What’s Wrong With theHealth Care System and

Who’s Going to Fix It?

Bishop’s Convocation on Health Care Reform and Faith, March 31, 2006

Robert F. St. Peter, M.D.

President and CEO Kansas Health Institute

Kansas Health Institute Private, non-profit 501(c)(3) Conduct policy analysis and research Non-partisan (really), no lobbying or advocacy Annual operating budget of $2.8 million 20 full-time positions Use of experts/consultants ad hoc Working relationship with legislature, state

agencies, associations, universities Funding from foundations, local, state and

federal government agencies

Healthier Kansans through informed decisions

What Is Health?What Is Health?

Health is a state of complete physical, mental and social

wellbeing, and not merely the absence of disease or infirmity

World Health Organization

United Health Foundation

State Health Rankings

Kansas

Kansas Kids Count State Ranking

Ten Leading Causes ofTen Leading Causes ofDeath in the U.S., 2000Death in the U.S., 2000

Heart disease 710,760Cancer 553,091Stroke 167,661Chronic obstructive pulmonary disease 122,009Unintentional injuries 97,900Diabetes 69,301Pneumonia/influenza 65,313Alzheimer disease 49,558Kidney disease 37,251Septicemia 31,224Other diseases 499,283

Mokdad, AH, et. al.

Actual Causes of Death, 2000Actual Causes of Death, 2000Tobacco use 435,000Poor diet and physical inactivity 400,000Alcohol consumption 85,000Certain infections 75,000Toxic agents 55,000Motor vehicles 43,000Firearms 29,000Sexual behavior 20,000Illicit drug use 17,000

Mokdad, AH, et. al.

What Are the Determinants of Health?

Social and economic conditions Physical and built environments Health behaviors and coping skills Genes and biology Health care services

Determinants of Health

Social and economic conditions Income and income distribution Class Social support Community characteristics/social

cohesion Race/ethnicity Education

Determinants of Health Physical environment

Water Air Food supply

Built environment Housing Recreational opportunities Work place Injuries (intentional and unintentional)

Determinants of Health

Health behaviors and coping skills Health promoting attitudes, beliefs,

behavior Adaptive/maladaptive behaviors to stress Diet and exercise Tobacco Sexual behavior Substance abuse

Determinants of Health Genes and biology

Conception through aging Predisposition to disease Interaction with other determinants Targeted interventions

Determinants of Health

Health care services Access Preventive vs. curative Quality Effectiveness Cost of services

Determinants of Health

Thomas McKeown “The Role of Medicine(London; Nuffield Provincial Hospitals Trust, 197) p. 81

92-037

01-024

0.2

0.6

1

1.4

1.8

1850 1870 1890 1910160

162

164

166

168

170

Height (cm

)

Deaths/1,000Population

Income/CapitaHeight

Inco

me/

Cap

itaD

eath

s/1,

000

Pop

ulat

ion

Rel

ativ

e In

dex

1850

=1

Year

Economic Development and HealthHolland 1850 - 1910

Mustard, 2005

Literacy Levels by Physical, Mental or Other Health Conditions – USA (Quantitative)

0

10

20

30

40

50

60

1 2 3 4 5

Perc

ent

Level NALS, p. 44, 2002

Health Problems

Mental or Emotional Problems

Long-term Illness

05-173

00-046

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0 10 20 30 40 50

Months of Orphanage Rearing

Log1

0 S

aliv

ary

Cor

tisol

*linear trendline

Evening Cortisol Levels Increase withMonths of Orphanage Rearing *

03-089

Serotonin Gene, Experience, and Depression

Age 26

No Abuse Moderate Abuse Severe Abuse

.30

.50

.70

A. Caspi, Science, 18 July 2003, Vol 301.

Depression Risk

LL

SS

SL

S = Short Allele L = Long Allele

Early Childhood

Medical Care

DeterminantsDeterminants ofof HealthHealth

EnvironmentalBehavioral

Social

Genetic

10

88

20

4

20

4

50

4

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

100%

Influence on Health National HealthExpenditures

Social/BehavioralEnvironmentGeneticsAcces to Care

Where Does the Money Go?

Robert Wood Johnson Foundation, 2000

What Do We Get forOur Health Care Dollar in the U.S.?

