Health Care Reform:What It Likely Will and

Will Not AccomplishTom Schlesinger, Ph.D.Executive Consultant

Gundersen Lutheran

Access Quality

Cost

What are the problems and how did health reform address

them?

Where you stand depends on where you fall…

LIBERAL CONSERVATIVE

ACCESSIn developed countries the access issue is all about having health insurance

ACCESS- Current

Until now, U.S. only developed country w/o near universal coverage

US has over 15% uninsured - 45.7 million peopleEqual to populations of New York, Ohio, Pennsylvania

1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

10

20

30

40

50

60

70

American Health Care Insurance Coverage

Employment-based

Not Covered

Government Health Insurance

Perc

ent

QUALITY

QUALITY - Current

• Very uneven quality across the U.S.

• No relationship expenditures and quality• Limited transparency

• Current payment system incents expensive care rather than high quality, cost-effective care

QUALITY- Reform

• Transparency: • Public reporting of physician sites

• Quality and Patient experience

• Paying for Value• Pay for performance• Value Index

COST

COST-CurrentWhat Drives the Rate of Increase?

1. Widespread use of expensive tests and treatments, much of it of marginal value

a) Fee for Service reimbursement2. System incents high cost care not value3. American health care is very fragmented

Costs very concentrated in small group4. Rising prevalence of chronic disease, some

estimates put it at 75% of health care costs1. - Much of this due to lifestyle choices

COST- ReformFocused on Access

Cost Control severely greatly constrainedPilots and/or watered down.

• Prices->Reduced annual payment updates

• Benefits plans-> tax ‘cadillac’ health plans limited

COST- Reform

• Congress unable to cut spending• Payment Advisory Board • Cannot change benefits, ration care, raise taxes, premiums, or cost-sharing

• Lawsuits->State grants to pilot tort reform• Geographic Payment Inequity-> study

COST- Reform

• Insurance Markets -> Exchanges• Intent is to reduce cost and improve access

• Small business and individual

COST- Reform

• Marginal care driven by Fee for Service• U.S. health care providers fragmented->

• Accountable Care Organizations (ACO)• Umbrella organizations to provide systems/processes and skills

• Move from FFS to bundled/global pay• Quality and cost will be compared to historical performance

• Savings will be shared

Specialty Care

Inpatient Care

AncillaryCare

What does this mean?

• Payment system reform is necessary but not sufficient to reform the delivery system

But payment reform will drive delivery reform• We are not sure what might best bend the

cost curve and yet be acceptable to stakeholders

• The system is so fragmented, change will be slow

• More and stronger efforts at cost reform are not far in the future

Will this pass ‘constitutional muster’?• Is Congress over-reaching?

• Commerce clause• Does the mandate violate fundamental

individual rights as put forward in the Bill of Rights?

Discussion