Transcript Slide 1

Coalition For Sensible Health Care Solutions
Choosing Private Market Solutions over Government Reform
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Health Care Cost Crisis
16%
Se le ct Com pone nts of Gr os s Dom e s tic
Pr oduct
Source:” Health Affairs. February 7, 2003.
&
U.S. Department of Commerce Bureau of
Economic Analysis. July 30, 2004.
15.2%
12%
8%
4%
10.8%
9.7%
4.5%
0%
Food
Housing
Health
Growth in National Health Expenditure,
as a Percentage of the Gross National Product
Percentage
National
Def ense
18
16
14
12
10
8
6
4
2
0
1980
1993
1998
2000
Source: Centers For Disease Control
2011
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America is at a crossroad
Health care costs are rising . . .
18%
18%
16%
14%
Employer- 12%
based health 10%
8%
insurance
6%
4%
premiums,
2%
overall
0%
1985
inflation,
worker
earnings
14%
14%
13%
12%
Health Insurance
Premiums
11%
9%
8%
Overall Inflation
5%
Workers' Earnings
1%
1990
1995
2000
2005
Source: EMPLOYER HEALTH BENEFITS 2003 ANNUAL SURVEY. The Kaiser Family Foundation and Health Research and Educational Trust.
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The Problem
•Health Care Costs
“Healthcare costs are not expensive
because of health insurance - health
insurance is expensive because of
healthcare costs”
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Getting to the Core Problem:
Medical Care Expenses
Health Care Cost Type
Amount Paid Out of Every
Health Care Dollar
Administration
$.12
Medical Care Expenses
$.88
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group.
New England Journal of Medicine, Costs of Health Care Administration in US & Canada
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The Reason
• Components Certainly Include:
–
–
–
–
–
–
–
–
Reimbursement Rates from Medicaid/Medicare
Tort Reform
Aging Population
Advanced Technologies
Cost Shifting from the Uninsured
Shift in Bargaining Power to Providers
Government Interference (Mandates)
Market Consolidation of Providers & Payers
• But, these are not the Core Reasons
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Cato Policy Analysis
“The major culprit…..the removal of
the patient as a major participant
in the financial and medical
choices that are currently being
made by others in the name of
the patient.”
Professor Stan Liebowitz
Professor of Managerial Economics in the Management School of the University of
Texas at Dallas
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Cato Policy Analysis
• As the percentage of the patient’s share of
medical bills goes down, the cost of that care
increases dramatically because patients no
longer care what the total cost is.
• Because patients no longer care about the cost,
it’s human nature for the providers of that care to
no longer care about the cost.
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Micro Example
• Prescription Drug Costs
• From 1965 to 1990, one of the most stable
components of health care
• GNP rose 194%
• Rx Drugs rose relatively close at 250%
– By Contrast, Hospital Expense rose nearly 500%
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Why the Increase in Rx Drug
Costs?
• Consumer Behavior
– Prior to 1990’s, consumers paid full cost of
the drug and then filled out claim form
– In 1993 the advent of the drug co-pay
– Now, any drug at any cost for only $2
– Is there any wonder drug companies started
to advertise to consumers?
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A Brief History of Health Care &
Health Insurance
• Prior to the 1980s:
– Healthcare Delivery
• Independent Hospitals & Physicians
• Community-based or Religious-based Non-profit
Hospitals
– Health Insurance Plan
•
•
•
•
•
Comprehensive Major Medical Insurance
$500 Deductible
80%/ 20% Coinsurance
No Drug Card Copays
No Doctor’s Office Visit Copays
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A Brief History of Health Care &
Health Insurance
• The 1980s and 1990s:
– Healthcare Delivery
• Integrated Healthcare Systems– Non Profit Corporate
Structures:
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–
–
–
Aurora Healthcare
Marshfield
Theda / Bellin
Luther/ Midlefort
– New Full Service Health Insurance Plans
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•
•
•
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1973 Federal HMO Act
No Patient Financial Responsibility
Drug Card Copays
Doctors Office Visit Copays
Maintenance Plans
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A Comparison of Historical Insurance
Costs
A typical health care plan
in 1985 had a $200
deductible and a $1,200
out-of-pocket maximum.
