Coverage vs. cost: The US health care reform in
Transcription
Coverage vs. cost: The US health care reform in
Current Issues Coverage vs. cost International topics May 20, 2010 The US health care reform in perspective Following a protracted legislative battle, President Barack Obama signed a landmark health insurance reform into law in late March 2010. The legislation represents the most significant reform of the US health care system since the introduction of Medicare in the 1960s, expanding insurance coverage to a large portion of America‘s uninsured and, to a lesser degree, addressing issues of cost and quality. The reform aims to sharply reduce the number of Americans without health insurance, by an estimated 32 million by 2019, with nearly ninetyfive percent of citizens projected to have health insurance coverage by the end of this decade, compared to 83% today. The expansion in coverage, at a gross cost of USD 938 bn over ten years, is achieved through an expansion of public insurance programs as well as by requiring individuals to carry basic health insurance and creating a system of state-run private insurance exchanges, with subsidies to help purchase insurance. The legislation imposes a number of new restrictions on insurance practices, such as prohibiting the denial of coverage on the basis of pre-existing conditions. The Congressional Budget Office estimates that the reform will reduce the federal budget deficit by USD 143 bn in the first decade and by up to 0.5% of GDP in the second decade. The cost of expanding coverage is offset by a variety of tax increases and program cuts, including an excise tax on expensive insurance policies; an additional Medicare payroll tax for wealthy Americans; penalties for individuals who do not buy insurance and companies who do not offer health insurance policies for their employers; and reductions in Medicare payments to providers. Some of these offsets may prove politically difficult to carry out, thus presenting a potential upside risk to the net cost of the reform. Author Amy Medearis +49 30 3407-2950 [email protected] Editor Klaus Deutsch Technical Assistants Judith Runge Angelika Greiner Deutsche Bank Research Frankfurt am Main Germany Internet: www.dbresearch.com E-mail: [email protected] Fax: +49 69 910-31877 Managing Director Thomas Mayer The reform falls short with respect to ‘bending’ the health care cost curve, i.e. slowing the increase in the share of GDP devoted to health care (currently over 17% of GDP and rising). The act contains some worthy measures that could help moderate the growth in health care spending, but their impact will be gradual and relatively limited. Additional reforms will be necessary in the future to build on the strategies that prove effective at reducing health care spending and improving the quality and efficiency of health care delivery. Getting health care cost inflation under control is a key element to putting the US back on a sustainable fiscal path. Coverage vs. cost The major public health programs Background: The long and winding road to reform Medicare Enacted in 1965, Medicare provides health insurance coverage to Americans age 65 and older, individuals under age 65 with certain disabilities. 14.3% of the US population was covered by Medicare in 2008 (Census 2009). Medicare consists of several types of insurance: Part A (hospital insurance) helps cover inpatient care in hospitals and skilled nursing facilities (not including custodial or long-term care). It also helps cover hospice care and some home health care for beneficiaries who meet certain conditions. Part A benefits are financed mainly through a payroll tax of 2.9% of income (half of which is paid by the employee and half by the employer). Most people do not pay a premium for Part A because they or a spouse already paid for it through their payroll taxes while working. Part B (supplementary medical insurance) helps cover services provided by physicians and other practitioners, as well as hospital outpatient care. It also covers some other medical services deemed necessary that Part A does not cover, such as some of the services of physical and occupational therapists, laboratory and medical equipment fees, and some home health care. Most people pay a monthly premium for Part B based on a sliding income scale, and these premiums cover about one-quarter of the cost of Part B benefits. Medicare advantage (sometimes referred to as Medicare Part C), an optional insurance offered by private insurers, provides additional insurance, e.g. for dental and vision, not covered by Medicare Parts A and B. Originally designed to have lower costs, the gradual introduction of payment floors to attract insurance plans, in particular for rural regions, resulted in an acceleration of Medicare Advantage plan costs over the past decade. In 2009, payments to Medicare advantage plans per enrollee averaged 114% of the traditional fee-for-service Medicare plans. Part D (prescription drug plan), enacted under the Bush Administration in 2003, provides expanded coverage for prescription drugs to Medicare beneficiaries. Part D is partially financed (less than one-quarter) through premiums. Medicaid Medicaid is available only to certain lowincome individuals and families who fit into an eligibility group that is recognized by federal and state law. Although the federal government establishes general guidelines for the program, Medicaid is administered by the states, with each state setting its own guidelines regarding eligibility and services. In 2008, 14.1% of the US population was covered by Medicaid (Census 2009). May 20, 2010 ‘This legislation will not fix everything that ails our health care system. But it moves us decisively in the right direction. This is what change looks like.’ – President Barack Obama, March 21, 2010, in a speech following passage of the final health care reform legislation by the US House of Representatives After over a year of intense debate and political haggling, the United States Congress narrowly passed an historic health care overhaul, which President Obama signed into law at the end of March. The legislation expands health insurance coverage to a large portion of the nearly 50 million Americans without insurance, introduces for the first time an insurance mandate requiring nearly all Americans to have coverage, and ushers in significant changes to insurance rules. It is being touted as the biggest change in domestic social policy since the 1960s. The US health care system desperately needs reforming. Despite spending vastly more money on health care than any other country (an estimated USD 2.5 trillion in 2009), the US does not enjoy health outcomes commensurate with its high level of spending. US national health expenditures amount to over 17% of GDP, compared with the OECD average of about 9% of GDP, but the US ranks in the lower third of advanced countries on major measures of health such as life expectancy and infant mortality. Moreover, if left unchanged, the burgeoning costs of the US system will put unsustainable fiscal pressure on public finances in the coming years. In addition, a large and rising share of the US population is left without health care coverage. Providing a vehicle to insure many of these people, as the new legislation does, moves the US toward a more egalitarian health care system. Because the large number of uninsured persons adds to health care spending, there are also direct and indirect economic gains to be reaped from increased health insurance coverage. Substantial further economic gains could result from more broadly trimming the inefficiencies that are prevalent throughout the US health care system. Yet therein lies the real challenge. While the health care reform legislation succeeds in vastly expanding health insurance coverage, it does not do enough to increase efficiency in the system and slow the growth in US health care spending. This is partly because of the powerful health care interest groups (the top US lobby organisations represent the elderly, hospitals, drug companies and physicians) that resist a more radical overhaul of the complex system from which most actors benefit. Moreover, there is little public or political appetite for moving to a single-payer (government-run) system in the US. There has also been little scope in the reform debate to tackle two of the largest distortions in the US health care system, namely the tax-free status of employer-provided health insurance plans, and the fee-for-service based system that compensates providers for quantity rather than quality of care. Truth be told, Americans like ‗all-you-can-eat‘ health care and reject plans that ration or ‗manage‘ care. As a result, many proposals that could have led to greater reductions in health care spending, even ones recommended by top health economists, were not included in the reform legislation because they would have radically altered the system (e.g., moving to a single-payer system, shifting from a feefor-service to a pay-for-performance payment 3 Current Issues On average, federal Medicaid payments represent approximately 57% of total Medicaid payments, with the states‘ share of outlays approximately 43%. CBO (2009) estimates that total federal Medicaid payment outlays amounted to USD 255 billion in 2009. Beneficiaries in some states pay a small part of the cost (co-payment) for some medical services. Children’s Health Insurance Program (CHIP) Begun in 1997, CHIP is a program administered by the Centers for Medicare and Medicaid Services that provides health insurance to nearly 10 million children and pregnant women. The program was reauthorised through the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which finances CHIP through 2013. Like Medicaid, CHIP is jointly financed by the federal and state governments and is administered by the states. Within broad federal guidelines, each State determines the design of its program, eligibility groups, benefit packages, payment levels for coverage, and administrative and operating procedures. CHIP provides a capped amount of funds to states on a matching basis. The federal budgetary authority for CHIP amounted to $16 billion in 2009. Military personnel and veterans Military health care encompasses a diverse range of programs, each serving a total military population of more than 9.2 million people, including active duty personnel and families, retirees and their families, and eligible veterans. The major military health care programs are operated through the Department of Defense (covering active duty service members and retirees from all branches of the US military and their eligible family members) and the Department of Veterans Affairs (covering veterans and their eligible family members). Each program has different eligibility criteria, benefits packages, and financing structures. Sources: Centers for Medicaid and Medicare Services Weak popular support Would you say that you support or oppose the changes to the health care system that have been enacted by Congress and the Obama Administration? 