The Affordable Care Act & Diabetes Care

Geoffrey Joyce, PhD

Schaeffer Center for Health Policy & Economics

Outline

Why reform health care

Overview of the ACA

Impact on diabetes care

Innovations

Why Health Reform?Because the Status Quo is Not Good

1. We spend too much

—$2.8 trillion in total health care spending (17% of GDP)

—Per capita spending 50% - 100% higher than OECD countries

2. Many lack insurance coverage

– 50 million uninsured + 25 million underinsured

3. Quality is mixed

– High infant mortality, medication errors, readmission rates

– Longer wait times

$2,729$2,870 $2,902

$3,129$3,353 $3,470

$3,677 $3,696 $3,737$3,970 $4,063 $4,079

$4,627

$5,003

$7,538

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Per

Capita S

pendin

g -

PPP A

dju

sted

Total Health Expenditure per Capita, U.S. and Selected Countries, 2008

Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en(Accessed on 14 February 2011).Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted.

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1970 1975 1980 1985 1990 1995 2000 2005

Per

Capita S

pendin

g -

PPP A

dju

sted

Growth in Total Health Expenditure Per Capita, U.S. and Selected Countries, 1970-2008

United States

Switzerland

Canada

OECD Average

Sweden

United Kingdom

Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en (Accessed on 14 February 2011).Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted. Break in series: CAN(1995); SWE(1993, 2001); SWI(1995); UK (1997). Numbers are PPP adjusted. Estimates for Canada and Switzerland in 2008.

On Average, Spending Increase Has Been Worth It

0

10

20

30

40

50

60

40 45 50 55 60 65 70 75

DeathsPer

1,000Pop.

1974

1984

1994

2004

14.6

Source: Martin, Freedman, Schoeni, 2008.6

Age

But High Costs Drive People Out of the Market

12

13

9

5

3

5

0

2

4

6

8

10

12

14

Below FPL 100-199%FPL

200-299%FPL

300-399%FPL

400-499%FPL

500%+FPL

Number ofUninsured(millions)

Note: FPL=Federal poverty level (about $21,000 for family of 4)

But It’s Larger Than Reforming Health Care…It’s also a Public Finance Issue

0 100 200 300 400 500 600 700 800 900 1000

Executive Office of the PresidentLegislative Branch

National Science FoundationDepartment of Commerce

Corps of EngineersEnvironmental Protection Agency

Department of the InteriorOther Independent Agencies

NASAInternational Assistance

Department of StateDepartment of EnergyDepartment of Justice

Homeland SecurityHousing and Urban Development

Department of EducationOffice of Personnel Management

Department of TransportationDepartment of Veterans Affairs

Department of LaborDepartment of Agriculture

Department of the TreasuryDepartment of Defense

Social Security AdministrationHealth and Human Resources

Federal Spending in 2011 (Billions of Dollars)

Outline

Why reform health care

Overview of the ACA

Impact on diabetes care

Innovations

Key Tenets of the Affordable Care Act (ACA)

•Expand Coverage

•Protect Patients

•Reform Payment

Expand Insurance Coverage

• Individual mandate

• Employer “pay-or-play”

• Insurance exchanges (e.g. Covered California)

• Medicaid expansions (voluntary)

• Insurance subsidies (Cost=$1 Trillion/10 yrs)

– Subsidize purchase of insurance up to 400% FPL

11

Health Insurance Exchanges

• As of January 1, 2014:

– Individuals without other coverage & small employers can purchase coverage through exchanges

• Currently, “open enrollment” for 2015

– An estimated 20-27 million will enroll in coverage through these new exchanges by 2017

– Premium and cost-sharing subsidies available

12

The ACA Medicaid Expansion Fills Current Gaps in Coverage

Adults

Elderly & Persons with Disabilities

Parents

PregnantWomen

Children

Extends to Adults

≤138% FPL*

Medicaid Eligibility in 2013Medicaid Eligibility in 2014

Limited to Specific Low-Income Groups

Extends to Adults ≤138% FPL*

Current Status of State Medicaid Expansion Decisions, as of July 1, 2013

WY

WI

WV

WA

VA

VT

UT

TX

TN1

SD

SC

RI

PA

OR

OK

OH1

ND

NC

NY

NM

NJ

NH

NVNE

MT2

MO

MS

MN

MI1

MA

MD

ME

LA

KYKS

IA1

IN1IL

ID

HI

GA

FL2

DC

DE

CT

COCA

AR1AZ

AK

AL

Debate Ongoing (6 States)

Moving Forward at this Time (24 States including DC)

Not Moving Forward at this Time (21 States)

With Medicaid Expansion

Without Medicaid Expansion

Up to 100% of poverty

Medicaid Unsubsidized

100-138% of poverty* Medicaid Exchange

138-400% of poverty Exchange Exchange

>400% of poverty Unsubsidized Unsubsidized

NOTES: Poverty Level is $11,170 for a single person and $23,050 for a family of four*Medicaid eligibility cut off is 133% FPL, however 5% of income is disregarded, making the threshold 138% FPLSOURCE: Kaiser Family Foundation

