ph.D. PresidentPresidentGalen Institute, Inc.Galen Institute, Inc.Alexandria, VA Alexandria, VA
Turner # Turner # 22
The U.S. health care system The U.S. health care system is in troubleis in trouble
Rising insurance costs threaten coverage Rising insurance costs threaten coverage for many for many
Millions are uninsuredMillions are uninsured
A plethora of rules, regulations, fines, A plethora of rules, regulations, fines, penalties govern the system penalties govern the system
Turner # Turner # 33
2004 U.S. health expenditures 2004 U.S. health expenditures (estimated)(estimated)
Total Total $1.8 trillion$1.8 trillion 15% of GDP15% of GDP
Private:Private: $984 billion$984 billion 55% of total55% of total
Public:Public: $810 billion$810 billion 45% of total45% of total
see see http://www.cms.hhs.gov/statistics/nhe/projections-2003/t3.asp
Turner # Turner # 44
Cost concerns drive debateCost concerns drive debate
2.7%
7.5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
General Inflation Index Employer HealthInsurance Cost
“2004 Mercer U.S. National Employer-Sponsored Health Plans Survey,” Mercer Human Resources, November 22, 2004. http://www.mercerhr.com/knowledgecenter/reportsummary.jhtml?idContent=1051300
U.S. Department of Labor, Bureau of Labor Statistics. Consumer Price Index. January 19, 2005. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
Turner # Turner # 55
Does the U.S. spend too much or Does the U.S. spend too much or too little on health care? too little on health care?
0
10
20
30
40
50
60
70
80
Too LittleAbout RightToo Much
Robert Blendon and John Benson. “Americans’ Views on Health Policy” Health Affairs. March/April 2001.
Turner # Turner # 66
Consumers pay 15% of costsConsumers pay 15% of costs
0
10
20
30
40
50
60
1960 1980 2000
Out-of-PocketPublic PayersPrivate Insurance
Office of the Actuary, Centers for Medicare and Medicaid Services
Turner # Turner # 77
Kaiser benefits studyKaiser benefits study
Premiums now average $3,383 for single Premiums now average $3,383 for single coverage and $9,068 for familiescoverage and $9,068 for families
Worker contributions were stable for Worker contributions were stable for singles (at $508) and rising 13% for singles (at $508) and rising 13% for families (to $2,412)families (to $2,412)
Kaiser 2003 Employer Health Benefit Survey
Turner # Turner # 88
Cost drivers for health insuranceCost drivers for health insurance
18%18% General health care inflationGeneral health care inflation
22%22% New medical advances, drugsNew medical advances, drugs
18%18% Rising provider expensesRising provider expenses
15%15% Government mandates and regulation Government mandates and regulation
15%15% Increased consumer demandIncreased consumer demand
7%7% Litigation and defensive medicineLitigation and defensive medicine
5%5% Fraud and abuse, etc.Fraud and abuse, etc.
PriceWaterhouseCoopers 2002
Turner # Turner # 99
Research questionResearch question
Can State health insurance regulations Can State health insurance regulations
reduce costs and increase access reduce costs and increase access
to health insurance? to health insurance?
Turner # Turner # 1010
Insurance regulationsInsurance regulations
Guaranteed issue Guaranteed issue
Guaranteed renewalGuaranteed renewal
Community ratingCommunity rating
Mandated benefits Mandated benefits
Pre-existing condition exclusionsPre-existing condition exclusions
Turner # Turner # 1111
The GAO identified 16 States that passed The GAO identified 16 States that passed these insurance regulations in the early- and these insurance regulations in the early- and mid-1990s.mid-1990s.
What happened?What happened?
Turner # Turner # 1212
Annual growth rate in number of Annual growth rate in number of uninsureduninsured
4.6%3.9%
4.1%
1990 1996
8.1%
1.0%
2.7%
16 34 50 16 34 50
“Uninsured Rates Rise Dramatically in States with Strictest Health Insurance Regulations,” Arnett GM, Schriver ML. The Heritage Foundation 1998. http://www.galen.org/statehealth.asp?docID=179
# of States
% g
row
th r
ate
in
nu
mb
er o
f u
nin
sure
d
Turner # Turner # 1313
Expanding access to the Expanding access to the uninsureduninsured
Why is it so hard for the States to Why is it so hard for the States to solve this problem?solve this problem?
