Presidential Candidates Health Care Plans: A First Look

1. Presidential Candidates Health Care Plans: A First Look Karen Davis President, The Commonwealth Fund National Press Foundation November 11, 2007 kd@cmwf.org www.commonwealthfund.org

2. What Are the Problems? Costs of Care Uninsured Rates Administrative Complexity Quality of Care Chasm

3. US Scorecard: Why Not the Best?Commonwealth Fund Commission National Scorecard • 37+ Indicators • U.S. compared to benchmarks Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 3

4. Health Care is Top Domestic Issue for 2008 Presidential Race Percent of Americans who think issue is the most important problem for government to address Source: Kaiser Health Tracking Poll: Election 2008, Issue 3, August 2007

5. Uninsured Top Priority for CongressAccording to Health Care Opinion Leaders “How important do you think the following health care issuesare for Congress to address in the next five years?” Top 10 issues: Percent responding “absolutely essential” or “very important” Rank 1 2 3 3 5 6 7 8 9 9 Note: Based on a list of 17 issues. Source: The Commonwealth Fund Health Care Opinion Leaders Survey, Jan 2007.

6. NH ME WA NH VT ME WA VT ND MT ND MT MN MN OR NY MA WI OR MA NY ID SD WI RI MI ID SD RI WY MI CT PA WY NJ CT IA PA NJ NE IA OH DE IN NE OH NV DE IN IL MD NV WV UT VA IL MD CO DC WV UT VA KS MO KY CA CO DC KS MO KY CA NC NC TN TN OK SC AR OK AZ NM SC AR AZ NM MS GA AL MS GA AL TX LA TX LA FL FL AK AK HI HI Health Insurance Coverage Getting Worse for Adults, Better for Children Percent change between 1999-2000 and 2005-2006 in uninsured adults ages 18-64 Percent change between 1999-2000 and 2005-2006 in uninsured children under 18 NH ME WA NH VT ME WA VT ND MT ND MT MN MN OR NY MA WI OR MA NY ID SD WI RI MI ID SD RI WY MI CT PA WY NJ CT IA PA NJ NE IA OH DE IN NE OH NV DE IN IL MD NV WV UT VA IL MD CO DC WV UT VA KS MO KY CA CO DC KS MO KY CA NC NC TN TN OK SC AR OK AZ NM SC AR AZ NM MS GA AL MS GA AL TX LA TX LA FL FL AK AK Decreased -7% to -2.5% Decreased -7% to -2.5% HI HI Decreased –2.4 to 0% Decreased –2.4 to 0% Increased 0.1% to 4% Increased 0.1% to 4% Increased 4.1% to 7% Increased 4.1% to 7% 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.

7. Adults With No or Unstable Insurance Are Less Likely to Get Preventive Screening Tests Percent Note: Pap test in past year for females ages 19–29, past three years age 30+; colon cancer screening in past five years for adults age 50–64; and mammogram in past two years for females age 50–64. Source: S.R. Collins et al., Gaps in Health Insurance: An All-American Problem, Findings from the Commonwealth Fund Biennial Health Insurance Survey, The Commonwealth Fund, April 2006.

8. Adults Without Insurance Are Less Likelyto Be Able to Manage Chronic Conditions 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).

9. Figure 12.

10. International Comparison of Spending on Health, 1980–2005 Average spending on healthper capita ($US PPP) Total expenditures on healthas percent of GDP Source: OECD Health Data 2007. 10

11. Cumulative Annual Changes in National Health Expenditures Growth, 2000-2007 109% 91% 65% 24% Note: Data on premium increases reflect the cost of health insurance premiums for a family of four/ The average premium increase is weighted by covered workers. *2006 and 2007 private insurance administration and personal health care spending growth rates are projections. SOURCE: A. Catlin, “National health Spending in 2005: The Slowdown Continues,” Health Affairs, January/February 2007, 143-153; J. A. Poisal, et al. “Health Spending Projections Through 2016: Modest Changes Obscure Part D’s Impact,” Health Affairs, February 2007, w242-w253; 2000-2007 Kaiser Employer Benefits Survey

12. Percentage of National Health ExpendituresSpent on Health Administration and Insurance, 2003 Net costs of health administration and health insuranceas percent of national health expenditures a b c * a2002 b1999 c2001 *Includes claims administration, underwriting, marketing, profits, and other administrative costs;based on premiums minus claims expenses for private insurance. Data: OECD Health Data 2005. Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006.

13. Why Does the Current Health Insurance System 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

14. 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

15. What are the Options for Health Insurance Reform? 0 = Minimal or no change from current system; – = Worse than current system; + = Better than current system; ++ = Much better than current system Source: 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.