100 80 60 40 46% 50% Support Oppose 20 0 Source: Washington Post-ABC News poll conducted March 23-26, 2010 4 1 system, or an end to the tax preference for employer-sponsored health care plans). Still, the reform does represent a start to controlling run-away health care inflation, and this is certainly an achievement relative to the unsustainable status quo. The legislative road to health care reform was nothing short of a political rollercoaster ride. During the 2008 presidential campaign, a widespread consensus around the need for health care reform began to materialise among the public and across political party lines. Yet political and public support for a comprehensive reform started to wane last summer, for a number of reasons. Although most Americans agree that the health care system as a whole is plagued with problems, the overwhelming majority is satisfied with the quality of health care that they personally receive. As President Obama and Congressional Democrats pursued wide-reaching legislation, they weren‘t successful in communicating clearly the benefits of reform to the average American who has satisfactory health insurance, and were criticised for spending too much time on health care at the expense of other domestic priorities, in particular job creation. Meanwhile, the Republican opposition hailed the legislation as a ‗government take-over‘ of one-sixth of the economy, and gradually succeeded in raising fears that ‗Obamacare‘ would result in higher taxes, higher health insurance premiums, and higher government debt. Public concern and skepticism, together with the momentum of the anti-reform ‗Tea Party‘ movement and the political weight of interest groups opposed to fundamental change of the health care system, shifted public opinion narrowly against the legislation in the crucial last months of the debate. Nevertheless, Democratic leaders in Congress pushed ahead with their reform proposals and, after months of hearings and back-room dealing, the House of Representatives and the Senate both passed health reform legislation, the House on November 7, 2009 by a margin of 220-215 votes, and the Senate on December 24, 2009 by 60-40, the slimmest of margins necessary to avoid a Republican filibuster. Informal talks between House and Senate leaders began in January 2010 and were making progress toward ironing out the differences between the bills, particularly with respect to the offsetting sources of revenue to finance the expansion of insurance coverage. But these talks were halted when Republican Scott Brown won the open Senate seat in Massachusetts, thereby depriving the th Democrats of the 60 vote in the Senate necessary to cut off debate and pass a bill. The defeat caught Democrats off guard, and at several points in February and March the health care reform legislation appeared to be dead. Yet rather than changing course and pursuing a much smaller package of measures, as some of his advisors had urged, Obama inserted himself into the middle of the debate and convinced Democratic Congressional leaders to continue to pursue comprehensive reform legislation, despite what appeared to be insurmountable obstacles. They adopted a strategy whereby changes to the Senate legislation could be made through a socalled budget Reconcilation and approved with a simple majority rather than 60 votes. Even that proved difficult. But in the end, the risky political gamble paid off for the President, with the passage of the Senate‘s st legislation by the House on March 21 , followed by the passage of th the Reconciliation Bill by both houses of Congress on March 25 . May 20, 2010 Coverage vs. cost The longer-run political (and economic) pay-off will depend on how the administration and Congress are able to sell the benefits of the reform to a public that is not convinced of its merits. Deficit angst 5% 16% This report attempts to summarise the US health care system and its fundamental problems, to explain the key measures in the health care reform legislation, and to evaluate the impact of the legislation on the health care system and on the federal budget. The analysis takes an economic perspective in evaluating the legislation, and in particular tries to judge whether the changes within the reform will slow the rapid growth in national health care spending that currently represents the greatest longer-term threat to US fiscal sustainability. 65% 14% Increase Decrease No effect No answer Overview of the US health care system Do you think these changes to the health care system will increase the federal budget deficit, decrease it, or have no effect? Source: Washington Post-ABC News poll conducted March 23-26, 2010 2 Most Americans get health insurance through an employer … Coverage by type of health insurance, 2008 % No insurance Military Medicaid Medicare Any government Direct-purchase Employer-based Any private 15.4 3.8 14.1 14.3 29.0 8.9 58.5 66.7 Source: US Census Bureau 3 … but rising costs have forced some firms to drop coverage Spending on health care in the United States is financed through a combination of private and public sources. In 2008, the private share accounted for just over half, or 52.7%, of national health expenditures, while the public share accounted for 47.3% (34.9% federal and 12.4% state and local) (CMS, 2010a). This is a fairly low public share compared to the OECD average, but in the United States, publicly-sponsored health care covers a much smaller portion of the population (only the very poor, elderly, and disabled) compared to the universal coverage offered in most OECD countries. The main publicly-sponsored health care programs in the US are Medicare (for Americans 65 years of age and older), Medicaid (for the poor and disabled), and the Children‘s Health Insurance Program. Although nearly half of health care spending is financed publicly, most of the services are furnished by private providers. According to the most recent official data, 66.7% of Americans were covered by private insurance in 2008, with 58.5% of Americans receiving or purchasing insurance through an employer and 8.9% purchasing private health insurance directly from insurers. Government insurance covered 29% of Americans, and 15.4% of Americans had no health insurance coverage whatsoever (Census 2009). The dominance of employer-based health insurance in the United 1 States came about largely by historical accident , but has been encouraged through the tax code, under which employer-provided health care benefits are tax-free. The employer-based system also receives strong political support from labor unions, because many union members benefit from generous health insurance plans, for example those offered by big manufacturing companies. Yet while the vast majority of Americans under the age of 65 get private insurance through an employer, this percentage has fallen in recent years as the high cost of health insurance premiums has driven some employers (particularly small businesses) to cease offering health insurance, and/or to classify more jobs as part-time so as to reduce the number of workers covered by company plans. Moreover, despite the steady growth in the share of government insurance coverage (and thus of the public share of health care financing) over the years, the number of people without health insurance has also risen, and an increasing number of families struggle to afford health care insurance premiums and/or out-ofpocket health care payments. 1 May 20, 2010 During the Second World War, wage controls led many employers to start compensating their employees through health care benefits in lieu of salary increases. 5 Current Issues This rather confusing patchwork of public and private insurance financing and coverage (or lack of coverage) has resulted in a complex system that is both difficult to comprehend, expensive to administer, and difficult to change. Problems with the US health care system The US health care system is plagued by three major problems: Uninsured rate 1999-2008 1. Inadequate insurance coverage; % of total population 16 15.5 3. Uneven quality of care. 15 14.5 Inadequate coverage 14 For one of the richest countries in the world, the United States has a substantial number of people who lack health insurance coverage. The number of uninsured reached 46.3 m in 2008, representing about one-sixth of the non-elderly population (Census 2009). That figure would be much larger if the statistics also counted as uninsured those people who experience a gap in insurance coverage at any time in a given year, rather than counting as insured anyone who has health insurance for at least part of a given year. Moreover, children make up a large portion of the uninsured, with 7.3 m children (9.9% of children under age 18) lacking health insurance in 2008. 13.5 13 12.5 99 00 01 02 03 04 05 06 07 08 4 Source: US Census Bureau Uninsured by age, 2008 % 35 30 25 20 15 10 5 0 < 18 18 – 25 – 35 – 45 – 65 > 24 34 44 64 Source: US Census Bureau 5 Uninsured by race, 2008 % 35 30 25 20 15 10 5 0 White, Black not Hispanic 2. High and rising costs and Asian Hispanic (any race) Source: US Census Bureau 6 In contrast to a universal, single-payer health care system, the American patchwork system of private and public insurance described above leaves out many people: those who do not have access to health insurance through their own or a family member‘s employer; those who are not old enough, poor enough, or disabled enough to qualify for Medicare or Medicaid; those who cannot afford to purchase health insurance in the private market; and those with a high propensity for risk (generally the young and healthy) who choose not to purchase health insurance. Studies show that for the majority of the uninsured, going without insurance is not a choice. Lower-income Americans are disproportionately uninsured, with some 48% of households with incomes less than twice the federal poverty level (about USD 40,000) lacking health insurance at some point during 2007 (OECD, 2008). Also among the disproportionately uninsured are young adults and non-whites (especially Hispanics, many of whom are illegal immigrants). Rising costs for health care and health insurance explain more than half of the decline in insurance coverage over the past three decades. The ranks of the uninsured have risen primarily because soaring premiums have left many individuals unable to afford health insurance and many employers no longer willing or able to provide insurance to their employees. Since the early 1980s, the share of the non-elderly with employer-provided insurance has declined by nearly ten percentage points, from 73% in 1983 to 63%, as the increasing cost of providing insurance to employees forced many employers to either cut coverage completely or to hire more parttime and temporary workers. Even large companies who traditionally offered generous health care benefits to their active and retired employees have been forced to cut back on these plans to remain 2 competitive. 2 6 A well-known and powerful example: a General Motors auto contains more healthcare than steel. May 20, 2010 Coverage vs. cost Uninsured by income, 2008 USD 1,000 % 30 25 20 15 10 5 0 <25,000 25,000 - 50,000 - 75,000 49,999 74,999 or > 7 Source: US Census Bureau Lack of health insurance results in high ‘hidden’ costs 25 14,000 20 12,000 10,000 15 8,000 10 6,000 4,000 5 0 00 03 06 09 12 15 18 Per Capita, USD (left scale) % of GDP (right scale) May 20, 2010 It is estimated that over 2 million Americans per year are involved in medical bankruptcies. According to a Harvard University study, medical illness or injury contributed to over 62% of all bankruptcies in 2007 (Himmelstein, 2009). That rate probably rose in the recent economic downturn. Surprisingly, nearly 78% of those forced into bankruptcy for medical reasons were insured at the start of the illness. In many cases, illness led to job loss, and with it the loss of health insurance. High and rising costs Total spending on health care in the US has surged in recent decades, from 5.2% of GDP in 1960 to an estimated 17.3% in 2009, with growth in health care spending exceeding the rate of consumer price inflation by 2.5 percentage points per year on average with only brief interruptions throughout those decades (CMS, 2010b). According to the latest available data from the National Health Expenditure Accounts, US health care spending growth actually decelerated in 2008 (to 4.4% compared to 6.0% growth in 2007), but this ‗improvement‘ was due to the economic recession as consumers cut back spending (including spending on health). 