THE COMMONWEALTH

FUND

The National View of Health Insurance

Cathy SchoenSenior Vice President, The Commonwealth Fund

Alaska Work Shop Panel: National Overview and State Strategies

Anchorage, AlaskaDecember 7, 2006

2

THE COMMONWEALTH

FUND

Overview: Health Insurance, Costs and Health System Performance

• Triple threats to health and economic security– High rates uninsured, unstably insured and under-insured– Rising health care costs outpacing incomes– Low value for high $ investment: inefficient insurance and

care systems with wide variations in quality

• Consequences of inadequate and fragmented insurance coverage – Health and financial risks for uninsured and under-insured– Less healthy, productive workforce– Inefficient health care system– Barrier to achieving a high performance system

• National and state insurance reform strategies: national proposals and recent state action

• Health insurance as critical element to improving overall care system performance

3

THE COMMONWEALTH

FUND

U.S. Healthcare System Falls Short - Need for Policy Action

• Highest costs in the world– Increasing much faster than wages or incomes

– Average family premium exceeds minimum wage worker annual income

• Rising numbers uninsured and underinsured

• Public programs + employer base under stress

• Quality widely variable

• National scorecard score of 66 reflects wide gaps on access, quality and efficiency*

– US evidence – little relationship between quality and efficiency. Opportunity for net gains

– International evidence – not getting value for money

– Lack of 21st Century Infrastructure

*Commonwealth Fund Commission on a High Performance Health System, Why Not the Best?Results from a National Scorecard on U.S. Health System Performance, Sept. 2006

4

THE COMMONWEALTH

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Health Insurance and Cost Trends and Implications

5

THE COMMONWEALTH

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*1999–2005 reflect effect of verification question and implementation of Census 2000-based population controls.Note: Projected estimates for 2005–2013 are for non-elderly uninsured based on T. Gilmer and R. Kronick, “It’s the Premiums, Stupid: Projections of the Uninsured Through 2013,” Health Affairs Web Exclusive, April 5, 2005.

Source: U.S. Census Bureau, March CPS Surveys 1988 to March 2006.

31 33 33 35 3539 40 40 41 42 43 44

40 40 4144

56

45

0

20

40

60

1987 1990 1993 1996 1999* 2002 2005 2008 2011

Millions uninsured

Projected2013

46 47

47 Million Uninsured in 2005 Increasing Steadily Since 2000

6

THE COMMONWEALTH

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One in Five Adults Uninsured: Up 7 Million in 5 YearsPopulation Under Age 65 Uninsured

18

12

16

21

11

18

0

10

20

30

All under 65 Children < 18 Adults 18–64

2000 2005

Data: Analysis of Current Population Survey, March 2000–2006 supplements; EBRI Sources of Health Insurance and Characteristics of the Uninsured, Current Population Survey March 2006.

Percent uninsured

9 9 9 9 8 8 8

30 31 32 35 36 37 38

0

20

40

60

1999 2000 2001 2002 2003 2004 2005

Adults 18–64

Children under 18

Millions uninsured

39 40 4143 45 4645

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 6

7

THE COMMONWEALTH

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Rising Rates of Adults Uninsured Across States: Percent of Adults Ages 18–64 Uninsured

Data: Two-year averages 1999–2000 and 2004–2005 from the Census Bureau’s March 2000, 2001 and 2005, 2006 Current Population Surveys. Estimates by the Employee Benefit Research Institute.

WA

ORID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVTNH

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

ILIN

AR

LA

AL

SCTN

NCKY

FL

VA

OH

MI

WV

PA

NY

AK

ME

DE

DC

HI

CO

GAMS

OK

NJ

SD

19%–22.9%

Less than 14%

14%–18.9%

23% or more

1999–2000 2004–2005

MA

RI

CT

VTNH

MD

NH

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 7

8

THE COMMONWEALTH

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International Comparison of Spending on Health, 1980–2004

0

1000

2000

3000

4000

5000

6000

7000 United StatesGermanyCanadaFranceAustraliaUnited Kingdom

Data: OECD Health Data 2005 and 2006.