Turner # Turner # 1414
The tax treatment of health The tax treatment of health insuranceinsurance
A huge Federal subsidy that discriminates A huge Federal subsidy that discriminates against lower-income, working Americans against lower-income, working Americans who are most likely to be uninsuredwho are most likely to be uninsured
Turner # Turner # 1515
Low income families hard to reach with job-based coverage
Less than$25,000
Over$75,000
23%
82%
Persons with job-based health insurance, by income
U.S. Census Bureau, Current Population Survey, 2004 Annual Social and Economic Supplement. Table HI01. Health Insurance Coverage Status and Type of Coverage by Selected Characteristics: 2003 (All Races)
Turner # Turner # 1616
Population under age 65 with health coverage
$0 $75,000Income
42 MillionUninsured
Conceptual depiction based upon the logo of the Galen Institute.
The Galen GapThe Galen Gap
Turner # Turner # 1717
Getting to the root of the Getting to the root of the problemproblem
Price controls Price controls in World War IIin World War II
Turner # Turner # 1818
1943:1943:Health insurance to boost payHealth insurance to boost pay
Workers are scarceWorkers are scarceWage and price Wage and price controls cap paycontrols cap payHealth insurance Health insurance offered insteadoffered insteadHealth insurance Health insurance becomes job-basedbecomes job-based
Turner # Turner # 1919
Sixty years and $1 trillion Sixty years and $1 trillion later...later...
A $189 billion annual tax subsidy that A $189 billion annual tax subsidy that is: is: – InefficientInefficient
– RegressiveRegressive
– DiscriminatoryDiscriminatory
Turner # Turner # 2020
ProblemsProblems
Leads people to think health insurance is a Leads people to think health insurance is a gift from employers, not part of their pay, gift from employers, not part of their pay, as it isas it isConsumers of health care drive up costs Consumers of health care drive up costs by demanding more expensive coverage by demanding more expensive coverage without seeing the pricewithout seeing the priceHigher costs drive more and more people Higher costs drive more and more people out of the market for health insurance, out of the market for health insurance, especially low-income workers/familiesespecially low-income workers/families
Turner # Turner # 2121
$0 $75,000Income
Pressure for Government Pressure for Government to fill the gapto fill the gap
Turner # Turner # 2222
A fresh idea: A fresh idea: Create new, fairer subsidies for Create new, fairer subsidies for
health insurancehealth insuranceTax credits for the uninsured to purchase Tax credits for the uninsured to purchase health insurancehealth insurance
Credits are “refundable” and Credits are “refundable” and “advanceable”“advanceable”
Provide new help for those shut out of the Provide new help for those shut out of the systemsystem
A new fairness in subsidizing insurance A new fairness in subsidizing insurance “Empowering Health Care Consumers through Tax Reform,” Grace-Marie Arnett, Ed. University of Michigan Press, Ann Arbor. September 1999. http://www.galen.org/book.asp Mark Pauly and Bradley Herring. “Expanding Coverage Via Tax Credits: Trade-Offs and Outcomes,” Health Affairs, January/February 2001.
Turner # Turner # 2323
The uninsured will need new The uninsured will need new places to purchase coverageplaces to purchase coverage
Individuals with new subsidies will need Individuals with new subsidies will need new places to buy health insurance, new places to buy health insurance, outside the workplace, to get group ratesoutside the workplace, to get group rates
Labor unions, professional organizations, Labor unions, professional organizations, churches, and other affinity groups could churches, and other affinity groups could offer insurance as a member benefitoffer insurance as a member benefit
This insurance would be portable from job This insurance would be portable from job to job and provide more continuity in to job and provide more continuity in coveragecoverage
Turner # Turner # 2424
Bipartisan agreementBipartisan agreement
Tax credits for the uninsuredTax credits for the uninsured
New purchasing pool New purchasing pool arrangementsarrangements
Enrolling those eligible for Enrolling those eligible for Medicaid and SCHIPMedicaid and SCHIP
Gaining efficiencies through Gaining efficiencies through health information health information technologiestechnologies
My assessment of general agreement based upon joint publications and position papers by political leaders, including President Bush, Senator Kerry, Senator Frist, Senator Clinton, etc.
