Why Did Health Care Why Did Health Care Reform Come so Hard: How Reform Come so Hard: How Much More is There to Do?Much More is There to Do?

Steven A. Schroeder, MDSteven A. Schroeder, MD

Health Services Research Seminar, UC DavisHealth Services Research Seminar, UC DavisMay 27, 2010May 27, 2010

Speaker’s Disclosure Speaker’s Disclosure StatementStatement

Neither I nor my wife have ever had a Neither I nor my wife have ever had a personal financial relationship with any personal financial relationship with any manufacturer of any of the products manufacturer of any of the products discussed in this seminardiscussed in this seminar

Support for Dr. Schroeder and the Support for Dr. Schroeder and the Smoking Cessation Leadership Center Smoking Cessation Leadership Center come from the Robert Wood Johnson come from the Robert Wood Johnson and American Legacy Foundations, as and American Legacy Foundations, as well as the Centers for Disease Control well as the Centers for Disease Control

Educational ObjectivesEducational Objectives

To describe health care reform To describe health care reform actions taken before passage of the actions taken before passage of the Patient Protection and Affordable Care Patient Protection and Affordable Care Act of 2010Act of 2010

To identify the context for the recent To identify the context for the recent health care reform debatehealth care reform debate

To understand aspects of the U.S. To understand aspects of the U.S. health care system—specifically costshealth care system—specifically costs—that still need attention—that still need attention

Quick PollQuick Poll

How many think the recent health care How many think the recent health care reform legislation was a good thing?reform legislation was a good thing?

How many think U.S. has best medical How many think U.S. has best medical system?system?

How many have parents happy with their How many have parents happy with their own medical care?own medical care?

How many of you want your parents to die How many of you want your parents to die in an ICU? In a hospital?in an ICU? In a hospital?

How many of you will consider at some How many of you will consider at some time undertaking a leadership role in time undertaking a leadership role in health reform?health reform?

Central Challenges of Health Central Challenges of Health Care ReformCare Reform

Expand coverage for health Expand coverage for health insuranceinsurance

Pay for this expansionPay for this expansion How much to try to change health How much to try to change health

care delivery at the same time?care delivery at the same time? How much else to attempt?How much else to attempt?

2009 American Recovery and 2009 American Recovery and Reinvestment Act (Stimulus Reinvestment Act (Stimulus

Package)Package) Comparative effectiveness research--$1.1 billionComparative effectiveness research--$1.1 billion Continue HI coverage for newly unemployed--Continue HI coverage for newly unemployed--

$24.7 billion$24.7 billion Health Information Technology--$19.2 billionHealth Information Technology--$19.2 billion HRSA--$2.5 billionHRSA--$2.5 billion

--$1.5 billion for construction and IT at --$1.5 billion for construction and IT at community health centerscommunity health centers

--$500 million for services--$500 million for services

--$300 million for National Health Services Corps--$300 million for National Health Services Corps

--$200 million for other health prof. training--$200 million for other health prof. training

—

2009 Stimulus Package (2)2009 Stimulus Package (2)

Medicare--$338 million for teaching hospitals, Medicare--$338 million for teaching hospitals, hospice, and long-term carehospice, and long-term care

NIH--$10 billion (80% new grants, 20% NIH--$10 billion (80% new grants, 20% intramural and construction)intramural and construction)

FDA tobacco regulationFDA tobacco regulation Prevention and wellness--$1 billionPrevention and wellness--$1 billion Medicaid and other state programsMedicaid and other state programs

--$87 billion for new grants--$87 billion for new grants

--$3.2 billion for extra state health $ relief--$3.2 billion for extra state health $ relief

Other Obama Health Other Obama Health ChangesChanges

Enlargement of CHIP--$33 billionEnlargement of CHIP--$33 billion 62 cent/pack tax increase on cigarettes62 cent/pack tax increase on cigarettes Greater FDA emphasis on food safetyGreater FDA emphasis on food safety Removed barriers on stem cell Removed barriers on stem cell

researchresearch Uncoupled foreign aid from “abstinence Uncoupled foreign aid from “abstinence

only”only” Strong subcabinet appointmentsStrong subcabinet appointments

Health Care Reform, 2009-Health Care Reform, 2009-20102010

Background of fierce partisan politicsBackground of fierce partisan politics 24 hour news coverage sensationalizes 24 hour news coverage sensationalizes

the issues (“death panels”)the issues (“death panels”) Health care reform as “third rail” of Health care reform as “third rail” of

politicspolitics Lessons of Clinton attempt in 1993-Lessons of Clinton attempt in 1993-