0

2

4

6

8

10

12

14

16

United StatesGermanyCanadaFranceAustraliaUnited Kingdom

Average spending on healthper capita ($US PPP)

Total expenditures on healthas percent of GDP

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 8

9

THE COMMONWEALTH

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U.S. National Health Expenditures as a Percent of National Income (GDP): Total Projected to Double

from $2 trillion to $4 Trillion in 10 Years

7.29.1

13.8 13.6 13.815.4 15.9 16.0 16.2

18.020.0

0

5

10

15

20

25

1970 1980 1993 1997 2000 2002 2003 2004 2005 2010 2015

Percent

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196; Smith et al., “Health Spending Projections Through 2015: Changes On The Horizon,” Health Affairs Web Exclusive (February 22, 2006): W61-73.

Projected

10

THE COMMONWEALTH

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Growth in National Health Expenditures: Private, Public, and Total Expenditures, 1980–2004

10.3

6.3

8.4

10.1

4.5

7.28.0

10.7

5.3

8.9

5.46.4

0

2

4

6

8

10

12

14

1980–1993 1993–1997 1997–2000 2000–2004

Total NHE Private Public

Average percent growth in health expenditures

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196.

11

THE COMMONWEALTH

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Health Expenditure Growth 1980–2004for Selected Categories of Expenditures

9.2

11.8 11.4 11.7 12

8.1

4.63.6

11.1

3.0

4.6

6.2

1.9

15.9

10.8

8.2 8.5

5.9

11.8

13.9

0

5

10

15

20

Hospital care Physician &clinical services

Nursing home &home health

Prescription drugs Prog. admin. & netcost of private

health insurance

1980–1993 1993–1997 1997–2000 2000–2004

Average annual percent growth in health expenditures

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196.

12

THE COMMONWEALTH

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Percent of National Health Expenditureson Health Insurance Administration, 2003

a 2002 b 1999 c 2001* Includes claims administration, underwriting, marketing, profits, and other administrative costs; based on premiums minus claims expenses for private insurance.Data: OECD Health Data 2005.

Net costs of health administration and health insurance as percent of national health expenditures

1.9 2.1 2.12.6

3.34.0 4.1 4.2

4.8

5.6

7.3

0

2

4

6

8

a b c *

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 12

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THE COMMONWEALTH

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Source: KFF/HRET Survey of Employer-Sponsored Health Benefits: 2005. 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 .

12.0

18.0

0.8

13.912.9

10.9

8.2

5.3

11.2

8.5 9.2

0

5

10

15

20 Health Insurance PremiumsWorkers EarningsOverall Inflation

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

Percent

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THE COMMONWEALTH

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Deductibles Rise Sharply, Especially in Small Firms, Over 2000–2005*

*Out-of-network deductibles are for 2000 and 2004.

Source: J. Gabel and J. Pickreign, Risky Business: When Mom and Pop Buy Health Insurance for Their Employees (Commonwealth Fund, April 2004); KFF/HRET Employer Health Benefits 2005 Annual Survey.

210

383

157

319

469

676

254

510

$0

$150

$300

$450

$600

$750

$9002000 2005

In-network Out-networkOut-network In-networkSmall Firms,

3-199 EmployeesLarge Firms,

200+ Employees

PPO in-network and out-of-network deductibles

15

THE COMMONWEALTH

FUND

0

1000

2000

3000

4000

5000

6000

0 100 200 300 400 500 600 700 800 900

a

Note: Adjusted for Differences in the Cost of Living, 2003.Source: B. Frogner and G. Anderson, “Multinational Comparisons of Health Systems Data, 2005,” The Commonwealth Fund, April 2006.

