universal coverage: curb your enthusiasm
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Universal Coverage:Curb Your Enthusiasm
“State Coverage Initiatives”
Alliance for Health Reform briefing
Tom Miller
American Enterprise Institute
October 26, 2007
The Life Cycle of National Health Reform & Universal Coverage
Answer: Universal Coverage
Source: WHO: World Health Statistics 2007 based on OECD 2004 Health Data
Out of Pocket Share of Total Health Spending for Select Nations
7.5% 7.7%9.1%
12.6% 13.2% 13.3% 13.9% 14.4% 14.9% 15.7%17.2% 17.7%
20.0% 20.4% 21.0%23.6%
31.8%
0%
5%
10%
15%
20%
25%
30%
35%
State Rankings on Healthy Lives and Access Dimensions
AL
AK
AZ
AR
CA CO
DE
DC
FL
GA
HI
ID
ILIN
IA
KS
KYLA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SC
SD
TN
UT
VT
VA
WA
WV
WI
WY
CT
TX R2 = 0.0198
1
26
51
12651
State Ranking on Access
Sta
te R
anki
ng
on
Hea
lth
y L
ives
Source: Derived from Commonwealth Fund State Scorecard on Health System Performance, 2007
Source: Derived from Commonwealth Fund State Scorecard on Health System Performance, 2007Source: Derived from Commonwealth Fund State Scorecard on Health System Performance, 2007
State Rankings on Healthy Lives and Quality Dimensions
AL
AR
CO
DE
DC
FL
GA
HI
ID
ILIN
IA
KS
KYLA
MDMI
MN
MS
MT
NE
NV
NH
NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SD
UT
VT
VA
WAWI
WY
CT
AK
AZ
CA
MEMA
MO SCTN
TX
WV
R2 = 0.0113
1
26
51
12651
State Ranking on Quality
Sta
te R
an
kin
g o
n H
ea
lth
y L
ives
Source: Derived from Commonwealth Fund State Scorecard on Health System Performance, 2007
Beyond Health Insurance
• Need stronger tools to improve health
• Avoidable deaths
• Upstream patient/consumer factors
• Downstream provider delivery value
• Limits of prevention
• Premiums reflect claims costs
Beyond Health Insurance
Discuss among yourselves:• “Making A Difference in Differences for the Health
Inequalities of Individuals,” Health Affairs, vol. 26, no. 5• “Measuring Distributive Injustice on a Different Scale,”
Law & Contemporary Problems, Autumn 2006• “Getting to Better Value in Health Care: The Role of
Physician Performance Measurement,” AEI, Nov. 5• “The Case for More Active Policy Attention to Health
Promotion,” McGinnis et al, Health Affairs, vol. 21, no. 2• “Health Policy Approaches to Population Health:
The Limits of Medicalization,” Lance et al, Health Affairs, vol. 26, no. 5
Administrative Costs as a Percent of Private Health Premiums
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Source: CMS National Health Accounts
Source: CMS National Health Accounts
Year to Year Premium and Admin Cost Growth
-20%
-10%
0%
10%
20%
30%
40%
50%Year to YearPercent Changein PrivatePremiums
Year to YearPercent Changein PrivateAdministrativeCosts
Annualized Growth Rate of Premiums 6 year periods
Annualized Growth Rate of Admin Costs 6 year Periods
Starting in 2000 8.81% 13.29%
1999 9.30% 15.09%
1998 9.42% 15.70%
1997 8.93% 11.96%
1996 7.78% 7.21%
1995 6.96% 6.22%
1994 6.27% 3.73%
1993 5.43% 1.34%
1992 5.51% 4.86%
1991 6.14% 6.68%
1990 6.83% 5.76%
1989 8.54% 8.53%
1988 10.99% 15.21%
1987 13.02% 17.35%
1986 13.37% 12.50%
1985 12.28% 8.59%
1984 11.52% 6.76%
1983 10.90% 6.88%
1982 9.71% 4.29%
1981 10.81% 11.95%Source: CMS National Health Accounts
What’s Gotten in to State Health Policy?
• Gap filling & incrementalism on steroids• “I got it one piece at a time
And it didn't cost me a dimeYou'll know it's me when I come through your townI'm gonna ride around in styleI'm gonna drive everybody wild'Cause I'll have the only one there is around.”
Johnny Cash 1976
Massachusetts:Miracle or Mirage?
• Starting off on third base
• Setting min. coverage, subsidies, affordability
• Punting on cost containment, sustainability
Pennsylvania Keystones:Costs, Capacity & Transparency
• Control costs first, ins. mandate later
• Expand supply (scope of practice)
• Actionable info, accountable transparency
• Fair share & higher taxes won’t fly
• Counter-productive small grp regulation
• Hospital mandates (mostly unfunded)
California:“Hide & Seek” Taxation
• Exaggerating “hidden” taxes
• Barriers to real ones
• Mandates: a heavy lift even for Arnold
What States Can Do
• The “bottoms up” road to “top down”
• Experiment w/o blowing up entire lab
• Build smaller consensus, lower transaction costs
• Internalize costs & consequences
What States Can’t Do (Well)
• Broaden their revenue base• Borrow (a lot)• Change the internal revenue code• Get around ERISA, lock all the exit doors• Ignore underlying drivers of health costs• Manage complex, personal health decisions
and tradeoffs• Export mistakes and burdens
Pooling in Shallow Water
• Not enough risk rating to negate substantial
risk pooling (limits, costs, imperfections)• Most state regulation – moderate harassment,
beside the point distraction• Cost averaging doesn’t reduce overall costs• Residual market vs. deeper one• Pooling of different scale and scope
Pooling in Shallow Water
Discuss among yourselves:• “Pooling Health Insurance Risks,” Pauly & Herring, AEI
1999• “Risk Pooling and Regulation,” Pauly & Herring, Health
Affairs, vol. 26, no. 3• “Consumer Decision Making in the Individual Health
Insurance Market,” Marquis et al, Health Affairs, May 2, 2006
• “Risk and Regulation: A New Look at the Individual Health Insurance Market,” AEI, May 11, 2007
Numbers to Remember
• 30 %
• 55%
• 49%
• 40%
• 10%
• $70 trillion or $38 trillion (who’s counting?)
• 2009
• 18% GDP
Potholes in the Road to Coverage Expansion
• Mission creep, overreaching
• Ceilings & floors
• Why need to mandate?
• Can’t make up your losses on volume
• Value = better outcomes at lower cost
Rx
• Healthier people
• Better-performing providers & delivery
• Education, early childhood, culture, behavior, time horizons, decision support, navigation, incentives, transparency, accountability, competition, decentralized choice, deregulation, targeted assistance, tax reform
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