Bending the HealthCare

Cost Curve:

(Part 2) Supplemental

Charts to Live Presentation

(updated 10/16/16)

Cathy Schoen

Senior Scholar, NYAM

National Conference of State

Legislatures

New Orleans Oct 27, 2016

Supplemental Charts

• Recent slow-down in rate of growth per person: private and public

– Medicare little to no growth: historic lows

• Medicaid slow growth harder to see with growth in enrollment

• Premiums continue to rise faster than income in all states

– Affordability concerns for insured

– Higher deductibles + cost-sharing = substantial share of income

– Extra costs if go out of network

• Price paid by private insurers have been driving claims costs

– Widely variations within markets reflect provider market power

• Medicare data enables geographic comparisons

– Wide variation in potentially preventable hospital use

– Private sector (higher/lower use) tend to track Medicare patterns

• Readmission rate decline in Medicare benefits private sector and Medicaid

– States with the highest rates had the largest 2013 decreases

2

Marked Slow-Down in Medicare and Private

Spending Growth Per Enrollee

5.1

5.8

6.5

5.8

5

1.9 1.7

3.2

4.24.7

5.4

4.4

1.8

2.4

0.1

-0.2

2.4

1.8

-1

0

1

2

3

4

5

6

7

2007 2008 2009 2010 2011 2012 2013 2014 2016

Privately Insured MedicareAnnual

percent

change

Source: CMS Office of the Actuary Table 17, July 2016 – with projections 2016. 3

Medicaid as Share of State Budgets, 2013

24.5%

15.1%

0.0% 25.0% 50.0% 75.0% 100.0%

Medicaid Elem/Secondary Higher ED All other

State Funded

Budget

$1.2 Trillion

Total State

Budget*

$1.8 Trillion

* Includes federal funds. Federal Medicaid = 13.9% state total budget.

Source: MacPac analysis of National Association of State Budget Officers, 2014. 4

Medicaid (including federal funds) as percent of Total State Expenditures, 2014*

0

5

10

15

20

25

30

35

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*Includes federal and state funds for Medicaid and total state spending from all sources. Federal $ average 58% of Medicaid. Range from lows of under 50% in high income states such as MA and CT to more than 70% in low-income states such as WV, Mississippi, New Mexico

Source: NASBO, State Expenditure Report, 2013- 2015, Fall 2015. www.nasbo.org

Percent

All State Average 2014 = 26%

5

Costs a Shared Concern: Total Premiums Increase

Faster than Median Income in All States

Data: 2003 and 2013 Medical Expenditure Panel Survey–premiums for employer-based health plans. Median Income 2003–04

and 2013–14 Census CPS under-65 population.

Source: Schoen, Radley, Collins, State Trends Employer Premium and Deductible, 2003-2013. Commonwealth Fund Jan. 2015

82 percent of under-65 population in live where total premiums

amount to 20 percent or more of median income

2003 2013

ND

SD

DC

ID

DE

IA

IN

WI

CA

HI

KS

UT

AZ NM AR

LA

KYVA

VT NH

MA

CTRI

NJ

AK

ALMS

MI

ME

WV MDCO

NE

WY

OR

IL

TNNC

SC

GA

FL

PA

NY

OH

MO

MN

OK

TX

MT

NV

WA

ND

SD

DC

ID

DE

IA

IN

WI

CA

HI

KS

UT

AZ NM AR

LA

KYVA

VTNH

MA

CTRI

NJ

AK

ALMS

MI

ME

WV MDCO

NE

WY

OR

IL

TNNC

SC

GA

FL

PA

NY

OH

MO

MN

OK

TX

MT

NV

WA

Less than 14%

14%–16.9%

17%–19.9%

25% or more

20%–24.9%

6

$0

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Insurance Expensive No Matter Where you Live:

Insurance Premiums for Family Coverage 2015

Data source: 2015 Medical Expenditure Panel Survey–Insurance Component Private-Employer Sponsored Plans..

U.S. average total family premium = $17,322

For trends: Schoen, Radley, Collins, State Trends Employer Premium / Deductibles, 2003-2013. Commonwealth Fund 1/2015 7

$0

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Single-Person Deductibles, 2015

Average $1,000 or more in all but 3 States

Source: 2015 Medical Expenditure Panel Survey–Insurance Component Private Employer sponsored plans.

Dollars

8

US national

average $1,353

Affordability Concerns: Out-of-Pocket Medical Spending, 2013-14

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Low income is below 200% of the federal poverty level. State estimates average of the two years. Data: U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement, March 2014 and March 2015. Analysis by C. Roman-Solis, New York University, Wagner School of Public Policy.

Percent of under age 65 population spending 10% or more of income or 5% if low-income on medical care, not including premiums

U.S. Average, 2013-14 = 15%

9

Analysis to Inform Strategic Efforts

• Payment reform– Payment methods and price levels– Incentives across a care continuum

• Value oriented Insurance benefits– Information on price variation for benefit design– Transparency for patients before access care

• Market wide policies– Better, transparent information– Medicare data on variations may provide insights– Accountability: balance market power of consolidated

systems and insurers– Other: malpractice; licensure

• Alignment across public and private payers

10

Knee Replacement facility prices vary widely within markets

Denver, CO Atlanta, GA Manhattan, NY

Columbus, OH Philadelphia, PA Houston, TX

Source: Z. Cooper et al. The Price Ain’t Right. Hospital Price and Health Spending on Privately Insured. NBER December 2015.

© Cooper, Craig, Gaynor, and Van Reenen

30-Day Hospital Readmission, 2013 Potentially Avoidable ED Visits, 2013

Potentially Avoidable Hospital Use Among

Medicare Beneficiaries Varies Widely

Note: Potentially avoidable emergency room (ED) visits are treatment was not required within 12 hours, or urgent but primary-care treatable,

could have been provided in a primary care setting. Data: Analysis of Medicare Claims

SOURCE: Commonwealth Fund State Scorecard on Health System Performance, December 2015

127 - 160 (12 states)

163 - 178 (14)

179 - 192 (13)

196 - 251 (11 + DC)

10 - 23 (12 states)

24 - 30 (15)

31 - 35 (12)

36 - 48 (11 + DC)

Per 1,000 beneficiaries Per 1,000 beneficiaries

12

Unsafe Prescribing: Medicare beneficiaries with drugs

should avoid in elderly: 2012 Range from 9% to 24%

30-Day, All-Condition Medicare Readmission Rates

ACA passed Penalties start

Source: Niall Brennan, Centers for Medicare and Medicare Services, “Findings from Recent CMS Research on Medicare,”

Presentation at AcademyHealth Annual Research Meeting session on The Centers for Medicare and Medicaid Services Data

and Information Products, June 9, 2014. Available at http://www.academyhealth.org/files/2014/monday/brennan.pdf 14