16. Medicare for All, Private Insurance Exchanges, Tax Incentive Proposals Cause Major Shifts in Coverage, 2007 Current Law Healthy Americans Act (Wyden) Uninsured 47.8 (16%) Employer 153.7 (52%) Uninsured 2.5 (1%) Medicare 31.9 (11%) Dual Eligible 8.0 (3%) Medicaid/ SCHIP 37.5 (13%) HAA Coverage 248.8 (84%) CHAMPUS 3.9 (1%) Dual Eligible 8.0 (3%) AmeriCare (Stark) President Bush’s Proposal Medicare 31.9 (11%) Dual Eligible 8.0 (3%) Medicare 31.9 (11%) Uninsured 38.8 (13%) CHAMPUS 3.4 (1%) CHAMPUS 3.4 (1%) Employer 145.2 (49%) Employer Retiree 3.3 (1%) Employer 5.0 (2%) Private Non-Employer 9.5 (3%) Medicaid/ SCHIP 38.5 (13%) Medicare 39.9 (14%) AmeriCare 246.8 (83%) CHAMPUS 3.4 (1%) Private Non-Employer 29.3 (10%) Total population = 295.1 million Note: Average monthly coverage. Primary payer is determined on basis of current prevailing coordination of benefits practices. Source: The Lewin Group for The Commonwealth Fund.

17. Some Reform Proposals Reduce Total Health System Spending,But Federal Government Outlays Require Feasible Financing (Change in Health Spending by Stakeholder Group, Billions of Dollars, 2007) 1Out of an estimated total uninsured in 2007 of 47.8 million. 2Estimates reflect a mandatory cash-out of benefits on the part of employers that currently offer coverage. Source: S. R. Collins, K. Davis, and J. L. Kriss, An Analysis of Leading Congressional Health Care Bills, 2005-2007: Part I Insurance Coverage, The Commonwealth Fund, March 2007

18. Creating Consensus: Minimal Disruption in Current Coverage, 2004 CURRENT INDIVIDUAL MANDATE CHAMPUS/ Others 1% Uninsured 1% Uninsured 15% CHAMPUS/ Others 1% Employer 58% Medicaid/ CHIP/FHIP 15% Employer 59% Medicaid/ CHIP 10% Medicare 14% Non-group 1% Medicare 12% Congressional Health Plan 9% Non-group 4% Source: K. Davis and C. Schoen, “Creating Consensus on Coverage Choices,” Health Affairs (Web Exclusive April 23, 2003). Lewin Group estimates using the Health Benefits Simulation Model.

19. Creating Consensus: Choice between Private Insurance and Public Program Coverage New Coverage for Currently Uninsured 11m 13m 14m 1m Congressional Health Plan TOTAL = 24 m Employer Group Coverage TOTAL = 165 m CHIP/FHIP TOTAL = 43 m Medicare TOTAL = 38 m 3m 11m 1m 3m Improved Coverage for Underinsured Source: K. Davis and C. Schoen, “Creating Consensus on Coverage Choices,” Health Affairs (Web Exclusive April 23, 2003).

20. Health Reform and the Presidential Candidates • Leading Democrats: • Mixed private-public insurance • Shared financial responsibility (government, employers, households), individual mandate • FEHBP or Medicare national insurance connector • IT, prevention, chronic care management, comparative effectiveness, pay for performance, transparency • Finance with system reforms and repeal/expiration of high-income tax breaks • 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

21. Features of Candidates’ Approaches to Health Care Reform

22. Candidates’ Agreement on Health Care Reform Features

23. Judging the 2008 Presidential Candidates’ Health Plans Note: Scale is 1-10; 10 is the best Source: Marilyn Werber Serafini, "Judging the 2008 Health Plans," National Journal, October 26, 2007

24. Health Reform and the Presidential Campaign • Health policy a top domestic issue • Universal coverage is central to high performance health system • Needs to be combined with initiation of effective health system reforms • Organize the health care system around the patient to ensure accessible and coordinated care • Align financial incentives: payment reform and effective strategies for enhancing value and achieving savings • Pursue and raise benchmark levels of high quality, efficient care and enhance capacity to innovate and improve including IT capacity • Ensure national leadership and public/private collaboration

25. Why Not the Best? • Current directions absent policy change • Costs expected to go to 20% of GDP • More uninsured, affecting middle class families as well as low-income • More underinsured, bill problems, medical debt • Aiming higher: Why not the best? • U.S. has the resources and expertise • Benchmarks for a high performance health system are achievable • Achieving consensus requires that everyone participate and be willing to come together for the greater good

26. Visit the Fund’s website atwww.commonwealthfund.org

27. Thank You! Stephen C. Schoenbaum, M.D., Executive Vice President and Executive Director, Commission on a High Performance Health System, scs@cmwf.org Sara Collins, Assistant Vice President, src@cmwf.org Cathy Schoen, Senior Vice President for Research and Evaluation cs@cmwf.org Katherine Shea, Research Associate ks@cmwf.org

