Health Policy Program: Policy Papers

Grand Junction, Colorado

Health Policy — Wed, 12 Aug 2009 23:00:00 -0400

Realigning U.S. Health Care Incentives to Better Serve Patients and Taxpayers

Health Policy — Fri, 12 Jun 2009 02:00:00 -0400

Our Vision for Health System Reform:

The Hill Physicians Medical Group and the Baylor Health Care System

Health Policy — Wed, 25 Mar 2009 19:00:00 -0400

In these case studies for The Commonwealth Fund, Dr. Nichols and Tom Emswiler examine high-performing health care systems to see how they achieve better outcomes at lower cost. Both the Hill Physicians Medical Group, an association of physicians in individual practice, and the Baylor Health Care System, a highly integrated delivery system, have successfully standardized care, implemented electronic medical records, and improved clinical outcomes.

Making Medicare Sustainable

Health Policy — Thu, 19 Mar 2009 07:40:00 -0400

About the Collection:

The ever-growing cost of health care is the largest threat to our nation's long-term fiscal future. One way of tackling this problem is by using Medicare-the nation's largest purchaser of health care-as a catalyst for widespread efficiencies in the private sector. Medicare must become a more value-based purchaser to make the Program sustainable over time and incent the private sector toward change. It is imperative that we act decisively and soon. Yet, we believe embarking on a Medicare-only reform effort

A Modest Proposal for a Competing Public Health Plan

Health Policy — Wed, 11 Mar 2009 18:00:00 -0400

For the full text of the paper, please click here.

For a brief summary of the paper, please click here.

For Len Nichols' post on National Journal's Health Care Experts blog, please click here.

The Case for Health Reform

Health Policy — Fri, 20 Feb 2009 17:12:00 -0500

About this paper:

"The Case for Health Reform: The Moral, Economic, & Quality Motives for Action" compiles the facts and figures that explain why health reform is a moral imperative, an economic necessity, and a necessary step toward ensuring our health system delivers high-quality care to us all.

The Cost of Doing Nothing

Health Policy — Thu, 13 Nov 2008 17:07:00 -0500

Introduction
The U.S. health care system is in crisis. Health care costs too much; we often get too little in exchange for our health care dollar; and tens of millions of Americans are uninsured.

Across State Lines Explained

Health Policy — Wed, 08 Oct 2008 03:36:00 -0400

As we enter the home stretch of a long presidential campaign, the good news is that both major candidates recognize that our health care system, especially the insurance marketplace, does not work well. The concept of selling health insurance across state lines has been included in health care proposals put forth by several Members of Congress and most recently in the campaign plan of Republican presidential nominee, Senator John McCain.

Allowing insurers to sell insurance across state lines would not work as advertised. While it may help the young and healthy, it will have a devastating impact on the insurance market for everyone else (and none of us will be young and healthy forever).

premiums would rise for many people,
benefits would be less-generous,
more Americans would likely become uninsured over time.

This policy approach fails to provide the incentives necessary to transition insurers to a 21st Century business model that values care coordination and high value care over underwriting and marketing. Without substantial additional reforms, the proposal to sell insurance across state lines will not work for most Americans.

For the complete policy paper, please click here. For a brief summary of the findings of the paper, please click here.

Ambulance Diversions

Health Policy — Wed, 03 Sep 2008 08:26:00 -0400

Every minute in the United States, an ambulance is turned away from a hospital because of a practice known as ambulance diversion. Diverting ambulances away from emergency departments (EDs) poses a serious threat to the health outcomes of both the insured and uninsured population. Ambulance diversions also indicate a struggling health system in need of comprehensive delivery system reforms.

What is an Ambulance Diversion?

An ambulance diversion occurs when a hospital ED cannot care for additional emergency patients. When a hospital is “on diversion” it redirects ambulances from their ED to another hospital or medical facility.

Why Do Diversions Matter?

Ambulance diversions pose a health risk to anyone who needs immediate medical attention. Furthermore, ambulance diversions are an indication that individuals are using EDs for their primary care, and that hospitals have inadequate bed capacities, and/or are being poorly managed.

What Can We Do to Fix This Problem?

There are two major possible policy solutions for ED diversion:

Standardizing Ambulance Diversion Criteria
Covering the Uninsured

For the full text of the issue brief, click here.

Employer Health Costs In a Global Economy

Health Policy — Tue, 06 May 2008 05:29:00 -0400

Increasing Employer Health Costs, Lowering U.S. Competitiveness

Although most Americans get health insurance through their employers, business leaders are increasingly united in their belief that rising health care costs threaten America’s competitiveness in the global economy. Business support for comprehensive health reform has been growing as a result.

