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As health care tabs rise, every American feels the impact – on personal finances, company budgets, state coffers and federal entitlement programs. Rising demands for services from an aging population, medical advances, and quality imperatives all impact health care costs. Within this context, it is important to understand how various sectors of our health care system price services and account for costs.
Disparities in health care have been well documented: Nonwhites have higher rates of infant mortality, death from heart disease, incidence of diabetes and HIV/AIDS and are less likely to receive appropriate immunization than are whites. A recent study in the Journal of Racial and Ethnic Disparities indicates that between 1991 and 2000, five times as many lives could have been saved by ending health disparities than were saved by innovations in health technology over the same period.
Medicare now covers nearly 42 million beneficiaries who are elderly, or who have a severe disability or end stage renal disease. The Medicare Modernization Act of 2003 made many changes to the program – including the addition of an outpatient prescription drug benefit (“Part D”), which will become effective in January 2006. Understanding this new benefit is of paramount importance to the many people who advise senior citizens, and to millions of Medicare beneficaries who will be scrutinizing different prescription drug plans available in their area.
The U.S. isn’t alone in efforts to improve the quality of health care. Other countries as well are coming up with new ways to measure quality, working to improve patient safety, and experimenting with financial incentives to encourage physicians to meet or exceed quality targets.
The enactment of the Patient Safety and Quality Improvement Act last year sets the stage for health care providers to be able to report medical errors confidentially to designated entities known as “Patient Safety Organizations” (PSOs).
The U.S. health care system is the most expensive in the world. Yet it is clear that by many measures, Americans are not receiving commensurate value for the health care dollars they spend. Is it possible to simultaneously improve health coverage and quality, while generating savings for health care consumers, employers, government and health care providers? What are the characteristics of a high performance health system? What realistic steps does the private sector need to take, contrasted with government bodies, to move the U.S. toward such a system? What policy changes would be most helpful to the most vulnerable populations – the uninsured, and those facing disparities in care or coverage due to income, race/ethnicity, health or age?
Medicare now covers nearly 42 million beneficiaries who are elderly, or who have a severe disability or end stage renal disease. The Medicare Modernization Act of 2003 made many changes to the program – including the addition of an outpatient prescription drug benefit (“Part D”), which will become effective in January 2006. Understanding this new benefit is of paramount importance to the many people who advise senior citizens, and to millions of Medicare beneficaries who will be scrutinizing different prescription drug plans available in their area.
The costs of caring for the elderly have been growing steadily higher. Spending on Medicare benefits accounted for 17 percent of the nation’s total health care spending in 2004. With baby boomers retiring, and Medicare benefits changing, this percentage is expected to grow in the future. Americans spend approximately $140 billion on long-term care in the U.S., most of it on the elderly, and Medicaid picks up almost half of the cost. Even among large private firms, health care costs for older people have taken their toll with only one-third offering health benefits to their retirees today, compared with two-thirds in 1988.
Wider use of health information technology has been touted as one way to improve the quality of care and reduce medical errors, while reducing the continued rapid growth of health care spending. Providers across the country are already adopting new health IT systems, and many patients have welcomed the trend. Other providers say they can’t afford the large upfront costs involved, and some analysts question whether health IT will save any money at all.
With New Orleans largely evacuated and hundreds of thousands of people separated from their regular health care providers, how will Hurricane Katrina’s evacuees attend to their health and health care needs?
The National Governors’ Association recently made a series of recommendations that would give states more flexibility in administering Medicaid benefits. In addition, the Medicaid Commission has been tasked with the short-term objective of developing policy options to achieve program savings, and Congress will soon consider changes to Medicaid that could include modifications to Medicaid’s benefits as well.
“Cash and Counseling” is a way of allowing individuals receiving personal assistance services through Medicaid to have more control over the services they get and who provides them. The program provides an individualized allowance that beneficiaries can use to hire a personal care assistant of their choice – often a family caregiver – or purchase items that help them live independently, such as chair lifts.
Pay-for-performance programs have been touted by some as a way to improve the overall quality of care provided to patients, while being criticized by others who fear unintended consequences in attempting to change physician behavior. The Medicare Payment Advisory Commission has recommended that pay-for-performance be incorporated into Medicare reimbursement policy in a number of areas. Recent laws, including the Medicare Modernization Act, have mandated pay-for-performance demonstration projects, including one for chronically ill Medicare patients.