2,000 Source: Centers for Medicare and Medicaid Service The lack of health insurance for so many Americans compromises health and puts additional stress on individual as well as public finances. The uninsured are much more likely to skip regular checkups, tests, and even treatment for chronic conditions such as diabetes. This leads to worse health and more emergency visits to hospitals, with resulting costs for ‗uncompensated care‘ – costs incurred by hospitals and physicians for the care they provide to the uninsured and for unpaid bills. A large portion of these uncompensated care costs is reimbursed by federal and state government, to the tune of approximately USD 43 bn per year in 2008 (Hadley et al., 2008). Moreover, the indirect costs linked to being uninsured – including lost health, decreased workforce productivity, developmental and educational losses among children, and shorter life spans – have been estimated at USD 100-200 billion per year (CEA, 2009; Axeen and Carpenter, 2008). Indeed, the need for health insurance can result in labor market distortions, as workers who might seek new employment or move into self-employment may be reluctant to do so because they fear losing their health insurance. This ‗job-lock‘ phenomenon has been studied by several health economists, many of whom have advocated dismantling the employer-based insurance system in favor of a system of universal coverage (see a.o. Endhoven, 2007). However, opposition from interest groups (unions in particular) prevented such a radical change in the employer-based system from being considered in the current health care debate. National Health Expenditures 2000-2019 16,000 Given these trends, the number of uninsured is projected to increase rapidly to 54 m in 2019 in the absence of reform. Although the number and percentage of uninsured children declined in 2008 (to 9.9%, down from 11.0% in the previous year), this was due solely to the increases in federal outlays for CHIP contained in the 2009 stimulus legislation. Most observers expect a further jump in the number of uninsured in 2009 and 2010, due to the impact of the economic recession that has left many people unemployed and, thus, without health insurance. 8 While growth in private health insurance premiums and out-ofpocket spending on health care decelerated, spending for Medicare and Medicaid grew at a faster rate, in part due to provisions 7 Current Issues Insurance cost-sharing explained Premium: The cost of the insurance policy, which is normally paid on a monthly basis. Under employer-sponsored plans, a portion of the premium is paid by the employer and a portion by the employee through monthly payroll deductions. Co-payment (or copay): A specified fixeddollar amount paid by the policy enrollee at the time of service. Co-insurance: A specified percentage of the cost of the medical service to be paid by the enrollee. Not all policies require co-insurance, but for those that do the cost-sharing ratio is normally 80-20 or 70-30 (the portion paid by the insurance company to that paid by the insured). Deductible: A specified fixed-dollar amount that enrollees must pay ‗out of pocket‘ before the insurer begins paying for medical services. Cost-sharing requirements differ by type of plan, and tend to be higher in the individual insurance market (particularly under ‗consumer-driven health plans‘ whose policies generally carry higher premiums). Costsharing is very low under Medicaid and somewhat higher under Medicare (but generally not as high as individual or employer-sponsored plans). For the most common type of plan, an employer-sponsored preferred provider plan, the average annual premium amounted to USD 4,824 for single coverage and USD 13,375 for a family in 2009, a 131% increase for family coverage compared to 1999. In 2009 the deductible for an employer-sponsored preferred provider family plan averaged about USD 634 per year and exempt regular physician visits within the network of preferred providers. The copayment averaged USD 20 per primary care physician visit and USD 28 for specialist visits within the network of preferred providers. Covered workers with coinsurance requirements paid on average 18% of the cost of a primary care physician visit in 2009. That share is typically as high as 30-35% for visits outside the network of preferred providers, though coinsurance requirements normally vary by type of service. Most employer-based insurance plans require the enrollee to pay a portion of the cost of advanced diagnostic tests and outpatient surgery (coinsurance being more common) and for emergency room and urgent care visits (copayments being more common). Most plans also limit total out-of-pocket spending that enrollees can incur in a given year. For a typical preferred provider plan, average out-of-pocket maximums are about USD 2,000 for individual coverage and USD 4,000 for family coverage. Since 2000, employee cost-sharing for health care services has increased and well outpaced inflation. Sources: Kaiser Family Foundation (2009), CBO (2008), Fronstein (2007). 8 associated with the American Recovery and Reinvestment Act of 2009. As a share of GDP, total health expenditures in 2008 continued to rise (to 16.2%, up from 15.9% in 2007), as health spending reached USD 2.3 trillion, or USD 7,681 per person. The Centers for Medicare and Medicaid Services predict that growth in health care spending will persist, with national health expenditures projected to reach nearly USD 4.5 trillion, or USD 13,400 per capita, in 2019 (CMS, 2010b). The rising cost of health care in the US is borne by households, employers and the government alike. In 2009, average annual medical spending for a typical American family of four covered by an employer-sponsored plan reached USD 16,771, up 7.4% from the previous year. Employers paid about 59% of the total in the form of subsidies to cover a portion of the monthly health insurance premium costs, employees paid about 24% of the total cost in the form of employee contributions to the monthly insurance premiums (normally through payroll deductions), and an additional 17% in outof-pocket costs (e.g., copayments and deductibles) at the time of service. Looking longer term, the current trajectory of health care spending is clearly unsustainable. Barring changes to the current system, health spending will continue to rise sharply in coming years, putting severe pressure on personal and public finances and crowding out private and government spending on other things. The non-partisan Congressional Budget Office, in its most recent assessment of longterm health care costs, predicts that the share of GDP devoted to health care will rise from over 17% currently, to 25% of GDP in 2025, 37% in 2050, and 49% in 2082 (CBO, 2007). Federal spending on Medicare (net of beneficiaries‘ premiums) and Medicaid alone would rise from 4% currently to 7% in 2025, 12% in 2050, and 19% in 2082. Projections of the Trustees of Medicare and Medicaid, the body that oversees those federal programs, are a bit less pessimistic, since they assume that spending on these programs will grow slower than it has in the past, resulting in less drastic increases for the out years in particular. Yet even under less pessimistic scenarios than the CBO‘s, it is clearly unthinkable that healthcare would be permitted to engulf such a large portion of the federal budget, and eventually something would have to change. But these long-term predictions, even if imprecise and unrealistic, illustrate the undeniable fact that spending on health care will reach unsustainable levels if fundamental reforms to the system are not made. Several factors lie behind the higher levels of health care spending and faster growth in health care costs in the United States. Compared to other OECD countries, the US spends more on inpatient and out-patient hospital care as a percentage of overall spending, and much more on administration. According to OECD comparative health data, health price levels in the United States exceed the OECD average by about 25%, with prices for hospital services, pharmaceutical prices, and physician remuneration much higher than in other OECD countries. There are also, on average, fewer doctors and hospital beds per capita, suggesting that insufficient supply may in some cases be pushing prices higher. Yet although there are fewer doctor visits and shorter hospital stays in the US relative to other OECD countries, the US has vastly higher rates of activity (i.e., more procedures and tests, particularly those associated with innovative technology and medicine) (OECD, 2009). May 20, 2010 Coverage vs. cost Health economists confirm that advances in technology and medical science are the leading driver of high US health spending. In particular, the high rate of usage of new (and expensive) diagnoses and treatments in the United States, compared with other countries, exerts upward pressure on costs. Medical innovation leads to demand for improved technology, and the availability of new technology has led to greater demand for state-of-the-art tests, treatments and drugs. The result is a continuous upward pressure on costs. At least in part in response to this technology-driven increase in demand, health insurers have expanded the health care benefits covered under insurance plans, with more generous policies accompanied by higher premiums but resulting in less out-of-pocket spending required by policy holders. If anything, this has exacerbated the problem of perverse cost incentives within the US health care system that lead to more consumption (and in some cases overuse and over-prescribing). The ‗fee for service‘ system prevalent in the US means that providers (doctors and hospitals) are paid per service they perform, rather than per health episode or patient outcome. As a result, health providers prescribe more tests and procedures, and have a greater financial incentive to use expensive technology. Insurers have little incentive to curb costs either, since they earn management fees from administering company health plans, and those fees increase with spending. Studies based on regional data show that the higher proportion of specialists in the US also contributes to the higher cost of health care. These specialists rely more on expensive technical procedures and are more highly paid than primary care physicians. Factors contributing to higher US health spending — Technology-driven demand — ‗Fee-for-service‘ system — Too many specialists, too few primary doctors — Lack of cost transparency — Medical liability insurance — Administrative costs Average annual family medical cost USD 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 9 Source: Milliman Medical Index (MMI), 2009 Projected spending on health care % of GDP 60 50 40 30 20 10 0 2007 2021 2036 2051 2066 2081 All other health care Medicaid Medicare Source: Congressional Budget Office May 20, 2010 10 On the consumer side, individuals pay a relatively small (albeit growing) share of their health expenses ‗out-of-pocket‘, and this generally encourages over-consumption. Whereas consumers were responsible for 43% of total national health care expenditures in 1965, over the years this share fell to 11.9% in 2008, as growth in expenditures by private insurers, Medicaid and Medicare grew at much faster rates (de Rugy, 2010). If, as under most health insurance policies, consumers only pay a fraction of the actual cost (normally in the form of a co-payment), then there is little incentive for consumers to opt for less expensive tests and treatments even if evidence suggests that their cost outweighs the benefits. Moreover, lack of transparency means that consumers have little information about the actual cost of the health services they use, leading them to demand more and in many instances to over-use health care. Also contributing to the higher level of spending in the US relative to other advanced countries are the proliferation of medical lawsuits (which drive up the cost of medical liability insurance and the incidence of unnecessary tests and procedures), the relatively high level of physician income, and higher prices for pharmaceutical drugs. Moreover, the US system of multiple insurance providers and sources of financing translates into much higher administration costs in the US. This, along with high hospital re-admission rates, has