$1200
out-of-pocket
costs
Adjusting for trend (7%
annually), a comparable plan in
2000 would have a $551
deductible, $3,310 out-of-pocket
maximum.
$3,310
out-of-pocket
costs
$551 Ded
$200 Ded
1985 (Typical Plan)
2000 Trend-adjusted (7% annual)
An actual average
healthcare plan in 2002 has
a $276 deductible and a
$1000 (or less) out-ofpocket maximum.
$1000
out-of-pocket
costs
($276 Ded)
2002 Average Plan
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Results of the Full Service Plan Experience:
• Eliminated the consumer in the health care
system.
• Changed the concept of insurance from “financial
protection against large, unexpected medical
expenses” to “maintenance coverage for all health
care needs, with little or no financial responsibility
on the part of the policyholder.”
• Some consumers today think that the cost of a
doctor visit or a prescription drug is a $25 copay.
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Today’s Health Care Environment
• Today:
– Healthcare Delivery
• Integrated Healthcare Systems – Non Profit Corporate
Structures:
Aurora
Gunderson/Lutheran
St. Josephs / Marshfield
• Non-Typical Competition for Patients
Patient Demand
• Duplication of Services
Cardiac Centers & Heart Hospitals
MRI’s
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Wisconsin Premium Comparison By Location
Location
Group 1
(5)
Group 2
(25)
Group 3
(45)
Single
Family
Single
Family
Single
Family
Milwaukee
393.89
1024.11
415.34
1079.89
389.73
1013.30
Kenosha
381.20
991.11
401.90
1044.93
377.07
980.38
Madison
369.91
961.77
389.95
1013.86
365.81
951.11
La Crosse
364.27
947.11
383.97
998.32
360.18
936.48
Racine
354.40
921.44
373.51
971.13
350.34
910.87
Eau Claire
345.59
898.52
364.18
946.86
341.54
888.01
WI Rapids
335.71
872.85
353.72
919.67
331.69
862.40
Superior
331.48
861.85
349.24
908.02
327.47
851.43
Green Bay
306.10
795.85
322.35
838.10
302.15
785.58
Wausau
282.16
733.61
296.99
772.17
278.26
723.48
Appleton
227.26
590.88
238.84
620.98
223.49
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581.08
Urban v Rural Health Care
• Urban Health Care
– Two or More Competing Corporate Structured
Health Care Systems
– Stronger Penetration of 1st Dollar Coverage
(HMO) Plans
• More Public Sector Employees
• More Union Bargained Plans
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Urban v Rural Health Care
• Rural Health Care
– Single Community Based Hospital
– More Traditional Health Plans (Cost Sharing)
• Higher Deductibles and/or CDHC Plans
– Less Public Sector Employees
– Less Union Influence
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Insurance Reform v. Health Care Reform
• Government solutions have focused on
how we finance health care, rather than
focusing on health care costs
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Why Insurance Reform?
• It has been the Only Politically Viable
Option for Politicians
• Government Has Only Two Options in
Reforming Health Care Costs
– Control Over Providers
– Allowing the Market to Work
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The Solution is the Second
Option
• The Only Comprehensive Health Care Reform
Plan is the Sensible Health Care Solutions.
– Decreases the influence of third party payments
– Give consumers control over their health care
decisions and the cost of their health care
– Give providers a reason to be concerned with the cost
of the care they deliver
– Begins to create competition in health care
– Incentivizes Employees to take better care of
themselves
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Basis for SHCS
• Recognize & Identify the Real Problem –
Health Care Costs
• Stop Trying to Reform Insurance Just
Because it is Politically Attractive & Safe
• Listen to the Experts Why Costs Are High
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Sensible Solutions Include:
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Returning to Fundamental Principal of Insurance
Reform Medicaid & BadgerCare
Expand Wellness Programs
Health Information Technology
Health Care Transparency
Expand Long Term Care Coverage
Insurance/Market Reforms
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Returning to Fundamental Principal
of Insurance
• Introduce Comprehensive Major Medical
Insurance Plans into the Public Sector
• HSA Tax Deductibility
• Health Insurance Premium Tax
Deductibility
– Expand the Reach of Section 125
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Evidence of Consumerism
Consumer-driven health care consumers
were more value conscious:
• They were 50% more likely to ask about costs, and;
• Three times more likely to have chosen a less
expensive treatment option, and;
• They also were much more likely to visit an urgent
care center than a hospital emergency room
“CONSUMERISM IN HEALTH CARE: EARLY EVIDENCE IS POSITIVE”. The Galen Institute, August 11,
2005.