Vaccines are among the greatest triumphs of medical science over illness and disease in the past half-century. In the United States, vaccine use has virtually eradicated smallpox and polio and has drastically reduced the incidence of the dangerous—and formerly common—childhood illnesses measles, mumps and rubella.
Medicare covers nearly 42 million beneficiaries who are elderly, or have a disability or end stage renal disease. Spending on Medicare benefits accounted for 17 percent of the nation’s total health care spending in 2004. The Medicare Modernization Act of 2003 made many changes to the program including the addition of a prescription drug benefit (“Part D”), which will begin full implementation in 2006.
Health care information about individual patients is one of the least automated aspects of the U.S. economy. Promoting greater access to secure, easily shared electronic health records for all Americans has strong support from the Administration and both parties in Congress.
The federal government’s responsibility to provide access to health care for the nation’s 41 million Medicare beneficiaries implies another obligation: to spend taxpayer dollars wisely. This means assuring that the $250 billion+ spent for Medicare goes for services that are safe, timely and effective.
A worldwide discussion is under way on the role of evidence-based medicine in evaluating the relative effectiveness of prescription drugs. Publicly funded health programs, large employers and managed care plans all are working to learn more about how the costs and benefits of one drug compare with those of another. At the same time, these payers of health care want to make sure that their beneficiaries have access to new pharmaceuticals that offer measurable improvements over older products.
A newly launched website known as “Hospital Compare” is the most comprehensive attempt yet by the Centers for Medicare and Medicaid Services (CMS) to display voluntary, self-reported information by hospitals on steps that can be taken to reduce the impact of three major causes of morbidity and mortality – heart attack, heart failure, and pneumonia – in a consumer-friendly format.
With rapidly rising health care costs and pressures on both federal and state budgets as a backdrop, lawmakers are considering a variety of changes to Medicaid this year. This briefing will offer a chance to learn more about the fundamentals of Medicaid, for those who would like to brush up on their knowledge as well as those new to the subject.
Millions of children are eligible for Medicaid and the State Children’s Health Insurance Program (SCHIP), but remain without coverage. How have state budget constraints affected outreach and enrollment in Medicaid and SCHIP? What are the goals of the Administration’s proposed “Cover the Kids” campaign?
President Bush’s FY 2006 budget could have long-lasting effects on several health programs. If enacted as is, the budget would trim $60 billion in the growth in Medicaid spending over the next 10 years. At the same time, the budget offers $11 billion in new money to enroll children in Medicaid and the State Children’s Health Insurance Program. It would provide $74 billion in tax incentives to help the uninsured buy coverage. Some congressional budget leaders have signaled their intention to find budget savings in another entitlement program – Medicare.
The budget season is upon us. The Congressional Budget Office’s January 2005 “Budget and Economic Outlook” provides an overview of where Congress will start, and the President’s budget request will arrive next week. The journey down the sometimes bumpy, sometimes difficult-to-understand road to a federal budget for FY 2006 is beginning.
Evidence-based medicine offers a win-win proposition: improve the quality and effectiveness of care while at the same time identifying opportunities to reduce waste of valuable health care resources. But what evidence should employers, health care providers and consumers pay attention to? And how should this information be disseminated to those who need it?
In 2003, the Trust for America’s Health released a report on state preparedness in the age of bioterrorism. The study found that despite nearly $2 billion in federal funding, state public health systems were insufficiently prepared to handle a bioterrorist attack.
The 2004 election featured debates on major health issues including costs, access, and affordable prescription drugs. These issues will likely be subjects of continued focus during the upcoming Congress.
Health care didn’t prove to be a make-or-break issue in most races during the 2004 election. But post-election polls showed the public still thought our health care system had major problems, and a substantial number of people wanted action from Congress on health issues – especially costs, access and affordable drugs.
In addition to providing health insurance coverage for 35 million seniors, Medicare covers about 6 million disabled beneficiaries under age 65 who are entitled to cash benefits under the Social Security Disability Insurance (SSDI) program. SSDI is designed to assist adults who are unable to work due to severe, long-lasting disabilities. However, disabled people who wish to receive coverage under Medicare must first qualify for SSDI cash benefits and wait five months before receiving the benefit. These individuals must then wait an additional two years before becoming eligible for Medicare.
