Future Directions for Health Care Reform in Vermont

1
Future Directions for Health Care Reform in
Vermont

• Kenneth E. Thorpe, Ph.D.
• Robert W. Woodruff Professor and Chair
• Department of Health Policy and Management
• Rollins School of Public Health
• Emory University
• kthorpe_at_sph.emory.edu

2
Overview

• Crafting effective health reform solutions and
  providing universal access requires a clear
  understanding of what accounts for the growth in
  spending
• Key facts from the US and Vermont context
• 80 of total health care spending linked to
  chronically ill patients
• Chronically ill receive approximately 50 of all
  clinically recommended medical care
• Rise in treated disease prevalence accounts for
  nearly two-thirds of the growth in health care
  spending
• Rise in obesity prevalence in US accounted for
  27 of the growth in health spending over the
  past 20 years.

3
Percent of Private Firms offering Health
Insurance in Vermont, 2003 Only 55 of the 19,
236 Firms Currently Offer Health Insurance
Source MEPS-IC
4
Per Capita Spending is Lower in Vermont Yet
Private Insurance is More Expensive!
Source CMS
5
Single Premiums, Vermont and US Totals, 1999 and
2003 Vermont is 3.3 Higher than National Average
Source MEPS-IC
6
Family Health Insurance Premiums Are Higher in
Vermont Compared to the National Average
Source MEPS-IC
7
Where Does Vermonts Health Care Dollar Go? More
than 80 of Health Care Spending on Behalf of
People with Chronic Conditions
Source MEPS
8
Distribution of Medical Care Spending by Number
of Chronic Health Care Conditions, 2001
Source MEPS
9
Issue Level vs. Trends in Spending

• Level US and Vermont Spends approximately 50
  more per capita than European countries
• Traced to higher clinical and administrative
  expenses, fragmented purchases, and ultimately
  higher prices
• Trends Growth in spending in US and Vermont has
  risen faster that 19 of 23 OECD countries between
  1980 and 2003.

10
Why Does Real Per Capita Health Spending Rise
Over Time?

• Rise in Treated Disease Prevalence
• Rise in Spending Per Treated Case
• Both

11
Obesity Has Doubled Among Adults in Vermont and
US, 1990-2003
Source BRFSS
12
Increase in Treated Disease Prevalence in
Vermont, Key Factor Driving the Growth in Health
Care Spending
Source BRFSS
13
What Accounts for The Rise in Treated Disease
Prevalence?

• Rise in Population Disease Prevalence fueled by
  obesity and other risk factors
• Changes in threshold for treating asymptomatic
  patients (hypertension, hyperlipidemia, the
  metabolic syndrome)
• Innovation (SSRI, statins, medical devices)

14
Rise in Treated Disease Prevalence Linked to the
Rise in Obesity Key Single Largest Driver of
Health Care Spending Over Time
Source Kenneth E. Thorpe, PhD
15
Implications for Reform

• Universal Coverage will need assurance that we
  have the ability to control spending- need
  policy options address both level and growth.
• Policy options for reform need to attack the key
  drivers of costrising disease prevalence.
  Reforms need to result in better value care
  provided to all patients, but in particular to
  chronically ill patients.
• Need options reducing excess clinical costs (i.e.
  additional costs linked to medical errors/events)
  and administrative costs.

16
Implications for Reform

• Potential Options for Restructuring Care
• Change how plans are paid and compete.
• Consider encouraging competition around specific
  chronic diseases that accounts for the most
  spending, most of the growth in spending.
  Ability to effectively treat multiple chronic
  conditions.
• Develop captitated payment based on
• Annual cost of providing all clinically
  recommended care for patients with single or
  multiple chronic illnesses (starting to occur in
  the market todayMedicare already has the
  methodology for risk adjusting payments.
• Compete on value (quality of care per dollar
  spent)
• Best clinical outcomes at lowest cost
• No co-pays or deductibles for clinically
  recommended services.
• Promote access to state-of-the-art care by most
  vulnerable patients.
• Green Mountain Health. Universal health wellness,
  promotion, disease prevention benefits. What
  constitutes a best practice program?

17
Implications Slowing the Growth in Spending

• Key Issues Slow rise in treated disease
  prevalence through,
• Slowing the rise in obesity prevalence
• Policy Tools
• School Based Interventions
• New and effective health promotion, wellness,
  disease prevention programs available for all
  adults
• Financial incentives to participate

18
Summary

• Changes outlined above requires fundamental
  restructuring of Vermonts payment and delivery
  health care systems
• Explore competition among health plans and
  provider groups around key chronic conditions
• Develop state strategy for addressing rise in
  treated disease prevalence
• Develop options for reducing the level of
  spending (lower clinical and administrative
  costs)
• Devote resources to developing effective health
  promotion, wellness programs for use in schools,
  and the worksite.

19
Options for Financing Health Care Expansions

• Evaluate options for financing health care for
  all Vermont residents through the following
  approaches
• Savings in existing programs
• Premium assessments on health plans
• Innovative uses of global commitment
• Others

20
Summary/Workplan

• Workplan
• What questions can we address by January 15th
  (i.e. financing, economic impact, etc.)
• What approaches can be outlined/evaluated for the
  upcoming session (short-term changes)?
• What approaches can be outlined/evaluated for the
  futurelong term changes?