Cost Of Failure

Health Policy — Tue, 25 Mar 2008 06:07:00 -0400

In 2000, the Institute of Medicine (IOM) estimated that the “annualized economic cost of the diminished health and shorter lifespan of Americans who lack health insurance is between $65 and $130 billion for each year of health insurance forgone.”

After updating the IOM’s numbers to reflect growth in the economy and increases in the number of uninsured, we estimate that the poor health and shorter lifespan of the uninsured cost the U.S. economy between $102 billion and $204 billion in 2006. This estimate does not include spillover costs. For example, when medical bills go unpaid, providers attempt to recoup lost revenues by raising the rates for their services. In response, insurers raise premiums. This vicious cycle of “cost shifting”
inextricably links the uninsured to rising health care costs and premium rates for the insured.

The economic cost imposed on the nation by the uninsured is as much as and perhaps greater than the public cost of covering them...

For the full text of the issue brief, please see the PDF attached below.

Lessons From California's Health Reform Efforts For the National Debate

Health Policy — Fri, 07 Mar 2008 18:10:00 -0500

In January 2007, Governor Arnold Schwarzenegger unveiled a comprehensive health care plan that aimed to provide quality, affordable health insurance to all Californians. Based on individual responsibility, the plan focused on prevention and wellness and emphasized a shared responsibility approach to financing.

After almost a year of negotiations between Governor Schwarzenegger and Democratic legislative leaders, compromise legislation with a framework and goals similar to the governor’s original proposal passed the State Assembly with a large majority. This compromise legislation, however, was later rejected by the California Senate’s Health committee.

The effort to reform California’s health care system faced several obstacles unique to the state. Californians seeking reform had a very narrow margin of error within a complex set of legislative, political, and demographic challenges. Health reform proponents also encountered several systemic roadblocks regarding affordability and sustainability common to health care reform proposals generally.

Nonetheless, the bipartisan spirit displayed by Governor Schwarzenegger and Assembly Speaker Núñez showed that Republicans and Democrats can work together to solve our nation’s challenging health care crisis and proved that lawmakers can reach consensus without compromising core values. This bipartisan effort to cover all Californians united a broad coalition of advocates representing citizens, patients, workers, employers large and small, hospitals, insurers, and politicians.

While comprehensive health reform legislation was never signed into law, efforts to reform California’s health system produced a number of lessons for the national health care debate and other states seeking to institute reforms. Among the most important: leadership matters, broad coalitions can be built and maintained, and the issues of affordability for families and sustainability for taxpayers must be satisfactorily addressed.

For the full text of the policy paper, please see the PDF attached below.

Who Receives Uncompensated Care?

Health Policy — Tue, 04 Mar 2008 11:16:00 -0500

Uncompensated care (UC) is health care that is delivered, but not paid for by either a patient or a third party payer. Most UC is delivered to the very ill during or after a visit to an emergency room. In 2004, UC was estimated to total $41 billion dollars.

This issue brief finds that individuals with incomes above 200% of the Federal Poverty Level (FPL) or $41,300 for a family of four and people living at or below the poverty level account for two-thirds of all UC in the U.S.

Three policy solutions may be necessary to reduce UC costs:

More effective outreach initiatives to enroll low-income Americans who are eligible for subsidized coverage in order to minimize the number of people who are currently missed by the system.
Sliding scale subsidies to help make health insurance more affordable for all Americans.
When health insurance is affordable, a purchase requirement or “individual mandate” to address the “free rider” problem and ensure all Americans pay their share for health care.

For the full text of the issue brief, please see the PDF attached below.

Health Care Reporting Guide for Journalists

Health Policy — Tue, 04 Mar 2008 11:08:00 -0500

For reporters new to the health beat -- or for political or business reporters who need to delve into health policy now and then -- the topic can be daunting. Luckily, there are many, many resources on the web, useful whether you are in Washington or around the country... If you find yourself drowning in jargon and acronyms, it helps to take a breath and remember that health care is about people, and that it affects every one of us, and everyone we care about.

This issue brief discusses three common health care concepts:

What Hill Staff Should Know About Health Care

Health Policy — Tue, 04 Mar 2008 10:59:00 -0500

Our current health system is not sustainable. It leaves many Americans without access to quality, affordable health coverage, weakens the ability for U.S. businesses to compete internationally, and threatens the stability of our economy.