Despite vigorous efforts in recent years to insure more uninsured children, the number of kids without coverage is stuck at 8.4 million. Public coverage of children is on the rise – up 1.7 million between 2002 and 2003. But employer-sponsored coverage is shrinking – down 1.2 million during the same period. One reason: Firms are subsidizing coverage for individual employees to meet insurers’ minimum participation requirements, but aren’t as likely to subsidize family coverage.
Congress made major changes in the Medicare managed care program, now named “Medicare Advantage,” affecting plans and beneficiaries in 2005 and 2006. The Department of Health and Human Services (HHS) has proposed regulations to implement this part of the new law, and comments on the draft regulations are due by October 4, 2004.
In August 2004, the U.S. Census released its most recent figures, showing that the number of Americans without health insurance increased to 45.0 million in 2003, up from 43.6 million people in 2002. Those covered by government health insurance programs increased between 2002 and 2003 — from 73.6 million to 76.8 million, largely as a result of greater coverage by Medicaid. At the same time, employer-based coverage shrank. The number of people covered by employment-based insurance fell from 175.3 million to 174.0 million from 2002 to 2003, and the share of the population covered declined from 61.3 percent to 60.4 percent.
After being buried under stories about the war in Iraq, terrorism and joblessness, health care seems poised to make a comeback as a campaign issue. President Bush has announced that his goals for a second term will include making health care more available and affordable. Details are expected in August. Sen. Kerry and running mate Sen. John Edwards mention the Kerry health proposals often in their appearances.
Congressional interest in prescription drugs was by no means exhausted once the Medicare drug bill passed in December 2003. A continuing focus on the Hill is whether to encourage reimportation of drugs to the U.S. from other countries, notably Canada. The secretary of Health and Human Services has had the right to authorize reimportation since the Clinton administration, but no secretary has yet exercised the right, citing safety concerns.
Some market-oriented economists have long contended that the best way to get a handle on rising health care costs is to give patients more control over the type of services they consume and the prices they pay for them. There are increasing signs that the market is gravitating in this direction. In the last several years employers have been setting up so-called “consumer-directed” plans, which put more responsibility for selecting the appropriate provider at the right price in the hands of employees—in exchange for potential financial gains.
For decades, it was routine in the U.S. to house individuals with disabilities in institutions. Those with mental illnesses, for instance, were placed in “insane asylums,” as they were once called. The U.S. Supreme Court took a firm step toward ending this practice five years ago. In the Olmstead v. L.C. decision, the court found that institutional isolation of individuals with disabilities was, under certain circumstances, a violation of the Americans with Disabilities Act.
After passing a Medicare drug benefit in 2003, a number of key lawmakers have turned their sights to expanding health insurance coverage, to reduce the 43 million Americans who remain uninsured. Proposals to expand coverage vary widely, including tax credits and limited public coverage expansions.
With nearly 130 million people obese or overweight, America is truly facing an epidemic. The proportion of Americans who are overweight or obese rose to 64 percent of the population in 2000 from 60 percent in 1990. Moreover, nearly 17 percent of preventable deaths in 2000 were attributable to poor eating habits and sedentary lifestyles, up from 14 percent in 1990, according to the Journal of the American Medical Association.
On June 1, 2004, Medicare beneficiaries were able to use their new drug discount cards for the first time. But around the country, many Medicare beneficiaries, family members and service organizations were asking questions about how to choose a card and exactly how the cards will help beneficiaries reduce their drug costs.
The health care sector has languished behind almost all other industries in adopting information technology, which has the potential of vastly improving quality. For example, a variety of studies have found that prescribing drugs through a system known as computer physician order entry, compared with a handwritten prescription, greatly reduces the incidence of the wrong medication being prescribed or the wrong dose dispensed. There are significant barriers to the adoption of information technologies in health care. These barriers include technical and infrastructure obstacles, initial implementation costs, provider resistance, current reimbursement structures and a lack of more uniform standards that would allow products from different vendors to work together.
More than 43 million U.S. residents lacked health coverage in 2002 and unless private or public coverage programs expand, the number of uninsured could continue to rise over the next decade. To address this growing problem, the Institute of Medicine (IOM), with support from The Robert Wood Johnson Foundation, has been conducting a three-year study of the uninsured to assess and consolidate evidence about the health, economic and social consequences of uninsurance for those without insurance, their families, health care systems and institutions, and communities as a whole.
