Transcript Cathy Schoen Presentation - Alliance for Health Reform

1
THE
COMMONWEALTH
FUND
Benefit Design: Access,
Affordability, Risk Pooling
Cathy Schoen
Senior Vice President, Commonwealth Fund
Benefits in Health Insurance
Alliance for Health Reform
Washington, DC
October 10, 2008
2
Benefit Design: Goals and Issues
• Core goals of health insurance
– Timely access
– Affordability and financial Protection
– Risk pooling
• Income matters: need to vary standard by income
– Low income sensitive to cost-sharing
• National minimum benefit floor
– Rationale
– Principles and standards
• Design issues: limit variation or actuarial equivalent?
– Standardization advantages: choice, administrative
costs, and health risk
– Design innovation within limits?
THE
COMMONWEALTH
FUND
3
Insurance Matters for Access and Financial
Protection: Underinsured and Uninsured at High Risk
Percent of adults (ages 19–64)
Insured, not underinsured
Underinsured
Uninsured during year
68
75
53
45
50
51
31
21
25
0
Went without needed care due to
costs*
Medical bill problem or medical debt**
*Did not fill prescription; skipped recommended test, treatment, or follow-up, sick but did not visit doctor; or did not get
needed specialist care because of costs. **Problems paying medical bills; changed way of life to pay medical bills;
collection agency for inability to pay medical bills or debt.
Source: C. Schoen et al. “How Many are Underinsured? Trends Among U.S. Adults, 2003 and 2007, Health Affairs
Web Exclusive, June 2008. Data: 2007 Commonwealth Fund Biennial Health Insurance Survey
THE
COMMONWEALTH
FUND
4
Cost-Sharing Can Reduce Essential and Less
Essential Care and Increase Health Risks
Percent reduction in drugs per day
Elderly
Elderly
Low Income
22
25
140
120
20
14
15
10
Percent increase in incidence per 10,000
15
100
Low Income
117
97
78
80
9
60
43
40
5
20
0
0
Essential
Less Essential
Adverse Events
ED Visits
Source: R. Tamblyn, R. Laprise, J. A. Hanley et al., “Adverse Events Associated with Prescription Drug Cost-Sharing
Among Poor and Elderly Persons,” Journal of the American Medical Association, Jan. 24/31, 2001 285(4):421–29.
THE
COMMONWEALTH
FUND
National Minimum Benefit Floor: Principles
5
• Rationale
– Ensure access with financial protection
– Risk pooling: limit competition based on risk
– Defined minimum for tax credit or mandate
• Design Principles
– Broad scope of benefits
– Prohibit disease or service specific limits; eliminate
lifetime limits or very high ceiling
• Patient protection: benefits don’t “run out” no surprises
– Maximum deductible
• Exempt preventive care and essential medications
– Annual out- of-pocket maximum
• Deductible plus co-payments or co-insurance
THE
COMMONWEALTH
FUND
Health Care Costs Concentrated in Sick Few—
Sickest 10 Percent Account for 64 Percent of Expenses
6
Distribution of health expenditures for the U.S. population,
by magnitude of expenditure, 2003
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1%
5%
10%
Expenditure
threshold
(2003 dollars)
24%
49%
50%
64%
$36,280
$12,046
$6,992
97%
$715
U.S. Population
Health Expenditures
Source: The Commonwealth Fund. Data from S. H. Zuvekas and J. W. Cohen, “Prescription Drugs and the
Changing Concentration of Health Care Expenditures,” Health Affairs, Jan./Feb. 2007 26(1):249–57.
THE
COMMONWEALTH
FUND
Standardization Above Minimum or Limited
Variation within Group/Bands?
7
• Standardization, with limited variations above
minimum?
– Facilitates informed choice
– Lowers administrative costs; complexity
– Avoids variations that could segment risk
• Allow variations above minimum, equivalent bands?
– Could allow for value-based design innovation
– Restrict areas of variation
• Prohibit caps or limits on services; high, standardized
lifetime maximum
• Limit range of cost-sharing variation; specify out-of-pocket
maximums in equivalent bands or grouping
– Public disclosure in standardized format
THE
COMMONWEALTH
FUND
8
Source: E. O'Brien and J. Hoadley, Medicare Advantage: Options for Standardizing Benefits and Information to Improve
Consumer Choice, The Commonwealth Fund, April 2008
THE
COMMONWEALTH
FUND
Cumulative Changes in Annual
National Health Expenditures, 2000–2007
9
Percent change
125
Net cost of private health insurance administration
100
Family private health insurance premiums
109%
Personal health care
91%
Workers earnings
75
65%
50
25
24%
0
2000
2001
2002
2003
2004
2005
2006*
2007*
Notes: Data on premium increases are cost of health insurance premiums for a family of four.
*2006 and 2007 private insurance administration and personal health care spending growth rates are projections.
Sources: A. Catlin et al., “National Health Spending in 2005: The Slowdown Continues,” Health Affairs, Jan./Feb. 2007; J. A.
Poisal et al., “Health Spending Projections Through 2016,” Health Affairs Web Exclusive (Feb. 21, 2007); Henry J. Kaiser Family
Foundation/HRET, Employer Health Benefits Annual Surveys, 2000–2007 (Washington, D.C.: KFF/HRET).
THE
COMMONWEALTH
FUND
10
Benefit Design: Low-Income
• Low and modest income highly sensitive to cost sharing
– RAND plus more recent studies: adverse health plus
increased use ER and hospital
– At or near poverty = limited income for necessities
• State innovations in benefit design to assure
affordability
– Broad scope of benefits
– Eliminate deductible
– Low co-payment or cost-sharing
– Low out-of-pocket maximums
– Affordability standard relative to income
THE
COMMONWEALTH
FUND
Benefit Design to Enhance Access,
Affordability and Efficiency
1. Benefit floor: A standard benefit defined and
available to all
2. Limit range of variation
• Enable informed comparison
• Provide consumer protection
• Limit risk-segmentation
• Lower administrative costs
3. Low-Income: more comprehensive benefits
4. Design Goals:
• Access, income protection, risk pooling
• Focus competition on improving health &
slowing growth in total costs
11
THE
COMMONWEALTH
FUND