1994: Republican control of Congress, 1994: Republican control of Congress, and weakening of Presidentand weakening of President

Willingness of Healthier and Wealthier to Willingness of Healthier and Wealthier to Subsidize Care for Sicker and Poorer is Subsidize Care for Sicker and Poorer is

WeakeningWeakening

66%

51%

39%

0%10%20%30%40%50%60%70%80%90%100%

1991 2003 2006

Harris Survey question: Do you agree or disagree?The higher someone’s income is, the more he or she should expect to pay in taxes to cover the cost of people who are less well off and are heavy users of medical services.

http://www.harrisinteractive.com/news/allnewsbydate.asp?NewsID=1076

Health Care Reform (2)Health Care Reform (2)

Obama campaigned on the issueObama campaigned on the issue Obama instinct for consensus and Obama instinct for consensus and

bipartisanship as former community bipartisanship as former community organizer accounts for long negotiationsorganizer accounts for long negotiations

Kristol 1993 memo advocating Kristol 1993 memo advocating Republican resistance still pertainsRepublican resistance still pertains

Democrats fractured: single payer, Democrats fractured: single payer, community option, anti-insurance community option, anti-insurance companies, blue dogs companies, blue dogs

Health Care Reform (3)Health Care Reform (3)

Massive bail out of financial sector Massive bail out of financial sector raised fears of government intrusion on raised fears of government intrusion on the right, and resentment of helping the the right, and resentment of helping the fat cats by both left and populist rightfat cats by both left and populist right

Stimulus package may have been good Stimulus package may have been good for the economy, but unemployment for the economy, but unemployment still high and fears of governmental still high and fears of governmental intrusion very realintrusion very real

Rising federal debt a smoldering issueRising federal debt a smoldering issue

Political Barriers to Health Political Barriers to Health Care Reform (Costs and Care Reform (Costs and

Coverage)*Coverage)* Crowded agenda (2 wars, recession, energy Crowded agenda (2 wars, recession, energy policies)policies)

Slim Democratic majority in CongressSlim Democratic majority in Congress No consensus of shape of HI reformNo consensus of shape of HI reform Stakeholders resist changing status quo (insurance Stakeholders resist changing status quo (insurance

companies, pharma, device industry, health companies, pharma, device industry, health professionals, hospitals, academia)professionals, hospitals, academia)

How pay for expanded coverage ($100b/y) esp with How pay for expanded coverage ($100b/y) esp with huge budget deficit?huge budget deficit?

* * Oberlander. Great Expectations—the Obama administration and Oberlander. Great Expectations—the Obama administration and health care reform. NEJM 2009; Jan 22, 2009health care reform. NEJM 2009; Jan 22, 2009

Political Process DominatedPolitical Process Dominated

Attempt at bipartisan bill fails in Attempt at bipartisan bill fails in Senate and HouseSenate and House

--Daschle resigns as HHS designate--Daschle resigns as HHS designate

--Kennedy ill and then dies--Kennedy ill and then dies

--Brown victory on MA meant --Brown victory on MA meant filibuster possible in Senatefilibuster possible in Senate

Process dragged on, and support Process dragged on, and support declined. “Death by a thousand cuts”declined. “Death by a thousand cuts”

Unlikely Supporters of Unlikely Supporters of ReformReform

Organized medicine, though not Organized medicine, though not vigorously (concern re Medicare $ cuts)vigorously (concern re Medicare $ cuts)

Big Pharma (in exchange for some $ Big Pharma (in exchange for some $ protection)protection)

Business less antagonistic than in 1993, Business less antagonistic than in 1993, although small business still opposedalthough small business still opposed

Insurance less opposed than 1993Insurance less opposed than 1993 Catholic church split re Catholic church split re

abortion/coverage issueabortion/coverage issue

And a Bill Did PassAnd a Bill Did Pass

Surprised a lot of people, including meSurprised a lot of people, including me Democrats in general pleased, most Democrats in general pleased, most

Republicans irateRepublicans irate Still hugely controversialStill hugely controversial Bill very complicated and poorly Bill very complicated and poorly

understoodunderstood Looks a lot like MA plan, and old Looks a lot like MA plan, and old

Republican proposalsRepublican proposals Unclear how it will play politicallyUnclear how it will play politically

What Does the Bill Do?What Does the Bill Do?