Turner # Turner # 2525
Public sector innovationsPublic sector innovationsSecretary Leavitt will support greater use of 115 waivers Secretary Leavitt will support greater use of 115 waivers for Medicaid to expand optionsfor Medicaid to expand optionsGovernor Jeb Bush of Florida wants to bring competition Governor Jeb Bush of Florida wants to bring competition and choice into Medicaidand choice into MedicaidSouth Carolina offers Medicaid Health Savings Account South Carolina offers Medicaid Health Savings Account (HSA) option(HSA) optionNew York State’s reinsurance programNew York State’s reinsurance programMaine’s DirigoChoice for small businessesMaine’s DirigoChoice for small businesses
Turner # Turner # 2626
A new conversationA new conversation
PreventionPrevention
Disease managementDisease management
Value in medical careValue in medical care
Greater access to Greater access to informationinformation
More consumer input More consumer input into care choicesinto care choices
Turner # Turner # 2727
Care management programs have Care management programs have demonstrated successdemonstrated success
Florida’s Cash and Counseling programs Florida’s Cash and Counseling programs give the disabled more choice and controlgive the disabled more choice and control
Pitney-Bowes’ positive experience in direct Pitney-Bowes’ positive experience in direct care management care management
The Asheville Project provides care for The Asheville Project provides care for chronic conditions like diabetes, asthma, chronic conditions like diabetes, asthma, and heart diseaseand heart disease
Turner # Turner # 2828
Some options for the StatesSome options for the States
About one-third of new purchasers of About one-third of new purchasers of HSAs were previously uninsured HSAs were previously uninsured
Encouraging HSAs can help some citizens Encouraging HSAs can help some citizens to get coverageto get coverage
“Health Savings Accounts: The First Year in Review,” eHealthInsurance, February 15, 2005.
Teresa Chovan and Hannah Yoo. “Health Savings Accounts Off to a Fast Start in the Individual Market,” America’s Health Insurance Plans, January 12, 2005.
Turner # Turner # 2929
HSA overviewHSA overview
HSAs allow individuals, employers, or HSAs allow individuals, employers, or employees to deposit tax-free money into employees to deposit tax-free money into a special account to pay for current and a special account to pay for current and future medical expenses future medical expenses
Savings roll over from year to yearSavings roll over from year to year
Individuals must have a “high-Individuals must have a “high-deductible health plan” to open a HSAdeductible health plan” to open a HSA
Turner # Turner # 3030
One example of an HSAOne example of an HSA
$1,000 deposit
Employer, employee, Employer, employee, or individual makes or individual makes deposit to HSA. deposit to HSA. Unspent funds roll Unspent funds roll over to next year.over to next year.
Funds routine health spending. Preventive care exempt.
Catastrophic coverage + preventive care
High deductible insurance
$500 deductible
Turner # Turner # 3131
HSA options for the StatesHSA options for the States
Enhancing the HSA optionEnhancing the HSA option– Allow a State tax deduction for deposits to Allow a State tax deduction for deposits to
HSAsHSAs– Allow State tax deductibility for conforming Allow State tax deductibility for conforming
health insurancehealth insurance– Allow cross-State purchase of health Allow cross-State purchase of health
insuranceinsurance
A new benefit option for State employees A new benefit option for State employees to save State funds on health coststo save State funds on health costs
Turner # Turner # 3232
Other State responsesOther State responses
Avoid new State mandates and regulations that Avoid new State mandates and regulations that drive up costs and reduce choicedrive up costs and reduce choice
Extend Medicaid and SCHIP $$: Extend Medicaid and SCHIP $$: – Focus on better managing chronic care patientsFocus on better managing chronic care patients– Focus on value, not just cutting costsFocus on value, not just cutting costs– Provide incentives for patients to stretch dollarsProvide incentives for patients to stretch dollars
Develop private-public partnerships to Develop private-public partnerships to strengthen the safety netstrengthen the safety net
Expand community health centersExpand community health centers
Turner # Turner # 3333
What is the new world about?What is the new world about?
Patient controlPatient control: Consumers will have : Consumers will have more choices in health insurance more choices in health insurance arrangementsarrangements
Cost visibilityCost visibility: They will be more price : They will be more price conscious in shopping for insurance and conscious in shopping for insurance and some medical servicessome medical services
Savings incentivesSavings incentives: Consumers have : Consumers have more incentive to get the best product, more incentive to get the best product, service, and value for their moneyservice, and value for their money
Turner # Turner # 3434
The next big thing…The next big thing…
Consumer choice in Consumer choice in health care and health care and coveragecoverage
Turner # Turner # 3535
The goalThe goal
Engaging consumers as partners rather Engaging consumers as partners rather than adversaries in managing health than adversaries in managing health costs and getting the best value for costs and getting the best value for health care dollarshealth care dollars
Turner # Turner # 3636
For more informationFor more information
Contact:Contact:
Grace-Marie TurnerGrace-Marie Turner
Galen InstituteGalen Institute
www.galen.orgwww.galen.org
(703) 299-8900(703) 299-8900
[email protected]@galen.org