led to lower productivity in the US health care system relative to other countries. Yet another factor driving health care spending is population aging, which translates into an expansion of Medicare outlays as more people become eligible for the program (as well as for the long-term care services offered under Medicaid). However, population aging has not been a significant factor in the growth of health care 9 Current Issues Growth in Medicare and Medicaid spending % of GDP 20 18 16 14 12 10 8 6 4 2 0 07 17 27 37 47 57 67 77 Effect of excess cost growth Effect of aging No aging or excess cost growth Source: Congressional Budget Office 11 spending in the US up to now, and projections for the next 70-plus years show that even an acceleration in the effect of population aging will be a relatively moderate driver of growth in federal spending on health care. The much larger impact comes from excess cost growth (i.e., when increases in health care spending for an average individual exceed the growth in per capita GDP). It is important to note that not all of the causes of higher spending on health care are negative. For example, in the US and elsewhere the increase in average personal disposable incomes translates into higher spending on health, which is a superior good (i.e., the richer people become, the more health care they demand and thus consume). A high level of spending on health care is, in and of itself, a positive and natural development (in the US as in other advanced countries) that has led to longer and healthier lives (Cutler, 2004). What is problematic is not that the US is spending more, but that it is not getting as much as it should for its higher spending. Uneven quality and efficiency of care Economists and policymakers alike would have less reason to be concerned about health care cost inflation if higher spending on health care in the US was yielding commensurate gains in health outcomes. Yet the evidence suggests that much of the additional spending on health care in the US does not lead to better health, and that the US health system operates far from its efficiency frontier. Health outcomes are better in countries that spend much less Comparisons with other advanced countries show that health outcomes by many measures are worse in the US than in other advanced countries that spend far less on health care. Although health expenditures per capita in the US are by far the highest among OECD countries, life expectancy at birth has risen at a slower rate in the US over recent decades than in most OECD countries. The increase in life expectancy at age 65 has also been less than the OECD average. Moreover, the gap in life expectancy between socio-economic groups in the US has increased markedly. And another key indicator of population health status, infant mortality, has decreased at a slower pace in the US than in other OECD countries. Health expenditure per capita, 2007 USD PPP 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 OECD US NO CH LU CA NL AT FR BE DE DK IE SE IS AU GB '06 Private FI GR IT ES JP NZ PT KP CZ SK HU PL MX TR '06 '06 '05 Public Source: OECD Health Data, 2009 Up to one-third of US health care spending is wasted 10 12 Health care economists who have analysed spending and quality have determined that a surprisingly large share of US health care spending – up to one-third, or close to 5% of GDP – does not contribute to health care gains. Looking at it from a positive angle, May 20, 2010 Coverage vs. cost this apparently vast waste represents both an opportunity and challenge to reduce health care costs without impairing health outcomes. Life expectancy at birth, total population, 2006 In years 84 82 80 78 76 74 72 70 68 HU TR SK MX PL CZ US DK PT KP LU BE FI GB GR DE IR NL AT SE NZ NO CA FR AU ES IS IT CH JP Source: OECD Health Data , 2009 No regional correlation between spending and quality of care Regional variation in spending % increase from previous year Miami, Florida East Long Island, New York 5.0 US National Average 3.0 Boston, Massachusetts 3.0 San Francisco, California 2.4 Salem, Oregon 2.3 4.0 Average annual growth in per capita Medicare Expenditures, 1992-2006 Source: Fisher et al., 2009 14 Medicare spending per beneficiary Quintile 1st Inpatient days 1.4 per beneficiary 2nd 3rd 1.6 1.8 4th 2.1 5th Case studies of health care spending and health outcomes within the United States show that ‗more isn‘t always better‘ in health care, i.e., that more expensive care does not necessarily mean higher quality care. The great variation in Medicare spending per beneficiary by US region is vast, as are variations in spending among medical centers, providing a useful laboratory for 3 comparative research. The Dartmouth Atlas Project has analyzed regional variations in the practice of health care delivery and spending, principally for the Medicare population, and found no correlation between the quality of care and level of Medicare spending by state – defying the conventional view that more spending on health care automatically translates into better health outcomes. Specifically, Dartmouth researchers found a 2.5-fold variation in Medicare spending in different regions of the country, after adjusting for differences in local prices, and the age, race and underlying health of the population. They conclude that ‗patients who live in areas where Medicare spends more per capita are neither sicker than those who live in regions where Medicare spends less, nor do they prefer more care. Perhaps most surprising, they show no evidence of better health outcomes‘ (Fisher et. al., 2009). Patient outcomes in some cases actually suffer in higher-spending regions, as a result of an excessive number of physicians with too little information involved in a patient‘s care, increasing the likelihood of mistakes. Physicians in regions with a higher per capita supply of hospital beds and specialists are more likely to prescribe hospital stays and specialist visits, leading to more intervention and higher costs but on average not resulting in better health outcomes. Indeed, Dartmouth Atlas finds higher mortality rates in higherspending regions compared with lower-spending regions for several health problems (e.g., acute heart attack, hip fracture, and colon cancer). As the researchers conclude, ‗hospitals are dangerous places to be if you do not absolutely need to be there‘. 2.1 Physician visits 10.7 12.1 13.0 13.6 14.5 per beneficiary MRIs per 16.6 17.6 19.3 19.7 21.9 100 beneficiaries CT scans 46.9 54.0 58.7 61.2 61.4 per 100 beneficiaries Source: Sutherland et al., 2009 15 What are the sources of this regional variation? Using data from the Medicare Current Beneficiary Survey, Dartmouth researchers 3 May 20, 2010 13 For example, researchers found that Medicare spending for patients in the last six months of life was on average nearly twice as much at the University of California Los Angeles hospital as at the Mayo Clinic in Minnesota. 11 Current Issues conclude that patients in the highest-spending regions spend more time in the hospital, have more frequent physician visits, and undergo more magnetic resonance imaging (MRI) procedures and computed tomographic (CT) scans. Indeed, most of the regional variation in spending appears to stem from discretionary decisions by physicians. This suggests that there are substantial savings to be achieved through health care payment and delivery system reforms, without rationing care (Sutherland et al., 2009). The major elements of the 2010 health care reform What follows is a summary of the major elements of the final health care reform legislation, which comprises the Patient Protection and Affordable Care Act (as passed by the Senate on December 29, 2009 and by the House on March 21, 2010) and the Health Care and Education Affordability Reconciliation Act (whose final version was passed by both houses of Congress on March 25, 2010). Federal subsidies under the exchanges Income as Income % of FPL* level** USD Premium (% of Income***) Up to 133 29,326 2.0 133-150 29,326-33,075 3.0-4.0 150-200 33,075-44,100 4.0-6.3 200-250 44,100-55,125 6.3-8.05 250-300 55,125-66,150 8.05-9.5 300-400 66,150-88,200 9.5 Health insurance coverage mandate and subsidies (*Federal Poverty Level, **2010 Poverty Guidelines, ***increasing from to) Sources: US House of Representatives and US Department of Health and Human Services 16 Individuals with incomes less than USD 88,200 will get subsidies as of 2014 Penalty for individuals without health insurance USD amount In % of income 2014 95 1.0 2015 325 2.0 2016 on 695 2.5 Source: US House of Representatives 12 17 The legislation contains several measures aimed at significantly reducing the number of legal US residents without health insurance. It includes a first-ever requirement for individuals to obtain insurance (the so-called individual mandate), starting in 2014, and establishes insurance exchanges where individuals otherwise without access to health insurance can purchase it. Federally-funded ‗premium tax credits‘ (i.e., subsidies) will be provided to help people with low- to middle-incomes purchase health insurance through the exchanges if they cannot get insurance through an employer. The subsidies will be available to individuals and families with incomes between 133% and 400% of the federal poverty level (currently, between USD 29,326 and USD 88,200 annually). Incomes under 133% will be eligible for Medicaid. The subsidy is calculated on a sliding scale beginning at two percent of income for those at 100% of the federal poverty level and phasing out at 9.5 percent of income at 300-400% (see chart). If an employer offer of coverage exceeds 9.5% of a worker‘s family income, or the employer pays less than 60% of the premium, the worker may enroll in the exchange and receive credits. Starting in 2019, the subsidies are scheduled to increase at the rate of inflation (consumer price index), which would slow their growth relative to the expected rate of overall health care spending and premiums. In other words, the subsidies will become less generous over time. CBO (2010) estimates that the average exchange subsidy per subsidised enrollee would amount to USD 5,200 in 2015, and would gradually rise to USD 6,000 in 2019. For the first decade of the legislation (2010-2019), the insurance exchange subsidies and related spending would add USD 464 bn to the federal deficit. To encourage enrollment of the uninsured and to help finance the expansion, individuals and businesses that do not fulfill the insurance mandate will be penalised. Individuals who do not purchase health insurance, and whose income is over the tax filing threshold, will be assessed a penalty amounting to the greater of USD 695 or 2.5% of income by 2016 (phased in from 2014). The penalty was made more progressive in the Reconciliation Act, which lowered considerably the flat payment amounts (to which lowerincome earners would be subject) but raised the percentage of income payment amounts (to which higher-income earners would be subject), relative to the Patient Protection and Affordable Care Act. Firms with more than 50 workers that do not offer coverage will have to pay a penalty of USD 2,000 for each full-time employee, if any of May 20, 2010 Coverage vs. cost their workers obtain subsidised coverage through the insurance exchanges. The first 30 employees would be exempted under the legislation, meaning that a firm with 51 workers that does not offer coverage would pay an amount equal to 51 minus 30, or 21 times the USD 2,000 per full-time employee. Small businesses get a tax credit from 2010 if they offer insurance To help small firms afford to offer health care plans for their employees, the legislation offers tax credits that take effect already in 2010, well before the launch of the exchanges and penalty system in 2014. Small businesses with fewer than 25 full-time employees would be eligible to receive a tax credit for 35% of their cost in health care premiums for plans they offer to their