Expands coverage to about 33 million Expands coverage to about 33 million people by 2014 (50% private, 50% public people by 2014 (50% private, 50% public support); 95% eligible Americans would be support); 95% eligible Americans would be covered: 83% nowcovered: 83% now

Does this by a combination of expanding Does this by a combination of expanding Medicaid coverage, mandating that all Medicaid coverage, mandating that all individuals be covered (with certain individuals be covered (with certain exemptions), and mandating that private exemptions), and mandating that private businesses cover workers for firms with businesses cover workers for firms with >200 employees (WalMart issue)>200 employees (WalMart issue)

What Does the Bill Do? (2)What Does the Bill Do? (2)

Estimated costs of $965 billion/10 yearsEstimated costs of $965 billion/10 years Pays for expansion by combination of Pays for expansion by combination of

increased revenues and cost containmentincreased revenues and cost containment Lets states create insurance exchanges Lets states create insurance exchanges

to broaden and cheapen insurance to broaden and cheapen insurance options for those not coveredoptions for those not covered

Extensive and income-adjusted subsidies Extensive and income-adjusted subsidies for low income familiesfor low income families

What Does the Bill Do? (3)What Does the Bill Do? (3)

Penalizes employers that don’t provide Penalizes employers that don’t provide coveragecoverage

Expands Medicaid coverage to all Expands Medicaid coverage to all under 65 population with incomes under 65 population with incomes <133% of Federal Poverty Level<133% of Federal Poverty Level

Require states to maintain CHIP thru Require states to maintain CHIP thru 20152015

Increases taxes on high income Increases taxes on high income persons, beginning 2011persons, beginning 2011

The Bill (4)The Bill (4) Cracks down on Medical Savings Accounts, “Cadillac Cracks down on Medical Savings Accounts, “Cadillac

insurance plans” and Medicare Advantage Plans (to insurance plans” and Medicare Advantage Plans (to get new coverage $)get new coverage $)

Some charges to health insurance plans and pharmaSome charges to health insurance plans and pharma Health insurance reformHealth insurance reform

--Eliminates preexisting conditions--Eliminates preexisting conditions

--Jawbones insurance plans re “loss ratio” (>85%)--Jawbones insurance plans re “loss ratio” (>85%)

--Kids can stay on parents’ plans until age 26--Kids can stay on parents’ plans until age 26

--Eliminates lifetime expenditure caps--Eliminates lifetime expenditure caps

--Covers prevention services--Covers prevention services

--Gradually closes the doughnut hole for Medicare Part --Gradually closes the doughnut hole for Medicare Part DD

Cost Containment/Revenue Cost Containment/Revenue Generation Features of the Generation Features of the

BillBill Estimated 10 year $1.1 trillion savings Estimated 10 year $1.1 trillion savings

(vs. $965 billion costs)(vs. $965 billion costs) 50% through spending cuts: Medicare 50% through spending cuts: Medicare

advantage, limiting Medicare payment advantage, limiting Medicare payment growth, cutting payments to Medicare growth, cutting payments to Medicare Advantage; reduced payments to DSH Advantage; reduced payments to DSH hospitals like SFGH; otherhospitals like SFGH; other

50% through new revenue—taxes and 50% through new revenue—taxes and feesfees

Other Features—Many as Other Features—Many as DemonstrationsDemonstrations

Reduce waste, fraud and abuseReduce waste, fraud and abuse Comparative effectiveness researchComparative effectiveness research Medical malpractice reformMedical malpractice reform Increased payments for primary careIncreased payments for primary care New payments for prevention, New payments for prevention,

wellness; cover preventive serviceswellness; cover preventive services Increase residency positions in Increase residency positions in

primary care and general surgeryprimary care and general surgery

Important Political Important Political OmissionsOmissions

The public optionThe public option Abortion coverageAbortion coverage Coverage for non-citizens and illegal Coverage for non-citizens and illegal

immigrantsimmigrants How will states pay for their How will states pay for their

expanded Medicaid obligations?expanded Medicaid obligations?

Uncertainties in Health Uncertainties in Health ReformReform

Tricky implementation details, state and federalTricky implementation details, state and federal Can the proposed Medicare cuts survive Can the proposed Medicare cuts survive

politically?politically? Extent of political backlash (see catastrophic Extent of political backlash (see catastrophic

insurance, 1988)? Will Republicans try to repeal insurance, 1988)? Will Republicans try to repeal or just amend?or just amend?

What about those still lacking coverage?What about those still lacking coverage? Translating cost effectiveness research into Translating cost effectiveness research into

action (see mammography debate)?action (see mammography debate)? Care at the end of life and palliative care?Care at the end of life and palliative care? Can we truly bend the cost curve?Can we truly bend the cost curve?