There are many ways that we could achieve a system of coverage for all Americans. However, in order to be economically and politically sustainable over time, any comprehensive reform plan must:

Cover all Americans

Lack of health insurance negatively affects the overall productivity of society, the stability of emergency care, and the health and financial well-being of individuals.
Control health care cost growth

No health reform proposal will be sustainable over time without serious efforts to control health care cost growth. Rising health care costs are the most pressing economic challenge facing our nation and have left many Americans simply unable to afford health insurance. In addition, the cost of health care threatens the competitiveness of U.S. businesses and the solvency of the Medicare program.
Improve quality

The Institute of Medicine estimates that almost 100,000 people die every year as a result of preventable medical errors. This is far higher than the OECD average...

For the full text of the the issue brief, please see the PDF attached below.

Myths About the Individual Mandate

Health Policy — Mon, 18 Feb 2008 10:50:00 -0500

Requiring individuals to purchase health insurance -- the so-called “individual mandate” -- is the subject of much debate. In its latest fact sheet, the Health Policy Program addresses some of the most popular myths about an individual mandate and explains why requiring individuals to purchase health insurance is a necessary component of any plan that seeks to cover all Americans.

Myth: If individuals choose to be uninsured, there are no consequences to society.

Fact: The uninsured increase the price of premiums for the insured and drive uncompensated care costs that taxpayers and health care providers must absorb. They place undue strain on Emergency Departments and other sources of care that impact all of us.
Myth: An individual mandate would force families to forgo other necessities in order to buy health insurance.

Fact: All existing mandate-centered reform plans include subsidies for low-income people to ensure affordability, and insurance reforms to make health insurance markets work for all Americans.
Myth: An individual mandate is not enforceable.

Fact: Switzerland and the Netherlands have successfully enforced an individual mandate to purchase health insurance. Similarly, some American states have achieved close to 100 percent compliance with a mandate to purchase car insurance.
Myth: An individual mandate is not necessary to ensure that all Americans have health insurance coverage.

Fact: Many Americans who are eligible for public insurance at little to no cost do not enroll, while others who could afford private health insurance choose not to buy. This suggests a mandate is necessary to approach 100 percent enrollment.
Myth: An individual mandate will stifle market competition.

Fact: An individual mandate, coupled with insurance market reforms and subsidies, would make markets work more effectively and efficiently. By reducing the risk of adverse selection, an individual mandate would force insurers to compete based on price and quality, not underwriting and marketing.

For the full text of the fact sheet, please see the PDF attached below.

Why Does Health Insurance Matter?

Health Policy — Mon, 04 Feb 2008 14:06:00 -0500

Presidential candidates are travelling across the nation touting their respective plans to reform our nation’s struggling health system. Whether you are a Democrat or Republican, do you ever wonder: why all the fuss about health coverage? Campaign rhetoric aside -- why does health insurance really matter?

The New America Foundation today released “Why Does Health Insurance Matter?” This short policy brief outlines the societal, economic, and health-related consequences of the uninsured.

“Lack of health insurance negatively affects the overall productivity of society, the stability of emergency care, and the health and financial well-being of individuals,” said Len Nichols, Director of the Health Policy Program at the New America Foundation. “In addition, rising health care costs are one of the most serious economic challenges facing our nation,” Nichols continued, “but because the uninsured are inextricably linked to the cost of care for the rest of us, we cannot solve the cost problem without covering the uninsured.”

“Why Does Health Insurance Matter?” is part of an ongoing series of New America Health Policy Program policy briefs, which also includes: “Who Are The Uninsured?” and “Health Debate Reality Check: The Role of Individual Requirements.”

To read the brief, click the PDF file below.

Why the State's Budget Gap Shouldn't Derail Health Care Reform

Health Policy — Tue, 15 Jan 2008 14:47:00 -0500

On January 15, 2008, the San Francisco Chronicle featured an opinion piece authored by Leif Wellington Haase and Peter Harbage of the New America Foundation. The article, titled “Why the state’s the budget gap shouldn’t derail health reform,” presented several statistics on the importance of health reform. This background and analysis document offers the underlying support for the statistics used in their argument.

Who Are The Uninsured?

Health Policy — Mon, 10 Dec 2007 19:01:00 -0500

In the U.S., what region of the country has nearly half of all uninsured Americans? Are they employed? What is their economic background? How about their race? Who are the uninsured? To find out, click here.

To view Health Policy Program Director Len Nichol's related presentation, click here.

Health Debate Reality Check: The Role of Individual Requirements

Health Policy — Thu, 06 Dec 2007 12:57:00 -0500

The good news is that presidential candidates in both parties are talking about making health insurance and care more affordable in lots of ways. The inevitable bad news is that a few key points have become confused in escalating campaign combat. We three health economists, not affiliated with any specific campaign, feel compelled to clarify what health policy research does and does not have to say about an issue central to current campaign debates, the role of an individual requirement to purchase insurance.