Low-income Medicare beneficiaries are a vulnerable population because of their disproportionately high medical and long-term care needs. Among low-income beneficiaries are nearly seven million individuals who are considered “dual-eligibles,” with coverage from both Medicare and Medicaid. They represent around one in six Medicare beneficiaries and one in seven Medicaid beneficiaries.
September 11 and subsequent anthrax attacks demonstrated clearly that our public health system was not prepared to cope with a large-scale emergency. Congress responded by appropriating $1.8 billion to help states and communities better prepare. Another $1.12 billion is contained in the omnibus appropriations bill for 2004 awaiting final action.
Despite significant state and federal efforts to cover kids, including the State Children’s Health Insurance Program, 9.2 million Americans under the age of 19 (12.1 percent of all Americans) went without health insurance in 2001, according to the U.S. Census Bureau. Such a lack of coverage can have serious clinical and financial consequences for children and their parents, such as children not receiving critical preventative care, including immunizations. At the same time, even children with coverage don’t necessarily receive high quality care. To cite one example, immunization rates for children two or younger in 2000 were below the Childhood Immunization Initiative’s goal of at least 90 percent.
After years of discussion and debate, Congress has passed legislation providing prescription drug coverage for Medicare beneficiaries. The President is expected to sign it shortly.
National polls and opinion surveys consistently show that health care is an important issue for voters. In a June 2003 survey by Harris Interactive, health care ranked third after economy/jobs and war/defense as an issue needing government action. A Gallup poll in September 2003 found that 85 percent of respondents considered presidential candidates’ positions on health care issues to be either extremely important or very important in influencing their votes.
Having health insurance, more than any other factor, determines how soon a person will get needed health care and whether that care will be the best available. Unfortunately, minorities have much lower rates of insurance coverage compared with whites. African Americans, for example, are almost twice as likely as whites to be uninsured. Hispanics/Latinos are almost three times as likely to lack coverage.
But even when coverage is equal, disparities in care persist. Minorities tend to receive lower quality care than non-minorities, have less access to specialty care, and experience more difficulties when communicating with health care providers.
What can be done to narrow the disparity gap? What measures are being taken to improve minorities’ access to health services and their quality? How do we raise awareness in the provider community about these disparities? How do we improve communication between minority patients and non-minority providers? How do we increase the number of minority health providers?
To help address these and related questions, the Alliance for Health Reform sponsored an October 10, 2003 briefing with support from the Robert Wood Johnson Foundation. Panelists were: Risa Lavizzo-Mourey, president of the Robert Wood Johnson Foundation; Carolyn Clancy, director of the Agency for Healthcare Research and Quality; and Reed Tuckson, a senior vice president at UnitedHealth Group and an Alliance board member. Ed Howard of the Alliance moderated the discussion.
At the briefing, a new Alliance publication was released entitled Closing the Gap: Racial and Ethnic Disparities in Health Care. The brief was written by Brian Smedley, co-author of Unequal Treatment,a report by the Institute of Medicine on disparities in care with recommended solutions.
Medical errors and claims of malpractice are a fact of daily life, according to the Institute of Medicine and other researchers. For doctors, hospitals and other providers, so are rising malpractice premiums, which recent reports suggest may be hurting providers’ ability to administer care in some regions of the country and in some specialties, such as obstetrics.
Dual eligibles are low-income Medicare beneficiaries who are also eligible for Medicaid. They are a vulnerable population because of their disproportionately high medical and long-term care needs. At any given time, nearly seven million individuals are considered dual eligibles, representing around one in six Medicare beneficiaries and one in seven Medicaid beneficiaries.
After years of discussion and debate, both Houses of Congress passed bills providing for Medicare prescription drug coverage in July, 2003. In September 2003, conferees from both the House and Senate resumed their attempt to iron out the differences between the two bills and enact the most extensive expansion of the Medicare program since its inception.
After years of discussion and debate, both Houses of Congress appeared ready in 2003 to begin floor consideration of bills on Medicare prescription drug coverage. These bills embody perhaps the biggest changes in Medicare since its enactment in 1965.