U.S. spends more than twice as much on health care per capita as other industrialized countries ($4,631 vs. $1,983 in 2000)

Americans spend 13% of GDP on health care compared to OECD median 8% (2000)

Health care costs are on the rise again How much is enough? What should we expect for this investment?

What Do We Get forOur Health Care Dollar in the U.S.?

Quality of care Health status

U.S. Adults Receive Half of Recommended U.S. Adults Receive Half of Recommended Care, and Quality Varies Significantly by Care, and Quality Varies Significantly by

Medical ConditionMedical Condition

Source: E. McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States,"The New England Journal of Medicine (June 26, 2003): 2635–2645.

55

7665

5445

39

23

0

20

40

60

80

Overall BreastCancer

Hypertension Asthma Diabetes Pneumonia Hip Fracture

Percent of recommended care received

Provision of Appropriate CareProvision of Appropriate Care

First

ThirdFourth

Source: S.F. Jencks, E.D. Huff, and T. Cuerdon, “Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998–1999 to 2000–2001,” Journal of the American Medical Association 289, no. 3 (Jan. 15, 2003): 305–312.

Second

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

IL IN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

MD

MEVT

NH

MARI

CT

DE

DCCO

GAMS

OK

NJ

SD

Quartile Rank

Note: State ranking based on 22 Medicare performance measures.

Performance on Medicare Quality IndicatorsPerformance on Medicare Quality Indicators2000–20012000–2001

HI

AK

Quality of Care in US Compared Quality of Care in US Compared to Other Countriesto Other Countries

AUS CAN NZ UK US

Medical mistake in care 13 15 14 12 15

Wrong medication/dose 10 10 9 10 13

Lab error 14 18 14 11 23

Any of above 27 30 25 22 34

Source: 2004 Commonwealth Fund International Health Policy Survey.

Opportunities Exist for Enhanced Doctor–Opportunities Exist for Enhanced Doctor–Patient Communication and InteractionsPatient Communication and Interactions

Percent saying doctor: AUS CAN NZ UK US

Always listens carefully 71 66 74 68 58

Always explains things so you can understand 73 70 73 69 58

Always spends enough time with you 63 55 66 58 44

Source: 2004 Commonwealth Fund International Health Policy Survey.

U.S. Health Outcomes Better in Some Cases

Life expectancy at age 80 Survival of very low birth weight

infants Survival after heart attack, breast

cancer Waiting time for complex procedures Availability of high technology services

U.S. Outcomes Worse on Other Measures

U.S. Rank*

Life expectancy at birth

11-16

Infant mortality 18-19

Mortality rates, 15-59 yrs

9

Injuries 15-16

*Among 19 members of OECD

What Is Our Goal?What Is Our Goal?

To purchase the best health care?or

To purchase the best health?

WHO Declaration

…Health is a fundamental human right and that the attainment of the highest possible level of health is a most important world-wide social goal whose realization requires the action of many other social and economic sectors in addition to the health sector.

Declaration of Alma-Ata (1978) World Health Organization

Which one do you see as the most important health care issue

at the present time?

9%

38%

48%

Percent saying

The cost of health care

People who are not covered by insurance

The quality of health care

“Some other issue” and “Don’t know” responses not shown Harvard, KHI 2003

Problems getting or paying for medical care in the past 12 months

40%

9%

14%

14%

20%

45%

Uninsured at any time in the past 12 months Continuously insured General population

Percent saying

Did not get needed care due

to cost

Had a serious problem paying

medical bills

Harvard, KHI 2003

Worries about getting and paying for care in the future

14%

24%

29%

16%

20%

26%

Very worried Somewhat worried

They might not be able to afford health insurance (among those currently insured)

They might not be able to afford the prescription drugs they need

They will lose their health coverage (among those currently insured)

Percent saying they are worried that in the next six months…

55%

44%

30%

55%

44%

30%

Harvard, KHI 2003

The Basics Health Care Costs

Total health care spending Health insurance premiums Out-of-pocket spending State health care spending

Ability to Pay Employment and wage growth Economic growth

Quality of Care ?