a2002

Out-of-Pocket Health Care Spending per Capita, US$

National Health Expenditures per Capita, US$

United States

Australia

OECD Median

Canada

Japana

New Zealand

GermanyFranceNetherlands

Greater Out-of-Pocket Costs Not Associated with Lower Spending in Cross-National Comparisons

16

THE COMMONWEALTH

FUND

Insurance Dynamics: Gaps in Coverage

• Annual uninsured estimates undercount the uninsured

• An estimated one third of total under 65 population has had a time uninsured during past 2 years – 80 million people

• Change in family or job status can trigger part-year or longer loss of coverage– Low wage families and seasonal workers at highest risk for

moving in and out of private– High rates of “churning” in public programs

• Negative consequences– Undermines health access and financial security– Inefficient and lower quality of care– High insurance administrative overhead for programs and

providers

17

THE COMMONWEALTH

FUND

Uninsured Rates Rising Among Adults with Low and Moderate Incomes, 2001–2005

15 17 18

33 37 37

1724 28

9

9 9 9

1615 16

1111

13

9

76 2 33

7 9

0

25

50

75 Insured now , time uninsured in pas t year

U ninsured now

Percent of adults ages 19–64

Note: Income refers to annual income. In 2001 and 2003, low income is <$20,000, moderate income is $20,000–$34,999, middle income is $35,000–$59,999, and high income is $60,000 or more. In 2005, low income is <$20,000, moderate income is $20,000–$39,999, middle income is $40,000–$59,999, and high income is $60,000 or more.

Source: S.R. Collins et al., Gaps in Health Insurance Coverage: An All-American Problem, Findings from The Commonwealth Fund Biennial Health Insurance Survey, The Commonwealth Fund, April 2006.

26

52

35

16

4

24

49

28

13

4

Total Low income Moderate income

Middle income

High income2001 2003 2005 2001 2003 20052001 2003 20052001 2003 20052001 2003 2005

28

53

41

18

7

18

THE COMMONWEALTH

FUND

1810 13 15

2839

33 3644

60

3949

59

3743

0

25

50

75

Did not fill a

presc ription

Did not see

spec ialis t w hen

needed

Sk ipped

medic al tes t,

treatment, or

follow -up

Had medic al

problem, did

not see doc tor

or c linic

Any of the four

ac c ess

problems

Insured all year Insured now , time uninsured in past year U ninsured now

Lacking Health Insurance for Any Period Threatens Access to Care

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).

Percent of adults ages 19–64 reporting the following problems in the past year because of cost:

19

THE COMMONWEALTH

FUND

Adults Without Insurance Are Less Likely to Be Able to Manage Chronic Conditions

16 1827

58

35

59

0

25

50

75

Vis ited ER, hospital, or both for

c hronic c ondition

Sk ipped doses or did not fi ll

presc ription for c hronic c ondition due

to c ost

Insured all year Insured now , time uninsured in past year U ninsured now

Percent of adults 19–64 with at least one chronic condition*

*Hypertension, high blood pressure, or stroke; heart attack or heart disease; diabetes; asthma, emphysema, or lung disease.

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).

20

THE COMMONWEALTH

FUND

Adults Without Insurance Are Less Likely to Get Preventive Screening Tests

82

56

7577

31

5664

18

48

0

20

40

60

80

100

Pap tes t Colon c anc er sc reening Mammogram

Insured all year Insured now , time uninsured in past year U ninsured now

Percent of adults

Note: Pap test in past year for females ages 19-29, past three years age 30+; colon cancer screening in past five years for adults age 50+; and mammogram in past two years for females age 50+.

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).

21

THE COMMONWEALTH

FUND

1510

193026

41

1923

0

25

50

75

Test results or

records not

available at time of

appointment

Duplicate tests

ordered

Never received

lab/diagnostic test

results or delay in

receiving abnormal

results

Any lab test/

record problems

Insured all year Uninsured during the year

Adults With Any Time Uninsured Receive Less Efficient Care: Duplicate tests and delays

Percent of adults ages 19–64 reporting the following problemsin past two years:

Source: S.R. Collins et al., Gaps in Health Insurance Coverage: An All-American Problem, Findings from The Commonwealth Fund Biennial Health Insurance Survey, The Commonwealth Fund, April 2006.