employees. After the start of the exchanges in 2014, this tax credit would increase to 50%. The Congressional Budget Office estimates the net cost of these small employer tax credits will add USD 40 bn to the federal deficit in 2010-2019. A new marketplace for the uninsured to buy coverage State-run exchanges come on line in 2014 Health insurance would be offered to previously uninsured individuals and to small businesses through a new system of health insurance ‗exchanges‘ created and run by the 50 states, beginning in 2014. States will have the choice of whether to offer separate exchanges or a single exchange for individuals and small groups, and will also have the option of partnering with another state to form a joint exchange. And for states that choose not to operate their own exchange, the federal Department of Health and Human Services will run a multi-state exchange. Policies purchased through the exchanges (or directly from insurers) would have to meet several requirements, and would be subject to oversight of state insurance commissioners with respect to consumer protections, rate review and solvency. In particular, insurers would have to accept all applicants, would be forbidden from limiting or refusing coverage for preexisting medical conditions, and could not vary premiums to reflect differences in enrollees‘ health. The exchanges will not include a government-offered insurance plan (the so-called ‗public option‘) that was originally included in the House bill. The largest expansion of Medicaid since 1965 More people will qualify for Medicaid May 20, 2010 Beginning in 2014, most nonelderly citizens with incomes below 133 percent of the federal poverty level (USD 29,327 for a family of four) will be eligible for Medicaid, including low-income childless adults who are currently ineligible under most state rules. In an effort to ensure that physicians will accept these new Medicaid patients, payments to primary care doctors under Medicaid would be increased in 2013 and 2014 to bring them up to Medicare payment rate levels. The legislation also limits the burden of expanded Medicaid coverage and payments on cash-strapped states. The federal government would cover 100% of the increase in Medicaid payments to primary care physicians, and would cover 100% of the costs of covering newly eligible enrollees through 2016. In subsequent years, the federal share of spending would vary somewhat from year to year but would average about 90% by 2019 for most states. (Under current rules, the federal government usually pays about 57%, on average, of the costs of Medicaid benefits.) In addition, states would be required to maintain current coverage levels for all Medicaid beneficiaries until the exchanges become fully operational; and coverage levels for children under Medicaid and CHIP would have to be maintained through 2015. Beginning in 2014, states would receive higher federal reimbursement for CHIP beneficiaries, increasing from an average of 70 percent to 93 13 Current Issues percent. All told, the Medicaid and CHIP-related measures are estimated by the CBO to add USD 434 bn to the federal deficit in the 2010-2019 period. Medicare: Expanded drug coverage; cuts to Medicare payments Medicare ‘donut hole’ phases out by 2020 The legislation would gradually close the gap in coverage under Medicare‘s prescription drug plan, commonly referred to as the ‗donut hole‘. Under the Medicare drug plan (Part D), individuals are responsible for 100% of the cost of the drugs after they hit a certain dollar amount of individual spending on pharmaceutical drugs, until they reach a much higher level of spending at which the government again covers 75% of the cost. Under the reform, Medicare Part D enrollees who enter the ‗donut hole‘ will receive an annual USD 250 rebate in 2010. Beginning in 2011, pharmaceutical manufacturers will be required under the law to provide a 50% discount on brandname drugs, which would gradually increase to completely close the donut hole, with 75% discounts on brand-name and generic drugs by 2020. The Medicare Coverage Gap Discount Program, which was greatly expanded under the Reconciliation Act, is estimated to cost USD 42.6 bn over the 2010-2019 period. Cuts in various Medicare payments make up a large portion of the overall cost savings of the reform. The major Medicare savings measures include Steep cuts in Medicare payments to hospitals and insurers foreseen — A freeze on payments in 2011 under Medicare Advantage (MA), the private plan alternative to Medicare. In addition, MA payment benchmarks would be reduced relative to current levels starting in 2012 to bring them in line with payments under traditional Medicare plans. Reductions will vary by region and will be phased in gradually. Over the ten-year window, these lower payments are expected to reduce spending by USD 136 bn. — Permanent reductions in the annual updates to Medicare‘s feefor-service (FFS) payment rates for inpatient hospitals, long-term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospitals, that is estimated to save approx. USD 196 bn over the ten-year period 2010-2019. 4 — A reduction in so-called Disproportionate Share Hospital (DSH) payments beginning in 2014, yielding savings of USD 22 bn over the ten-year window. Medicaid DSH payments would also be reduced, by an estimated USD 14 bn over ten years. Tighter rules on insurers Insurers can no longer deny or rescind coverage Insurers will face a number of new restrictions under the health reform law, in return for the additional business they will have as a result of millions of new customers entering the health insurance market after the mandate and exchanges take effect in 2014. Insurers will no longer be able to put lifetime or annual limits (caps) on health care coverage. They will also be banned from dropping people from plans if they become ill (referred to as ‗rescission‘) or denying coverage on the basis of a pre-existing condition (or gender, race, income, etc.). And insurers will be subject to the decisions of a new, independent claims appeals process for consumers under new plans. Insurers will also have to provide 4 14 Disproportionate Share Hospital (DSH) adjustment payments provide additional help to those hospitals that serve a significantly disproportionate number of lowincome patients. The program seeks to continue to encourage hospitals to provide health services for these individuals. There are DSH programs for both Medicare and Medicaid. May 20, 2010 Coverage vs. cost preventive care at no cost under Medicare (co-pays and deductibles for most preventive care and wellness visits will be disallowed) and under new private plans under the exchanges. This will be the case for all plans as of 2018. In addition, insurers will have to guarantee that a certain percentage of the cost of health insurance premiums is devoted to health care, rather than to administration of plans. Starting in 2011, individual and small group insurance plans will be required to spend 80% of premium dollars on medical services, and large group insurance plans 85%. In an attempt to reduce the number of uninsured young adults, insurers will be required to cover individuals up to 26 years of age under their parents‘ policies. How is the reform financed? Reform is paid for by a 40% tax on the most expensive health plan … Agreeing on how to finance the expansion of coverage was one of the most difficult elements in the legislative battle over health care reform. During the final stage of negotiations, greater savings through both Medicare payment cuts (as outlined above) and various taxes needed to be found to offset increased costs in the form of more generous subsidies and a larger expansion in Medicaid coverage. The Senate legislation relied on a tax on highcost health care plans, while the House legislation included a tax on wealthy Americans. In the end, the Senate‘s excise tax on high-cost plans provided the basis for offsetting revenues; however, the introduction of the tax was postponed until 2018 (from 2013 in the Senate bill) and its threshold amounts were raised. The final legislation imposes a 40 percent excise tax on employer-provided insurance plans worth more than USD 10,200 for individuals and USD 27,500 for families. By comparison, the average cost of a family policy offered by an employer was USD 13,375 in 2009, i.e., considerably lower than the threshold. Just how many plans would fall under the excise tax in 2018 has not yet been officially 5 estimated, though it is unlikely to be more than one-tenth of plans. The tax, levied on insurers or employers, would apply to the value of the plan in excess of the threshold amount. For retirees and employees in high-risk professions, and for firms with a predominance of female and/or older workers, the plan value thresholds are set higher, at USD 11,850 for single coverage and USD 30,950 for a family. After 2020, those amounts would be indexed to the overall inflation rate (rather than inflation plus 1 percentage point in 2019). This means that if premiums continue to increase at a faster rate, more plans will be subject to the excise tax each year. CBO estimates that the excise tax will raise USD 32 bn by 2020 (USD 12 bn in 2018, its first year in effect, and USD 20 bn in 2019). … and hefty tax hikes for highincome earners To make up for the reduced revenue from the excise tax relative to the Senate bill, the Reconciliation Act also institutes fairly hefty tax increases on higher-income earners. Specifically, families earning over USD 250,000 (and individuals over USD 200,000) will be subject to an increased Medicare Part A (Hospital Insurance) payroll tax. The tax rate would be raised by 0.9 percentage point, to 2.35% of income, up from the current 1.45% rate). In addition, the investment income of these high-income earners would also be subject to a Medicare tax of 3.8%. Under the original House legislation, the Medicare payroll tax surcharge would have been 5 May 20, 2010 CBO estimated in November, 2009 (CBO, 2009d) that 19% of employer-sponsored health insurance policies would fall under the excise tax according to the lower, original Senate thresholds. CBO has not yet published an estimate for the thresholds in the final reform legislation. 