Health Care and Political Polarization Northeast Business Group on Health April 2012 Peter R. Orszag Citigroup, Council on Foreign Relations, and Bloomberg
What is driving the recent deceleration in health care costs?
Source: Health Affairs, 2012
3 Growth rate, 2010 minus 2008 2 1 0-1 Medicare Medicaid Private health Out of pocket -2-3 -4
Change in age-adjusted mortality rate since 2007 Change in unemployment rate since 2007
The fiscal future
CBO s Alternative Fiscal Scenario, 2011 35.0 30.0 Percent of GDP 25.0 20.0 15.0 10.0 Medicare, Medicaid, other health Social Security 5.0 0.0 Other non-interest spending 2080 2077 2074 2071 2068 2065 2062 2059 2056 2053 2050 2047 2044 2041 2038 2035 2032 2029 2026 2023 2020 2017 2014 2011
Possible Solutions 1. Price reductions 2. Rationing 3. Consumer directed health care 4. Provider information and incentives
Concentration of Total Annual Medicare Expenditures Among Beneficiaries, 2001
Continued opportunities to improve value proposition.
Source: Skinner, Gottlieb, Carmichael
Addressing High Cost Cases: Provider Value Emphasis Information and best practices Health IT systems, with clinical decision support software Benchmarking, comparative effectiveness, and other analytics Medical malpractice Delivery system structure and incentives, especially bundling
Some successful models.
Health IT Integrated Decision Support for Imaging Utilization management through decision support: experience at MGH Thrall, Radiology 2009
Utilization and Variation decreased 40 Adjusted Images / 100 Patients By Doctor (N=137) Images / 100 Patients 30 20 10 2006 practice mean = 16.1 standard error = 0.74 2009 practice mean = 12.1 standard error = 0.54 0 Doctors sorted by low to high (left-right) in each year
High Risk Care Management MGH Medicare Demo Opportunity 10% of Medicare patients account for nearly 70% of spending MGH Demo Medicare selected MGH to participate in a 3-year demonstration project focusing on high-cost beneficiaries in 2006 Shared savings model similar to ACO Required to cover costs of program +5% Gainsharing if savings greater than cost +5% Success determined using prospective matched comparison group
Chronic Conditions MGH Medicare Demo Enrolled 2,500 highest cost Medicare patients; TME = $68 M Average number of medications = 12.6 Average annual hospitalizations = 3.4 Average annual costs = $24,000 Nurse care managers embedded in primary care practices Coordinate care; point person for acute issues Identify patients at risk for poor outcomes Facilitate communication when many caregivers involved Key characteristics* Care managers have personal relationships with patients Care managers work closely with physicians All activities supported by health IT (universal EHR, patient tracking, decision support, home monitoring) * Identified by independent evaluator as critical to program success
Chronic Conditions MGH Medicare Demo Results from Independent Evaluator (RTI) Successful Enrollment 87% of eligible beneficiaries enrolled Successful Targeting of Interventions Interventions focused on the enrolled patients with the greatest opportunity Successful Communication Improved communication between patients and health care team High patient and physician satisfaction Successful Outcomes Hospitalization rate among enrolled patients was 20% lower than comparison* ED visit rates were 25% lower for enrolled patients* Annual mortality 16% among enrolled and 20% among comparison Successful Savings 7.1% annual net savings (12.1% gross) for enrolled patients Approximately 4% annual savings for total population For every $1 spent, the program saved at least $2.65 *Based on difference in differences analysis
During the demonstration, the health outcomes of bypass patients treated at the participating hospitals were similar to those of bypass patients treated at the comparison hospitals in the local market areas. In particular, the two groups of patients had similar inhospital mortality rates, complication rates, and postsurgical health and functional status.
The next frontier: the duals
Source: RWJF, Urban Institute
Three other big trends for next five years: 1. Providers assuming more risk (bundling/acos) 2. IT/clinical decision support (Watson etc) 3. Employers moving toward defined contribution models
The political economy context