Executive Series. Executive Series. 4. Spending More for He

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• The Imperative for Health Reform
• The Position of the National Business Group on
  Health
• November 2007

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Agenda

• Growing Health Care Cost and Quality Crisis
• 47 Million Uninsured
• Dysfunctional Financing System
• Unsustainable Government Spending
• Implications for Private Sector
• NBGH Position on National Health Reform

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Health Care Spending Increases
Health Care Spending Far Outpaces Wage Gains and
Inflation
Source 2007 National Health Expenditure Data,
with projections in 2006-2007 Kaiser/HRET Survey
of Employer-Sponsored Health Benefits, 1999-2007
Bureau of Labor Statistics, Consumer Price Index,
U.S. City Average of Annual Inflation (April to
April), 1988-2007 Bureau of Labor Statistics,
Seasonally Adjusted Data from the Current
Employment Statistics Survey, 1988-2007 (April to
April).
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Spending More for Health Care of Uncertain Value
Source McGlynn et al. The Quality of Health Care
Delivered to Adults in the United States. NEJM
20033482635-2645.
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Pricing More People Out of Coverage
Rate in Millions and Percent of Uninsured in the
US population 1987 - 2006
Note People were considered uninsured if they
were not covered by any type of health insurance
at any time in that year. Source U.S. Census
Bureau, Current Population Survey, 1988-2007
Annual Social and Economic Supplements
6
Unsustainable Federal Health Spending Trend
Projected Federal Spending on Medicare and
Medicaid as Percentage of GDP, with Minimal Cost
Effect by Aging Population
Note Excess cost growth is the extent to which
the increase in health care spending for an
average individual exceeds the growth in per
capita gross domestic product (GDP). Source
Congressional Budget Office, 2007
7
Increasing Risk of Cost-Shifting to Private Sector
Hospital Payment-to-Cost Ratios, by Type of Payer
Since 2002, private payer payments to hospitals
have increased, while at the same time, hospital
payments by Medicare and Medicaid have decreased.
Unless there is reform, this cost-shifting toward
private sector will continue.
Source A. Dobson, J. DaVanza and N. Sen. The
Cost-Shift Payment Hydraulic Foundation,
History, And Implications. Health Affairs
200625(1) 24. Note 1.0 represents costs and
payments in balance
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Straining Business Competitiveness
US Private Sector Spends more per Capita on
Health Care than Rest of World
6,096
3,521
3,038
2,900
2,823
424
70
31
Note Figures represent total per capita
government spending plus private spending. China
figure does not include Hong Kong and Macao
Special Administrative Regions.Source 2007
World Health Organization Statistics.
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NBGH Position on National Health Reform

• Address Cost, Quality, and Access Challenges
  Simultaneously
• Everyone Must Have Health Insurance
• Oppose Employer Mandates
• Maintain ERISAs Federal Framework and Oppose
  Federal Waivers for State Health Reform
• Maintain the Current Tax Treatment of
  Employer-Sponsored Coverage and Level the Playing
  Field for Individually-Purchased Insurance

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Address Cost, Quality, and Access Challenges
Simultaneously

• Workable health reform must successfully reduce
  costs and improve quality and safety in the
  health care delivery system while expanding
  access. Initiatives that do not do so will fail
  and any expansion of access will only be
  temporary and exacerbate cost problems.
• We need a health care system based on strong
  primary care.

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To Improve Quality and Control Costs, We Must
Implement

• A culture of quality and patient safety,
• Payment systems that reward outcomes not just
  utilization,
• Payment systems that support primary care and
  care coordination,
• Transparency of health care price and quality
  information,
• Comparative effectiveness research of health care
  interventions,
• Evidence-based medicine wherever possible,
• A secure, nationwide electronic health
  information network,
• Portable, personal health records for all,
• A focus on prevention and primary care,
• Capital spending only where truly needed,
• Personal responsibility for health and engagement
  in care decisions, and
• Reform of the health care legal system.

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Everyone Must Have Health Insurance
The following conditions are needed to make this
possible

• Access to a range of coverage choices that
  includes at least one option with an
  evidence-based core benefits package
• Coverage options beyond the core benefit package
• Coverage must promote efficiency by including
  best management practices to keep it affordable
• A strong health care safety net and effective and
  efficient public programs for those with little
  or no income who cannot afford coverage
• Enforcement mechanisms for an individual health
  insurance requirement should be at the
  federal/national level and result in no
  additional administrative burden for employers

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Oppose Employer Mandates

• States and the federal government should be
  working with health plans, employers and other
  stakeholders to develop, offer, and promote low
  cost, voluntary programs to cover working
  families who have low or moderate incomes, and
  programs to assist small employers offer health
  coverage to their employees.

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Maintain ERISA Framework Oppose Federal Waivers
for State Health Reform

• Employers must continue to have the flexibility
  to determine the types of benefits they offer and
  to tailor benefit plans to the specific needs of
  their employees and the circumstances of their
  companies.
• States can, and should, play an important role in
  expanding coverage, and they have significant
  resources and authority to adopt innovative
  programs to do so.
• States should not be permitted to regulate
  employer-sponsored benefit plans under waivers or
  carve-outs of ERISAs national framework.

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Keep Current Tax Status of Employer Coverage,
Extend Favorable Tax Treatment to Individual
Insurance

• Oppose capping or eliminating the current tax
  exclusion for employer contributions to employee
  health benefits.
• Oppose capping or eliminating the current ability
  of employers to fully deduct their expenses for
  employee health care.
• Support full tax equity for the purchase of
  individual coverage. There should be no tax
  differences for people who purchase insurance
  coverage on their own and those who have coverage
  through their employer.
• Everyone should be able to pay for out-of-pocket
  health care expenses on a pre-tax basis.