15 Current Issues larger (5.4%) but would have ensnared only those with incomes over USD 500,000 per year (USD 1 m for a family). In this respect, the tax base is broadened, hitting upper-class Americans rather than only the very wealthiest. Impact of the reform Sharp reduction in the number of uninsured 94% of Americans will have health insurance coverage by 2019 Impact on coverage, 2019 Non-elderly people, million Without reform Uninsured Exchanges* Nongroup & other Employer Medicaid/ CHIP 180 160 140 120 100 80 60 40 20 0 With reform *There are no exchanges without reform. Source: Congressional Budget Office 18 The Congressional Budget Office and Joint Committee on Taxation, in their final estimate of the impact of the Senate legislation as amended by the Reconciliation bill from March 20, predict that by 2019 the Act will reduce the number of uninsured Americans by about 32 million, leaving approximately 23 million non-elderly residents uninsured. About one-third of those 23 million would be unauthorised immigrants, who are not permitted to take part in the new insurance exchanges under the reform law. This reduction would put the share of legal nonelderly residents with insurance coverage at about 94%, compared to 83% currently – a considerable expansion that approaches, but does not fully reach, universal coverage. The sources of insurance coverage will also shift, though most Americans will retain their current health insurance (e.g., with their employer). According to CBO (2010), 29 million individuals would be covered under the exchanges by 2019 (24 m of whom would purchase their own coverage with the help of subsidies and another 5 million who would enroll in exchange plans offered by their employers but would not be eligible to receive subsidies). An additional 16 m people would be covered under Medicaid and CHIP. In contrast, the number of people purchasing individual coverage under private plans outside the exchanges would fall by 5 m, and the number of people insured under employer-sponsored plans would decline by 3 m. The net change in employer-based coverage would result from an additional 6-7 million people enrolling in plans as a result of the insurance mandate, another 8-9 million people who would lose their employer coverage as a result of smaller employers choosing not to offer insurance, and 1-2 million people who would opt to purchase insurance through the exchange rather than keeping their employer coverage. Although the cost of this expansion in coverage is large, it will reduce the expenditures associated with uncompensated care for the uninsured (paid for by providers and federal, state and local governments). Expanded coverage will also yield economy-wide savings through improved health – e.g., fewer sick days taken, lives saved, less risk of personal bankruptcy caused by health expenses – net welfare gains that could amount to tens of billions of dollars in savings per year (CEA, 2009). Positives and negatives for health consumers and providers The reform will affect most Americans, even though the vast majority will not change their health insurance 16 For individual consumers of health care, the impact of the reform will vary greatly by age, level of income, type of employment (employed or self-employed), and type of coverage (if any) prior to the reform. Beyond the issue of new taxes, which as noted above will hit upperincome and wealthy Americans (2.8% of families earned over USD 250,000 in 2008), the reform will affect several specific groups of individuals. It will benefit young adults (under 26 years of age) currently without insurance, who now will be covered under their parents‘ policies. Childless adults with very low incomes will benefit from expanded Medicaid eligibility. Seniors will be affected in several ways by the changes to Medicare: Those who are insured under May 20, 2010 Coverage vs. cost Medicare Advantage will probably see their premiums and out-ofpocket costs increase as Medicare payments to those plans are cut sharply under the reform. But Medicare patients will no longer have to pay for preventive care, and many will also be paying less for prescription drugs as a result of the closing of the Medicare Part D ‗donut hole‘. Net effect on premiums estimated to be modest overall The greatest impact of the reform on consumers of health care (both individuals and companies) potentially could come through the legislation‘s effects on health insurance premiums and out-of-pocket health care costs. The Congressional Budget Office and Joint Committee on Taxation estimated that, on average, health insurance premiums will remain about the same or edge slightly lower than in the absence of reform (CBO, 2009d). That is because they find only very moderate change in premiums of employer-sponsored plans, which will still comprise the vast majority of the total insurance market (83% in 2016, compared to 17% of the market for non-group 6 plans). People who purchase insurance individually will pay higher premiums (but will get more coverage, in most cases) Effect on average premiums for health insurance in 2016 In % Non-group market Small group Large group market market Distribution of nonelderly population insured in these markets under the reform 17 13 Estimated differences in average premiums relative to no reform, before accounting for subsidies +10 to +13 +1 to -2 0 to -3 Share of people receiving subsidies 57 12 n.a. For people receiving subsidies, difference in average premiums paid after accounting for subsidies -56 to -59 -8 to -11 70 n.a. The non-group market includes people purchasing coverage individually either in the proposed insurance exchanges or in the individual insurance market outside the insurance exchanges. The small group market includes people covered in plans sponsored by firms with 50 or fewer employees. The large group market includes people covered in plans sponsored by firms with more than 50 employees. Premium subsidies in the non-group market are those available through the exchanges. Premium subsidies in the small group market are those stemming from the small business tax credit. Source: Congressional Budget Office 19 Specifically, CBO concludes that the average premium per person for employer-based insurance policies in the small group market (plans sponsored by firms with 50 or fewer employees) would range between 1% higher and 2% lower in 2016 than without the reform. For the large group market (plans sponsored by firms with more than 50 employees), the reform would yield an average premium per person that is zero to 3% lower in 2016 relative to no reform. For non-group policies, including plans under the insurance exchanges, the effects would be larger, with the average premium per person 6 May 20, 2010 The CBO‘s estimate of the effect on premiums, published on November 30, 2009, was based on the Senate-passed legislation. In its cost estimate of the final legislation in March 2010, the CBO states that the effect on premiums would not differ substantially from its original estimates on the basis of the Senate legislation alone (CBO, 2009d). 17 Current Issues estimated to be about 10% to 13% higher in 2016 than without the reform. However, that increase reflects the greater amount of insurance coverage on average for enrollees in this market, due to regulations for the new exchanges that will require insurance policies to cover a minimum specified set of benefits and a minimum actuarial value (i.e., a higher share of costs for covered services paid by the insurer, resulting in higher premiums but lower out-ofpocket spending). In addition, about half of non-group market enrollees would receive government subsidies that would reduce their costs 56-59% below the premiums that would be charged for the same policies in the absence of the reform. A study published by the Lewin Group, on the basis of the original legislation passed by the House and Senate, estimated that total annual health care spending per household (premium payments plus out-of-pocket expenses) would be less than USD 100 higher under the reform, though premiums for families with newly-insured members would be significantly higher (over USD 1,000) due to the cost of the new coverage (Sheils, 2009). 18 Small companies not offering coverage already will have to pay more … For companies, the impact largely depends on firm size and whether insurance coverage was offered to employees prior to the reform. Large companies stand to be little affected, and smaller companies could wind up paying more (by either having to provide insurance or having to pay a fine), depending on whether they are small enough to be exempt from the penalty or to qualify for a tax credit. Sheils (2009) estimated that health care spending for firms currently offering insurance would increase by USD 133 more per worker per year under the original House bill, while under the Senate bill spending would decrease by USD 233 per worker due to the lower employer penalties that would lead some employers to discontinue offering health care coverage. Firms not offering coverage now would pay USD 800 more in health care spending per worker under the House bill and USD 316 more under the Senate bill, again reflecting the lower penalty for employers under the Senate bill. Since the final legislation contains higher employee penalties than the original Senate bill (though exempting the first 30 employees for small firms), the net effect for employers is likely to be about neutral for firms currently offering insurance (as long as the policies are not so expensive as to eventually be ensnared in the excise tax) and modestly negative (i.e., about USD 500 per worker) for firms who do not currently offer coverage. Very small firms (under 25 employees), which make up the bulk of businesses not offering health insurance, might even accrue some savings per worker thanks to the small employer tax credit. … but the smallest firms will get tax credits toward the extra costs Among provider groups, hospitals stand to benefit from increased business through the expansion of insurance coverage and decreased costs for uncompensated care of the uninsured. But expanded Medicaid eligibility could be a mixed blessing for hospitals, since Medicaid generally reimburses hospitals for less than the actual cost of treating Medicaid patients. Hospitals also will bear about USD 155 bn of the cost of expanded health insurance by accepting lower payments under Medicare. On average, hospitals‘ bottom lines will probably be little affected. Physicians will also benefit from more customers and a decline in uncompensated (‗charity‘) care to uninsured patients. The American Medical Association, one of the top US lobby groups and the major voice of medical professionals, concludes that the reform, which it supported, will also significantly reduce the time and cost burden for May 20, 2010 Coverage vs. cost physicians associated with the administrative aspects of health plans, which they judge would be simplified under the reform. Impact on the net federal deficit, 2010-2019 Change in the federal deficit, USD billion 938 Gross cost of coverage provisions - Exchange subsidies and related spending 464 - Medicaid and Children‘s Health Insurance Program outlays 434 - Small employer tax credits 40 Net cost of coverage provisions - Penalty payments by uninsured individuals 788 -17 - Penalty payments by employers -52 - Excise tax on high-premium insurance plans -32 - Other effects -49 Change in deficit from other spending reductions -441 - Reduced Medicare fee-for-service payment rates -196 - Reduced Medicare Advantage payment rate -136 - Reduced Disproportionate Share Hospital payments -36 - Other -73 Change in deficit from other revenue-raising provisions -210 - Fees on manufacturers and insurers -107 - Community living assistance (CLASS) -70 - Other -103 Net change in the deficit Deficit-reducing, with caveats -490 - Medicare tax increases on high-income individuals -143 Source: Congressional Budget Office The immediate reaction of financial markets to the passage of the 7 reform has been quite muted , perhaps because many of the major provisions won‘t take effect for several years, and because it will take even longer for the full impact of the reform to become clear. The Dow Jones Industrial Average rose moderately on the news of the legislation‘s passage, with stock prices rising slightly for hospital operators and pharmaceutical companies, and falling slightly for insurance companies. Health insurers will benefit from a larger pool of customers through expanded insurance coverage, but they will be subject to greater fees and restrictions. In general, they will be compelled to take less healthy, costlier patients since they are restricted under the legislation from refusing or rescinding insurance coverage on the basis of health, gender, age and income. Drug makers largely managed to escape the tough regulation they originally feared would be part of a comprehensive health care reform. Pharmaceutical companies will benefit from more customers and closure of the Medicare 'donut-hole', as many seniors who currently fall into the hole simply resort to buying less medicine (or to buying generics). But drug makers will have to contribute about USD 85 bn over ten years toward the cost of the reform in the form of industry fees and lower prices paid under Medicare‘s prescription drug program. The impact on medical device companies will probably be neutral, as they will benefit from expanded insurance but also are subject to an annual fee in the legislation. 