22

THE COMMONWEALTH

FUND

34

26

38

21

53 53

59

0

40

80

Total Income<$40,000

Income$40,000+

All Insured all year Uninsured during year

47

38

38

44

16

25

33

29

0 40 80

<200% of poverty

200%–399% of poverty

400%+ of poverty

Other

Asian/PI

Hispanic

Black

White

Medical Bill Problems or Accrued Medical Debt for Insured and Uninsured, 2005

Percent of adults (ages 19–64) with any medical bill problem or outstanding debt*

* Problems paying or unable to pay medical bills, contacted by a collection agency for inability to pay medical bills ), had to change way of life to pay bills, or has medical debt being paid off over time.Data: Analysis of 2005 Commonwealth Fund Biennial Health Insurance Survey

By income and insurance status By race/ethnicity and income

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006 22

23

THE COMMONWEALTH

FUND

Insurance Design Shift: Market Trends and Policy Increase Patient Cost Sharing

• Double digit premium increases triggering shift in insurance design– Increased patient cost sharing & benefit limits– Move away from spreading costs through premiums to shift

to sicker patients and their families– Current federal tax policies for health savings accounts

encourage high deductible plans

• Risk to basic goals of insurance– facilitate timely access to medical care– financial protection

• Deductibles and cost sharing limits rarely adjust for income

• Underinsured emerging concern

24

THE COMMONWEALTH

FUND

One-Third of All Adults Underinsured or Uninsured: 61 Million Adults, 2003

Insured All Year, Not Underinsured

65%

Underinsured9%

Uninsured During Year26%

Source: C. Schoen, et al., “Insured But Not Protected: How Many Adults Are Underinsured?” Health Affairs Web Exclusive, June 14, 2005. Underinsured=insured all year but had out of pocket costs of 10% of income or 5% if low income or deductible equal to 5% of more of income.

25

THE COMMONWEALTH

FUND

Underinsured and Uninsured Adults At High Risk of Access Problems and Financial Stress

25

117

35

59

44

28

4654

0

25

50

75

Went w ithout c are due to

c os ts

Contac ted by c ollec tion

agenc y about medic al bills

Changed w ay of life

s ignific antly to pay

medic al bills

Insured, not underinsured U nderinsured U ninsured during year

Percent adults 19-64

* Did not fill a prescription; did not see a specialist; skipped recommended care; or did not see doctor when sick because of costs.

Source: C. Schoen, et al., “Insured But Not Protected: How Many Adults Are Underinsured?” Health Affairs Web Exclusive, June 14, 2005.

26

THE COMMONWEALTH

FUND

Privately Insured Adults with High Deductibles Report Higher Rates of Medical Bill Problems

148 6

172323

913

2735

20

5

17

3141

0

25

50

75

Not able to pay

medical bills

Contacted by

collection

agency*

Had to change

way of life to

pay medical

bills

Medical debt

being paid off

over time

Any medical bill

problem or debt

<$500 $500–$999 $1,000+

Percent of adults ages 19–64 privately insured all year

Source: The Commonwealth Fund Biennial Health Insurance Survey (2005).

27

THE COMMONWEALTH

FUND

Cost-Sharing Reduces Use of Both Essential and Less Essential Drugs and Increases Risk of Adverse

Events

9

1514

22

0

5

10

15

20

25

Essential Less Essential

E lderly Low Inc ome

Source: R. Tamblyn et al., “Adverse Events Associated With Prescription Drug Cost-Sharing Among Poor and Elderly Person,” JAMA 285, no. 4 (2001): 421–429.