Performance of the U.S. Performance of the U.S. Health Care System, pre Health Care System, pre

ReformReform

Health (outcomes)Health (outcomes) CostsCosts AccessAccess

Health Status of the United Health Status of the United StatesStates

Ranks 19-25 in usual indicatorsRanks 19-25 in usual indicators

Health Status: United States vs. 29 Other OECD Health Status: United States vs. 29 Other OECD Countries Countries

Health Status Health Status MeasureMeasure

U.S.AU.S.A..

U.S. Rank in U.S. Rank in OECD (30)OECD (30)

Best Rank of Best Rank of OECDOECD

Life Expectancy from Life Expectancy from birth (y)birth (y)

All WomenAll Women 80.180.1 2222 Japan (85.3)Japan (85.3)

White womenWhite women 80.580.5 1919

All men All men 74.874.8 2222 Sweden (78.4)Sweden (78.4)

White menWhite men 75.375.3 1919

Life expectancy from Life expectancy from age 65/-2004*age 65/-2004*

All women, yearsAll women, years 19.819.8 1010 Japan (23)Japan (23)

White women, yearsWhite women, years 19.819.8 1010

All men, yearsAll men, years 16.816.8 99 Iceland (18.1)Iceland (18.1)

White men, yearsWhite men, years 16.916.9 99

* Data missing for six (6) countries

Some Good NewsSome Good News

US does much better for life expectancy US does much better for life expectancy after age 65after age 65

2005 life expectancy data at all time high2005 life expectancy data at all time high——77.6 years at birth77.6 years at birth– Women: 80.1, men: 74.8Women: 80.1, men: 74.8– White women>black women>white White women>black women>white

men>>>black menmen>>>black men– Almost all the recent gains were in upper SES Almost all the recent gains were in upper SES

groupsgroups– Much of those gains are from tobacco use Much of those gains are from tobacco use

declinesdeclines

Tobacco Tipping Point?Tobacco Tipping Point?

California 13% adult smoking prevalenceCalifornia 13% adult smoking prevalence National rates down to modern low of 19.8% in National rates down to modern low of 19.8% in

2007, up to 20.6% in 2008, ? in 2009.2007, up to 20.6% in 2008, ? in 2009. Northern California Kaiser Permanente down Northern California Kaiser Permanente down

to 9%to 9% Physician smoking rates around 1%Physician smoking rates around 1% Proliferation of smoke-free areasProliferation of smoke-free areas National 62cent/pack federal tax increase, National 62cent/pack federal tax increase,

20092009 Increased stigmatization of smokingIncreased stigmatization of smoking

Health Status—SummaryHealth Status—Summary

Doing betterDoing better But at bottom of developed worldBut at bottom of developed world Major declines in heart disease (multiple Major declines in heart disease (multiple

reasons)reasons) Major opportunities for improvement in Major opportunities for improvement in

tobacco and obesitytobacco and obesity Can’t improve without more attention to the Can’t improve without more attention to the

poorpoor Social causes very importantSocial causes very important Hard to improve through medical care aloneHard to improve through medical care alone

Costs of Medical Care: We’re Costs of Medical Care: We’re Number One!Number One!

Now up to 17% of GDPNow up to 17% of GDP

Poor health value for the dollarPoor health value for the dollar

Reluctance to take on the involved Reluctance to take on the involved sectors (pharma, device and sectors (pharma, device and insurance industries, hospitals, insurance industries, hospitals, doctors, unions)doctors, unions)

Actual and Projected National Actual and Projected National Health Expenditures, Selected YearsHealth Expenditures, Selected Years

Source: Sean Keehan and others (2008). “Health Spending Projections Through 2017: The Baby-Boom Generation is Coming to Medicare.” Health Affairs Web Exclusive, Feb. 26, pp w146. (www.healthaffairs.org)

The U.S. Healthcare Value The U.S. Healthcare Value ShortfallShortfall

Source: Havard Business Review, p. 70, April 2010

Years - Estimated Average Life Expectancy

Hea

lth

Car

e S

pen

din

g-

Per

Cap

ita

In $

US

PP

P*

Number of MRI Units per Million Persons 2006

0

5

10

15

20

25

30

UnitedStates

OECDMedian

NetherlandsCanada UnitedKingdom

France Australia

26.5

14.0

7.7 7.7 6.6 6.2

5.6 5.3 4.9

Switzerland

Germany

Data are from the organization for Economic Cooperation and Development (OECD) Health Data 2008. The value for the Netherlands is for 2005. NEJM 360:10 3/5/2009, p. 1032

No.

of

MR

I U

nit

s/M

illion

P

ers

on

s

Where the Health Care Dollar Comes From

Source: Hartman, M.; Martin, A.; McDonnell, P., et al. (2009). “National Health Spending in 2007; Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998.” Health Affairs, Jan/Feb., p. 254. (www.healthaffairs.org).