20 The Congressional Budget Office estimates that the reform will reduce the federal budget deficit by USD 143 billion in the first decade (2010-2019). The gross cost of coverage expansion (USD 938 bn in the first 10 years) mainly comprises the subsidies and other spending associated with the health insurance exchanges (USD 464 bn) and the expansion of Medicaid and CHIP (USD 434 bn). These costs are partially offset by spending reductions in public programs (mainly Medicare) amounting to USD 511 bn. Revenuegenerating measures also serve to offset the cost of coverage expansion, chief among these the Medicare tax hikes for highincome earners, the excise tax on high-premium plans (though due to its delayed start date of 2018, the excise tax would only yield USD 32 bn in revenues for 2010-2019), penalty payments from individuals and firms that choose not to take up coverage, and fees on insurers and other groups. In its second decade, the reform is projected to reap even greater savings, ‗in a broad range around one-half percent of GDP‘ over the decade 2020-2029 (CBO, 2010). The eventual larger savings come from the slower growth in premium subsidies beginning in 2019, as well as the change in the indexing of the threshold at which the excise tax on high-premium plans kicks in. Beginning in 2020, this would be indexed to the rate of general inflation, instead of the inflation rate plus one percentage point, meaning that increasingly more high-cost plans would be taxed. While Democratic leaders touted these savings as evidence that the health care reform bill will help bring down deficits and debt over time (proponents of the reform translated the 0.5% of GDP into USD 1.2 trillion in savings by assuming relatively strong rates of 7 May 20, 2010 The muted market reaction stands in contrast to the political reaction, with Democrats hailing this as the legislation of the century and Republicans claiming it a catastrophe of massive proportion. 19 Current Issues GDP growth over the period), CBO stresses that its long-term estimates are fraught with uncertainty. Some costs aren’t counted in the CBO cost projection, and some questionable savings are included Deficit hawks and opponents of the health care reform have criticised the CBO projections for being overly optimistic, and some skepticism is justified. The CBO estimates don‘t take into account all costs and count as savings other things unrelated to health care. Specifically, the estimates don‘t include the potential impact of the legislation on discretionary spending, for which CBO has provided a separate estimate. Additional discretionary outlays which are expected to arise from the legislation, but which must be appropriated by Congress, include at least USD 50 bn in specified and estimated authorisations for grant and other programs associated with the implementation of the legislation, in addition to USD 10-20 bn in costs for various government departments (e.g., Internal Revenue Service and Health and Human Services) to implement the subsidy program and the changes in Medicare, Medicaid and CHIP. On the other side of the ledger, the CBO counts USD 70 bn in ‗revenue‘ from a new voluntary long-term care programme (The Community Living Assistance Services and Supports, or CLASS), even though the fees initially paid to the program must be used for payments to enrollees in the second decade of the reform. In addition, the cost estimates include USD 19 bn in additional revenues from changes to the federal student loan program, which were included in the Reconciliation legislation but are totally unrelated to health care. If all of these additional costs and questionable revenues are factored in, the federal deficit in 2019 would be approximately unchanged or slightly higher, rather than USD 143 bn lower (compared to the baseline). Congress has consistently overridden a formula to keep Medicare payment cost growth in check – and may continue to do so A larger potential upside risk to the cost of the reform is the political uncertainty associated with some of the reductions in Medicare spending. The CBO estimates that cuts in Medicare payments will slow the growth in federal spending on Medicare to 6% per annum in the next two decades, down from 8% growth per annum in the past two decades (CBO, 2009). But this assumes the implementation of reductions in Medicare payment rates for physicians and other providers that ‗might be difficult to sustain over a long period of time‘. Specifically, the reform leaves out a planned 21% reduction in physician Medicare payments, to put payments in 8 line with the ‗sustainable growth rate‘ (SGR) formula , which Congress has postponed each year since 2003. The original House legislation included a permanent correction to the SGR at a cost of USD 228 bn over ten years; this ‗fix‘ was not included in the final reform but is currently being considered in separate legislation. The reform foresees further reductions in physician payments under Medicare in subsequent years, as well as payment rate increases for other providers of Medicare services (hospitals, etc.) below the rate of inflation – all of which may prove politically difficult to implement given the lobbying power of physician and hospital interest groups. 8 20 The Sustainable Growth Rate formula, introduced in 1997, sets a target each year for Medicare expenditures on physician services. If expenses are more than the target, Medicare balances spending by cutting physician payments. Spending has exceeded Medicare‘s target every year since 2002, and since 2003 Congress has overridden the SGR formula and increased fees by a small percentage each year, in an effort to keep doctors in the program. On April 16, 2010, Congress approved another temporary postponement of the Medicare physician payment cuts. By avoiding the cuts calculated by the SGR formula, the difference between targeted and actual spending on physician services accumulates. Payment cuts are postponed and therefore become larger every year. May 20, 2010 Coverage vs. cost The impact of the excise tax on costly plans is uncertain Another uncertainty that could have implications for the longer-term cost of the health care reform is how companies will react to the excise tax on high-cost health insurance plans. Employers may switch to lower-cost plans even before the tax takes effect in 2018, in order to avoid the tax itself (since the tax will be levied on companies who ‗self-insure‘, i.e., pay their employees‘ health care bills directly) or to avoid the increases in premiums that will inevitably result as insurance companies pass on the tax. Firms that decide to offer less generous health plans might compensate their employees through higher wages (Gruber, 2009), though whether this happens in practice remains to be seen. A general shift away from the most costly health plans would be a positive development in terms of trimming the premiums of overly expensive plans. But it would likely result in higher out-of-pocket spending for individuals, as a result of the reduction in plan premiums (and, in many cases, plan coverage). Moreover, this shift would result in less revenue generated from the excise tax, since fewer plans would exceed the tax threshold, thus limiting the net savings estimated to result from the reform in its second decade. Under certain alternative scenarios, the reform could increase, rather than decrease, the deficit in its second decade The projected longer-term budgetary savings could potentially turn to deficits if some of these and other politically difficult measures are not implemented or are partially implemented. Congressman Paul Ryan, a Republican from Wisconsin who fervently opposed the health care reform, asked the CBO to analyse the effects of the health reform legislation under the following alternative scenario: 1) No implementation of the excise tax on high-premium insurance plans; 2) No change in the indexing of exchange subsidies after 2018 (i.e., subsidies would not effectively decrease; 3) Inclusion of the ―SGR fix‖ to avoid Medicare payment cuts to physicians; and 4) No implementation of the Independent Payment Advisory Board. Taking these changes into account, CBO estimated that the legislation would increase the federal deficit during the decade 2020-2029 by about 0.25% of GDP, relative to the current baseline (i.e., no reform) — in contrast to CBO‘s predicted 0.5% of GDP in budgetary savings if the legislation is implemented as written. Additional caution is warranted regarding the ultimate cost of the reform with respect to its potential impact on state and local government finances, which the CBO estimates do not consider. Under the final legislation, the federal government assumes 100% of the cost of Medicaid and CHIP expansion for the first few years, thus relieving state and local governments from additional costs – but only temporarily. Many states are already getting nervous about having to pay considerably more for Medicaid once the federal government starts to pull back its generous support. With state finances currently deep in the red, many states were planning to cut back on Medicaid eligibility and benefits before the reform (or had already been forced to do so). States may need further federal assistance in order to attract a sufficient number of Medicaid providers and avoid curtailing Medicaid benefits and coverage. This would push up the cost of the reform. A start at bending the health care cost curve One-time cuts versus permanent spending control May 20, 2010 Most of the big ticket cost-saving measures in the first ten years take the form of direct program cuts (e.g., reductions in Medicare Advantage plan payments and Medicare provider reimbursement rates) rather than fundamental, system-wide changes that would slow the long-term growth of health care spending, in other words actually flatten the slope of the cost curve. However, the reform 21 Current Issues does take some important steps that have the potential to slow down the growth in health care spending, though mainly over the longer term: The exchanges should help bring down costs, but only for a small part of the system — The exchanges themselves should work to cut costs, by encouraging greater competition among insurers and introducing greater transparency about costs. Plans under the exchanges will have to adhere to new rules that 80-85% of premiums must go toward health coverage, which should help to limit spending on administration, advertising and brokers. Plans offered in the exchanges will also be rated on quality and price, potentially leading to greater cost consciousness on the part of plan purchasers. It is important to note, however, that the exchanges will cover less than 9% of the total non-elderly population. Excise tax takes effect only in 2018 — The excise tax on high-cost (‗Cadillac‘) employer-sponsored health plans theoretically should encourage employers to switch to less costly plans and insurers to trim the plans they offer. But precisely how and when the companies will react is unclear at this point. The Council of Economic Advisers (2010b) estimated that the tax could reduce the rate of growth in health care spending by 0.5 percentage point per year. But whether cost reduction of this magnitude will actually materialise is questionable, particularly given that the excise tax was watered down in the final stages of negotiations, taking effect only in 2018 and with higher thresholds (it is now referred to as a ‗Maserati‘ tax). Medicare board was watered down in legislative negotiations — Starting in 2014, a 15-member Independent Payment Advisory Board will be tasked with reporting on Medicare spending growth and presenting recommendations for spending reductions in the event that Medicare costs are projected to exceed certain targets. The Board‘s recommendations will take effect unless Congress passes alternative measures to achieve the same level of savings. However, the Board is forbidden from making proposals that ration care, change Medicare benefits, elgibility or cost sharing standards, or raise taxes or beneficiary premiums. Likely due to these restrictions (which beg the question, ‗where else can costs be cut?