Percent reduction in drugs per day

117

43

9778

0

20

40

60

80

100

120

140

Adverse Events ED V is its

E lderly Low Inc ome

Percent increase in incidence per 10,000

28

THE COMMONWEALTH

FUND

16.2

21.3

6.4

10.6

0

5

10

15

20

25

A CE Inhibitors S tatins

Copayments Inc reased Copayments NOT Inc reased

Tiered Prescription Drug Cost-SharingLeads to People Not Filling Prescriptions

Source: H.A. Huskamp et al., “The Effect of Incentive-Based Formularies on Prescription-Drug Utilization and Spending,” New England Journal of Medicine (December 4, 2003): 2224–32.

Percent of enrollees discontinuing use of all drugs in class

29

THE COMMONWEALTH

FUND

Health Care Costs Highly Concentrated: Sickest 10% = 70% Total Expenditures

0%

50%

100%

U.S. Population Health Expenditures

1%5%

10%

55%

69%

27%

Source: A.C. Monheit, “Persistence in Health Expenditures in the Short Run: Prevalence and Consequences,” Medical Care 41, supplement 7 (2003): III53–III64.

Distribution of Health Expenditures for the U.S. Population, By Magnitude of Expenditure, 1997

50%

97%

$27,914

$7,995

$4,115

$351

Expenditure Threshold

(1997 Dollars)

30

THE COMMONWEALTH

FUND

Summary of Trends and Implications

• Trends point to increase in under-insured as well as uninsured

– Affordability and access concerns make it harder to distinguish from uninsured

• Insurance design matters for access to effective care and financial protection

– Low and modest income and chronic ill at risk

– Need for attention to costs relative to income and benefit designs that encourage essential and effective care

• Design of insurance expansions need to target affordability and access for insured as well as uninsured

31

THE COMMONWEALTH

FUND

Public Support for Policy Action

• Broad and increasing public support for action on coverage and costs – but no clear consensus– Rising concern among middle income families– Employers?

• Surveys of public indicate willingness to relinquish some tax cuts to finance coverage expansions

• Preferences for source of coverage varies by current source

• Public view financing of coverage as a shared responsibility of citizens, employers, government

32

THE COMMONWEALTH

FUND

National Legislative Proposals Focused on Insurance Expansion

33

THE COMMONWEALTH

FUND

State Children’s Health Insurance Program (SCHIP): 2007 Reauthorization

• SCHIP widely popular and generally viewed as a success. 10th Anniversary requires action to extend

• Critical component of national and state success in maintaining or improving children’s insurance– Has lowered % of low income uninsured– Yet 8 million children remain uninsured– Two-thirds of uninsured children income eligible – Medicaid and SCHIP program rules barrier to

enrolment or staying covered

34

THE COMMONWEALTH

FUND

21.0 21.4 21.6 21.9 22.625.5 26.3 27.8

3.34.6

5.3 6.06.2

1.90.9

1997 1998 1999 2000 2001 2002 2003 2004

SCHIP

Medicaid

Source: Jeanne Lambrew George Washington University Presentation, 10-31-06. Adapted from Georgetown Center for Children and Families and CRS. Based on children ever-enrolled over the course of a year.

Children’s Enrollment in Medicaid & SCHIP 1997-2005

Of 6.1 Million in SCHIP in 2005:

- 1.7 million were in Medicaid - 4.4 million were in separate programs

22.3 23.525.2

21.0

27.230.8

32.334.0

35

THE COMMONWEALTH

FUND

0%

5%

10%

15%

20%

25%

30%

1997 1998 1999 2000 2001 2002 2003 2004 2005

Rate of Low-Income Uninsured Children, 1997-2005

Note: Beginning in 2004, the NHIS changed its methodology for counting the uninsured. This results in the data for 2004 and later years not being directly comparable to the data for 1997 – 2003.

Source: J. Lambrew based on Georgetown Center for Children and Families, L. Dubay analysis of data from the National Health Interview Survey.