How People Get Covered

NOTE: This assumes that all states choose to expand Medicaid eligibility up to 138% FPL January 2014.SOURCE: Congressional Budget Office, March 2012. Total may not equal 100% due to rounding

Estimated Health Insurance Coverage in 2016

59% 56%

10% 17%

12%

18%

20%9%

Without Health Reform With Health Reform

Total Nonelderly Population = 275 million

Uninsured

Medicaid/CHIP

Private

Non-Group/Other

Employer-

sponsored

Insurance

Uninsured

Medicaid/CHIP

Private

Non-Group/Other

Employer-

sponsored

Insurance

Protections for the Insured

• New restrictions on benefit limits

• No exclusions of preexisting conditions (<19 yr)

• No recission of coverage

• Adult children covered up to age 26

• Coverage of some preventive services

17

In Theory, the ACA is Budget Neutral

• Medicare reform ($500b)

– Slow payment increases to hospitals, nursing homes, providers, and Medicare Advantage plans

• Taxes ($500b)

– Fees on insurers, Pharma, device makers, high cost plans

– Taxes on high income individuals/families (>$200k/$250k)

– Taxes are not Indexed, so will affect more over time

18

Why So Much Opposition?

• Public’s ambivalence on the need for reform

• About 70% say health care system fails to meet the

needs of most Americans

• About 70% say health care system meets the needs of

their family

• May interfere with the MD-patient relationship

• Will not control spending

19

1. Electronic Medical Records

• Measure clinical outcomes & things that matter

2. Payment reform

• Incentivize providers via “shared savings”

3. Benefit design

• Incentivize patients to make cost-effective choices

4. Comparative effectiveness (CER)

• Accumulate good evidence on what works

5. Independent Payment Advisory Board

20

But How Will it Control Spending?

Outline

Why reform health care

Overview of the ACA

Impact on diabetes care

Innovations

Mostly Positive Changes in the Near Term

1. Cannot deny coverage to persons with diabetes

• Cannot exclude diabetes as a pre-existing condition

• Cannot cancel coverage

• No annual or lifetime benefit limits

2. Requires insurers to cover more services

– E.g. preventive services, including diabetes screening

– Diabetes education, annual eye exams, dental services

3. Lower Rx costs in Medicare Part D (doughnut hole)

4. Explicit and implicit subsidies

Longer Term Impacts Depend on System Reform

Current focus is on revenue growth

• Large capital investments & high fixed costs

• Incentives for more use

- Extra MRI means more revenue

- Only way to make margins is to use more or charge more

• Always leads to greater health care spending

Longer Term ImpactAccountable Care Organizations (ACOs)

Future focus is on spending targets & population health

Provides incentive to:

Avoid increases in capacity

Improve care in domains previously ignored

e.g. care coordination, end-of-life

Beneficial to persons with chronic disorders

ACOs are not a radical shift

Can be implemented with fee-for-service payment

Financial Risk Of Care For Provider And Payer,

By Payment Method.

Source: Frakt A B , Mayes R Health Aff 2012;31:1951-1958

Outline

Why reform health care

Overview of the ACA

Impact on diabetes care

Innovations

CMMI Project Overview

Integrate clinical pharmacists into primary care

at 10 large clinics:

– Improve care coordination and quality of care

– Educate patients about their condition(s)

– Manage drug therapies

27

Better health

Better care

Lower costs

Meets CMS Triple Aim:

Recruit High-Risk PatientsMission Accomplished

• Enrolled > 5,000 patients since Oct 2012

– Predominantly Hispanic, non-elderly women

• 3/4ths have hypertension, 36% uncontrolled

• 2/3rds have diabetes, 60% uncontrolled

• High rates of hospitalizations

28

Clinical Markers Are Improving

29

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Less than 7 7 to 8 8 to 9 9 to 10 Greater than 10

Blood Sugar Levels

Baseline 6 months Most Recent

Collaborating with USCInstitute For Creative Technologies (ICT)

• USC engineers and computer scientists developed “avatars”

– Help veterans identify/cope with PTSD (DoD funded)

– Not diagnostic or treatment oriented

• Rather, a resource and referral tool

– Wide applicability to health care

• Provide “script” or clinical content

• Create an avatar of “your” provider

• High risk and elderly are ideal targets

30

1533

One Solution: SimCoa c h

An online intelligent, interactive Virtual Human Agent program

Designed to attract and engage Service Members and their significant others who might not otherwise seek help

Create an experience that will motivate users to take the first step to empower themselves with regard to their Healthcare

Support users’ efforts to understand their situation better, explore available options and initiate the treatment process when needed.

SimCoach will not provide diagnostic or therapy services.

Beta Test Site: http://www.simcoach.org/