An individual requirement to buy or acquire health insurance is a necessary element of any proposal that aims to cover all Americans. A large share of the uninsured in the U.S. today are offered insurance at low or zero explicit premiums, either at the workplace or through public insurance programs, but they forgo these opportunities for a bargain. Sometimes but not always they do so because the cost is obviously too high relative to the income they have available for other needed consumption.

In particular, a sizeable share of the uninsured are higher income individuals who could afford to pay the full cost of a health insurance plan, or any fraction of it, but choose not to. As a result, any plan to increase insurance coverage in the U.S. that does not include a requirement to purchase or acquire insurance will not result in universal health insurance coverage. Recent estimates suggest that a plan with uniform generous subsidies but without a mandate would cover no more than one-half of the uninsured in the U.S. Even with other cost-saving measures and a child mandate, we think that it is very likely that at least 15 million Americans would remain uninsured.

When individuals remain "voluntarily uninsured," it imposes three costs, both on the uninsured and on those who are insured. First, these individuals do use medical care, to the tune of roughly $30 billion per year in unpaid hospital bills, and those costs get passed on to the insured. Second, the ability of those in better health to opt out of risk pools may mean (depending on how insurance is priced) that premiums rise for those in poorer health, and an "adverse selection" spiral that prices almost everyone out of the market. Finally, many of these "voluntarily uninsured" may not appreciate the actual health risks they face, and the value of at least holding catastrophic insurance coverage against these risks. In our view, therefore, an individual requirement should be a key part of fundamental health care reform in the U.S.

Of course, an individual requirement is not enough -- it is only one of the three elements central to universal coverage. The second is subsidies to ensure that the required insurance is affordable for all. The third is a reformed insurance marketplace where individuals can meet this requirement through improved markets, with competitive insurance rates and a range of insurance options. These essential insurance reforms will be much harder to implement unless insurers are confident that all -- the healthy as well as the sick, the irresponsible as well as the responsible -- are going to be in the risk pool.

Moreover, individual requirements will not be effective if they are not enforced. Contrary to some claims, however, considerable experience suggests that mandates are indeed enforceable. The Netherlands and Switzerland reach 98-99 percent compliance with their individual health insurance purchase requirements. American states that use information sharing smartly have reached 98 percent compliance with auto insurance mandates as well. Recent research by Sherry Glied and colleagues at Columbia suggests some key lessons about mandate enforcement. Penalties for non-compliance must be serious but not so high as to be unenforceable politically, and the probability of being detected if non-compliant must be high. This can be greatly aided if data about enrollment is shared among multiple entities (e.g., employers, schools, providers, insurers, insurance market administrators), and if recurrent checks of available data are made electronically. Auto-enrollment under certain circumstances can be a powerful tool abetting compliance. The tax system can be an effective way of reaching all households in which someone earns taxable income, which includes the vast majority of the uninsured. We expect most uninsured to comply willingly, once subsidies make insurance affordable, but the continued existence of a minority of free riders will taint (and perhaps destabilize) that achievement.

Some have pointed to the state of affairs in Massachusetts, which in 2006 passed an ambitious health reform plan, as indicting the role of the mandate. In fact, the opposite is true. Starting in late 2006, the government has provided heavily subsidized insurance for low income groups and a reformed insurance market for others. In addition, by the end of 2007, individuals in Massachusetts are required to have health insurance or to pay a small tax penalty; in 2008, the penalty becomes substantial. The voluntary system in place thus far in Massachusetts has been highly successful, with as many as half of the uninsured gaining coverage through late in 2007, but it has been far from universal. Yet this should not be surprising since the mandate is not yet in place! Far than showing a failure of a (not yet existent) mandate, the experience in Massachusetts shows the key role that must be played by a mandate: the state has covered less than half of the uninsured and those enrolled are the least healthy uninsured. To move to full coverage and to avoid this "adverse selection", a mandate must be in place.

On the whole, we veterans of past health reform wars are heartened by the effort most candidates in both parties have put into their health proposals and discussions this year. What is striking is how closely all proposals from serious candidates incorporate choices in markets and means testing of financing, raising the hope of compromise and political action. Compared to past presidential campaigns, we are particularly impressed with the greater realism that comes from attention devoted to the need to increase the efficiency of the health care delivery system as much as possible, and accept the higher cost of highly valuable care as worth paying for. We welcome this more balanced approach to achieving the goal of universal coverage as far more likely to attract the bi-partisan support any health reform proposal will need to be successful in 2009-10, when getting the details right will really matter.