22.3%

14.9%

36

THE COMMONWEALTH

FUND

AR

MEALSC

NDAZ

LA DCNY

IDCAMDMS

DE KY IN NHSD MIGA

KS VT IA NCVAMOMNNMWY RICTNV

TX FLIL NJ UTOHNEWV

OKMTWA HI

MA TN

ORWI

PA

CO

AK

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Change in Rate of Uninsured Children by State

Note: No state experienced a statistically significant increase in their rate of uninsured children.

Source: Minnesota State Health Access Data Assistance Center, The State of Kids’ Coverage, August 9, 2006.

National Average Decline: – 20.5%

Percentage Decline From 1997-98 to 2003-04

37

THE COMMONWEALTH

FUND

SCHIP Reauthorization 2007: Policy Issues

• Opportunity to reassess health coverage priorities and approaches– Sustain with minimal change would require increase of $12 to $14

billion over 5 years to keep up + reauthorization– Revise or expand?

• Eligibility issues– Maintain focus on core, currently eligible children

• Restrict or retarget funds on low income children• Eliminate current “crowd out” provisions• Extend to all income eligible – legal immigrants, children of

state employees, Medicaid eligible– Expand eligibility

• Increase age to include young adults• Raise income threshold to higher level, with buy-in option• Extend to parents – family care

• Benefits and financing– State options to wrap-around employer coverage– Sicker and special needs children benefits– Align matching rates of Medicaid and SCHIP

38

THE COMMONWEALTH

FUND

109th Congress Health Insurance Expansion Bills– Federal Support for Expansion

• Public program expansions– Medicare related

• Medicare for All with group insurance options• Medicare buy-in older adults• Eliminate 2 year waiting period for disabled in Medicare

– Universal coverage for kids• Up to age 21. Public expansion to 300%; tax credits and

buy-in options for higher income families

– Medicaid expansions: Various proposals• Expand to young adults age 23• Family Care: expand to parents of low income children

• Federal-State Partnership Approaches to Support Innovation

39

THE COMMONWEALTH

FUND

109th Congress National Legislative Proposals to Facilitate State Health Insurance Innovations

• Baldwin-Price: Health Partnership through Creative Federalism– State proposals for coverage, quality and efficiency and

information technology. Statewide or multi-state– Commission to review

• Voinovich-Bingaman: Health Partnership Act– State grants for innovation, priority to coverage and access– Commission to establish performance measures and goals

and review proposals

• Allen: Small Business Health Plans Act– Federal grants for states to establish small business health

benefits program. Similar to federal employees benefit program

– Federal reinsurance for coverage new programs– National program for employers in states without program

40

THE COMMONWEALTH

FUND

Health Insurance Expansion Bills 109th Congress – Private Market Focus

• Employer mandates

• Individual market and small group markets

– Tax credit and tax deductibility approaches

– Small group association plans: override state regulations

41

THE COMMONWEALTH

FUND

What Are the Goals of More Universal Coverage?Insurance as Foundation to Improve System Performance

• Meaningful, affordable, and equitable access

• Broad risk pooling– Eliminate insurance market incentives that reward avoidance of

health risk or cost shifting

• Use insurance as foundation to facilitate system-wide - – Timely, appropriate and effective care – Enhanced primary, preventive and well-coordinated care– More effective chronic care

• Lower insurance administrative costs by simplification and more efficient coverage– Stable coverage with seamless transitions– Reduce marketing, underwriting and overhead costs– Simplification and coordination

• Use insurance expansions as a vehicle and foundation to achieve more integrated, high quality and efficient care

42

THE COMMONWEALTH

FUND

State Strategies to Expand Coverageto Provide a Foundation to Improve Access, Quality

and Cost Performance • Develop blueprints toward more universal coverage

• Coherent policies that maximize connection and minimize complexity

• Expand public programs and “connect” with private

• Provide financial assistance for affordability – premium assistance; “buy-in” provisions