28. Appendix: Presidential Candidate Plans

29. Senator Clinton’s Health Plan • Universal health coverage with mixed private-public coverage, individual mandate • National insurance connector building on FEHBP, Medicare-like product option; keep current coverage if prefer • Sliding scale premium assistance; expand Medicaid/SCHIP • Shared financial responsibility; tax breaks for small business under 25 employees • Require all health plans to cover prevention; coordinate public spending on prevention; create National Prevention Initiative • End insurance discrimination to help reduce administrative costs • Quality and Efficiency Reforms • Chronic care coordination models • Create “paperless” health information technology system • Create independent “Best Practices” Institute • Implement Smart Purchasing Initiatives to constrain excess expenditures on prescription drugs and managed care • Pay providers for coordinated care, bonuses for maintenance of physician specialty certification • Revenue • $110 billion annual federal budget cost financed by system reforms and expiration of income-tax cuts for highest income

30. Senator Edwards’ Health Plan • Individual mandate once insurance is affordable • Shared responsibility • Employers provide coverage to workers or pay 6% of wages into pool • Medicaid/SCHIP expansions • Parents and children up to 250% of poverty • Childless adults up to 100% of poverty • Sliding scale premium subsidies (refundable tax credits) • Regional Markets – insurance pools of competing private plans and a public plan like Medicare • Quality and Efficiency Reforms • Insurance market; guaranteed issue and community rating • Coverage of preventive care and chronic care with minimal cost-sharing • Pay for results – reward quality and efficiency; reward primary care • Transparency – public reporting; IT • Patient safety; FDA device and drug safety • Quality benchmarks • Evidence-based medicine; health services research • Revenues • $90 to $120 billion a year federal budget cost from eliminating waste in health system and repealing Bush tax breaks for those over $200,000 • Enforcement of capital gains tax • Employer 6% of payroll contribution

31. Senator Obama’s Health Plan • Shared responsibility - Employers provide coverage to workers or contribute a percentage of payroll toward the costs of the national plan • Medicaid/SCHIP expansion; Sliding scale premium subsidies • Public health insurance plan – based on FEHBP – available to small businesses, individuals who don’t have access to group coverage • National Health Insurance Exchange to provide access to private coverage • Mandate that all children have coverage; Young adults expansion – allow young people up to age 25 to continue coverage through their parents’ plans • Reinsurance for employer health plans • Quality and Efficiency Reforms • Disease management programs; implement medical homes • Require cost and quality reporting, including medical errors and disparities in care, from participating providers; Require health plans to report percent of premiums that goes to patient care • Support efforts to align reimbursement with quality of care • Increase investment in comparative effectiveness reviews and research • Invest $10 billion per year over 5 years for U.S.-wide adoption of standards-based health IT systems • Increase competition in insurance and drug markets • Promote disease prevention • Revenues • $50 to $65 billion annual federal budget costs funded through expiration of high income tax breaks ($200,000 and above) • Employer contribution

32. Mayor Giuliani’s Health Plan • Tax incentives to buy health coverage – income-tax exclusion of up to $15,000 for families and $7,500 for individuals to buy private insurance and contribute to expanded health savings accounts • Buy insurance out-of-state • Block grants to states instead of Medicaid matching funds • Tort reform – reasonable caps on non-economic damages, alternative dispute resolution • Transparency of prices, provider qualifications, outcomes • Pay Medicare doctors and hospitals more for better-quality care • Public/private partnerships for IT standards • State Medicaid payments tied to success in promoting preventive care, tracking obesity in children • Reduce red tape in approval of medical devices

33. Senator McCain’s Health Plan • Keep employer tax incentives, but offer individuals tax incentives to buy insurance -- $2,500 refundable tax credit for individuals, $5,000 for families; if premium less, balance for health savings accounts • Buy health insurance out-of-state • Association health plans • Medicare/Medicaid pay providers for good outcomes, coordinating care, preventive services • Transparency about outcomes, quality of care, costs, and prices • Innovative delivery forms, e.g. retail clinics • Tort reform; protect doctors following clinical guidelines and patient-safety protocols • National standards for electronic health information systems and data collection

34. Governor Romney’s Health Plan • Recommends “extending health insurance to all Americans, not through a government program or new taxes, but through market reforms” • Would expand and deregulate the private health insurance market • Foster competitive health insurance markets in each state to bring down the cost of private health insurance • Reform tax code to make it cheaper for individuals to purchase private insurance, provide a deduction for the cost of health insurance and catastrophic medical expenses • Premium assistance to help people purchase private health insurance plans • Redirect state and federal spending from “free care” payments to provide sliding scale premium assistance • Insist that middle income individuals either purchase health insurance or pay for their own health care (reform state health insurance regulations to make health insurance more affordable) • Encourage more Health Savings Accounts and co-insurance products • Enhance the portability of private health insurance • Slow the rate of inflation in health care spending by: • Instituting tax reforms to promote smart spending on health care • Creating incentives for states to reform their health insurance markets • Implementing medical liability reform (caps on non-economic and punitive damage awards) • Federalist approach: • Facilitate and encourage reforms, don’t mandate them • States able to create reforms to match their unique needs • States as laboratories of innovation • Encourage innovation in Medicaid by providing block grants to states • Enhance the use of information technology • Establish cost and quality transparency