Where the Health Care Dollar Goes

Source: Hartman, M.; Martin, A.; McDonnell, P., et al. (2009). “National Health Spending in 2007; Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998.” Health Affairs, Jan/Feb., p. 247. (www.healthaffairs.org).

Why Is U.S. Medical Care So Why Is U.S. Medical Care So Costly?Costly?

Physician supply? No (but specialty % very Physician supply? No (but specialty % very high)high)

Fee for service payment valuations? YesFee for service payment valuations? Yes Health worker incomes? YesHealth worker incomes? Yes Hospital supply/length of stay? NoHospital supply/length of stay? No Proportion intensive care beds? YesProportion intensive care beds? Yes Rate of expensive procedures, and Rate of expensive procedures, and

technology in general? Yes, in spades!technology in general? Yes, in spades!

Why Is U.S. Medical Care So Why Is U.S. Medical Care So Costly (Part 2)?Costly (Part 2)?

Practice style variations? YesPractice style variations? Yes Administrative costs? YesAdministrative costs? Yes Malpractice, including defensive medicine? Malpractice, including defensive medicine?

YesYes Aging population? Not reallyAging population? Not really Patient demand? YesPatient demand? Yes Lack of cost competition? YesLack of cost competition? Yes Low investment in IT? MaybeLow investment in IT? Maybe

Why Not Let Costs Keep Why Not Let Costs Keep Rising?Rising?

Opportunity costsOpportunity costs– SchoolsSchools– The environmentThe environment– Jobs and overseas competition (see General Motors)Jobs and overseas competition (see General Motors)– Other worthy causesOther worthy causes

Business resistanceBusiness resistance– Operational costsOperational costs– Retiree costsRetiree costs– Source of labor disputesSource of labor disputes

Pressure on public programs (Medicare, Medicaid, Pressure on public programs (Medicare, Medicaid, County Hospitals)County Hospitals)

Increases the number of uninsuredIncreases the number of uninsured Biggest cause of personal bankruptciesBiggest cause of personal bankruptcies

Medicare Cost Crisis May Medicare Cost Crisis May Force Cost ControlForce Cost Control

Medicare to reach deficit in about 2017Medicare to reach deficit in about 2017 Congressional choices at that time:Congressional choices at that time:

--raise taxes--raise taxes

--cut benefits--cut benefits

--reduce costs--reduce costs Which is the most politically palatable?Which is the most politically palatable?

Access to Health CareAccess to Health Care

Insurance coverage the major barrierInsurance coverage the major barrier Geography, language, literacy, racial Geography, language, literacy, racial

barriers also importantbarriers also important Different salience for the two political Different salience for the two political

parties; issue of role of governmentparties; issue of role of government

The Uninsured in 2007The Uninsured in 2007

Source: Kaiser Commission on Medicaid and the Uninsured (2007). “The Uninsured: A Primer.” (http://www.kff.org/uinsured/7451.cfm)

Other Major IssuesOther Major Issues Quality/safety of careQuality/safety of care Coordination of chronic illness careCoordination of chronic illness care Long term careLong term care End of life careEnd of life care The work forceThe work force

--medical student debt corrodes values --medical student debt corrodes values and influences career choices (the and influences career choices (the “ROADE”)“ROADE”)--erosion of primary care--erosion of primary care--future of nursing--future of nursing

Concluding ThoughtsConcluding Thoughts

Health reform will be a continuing issue for Health reform will be a continuing issue for the rest of your lives. Tension between the rest of your lives. Tension between demand for coverage and inability to pay for demand for coverage and inability to pay for it. it.

Huge uncertainties regarding politics and Huge uncertainties regarding politics and implementation of health reformimplementation of health reform

U.S. poor health status not correctable by U.S. poor health status not correctable by better health care alonebetter health care alone

No easy solution to cost inflation and No easy solution to cost inflation and tendency to fix on technical solutions (IT)tendency to fix on technical solutions (IT)

Concluding Thoughts (2)Concluding Thoughts (2)

Primary care’s status uncertainPrimary care’s status uncertain Cost control threatens many, because Cost control threatens many, because

health care is 17% of the GDPhealth care is 17% of the GDP Great opportunity for health professional Great opportunity for health professional

influence in the years to comeinfluence in the years to come