Access: 45 Million Uninsured Americans (15.6%)

Kansas: 10.9%

Texas: 24.7%

MO: 10.9%

OK: 17.8%

CO: 15.8%

New Mexico: 20.9%

NE: 9.9%

Percent of Adults 19-64 Uninsured by StatePercent of Adults 19-64 Uninsured by State

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

IL IN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT NH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

IL IN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT NH

MARI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

19–23.9%

Less than 14%14–18.9%

24% or more

1999–20001999–2000 2003–20042003–2004

Source: Two-year averages 1999-2000 and 2003-2004 from the Census Bureau’s March Current Population Survey (CPS: Annual Social and Economic Supplements). Estimates by EBRI.

Total National Health Expenditures and As a Percentage of GDP

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$1,800.00

$2,000.00

1960 1970 1980 1990 1991 1992 1993 1994 1995 1998 1999 2000 2001 2002 2003 20040.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

National Health Expenditures As Percent of GDP

Levit et al, "Trends In U.S. Health Care Spending, 2001,” Health Affairs, January/February 2003 and Center for Medicare and Medicaid Services tabulations at http://cms.hhs.gov/statistics/nhe/historical/t1.asp

Custer, 2003

Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 2005; *Estimate is statistically different from the previous year shown at p<0.05^ Estimate is statistically different from the previous year shown at p<0.1.Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Historical estimates ofworkers’ earnings have been updated to reflect new industry classifications (NAICS).

12.0

18.0

0.8

9.2*8.511.2*

5.3*8.2*

10.9*12.9*

13.9^

0

5

10

15

20

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Health Insurance PremiumsWorkers EarningsOverall Inflation

Increases in Health Insurance Premiums Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2005Compared to Other Indicators, 1988-2005

Percent

Does More Spending Mean Better Health?

When it comes to achieving better medical outcomes, how much you spend matters a great deal less than what you buy (Dartmouth study, 2006)

Put more simply, the benefits of health spending depend on how one spends the money (Garber, 2006)

Sources: Adapted from Heffler, Smith, Keehan, Clemens, Zezza, and Truffer, Health Affairs, February 2004

Why have costs increased?

Medical prices51%

Demographics3%

Utilization46%

Role of Chronic Disease Rise in treated disease prevalence

Population factors• 27% of increase in spending from 1987-2002 due to

rise in modifiable risk factors (e.g., obesity) Changing treatment threshholds (e.g., high BP,

diabetes) Innovation (e.g., SSRIs, statins) Total: 63% of increase in spending

Rise in spending for treated cases Innovation (e.g., premies, heart attack) 37% of increase in spending

Thorpe, et al, 2005

Role of Chronic Disease Obesity

Annual health cost in Kansas is $657m• $143m paid by Medicaid

Medicare will spend 34% more on obese person than normal weight

Aged (>65) Disabled Low income

Employee Dependents

DirectPurchase

DirectPurchase

Health Care Providers

Government80 mil.

Uninsured = 45 mil

The U.S. Health System—A Simplified View

Insurancecarrier/Health

plan/TPA

Employer170 mil.

Hurley, 2003

Types of health insurance coverage in Kansas in 2003

Source: March 2004 Current Population Survey.

0%

10%

20%

30%

40%

50%

60%

70%

Private, job-based

Medicare Private,individuallypurchased

Medicaid Military Uninsured

Perc

ente

nge

of a

ll K

ansa

ns

Note: Percentages add to more than 100% because some individuals have more than one kind of insurance. Kansas Health Institute 2004

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Out of Pocket Private I nsurance

Percentage of Private Health Expenditures "Out-of-Pocket"

Center for Medicare and Medicaid Services National Health Expenditures-http://cms.hhs.gov/statistics/nhe/historical/t3.asp

73

48

37

29

23

15

14

9

8

7

4

5

1127

2529

313534

3841485254

715

1419

20222522

221817

16

19

23

27

27

30

30

28

29

23

24

26

0% 20% 40% 60% 80% 100%

1988

1994

1996

1998

2000

2002

Indemnity PPO POS HMO

Percent of all covered employees.