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Reform Medicaid & BadgerCare
• Covering the Uninsured – Moving Beyond
Medicaid
– Create Health Coverage Accounts
– Private Market Coverage versus Government
Plans
– Public/Private Partnership
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Expand Wellness Programs
• Remove Barriers to Offering Financial Incentives
• Encourage Wellness Plan for Private Sector
Employers
• Implement Wellness Plans for All Public Sector
Employees
• Implement Wellness Plans for Medicaid
Recipients
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National Healthcare Costs
• In 1980, the nation’s healthcare costs
totaled $245 billion
1
• In 2001, the nation’s healthcare costs
totaled $1.5 trillion
1
• Preventable lifestyle-related illness
accounts for 70% of the $1.5 trillion in
medical care costs
2
1 Department of Health and Human Services, 2003, The Power of Prevention.
2 Beyond Health Promotion, Health Affairs, 1998. Reducing need and demand for medical care.
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Prevention
70% of healthcare expenditures are preventable!
*
– Due to lifestyle or behavioral choices.
– You only have one body– take care of it!
Preventable Deaths:**
90%
Heart disease
37%
Cancers
50%
Strokes
34%
Diabetes
*Health Affairs, 1998
**JAMA, August 2003
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Health Information Technology
• Encourage Private Market Advancements
of Information Technology
– Tax Incentives
• Implement IT Requirements for State
Programs (Medicaid, State Employees)
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Health Care Transparency
• Require Full Disclosure of Health Care Costs
– Patient Right To Know. Consumers should be given
the estimated cost of the service at the time the
provider recommends the service.
• Move Private Market Where Necessary
– Hospitals have shown effort, but we need physician &
other provider data
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A Need for Health Care Consumerism?
“Consumers can guess the price of a Honda
Accord within $300, a roundtrip ticket
within $37 but they’re off by $8,100 for a
four day hospital stay.”
Source: “Consumer Attitudes Toward Health Care”, Harris Interactive survey of 2,000 individuals,
February 2005
Some plan members’ perception is that the real cost of an office
visit or prescription drugs is a $30 copay…
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Expand Long Term Care Coverage
• Implement Long Term Care Partnership
Program
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Insurance/Market Reforms
• List Bill
– Open options for coverage
– Reduce costs to consumers through IRS code
• Claims Data Disclosure
– Make insurance shopping easier & more
competitive
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What Simple Things Can
Consumers Do?
• See your doctor each year for preventative care
services
– Routine physical
• Make exercise and proper nutrition part of your
everyday life:
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Stairs versus the elevator
Hold the mayo
Get out and play (listen to your mother)
Eat fruits and vegetables.
– An apple a day can still keep the doctor
away!
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What Simple Things Can
Employers Do?
• Implement a Consumer Driven Health
Care Plan
• Short of that, remove co-pays and apply
all charges to large deductible and coinsurance with maximums
• Change your drug plan. Remove co-pays
and apply co-insurance for full cost of
drug.
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What Simple Things Can Citizens
Do?
• Get Active – Locally & State.
– Call your School Board and insist they implement
CDHC
– Call your County Board and insist they implement
CDHC
– Call your Legislators and insist they implement CDHC
• Get active with your local hospital. Find out who
serves on their board of directors and get vocal
with them about costs.
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QUESTIONS
Dan Schwartzer
Wisconsin Association of Health Underwriters
4600 American Parkway, Suite 208
Madison, WI 53718
608-268-0200
www.eWAHU.org
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