• Assure benefit designs cover primary, preventive and essential care

• Pool risk and purchasing power, with multi-payer collaboration

• More efficient insurance arrangements and simplification

• Pool purchasing power

• Develop reinsurance or other financing strategies to make coverage more affordable, pool risk and stabilize group rates

• Shared responsibility: mandate that employers offer and/or individuals purchase coverage

THE COMMONWEALTH

FUND

43

THE COMMONWEALTH

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Acknowledgements

Sara Collins

Assistant Vice President Future of Health Insurance Program

Karen Davis

President

Sabrina How

Research Associate

THE COMMONWEALTH

FUND

Anne Gauthier

Senior Policy Director, Commission of a High Performance Health System

For Commonwealth Fund Publications

Visit the Fund at: www.cmwf.org

44

THE COMMONWEALTH

FUND

The rich

CATEGORIES OF PEOPLE IN THE U.S. HEALTH INSURANCE SYSTEM

The poor

The near poor

The broad middle class

The Young

Working-age people

People age 65 and over

The 47 million or so

uninsured tend to be near poor

The federal-state Medicaid

program for certain of the

poor, the blind and the disabled

The employed and their families who are typically covered through their jobs, although many small employers do not provide coverage.

For the rich, “Disneyland” the sky-is-the limit policies without rationing of any sort (Boutique medicine)

Near poor children may be temporarily covered by Medicaid and S-Chip, although 7-8 million are still uninsured.

Persons over age 65, who are covered by the federal Medicare program, but not for drugs or long-term care. Often the elderly have private supplemental MediGap insurance

The very poor elderly are also covered by Medicaid

QUIMBIESSLIMBIES

Source: Professor Uwe Reinhardt, Princeton University

45

THE COMMONWEALTH

FUND

Making Coverage More AutomaticEmployer vs. Public Insurance

Source: Based on D. Remler, S. Glied “What Can the Take-Up of Other Programs Teach Us: Increasing Participation in Health Insurance Programs,” Am. J. of Public Health, January 2003.

Payroll deduction

85%-90% participation rates

Take a job

Decide to participate; choose plan

Employee Health Benefit Decision

Learn about programs

Obtain an application

Apply and prove eligibility

Choose plan

Periodic proofof eligibility

Make regular payments

by check or money order

40%-70% participation rates

Low Income Public ProgramApplicant Decision

Health Expenditures for Selected Type of Services, 2000-2015

Projected

TOTAL 2000 2005 2010 2015

Billions $1,358.5 $2,016.0 $2,879.4 $4,031.7

Percent GDP 13.8% 16.2% 18.0% 20.0%

BY TYPE OF SERVICE

Hospital care $417.0 $616.1 $882.4 $1,230.9

Physician & clinical services 288.6 429.9 610.7 849.8

Other professional services (dental, etc.)

138.2 201.3 292.6 411.5

Nursing home care 95.3 121.7 160.5 216.8

Home health care 30.6 48.9 72.3 103.7

Prescription drugs 120.8 203.5 299.2 446.2

Other medical products 49.5 56.3 69.1 83.1

Prog. admin. & net cost of private health insurance 81.2 142.4 210.6 289.8

Investment 94.0 133.8 191.3 268.9

Source: Smith et al., “National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending,” Health Affairs (January/February 2006): 186-196; Smith et al., “Health Spending Projections Through 2015: Changes On The Horizon,” Health Affairs Web Exclusive (February 22, 2006): W61-73.

Growth in National Health Expenditures (NHE) Under Various Scenarios

Source: Based on Borger et al., “Health Spending Projections through 2015: Changes on the Horizon,” Health Affairs Web Exclusive, February 22, 2006.

NHE, in trillions of dollars

47

1.75

2.25

2.75

3.25

3.75

4.25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Baseline NHEOne-time savings scenarioSlowing trend scenario

$2.016 trillion in 2005

Cumulative savings projections, 2007–2015:One-time savings 5%: $1.3 trillionSlowing trend 1%: $1.4 trillion $3.7 T

$3.8 T

$4.0 T