National Employee Enrollment By Type Of Plan

Gabel et al, KFF, 2002

Percentage of Large Employers (>200 workers) Making Selected Benefit Changes in Past Year

34

44

47

65

56

52

34

66Increase officecopays

Increasedeductible

Increase Rxcopay

Increasepremium

Yes No

Gabel et al, KFF, 2003

Consumer Directed Products—A Continuum Perspective

No Premium Contribution and “First Dollar” Coverage

Cash in Lieu of Benefits

Premium contributions and cost sharing

Sharply increased out-of-pocket costs/benefits buy-down

High deductible plan option/ Medical spending account

Defined contributionplans

Hurley, 2003

Percentage of Firms That Offer Employees a Percentage of Firms That Offer Employees a High-Deductible Health Plan, by Firm Size, High-Deductible Health Plan, by Firm Size,

2003-20052003-2005

5% 5% 5%

17%

5%10%

7%

20%

10%9%*

20%*

33%*

20%*20%*20%*

0%5%

10%15%20%25%30%35%

Small Firms (3-199Workers)

Midsize Firms (200-999 Workers)

Large Firms (1,000-4,999 Workers)

Jumbo Firms (5,000or More Workers)

All Firms

2003 2004 2005

Estimate is statistically different from previous year shown at p<.05

High-deductible health plan (HDHP): A plan with an annual deductible of at least $1,000 for single coverage and $2,000 for family coverage. In 2003 and 2004, the survey used a different definition and asked if firms offered a health plan with a deductible of more than $1,000 for single coverage. The survey did not specify a minimum deductible for family coverage. The prevalence shown is for all HDPs, regardless of whether they are offered with an HRA, are HAS qualified, or neither

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2003-2005.

Annual Change in Private Health Spending per Capita (adjusted for inflation), 1961-2001

3.6

5.16.1

9.4

6

-1.6

-3

75.75.3

3.8

7.3

2.9

-1.6

0.9

8.4

6.9

1.9

0.2-0.7

4.3

6.25.95.25.7

2.83.6

9.1

5.74.7

1.32 1.9

-1.10

0.7

2.93.43

4.7

8.1

-4

-2

0

2

4

6

8

10

12% Change In Spending per Capita

Medicare and Medicaid Implemented

Voluntary Effort

Managed Care and Threat of Health Reform

Wage and Price Controls

WhatNext?

Altman and Levitt, 2002

Keep the government out of my health care?

4 of 10 now covered by government Medicare Medicaid Government employee (incl. military) VA, CHAMPUS, IHS

$6 of $10 paid by government Tax policy on health benefits

Insurance cost deductible to employer and employee

Costs greater than home mortg. int. deduct.

What role is government already playing?

Public health insurance Medicare, Medicaid, SCHIP, VA, IHS

Government employee benefits Local, state, federal levels

State high-risk pools Health savings accounts, tax breaks,

group purchasing initiatives Regulation of insurance industry Direct-to-provider subsidies (safety net)

What can states do on costs? Revisit price controls Attempt to limit expansion of health

care facilities and technology Relax insurance mandates Re-insurance mechanisms Insurance market reforms

Group purchasing cooperatives Association health plans

What can states do on access?

Expand public health insurance Maximize federal match for Medicaid and

SCHIP (e.g., provider tax) Enroll those eligible but not enrolled Raise income thresholds for eligibility Allow buy-in for workers

Employer or individual mandates Expand access for those who have been

priced out of the market Health insurance subsidies for workers Strengthen the health care safety net

What else can states do? Administrative simplification Tort reform Promote prevention, dz. mgmt. Become model purchaser

Medicaid State employee health plan

Promote use of data & information Value-based purchasing Improve quality from providers More informed consumers

What states can not do

Regulate health insurance provided by large employers

Control development of technology Put themselves at competitive

disadvantage to neighbors Achieve statewide universal coverage

on their own

Where do we go from here?

Market-based solutions Emphasize role of consumers Maintain focus on employer-based

insurance system Increased government participation Single-payer health system

Are any of these enough? Role of chronic disease Social determinants framework

Early childhood imperative Comprehensive vs. transformational

change of “health system”

Transformative Change Major reform demands long range vision

What we want to accomplish in 20 years Criteria should not just be about economics

which conceals values Criteria in a democracy needs to consider

Values Science/ evidence Social goals Economics

Healthier Kansans through informed decisions

Kansas Health Institute