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Health System Reform: Why Now Why Illinois Whos Next Len M. Nichols, Ph.D. Director, Health Policy P

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Title: Health System Reform: Why Now Why Illinois Whos Next Len M. Nichols, Ph.D. Director, Health Policy P


1
Health System Reform Why Now? Why Illinois?
Whos Next? Len M. Nichols, Ph.D.Director,
Health Policy ProgramNew America
FoundationCampaign for Better Health
CareChicago, IllinoisOctober 12, 2006

2
Overview
  • Sources of extreme stress
  • Why the national debate is stuck (for now)
  • Competing Visions
  • States as
  • Laboratories
  • Catalysts
  • Partners
  • How Illinois could inspire the nation

3
Linked Problems
  • Low Value for Dollar
  • Uneven quality
  • Inequitable access to care

4
Compared to Other Countries
  • 1 in spending, share of GDP, per capita
  • 37 (by WHO) on overall system performance, next
    to Slovenia and Costa Rica
  • Life expectancy, child survival, fairness,
    responsiveness, health outcomes

5
Medicare Quality and Spending Correlation
Source Baiker and Chadra, Health Affairs we,
April 7, 2004
6
US Overuses interventionist technological
procedures
7
Institute for Healthcare Improvements
Ventilator Associated Pneumonia program
  • Known how to eradicate VAP since 99
  • 14 hospitals have
  • 6 more have made great progress
  • Why hasnt every hospital nationwide done this?

8
Percent of median family income required to buy
family health insurance
Source Authors calculations, using KFF and AHRQ
premium data, CPS income data.
9
Family health insurance premium as percent of
wages
Source authors analysis of KFF premium data,
BLS wage data
10
Labor Market Realities
Occupation Family premium/Median wage Physician
7.9 History professor 14.8 Secretary
30.9 Carpenter 25.6 Cook 50.0 Source KFF
premium and BLS wage data, 2004.
11
Premium Payments v. GDP Growth Rate
Source NIPA, BEA/Commerce Dept.
12
Employer Health Insurance Payments / Corporate
Profits
13
Result of our incremental approaches
  • Health insurance as we know it is out of reach of
    a growing share of our workforce
  • We tolerate a stunning amount of mediocre
    performance

14
Linkages Among Problems
Access
Cost
Quality
15
Political Gridlock and Fear
  • Rs dont want real reform discussions
  • universal coverage threatens tax cuts (1)
  • Serious cost-growth containment requires enhanced
    government role
  • Ds dont know what they want
  • Some want to use UC to get power
  • Others fear and want to avoid it to get power
  • Others fear any solutions which unions dont like

16
Visions of Problems
  • Right
  • High costs caused by moral hazard (too much
    insurance coverage)
  • Coverage expansion will require unimaginable
    taxes
  • Left
  • High costs caused by market forces, market
    power/high profits, adverse selection
  • Center
  • Problems LINKED, must be addressed
    simultaneously, for technical and political
    reasons

17
Competing Policy Visions
  • New Wild West, with tax breaks
  • Individual consumers will drive efficiency
  • Musty Cocoon of Single Payer
  • Elite control will drive efficiency
  • Brave New World
  • Mandates, smart regulation, combined buying power
    will drive efficiency

18
Presidents Proposals
  • Encourage non-group purchase of HSA-eligible
    insurance
  • Premium OOP from HSAs deductible
  • Payroll tax credit for HSA contribution
  • Support passage of AHPs federal override of
    state regulation of insurance markets
  • Malpractice reform
  • HIT and transparency exhortations

19
(No Transcript)
20
What Do We Need?
  • Political Space to Begin the Conversation
  • Moral case
  • Proof we are all in the same community
  • Economic case
  • Delivery system culture of value
  • Credible policy design
  • 3 dimensions of credibility
  • Stakeholders, politicians, people

21
Health System Culture of Value
  • Information infrastructure to support quality
    improvement
  • Malpractice safe harbors and value-enhancing
    incentives (for all)
  • Comparative technology assessment as
    countervailing power between medical technology
    and coverage/use decisions
  • Raise the bar at the FDA
  • Raise the bar for procedural interventions as
    well
  • Create Health Home, pay Host to guide us through
    system, teach/learn evidence base with us

22
Credible Policy Design
  • Individual and Shared Responsibility
  • Individual purchase requirement
  • Purchasing pool
  • Risk pooling/market rules
  • Administrative economies of scale
  • Subsidies for lower income
  • Financing sources
  • Culture of Value
  • Evidence-based limits on collectively financed
    benefits
  • Preservation of liberty and choice

23
Pew Typology Support for government guarantee of
health insurance, even if taxes must be raised
Pew Center for Research on People the Press
2005
24
States as Laboratories
  • No inpatient coverage
  • Utah, West Virginia
  • Limited inpatient coverage
  • Arkansas, New Mexico, Tennessee
  • Piggyback on states purchasing power
  • West Virginia, Oklahoma
  • Encourage offers within purchasing pools
  • Montana
  • Adding Adults
  • Wyoming, Pennsylvania

25
States as Catalysts
  • Maine
  • Build it, capture savings, hope theyll come
  • Illinois
  • Cover all kids, cover all citizens?
  • Vermont
  • Bipartisan, insurance home and subsidies for
    uninsured
  • Massachusetts
  • Bipartisan, individual mandate, subsidize lower
    income in smaller firms, hard budget constraint

26
Why Illinois Should Do This
  • Ich Bien Ein Illini
  • It would confound the cynics
  • It would inspire the Just
  • It would concentrate minds in Washington
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