Finding ways to help the uninsured get coverage has never been easy, but Congress actually enacted one in 2002. Under the Trade Act of 2002, workers who receive payments from the Pension Benefit Guarantee Corporation or lose their jobs due to foreign competition are eligible for fully refundable federal tax credits to pay for health insurance premiums. The credit is equal to 65 percent of the premium, either to continue their previous coverage or to buy coverage in group programs set up by their state of residence. As of August 1, the tax credits can be paid in advance.
Rising unemployment, persistent double-digit increases in health premiums and record state budget deficits are only the latest in a wide array of barriers that are keeping tens of millions of Americans from getting health insurance coverage.
Incremental improvements in coverage have been the focus at both national and state levels for several years. But there are indications that lack of coverage is growing, and broader proposals, aimed at securing coverage for a large number of the uninsured, are beginning to get more attention—tax credits, employer or individual mandates, public program expansions, and various combinations. The plans differ widely in scope, cost and impact, but any of them would mean major change in the status quo.
Medicare has made invaluable contributions to the health and financial security of the elderly and other vulnerable populations. However, its long-term financial stability is the subject of spirited debate, and various aspects of the program are being reassessed. Now, more than ever, with active consideration of an additional prescription drug benefit, proposals to improve and strengthen the program should receive serious attention.
The number of uninsured Americans is one important measure of how serious a problem the lack of health coverage is. But counting the uninsured is harder than it sounds. While Census Bureau estimates of the uninsured are the most widely quoted (41.3 million in 2001), Americans who lack health insurance are a constantly changing group. They may lose coverage when they are laid off, shift employers, no longer qualify for public insurance programs or go through divorce or the death of a covered spouse. Then many regain it.
Numerous comparisons have been made between the rates of spending growth in Medicare and private health insurance. Many believe that private sector innovations present opportunities for constraining Medicare costs. Nonetheless, recent research looking at the past 30 years concludes that Medicare spending growth has been similar to the private sector, and at times even slower. Figures from the Centers for Medicare and Medicaid Services show Medicare cost growth was lower than that of private insurance in 2000 and 2001. Some of the difference may be attributed to the fact that private insurance, unlike Medicare, usually covers outpatient prescription drugs, one of the fastest-growing segments of health care. Moreover, some analysts say that Medicare’s relative success in controlling costs has been at the expense of quality and access.
Although less well known than Medicare, Medicaid covers even more people. In fact, about 47 million people were expected to have been covered by the program for at least part of last year, including more than one in four children across the country. Medicaid, which is financed by both states and the federal government, also pays for nearly half of all long-term care services.
Much of the early health reform discussion in the administration and new Congress will focus on Medicare. On the agenda: Both the possible addition of a prescription drug benefit and the need for structural changes to the program itself.
The 107th Congress adjourned with many health issues unresolved. The House passed a Medicare drug bill, but the Senate didn’t follow suit. Medicare provider givebacks likewise got through the House, but not the Senate. The Senate, but not the House, passed a bill to restrain health costs by making generic versions of prescriptions drugs available sooner. Tax incentives for health insurance that would have been part of an economic stimulus package never saw the light of day.
Employers enjoyed relatively low health care cost increases in the mid-1990s, but the situation since then has drastically changed. Employer-paid health care premiums in 2002 rose an average of 12.7 percent, the highest leap since 1990, according to a recent major survey. Benefits consultants project even higher increases for 2003. Meanwhile, small businesses have faced even steeper increases than larger firms. Many have responded by discontinuing health coverage for their workers. Sixty-one percent of small firms offered benefits in 2002, down from 67 percent in 2000.
In November 2002, the Centers for Medicare and Medicaid Services (CMS) launched a nationwide initiative to improve nursing home quality by making information about the quality of care in individual nursing homes much more widely available. This was a welcome step toward giving consumers more information about the quality of nursing home care. Since a study by the Institute of Medicine more than 15 years ago found serious and widespread deficiencies in nursing home care, several major studies have confirmed continuing difficulties.
The U.S. faces not only a nationwide shortage of certain health professionals, but also regional and local mismatches between available professionals and patients who need their help.
Yet another nursing shortage is upon us but this time it’s projected to be here for decades. Almost as many people are leaving the nursing profession as are entering it. Many nurses are nearing retirement; only 12 percent of registered nurses are under age 30. At the same time, the aging baby boomer population is creating a growing need for nursing care.
