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Driving Competition, Efficiencies and Innovative Practices Throughout the Health Care System: A Public Health Insurance Plan

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Title: Driving Competition, Efficiencies and Innovative Practices Throughout the Health Care System: A Public Health Insurance Plan


1
Driving Competition, Efficiencies and Innovative
Practices Throughout the Health Care System A
Public Health Insurance Plan
  • Karen Davis
  • President, The Commonwealth Fund
  • Alliance for Health Reform Briefing
  • April 27, 2009
  • kd_at_cmwf.org
  • www.commonwealthfund.org

2
Affordable Coverage for All Policies In Path
Report
  • Builds on employer coverage and public programs
  • New national insurance exchange
  • Offers private plans and new public health
    insurance plan
  • Pools risk and reduces administrative costs, easy
    enrollment
  • All required to have coverage, with provisions
    for affordability
  • Low income programs expanded
  • Income-related premium assistance to make
    coverage affordable
  • Shared responsibility for financing all
    employers contribute
  • Insurance market reforms
  • Minimum national benefit standard
  • Guaranteed issue, renewal community rating
  • Provider payment reforms in public plan,
    Medicare, and Medicaid
  • Reward primary care blended medical home fees
    and FFS
  • Bundle hospital payment and post-acute care
  • Slow cost growth over time and share savings with
    providers
  • Insurers compete on basis of added value

Source The Path to a High Performance U.S.
Health System, Commonwealth Fund Feb. 2009.
3
Transforming Markets Potential of an Insurance
Exchange with a Public Health Insurance Option
  • Exchange with Insurance Market Reforms
  • Enables continuity and choice access to regional
    plans
  • Transparency easy to compare and enroll
    benchmarks
  • Reduces administrative costs marketing,
    underwriting, churning
  • Public Health Insurance Plan
  • Broadens foundation for rapid implementation of
    innovative payment and system reforms and slows
    growth in employer premiums
  • Provides less expensive way to cover the
    uninsured lower administrative costs lower
    federal budget cost
  • Expands choice/continuity with secure option
    nation-wide that will always be there
  • Ensures markets work in the public interest
    counterbalance to market power by insurers or
    providers