‘), CBO estimates that the Board will yield relatively minimal savings of USD 13 bn over 2010-2019. Medicare pilot programs geared toward rewarding quality over quantity CER has potential to promote costeffective treatments – but funding is small 22 — An expansion of pilot programs and provisions for so-called ‗bundled payments‘ under Medicare may help encourage reimbursement of health care providers on the basis of value, rather than volume, of care. Bundled payments are designed to move away from fee-for-service toward payment for performance. Yet while the Medicare pilot projects aimed at rewarding performance and quality of care, rather than quantity, are well intended, they will take a long time to bear fruit, and there is no mechanism in the legislation for ensuring their system-wide implementation. — The legislation provides modest new government funding (USD 20 million for the 2010-14, though this follows USD 1.1 billion allocated in the 2009 stimulus package) for Comparative Effectiveness Research (CER). CER is a technique that compares the impact of different options available for treating a given medical condition for a particular set of patients, with the goal of identifying cost-effective best practices and implementing them on a large scale. The CER proposals were watered down during the legislative debate, and CBO assigns virtually no cost savings to them in the first decade of the reform. May 20, 2010 Coverage vs. cost — The reform also includes measures to cut down on fraud and abuse related to Medicare and Medicaid payments, but CBO assigns almost no savings to these measures. Legislation left out some bigger-ticket cost control measures Several recommendations aimed at cost control were not included in the legislation, including the so-called ‗public option‘, i.e., offering a government-run health plan in the exchanges, which many experts believe could have put pressure on private plans in the exchanges to reduce their premiums. Medical liability reform (commonly referred to as ‗tort reform‘) was also left out, despite Republican urgings that it be included. Limits on excessive medical lawsuits and defensive medicine aimed at avoiding lawsuits could have saved USD 54 bn over ten years, according to the CBO. Moreover, the legislation contains only limited measures to promote ‗healthier living‘ and eliminated some proposals that would likely have had a large impact in this area (for example, a tax on sugary soft drinks aimed at reducing obesity, which was cut from the final legislation). Divergence of opinions on whether the reform will bend the health care cost curve A review of the reactions of prominent US health care economists to the final legislation yields a wide spectrum of opinions with respect to the potential of the reform to slow the growth in health care spending. Some economists, such as Princeton University‘s Uwe Reinhardt, share the disappointment that the reform did not include more on cost reduction. Reinhardt concludes that the reform ‗doesn‘t do much‘ to bend the health care cost curve, but agrees that it does ‗put in the architecture‘ necessary to eventually control spending growth (Klein, 2010). David Cutler of Harvard University (a former advisor to Obama) gives the reform better marks for cost reduction, arguing that it has taken on board most of the ideas put forth for controlling national health care spending, and concluding that legislation represents ‗the most significant action on medical spending ever proposed in the United States‘ (Cutler, 2010b). How will the reform affect consumer and provider behaviour? The ultimate impact of the reform on health care costs will depend a great deal on how it will affect behavior, which of course is quite difficult to predict. Will the exchanges produce lower-cost plans and eventually gain an increasing number of customers? Will they encourage consumers to factor cost into their health care decisions? If premiums continue to rise, will the federal government choose to reduce the subsidies or increase the deficit? Will the excise tax encourage insurers and employers to offer lower-cost plans, or will resulting premium increases force more companies to pay the penalty rather than offer insurance? Will Congress let the Medicare taxes on high-income earners ensnare an increasing number of people each year (since the income thresholds are not indexed to inflation), or will it attempt to ‗fix‘ this through potentially costly legislation? What will be the net effect of greater preventive care coverage – to drive up demand (and prices) or to improve health (and savings)? Unfortunately, none of these questions can be answered with any certainty so early in the reform process. Conclusion On the whole, the health care legislation signed by President Obama last month is a major reform in terms of health insurance expansion, but a moderate reform in terms of health system reform and cost control. Edward Kennedy, the late Democratic Senator from Massachusetts who spent much of his public career advocating universal health care coverage, called health care reform ‗the great unfinished business of our society‘. Even after the far-reaching reform of 2010, the business of health care reform in the United States remains incomplete, particularly with respect to slowing the May 20, 2010 23 Current Issues unsustainable pace of health care inflation. The steps aimed at cost reduction are important ones, but they do not go far enough and will need to be followed up with additional measures and system-wide implementation of cost-reducing strategies that prove, through comparative research and other methods, to be effective at changing the system so that it begins to reward quality and efficiency of care, rather than quantity. With respect to cost control, this reform should be viewed as a beginning from which to build. In his September 2009 speech on health care, Obama declared that he was not the first US President to try to reform health care, but that he intended to be the last. He has taken a big step, but the unsustainable US fiscal trajectory, largely driven by health care spending, means he cannot be the last. Amy Medearis (+49 30 3407 2950, [email protected]) 24 May 20, 2010 Coverage vs. cost Literature Axeen, Sarah and Elizabeth Carpenter (2008). The Cost of Doing Nothing: Why the Cost of Failing to Fix Our Health System is Greater than the Cost of Reform. New America Foundation Health Policy Program. November 2008. Centers for Medicaid and Medicare Services (2010a). National Health Expenditures 2008 Highlights. Washington, D.C. January 5, 2010. — (2010b). National Health Expenditure Projections 20092019. Washington, D.C. February 4, 2010. Congressional Budget Office (2010a). Cost estimate for the amendment in the nature of a substitute for H.R. 4872, incorporating a proposed manager's amendment made public on March 20, 2010. Washington, D.C. March 20, 2010. — (2010b). Responses to Questions About CBO's Preliminary Estimate of the Direct Spending and Revenue Effects of H.R. 4872, the Reconciliation Act of 2010. Letter to the Honorable Paul Ryan. Washington D.C. March 19, 2010. — (2009a). Patient Protection and Affordable Care Act, Incorporating the Manager‘s Amendment. Cost Estimate for the Amendment in the Nature of a Substitute to H.R. 3590. Washington, D.C. December 19, 2009. — (2009b). Correction Regarding the Longer-Term Effects of the Manager‘s Amendment to the Patient Protection and Affordable Care Act. Letter to the Honorable Harry Reid. Washington, D.C. December 20, 2009. — (2009c). H.R. 3962. Affordable Healthcare for America Act. Cost Estimate. Washington, D.C. November 20, 2009 (revised version). — (2009d). An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act. Letter to the Honorable Evan Bayh. Washington, D.C. November 30, 2009. — (2008). Key Issues in Analyzing Major Health Insurance Proposals. Washington, D.C. December 2008. — (2007). The Long-Term Outlook for Health Care Spending. Washington, D.C. November 2007. Council of Economic Advisors (2009). The Economic Case for Health Care Reform. Washington, D.C. White House. June 2009. Cutler, David M. (2010a). You Get What You Pay For: The Obama Approach to Health Care Reform. Presentation at a symposium hosted by Harvard University Medical School. January 11, 2010. Cutler, David M. (2010b). Health Reform Passes the Cost Test. The Wall Street Journal. March 9, 2010. Democratic Policy Committee Center (2009). Patient Protection and Affordable Care Act. Detailed Summary. http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm DeNavas-Walt, Carmen, Bernadette D. Proctor and Jessica C. Smith (2008). US Census Bureau Current Population Reports. Income, Poverty, and Health Insurance Coverage in the United States: 2008. US Government Printing Office, Washington, D.C. September 2009. May 20, 2010 25 Current Issues De Rugy, Veronique (2010). The High Cost of No Price. The American. December 1, 2010. Endhoven, Alain (2007). The US Experience with Managed Care and Managed Competition. In Jane Sneddon Little (ed.). Wanting It All: The Challenge of Reforming the US Health Care System. Pp. 97-118. Federal Reserve Bank of Boston. Engleberg Center for Health Care Reform at Brookings (2009). Bending the Curve: Effective Steps to Addressing Long-Term Health Care Spending Growth. Washington, D.C. August 2009. Fisher, Elliott, David Goodman, Jonathan Skinner and Kristen Bronner (2009). Health Care Spending, Quality and Outcomes: More Isn‘t Always Better. The Dartmouth Institute for Health Policy and Clinical Practice. Dartmouth, New Hampshire. February 27, 2009. Fronstein, Paul (2007). The Future of Employment-Based Health Benefits: Have Employers Reached a Tipping Point? Employee Benefit Research Institute. EBRI Issue Brief No. 312. December 2007. Gruber, Jonathan (2009). Impacts of the Senate High Cost Insurance Excise Tax on Wages: Updated. November 20, 2009. http://econ-www.mit.edu/faculty/gruberj/lightread Hadley, Jack, John Holahan, Teresa Coughlin and Dawn Miller (2008). Covering the Uninsured in 2008: A Detailed Examination of Current Costs and Sources of Payment, and Incremental Costs of Expanding Coverage. The Henry J. Kaiser Family Foundation. August 2008. Himmelstein, David U., Deborah Thorne, Elizabeth Warren and Steffie Woolhandler (2009). Medical Bankruptcy in the United States, 2007: Results of a National Study. The American Journal of Medicine. June 4, 2009. Kaiser Family Foundation and Health Research and Educational Trust (2009). Employer Health Benefits Survey 2009. http://ehbs.kff.org. Klein, Ezra (2010). Uwe Reinhardt: We are not 'off the hook' on costs. Interview with Uwe Reinhardt. Washington Post website. March 22, 2010. Sheils, John and Randy Haught (2009). Comparing the Cost and Coverage Impacts of the House and Senate Leadership Health Reform Bills: Long Term Costs for Governments, Employers, Families and Providers. The Lewin Group. December 9, 2009. Sutherland, Jason M., Elliott S. Fisher and Jonathan S. Skinner (2009). Getting Past Denial – The High Cost of Health Care in the United States. National Economic Journal of Medicine. September 9, 2009. United States House of Representatives‘ Tri-Committee House Staff. House-Senate Comparison of Key Provisions. December 29, 2009. United States Census Bureau (2009). Current Population Survey, 2009 Annual Social and Economic Supplements. Washington, D.C. 26 May 20, 2010 Current Issues ISSN 1612-314X OTC derivatives: A new market infrastructure is taking shape.................................................... April 28, 2010 Green buildings: A niche becomes mainstream .......................................................................... April 12, 2010 Public debt in 2020: A sustainability analysis for DM and EM economies ............................... March 24, 2010 Tele-medicine improves patient care........................................................................................ 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