Catamount Health and Health Care Reform in Vermont

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Catamount Health and Health Care Reform in Vermont
Kenneth E. ThorpeEmory University
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Context for Reform

• High and Rising Cost of Health Care--Growth in
  Vermont has exceeded the national average
• Without reform, the rise in health care costs
  will absorb 25 of the total growth in payroll
  over the next 5 years.
• Approximately 10 percent of Vermonters 65,000
  remain uninsured.
• We face gaps in the quality and safety of health
  care in the state
• Vermonters receive approximately 60 to 70 percent
  of clinically recommended health care (e.g. only
  half of Vermont diabetics routinely monitor their
  blood glucose).

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Context for Health Care Reform in Vermont

• To address these problems health care reform must
  transcend a simple debate over insurance!
• Reform must by SYSTEMIC, impact all Vermonters
  and address
• The high and rising cost of health care
• Gap between ideal and actual practice of care,
  particularly among the chronically ill
• The uninsured

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Context for Health Care Reform Key Facts

• About 80 percent of healthcare spending in
  Vermont is traced to patients with a chronic
  health condition. This is not an insurance issue
  it is a care management, delivery system and
  payment issue.
• 2. Chronically ill patients in the state do not
  receive all, or in many cases most, clinically
  recommended care. This includes patients in the
  single payer Medicare program, those with private
  insurance, Medicaid and the uninsured. This
  increases costs and produces substandard medical
  outcomes.

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Context for Reform Key Facts of What Really Is
Driving the Rise in Healthcare Spending

• 3. Two-thirds of the rise in the cost of private
  health insurance is traced to a rise in the share
  of adults and kids treated for chronic illness
  and innovations in medical treatmentlargely new
  drugs.
• 4. About 30 percent of the rise in spending is
  associated with the rise in obesity prevalence
  over the past 15-20 years

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The urban (and rural)-myth of hospital-
generated increases in health care spending
Health Spending VERMONT VERMONT VERMONT
Health Spending 1980 1990 2000
Hospital 45 38.8 34.9
Physician 20 24.0 25.0
Prescription Drugs 5.7 7.6 11.0
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Continued Dramatic Declines in Hospital Occupancy
Rates Associated with Changing Technology and
Patient Characteristics, Vermont and US, 1970-2003
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Trends in Hospital Capacity, US and Vermont
1970-2003 Beds per 1,000 Resident Population
Impact of Technology and the Rise in Chronic
Illness Continues to Reduce the Overall Share of
Hospital Spending
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Context for ReformAligning Reform with the
Underlying Problems in the System

• Systemic reform of Vermonts health care will
  require
• A major focus on the chronically ill that account
  for 80 percent of health care spending and most
  of the growth in spending
• A redesigned delivery system to improve quality
  and outcomes
• Changes in the way physicians are paid to care
  for patients

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Context for Reform

• Systemic reform will require
• Efforts to reduce administrative complexity and
  reduce excess clinical spending
• Investments in information technology, patient
  safety and error reduction
• Major expansions of coverage with universal
  insurance the ultimate target

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Catamount Health

• Will
• Enroll uninsured and eligible VHAP adults,
  Medicaid and Dr. Dynasaur children
• Provide the ability to purchase comprehensive,
  affordable health insurance for all uninsured
  Vermonters. Premiums reduced by up to 90.
• Have low administrative costsabout 4.
• Improve the quality of care delivered to all
  chronically ill patients, and improve the value
  of care purchased
• Reduce the administrative burdens facing
  physicians
• Lower health insurance premiums paid by workers
  and employers by 4 to 6 percent when the plan is
  fully implemented by reducing the cost shift, and
  reducing administrative costs and additional
  spending linked to medical errors and events.

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Impacts of Catamount Health

• Will reduce the level and growth in health care
  spending
• Through statewide use of the chronic care model
  for all Vermonters
• Through reduction in the existing cost shift
  built into premiums
• Through simplified administration and lower
  administrative costs
• Common claims forms
• Health information technology initiative (health
  record)
• Electronic billing
• Administrative costs of Catamount health about
  4!

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Catamount Health

• Combination of VHAP policies and Catamount health
  initially enroll about 20,000 uninsured
• Lowers private health insurance spending through
  use of chronic care management, reduction in
  medical errors, administrative costs and
  reduction in cost shift

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Catamount Health

• Places Vermont as the national leader in
  treatment of chronic disease through an
  innovative new delivery model, lower
  administrative and clinical costs. Improves the
  value of the dollar spent on health care.
  Provides the state a clear market advantage in
  attracting and retaining business.
• Provides business community short and long term
  answer to high and rising health care spending.
• Places Vermont as the national leader in focus on
  population health, primary and preventive care

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Private Insurance Spending (Millions of Dollars),
Currently Insured Reform vs. No ReformSpending
Falls by 550 Million Over the Next Ten Years.
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Financing Choices

• Total spending on Catamount health and the
  Governors plan are similar.
• Approaches for financing the costs of the two
  proposals differ however.
• The Governors plan is financed by increasing
  employer spending on health care by 45 to 50
  million.
• Catamount health is funded primarily by the
  federal government and the GC.

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Conclusions

• Catamount health builds on and expands the
  governors chronic care initiative. We cannot
  control the growth in spending without a focus on
  chronic illness and population health
  initiatives, period.
• It assures the chronic care infrastructure will
  be available to all chronically ill patients in
  the state, not just the privately insured
• It reduces administrative and clinical costs.
• It reduces substantially the number of uninsured
  in the state and provides them affordable
  comprehensive insurance
• It generates about 550 million in savings to
  employers and insured working families over the
  next ten years
• It will improve the quality of care, and provide
  better value for each health care dollar spent.