4
Market Share of Two Largest Health Plans, by
State, 2006
AK
HI
Note Market shares are for the combined HMOPPO
product market. For MS and PA, shading represents
shares of top three insurers in 2002-2003.
Source American Medical Association,
Competition in health insurance A comprehensive
study of U.S. markets, 2008 update, J.
Robinson, Consolidation and the Transformation
of Competition in Health Insurance, Health
Affairs, November/December 2004 D. McCarthy et
al., The North Dakota Experience Achieving
High-Performance Health Care Through Rural
Innovation and Cooperation, The Commonwealth
Fund, May 2008.
5
Benefit Design for Public Health Insurance
PlanOffered in Insurance Exchange
Current Medicare benefits New Public Health Insurance Plan in Exchange
Deductible Hospital 1,024/benefit period Physician 135/year Rx 275/year Hospital/Physician 250/year for individuals 500 for families Rx 0
Coinsurance Physician 20 Rx Depends on Part D plan Physician 10 Rx 25 Reduce for high-value chronic disease care/medical home Preventive services 0
Ceiling onout-of-pocket No ceiling 5,000 for individuals7,000 for families
Insurance-related premium subsidies Medicare Savings Programs Low-Income Subsidy Premium cap ceiling of 5 of income for low-income beneficiary premiums or 10 if higher income
Basic benefits before Medigap. Part D
coverage varies, often deductible. Most have
doughnut hole and use tiered, flat-dollar
copayments. Note Benefit design also would apply
to Medicare Extra supplement option available to
Medicare beneficiaries. Source Commonwealth
Fund Commission on a High Performance Health
System,  The Path to a High Performance U.S.
Health System A 2020 Vision and the Policies to
Pave the Way, Commonwealth Fund, February 2009.  
6
Cost of Administering Health Insurance as a
Percent of Claims, Current Law Compared to
Insurance Exchange with Reforms, by Group Size
Percentage
Data Estimates by The Lewin Group for The
Commonwealth Fund. Source Commonwealth Fund
Commission on a High Performance Health System,
The Path to a High Performance U.S. Health
System A 2020 Vision and the Policies to Pave
the Way, February 2009.
7
Net Insurance/Program Administrative Cost as a
Percent of Total Spending, Various U.S. Insurance
Markets
Percent of claims
Average for firms with 2 to 49 employees Top
five companies based on 2008 corporate financial
reports and filings. Computed based on medical
loss ratio Medicare includes administrative
costs of Part D private plans. Medicaid includes
eligibility determination. Source M. Hartman et
al. National Health Spending in 2007 Health
Affairs for national, Medicaid and Medicare.
Lewin group for market segments of private. SEC
filings and corporate reports for top 5 private
plans.
8
Estimated Premiums for New Public PlanCompared
with Average Individual/Small Employer Private
Market, 2010
Average annual premium for equivalent benefits at
community rate
Public plan with private payment rates saves 9
public plan with Medicare payment rates and
system reform saves 17-30 relative to current
small firm premiums.
Adjusted for Path benefits and average
enrollees. Benefits used for modeling include
full scope of acute care medical benefits 250
individual/500 family deductible 10
coinsurance for physician service 25
coinsurance and no deductible for prescription
drugs reduced for high-value medications full
coverage checkups/preventive care. 5,000
individual/7,000 family out-of-pocket limit.
Data Estimates by The Lewin Group for The
Commonwealth Fund.
9
Three Insurance Exchange ScenariosCumulative
11-Year Savings in National Health Expenditures,
20102020
Cumulative National Health Expenditures Savings
compared with baseline (trillions)
Data Estimates by The Lewin Group for The
Commonwealth Fund. Source Commonwealth Fund
Commission on a High Performance Health System, 
The Path to a High Performance U.S. Health
System A 2020 Vision and the Policies to Pave
the Way, Commonwealth Fund, February 2009.  
10
Path Net Cumulative Impact on National Health
Expenditures(NHE) 20102020 Compared with
Baseline,With and Without Public Health
Insurance Plan, by Major Payer Groups
Dollars in billions
Total NHE Netfederalgovernment Net state/local government Private employers Households
With Public Health Insurance Plan 2,998 593 1,034 231 2,325
Without Public Health Insurance Plan -766 1,112 -655 905 -2,128
Note A negative number indicates spending
decreases compared with projected expenditures
(i.e., savings) a positive indicates spending
increases. Data Estimates by The Lewin Group for
The Commonwealth Fund. Source The Commonwealth
Fund Commission on a High Performance Health
System, The Path to a High Performance U.S.
Health System A 2020 Vision and the Policies to
Pave the Way, (New York The Commonwealth Fund,
February 2009).
11
Total National Health Expenditures (NHE),
20102020Current Projection and Alternative
Scenarios
NHE in trillions
6.7 annual growth
5.2
5.0
4.6
5.5 annual growth
6.1 annual growth
2.7
Note GDP Gross Domestic Product. Data
Estimates by The Lewin Group for The Commonwealth
Fund. Source The Commonwealth Fund Commission on
a High Performance Health System, The Path to a
High Performance U.S. Health System A 2020
Vision and the Policies to Pave the Way, (New
York The Commonwealth Fund, February 2009).
12
Total National Health Expenditure Growth for
Hospitals and Physicians, Current Projections
and with Policy Changes, 20092020
Hospital Expenditures (trillions)
Physician Expenditures (trillions)
1.6
1.4
1.3
1.1
0.8
0.7
Data Estimates by The Lewin Group for The
Commonwealth Fund. Source The Lewin Group, The
Path to a High Performance U.S. Health System
Technical Documentation (Washington, D.C. The
Lewin Group, 2009).
13
Implications for Stakeholders of Path
  • Coverage and Savings
  • Coverage for all with 3.0 trillion system
    savings 2010-2020 with public health insurance
    plan 0.8 trillion without
  • Coverage for all with 593 billion federal budget
    cost 2010-2020 with a public health insurance
    plan 1.112 trillion without
  • Employers and Employees
  • Public health insurance plan more affordable than
    premiums now in small business market 20-30
    lower premiums
  • Savings to employers including payment and system
    reforms of 231 billion over 2010-2020
  • Providers
  • Provider revenues enhanced by increasing Medicaid
    payment to Medicare levels and buying in
    uninsured at Medicare rates
  • Payment reforms reward primary care and high
    performers but slower revenue growth over time
    than current law
  • Insurers
  • Rewards integrated delivery system and private
    insurers that enhance value
  • Administrative savings of 337 billion over
    2010-2020

14
Thank You!
Stephen C. Schoenbaum, M.D., Executive Vice
President and Executive Director, Commission on a
High Performance Health System, scs_at_cmwf.org
Stu Guterman, Assistant Vice President,
sxg_at_cmwf.org
Rachel Nuzum, Senior Policy Director rn_at_cmwf.org
Cathy Schoen, Senior Vice President for Research
and Evaluation, cs_at_cmwf.org
Sara Collins, Assistant Vice President,
src_at_cmwf.org
Kristof Stremikis, Research Associate, ks_at_cmwf.org
For more information, please visit www.commonweal
thfund.org
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