Achieving Affordable and Effective Health Care Reform Karen

Achieving Affordable and Effective Health Care Reform Karen Ignagni President & CEO April 27, 2009

National Expectations: What does the public want? § Increased affordability, especially for working families and small businesses § Guaranteed access to coverage, especially for those with pre-existing conditions § Improved quality, safety and effectiveness

Committing to Reform: What health plans have proposed Bending the cost curve • Establish goal of reducing future trend by 1. 5 percentage points per year • Blueprint for meaningful change established by stakeholder group • Series of reforms to promote value & affordability Covering everyone Keeping everyone covered • Guarantee issue (Eliminate preexisting condition exclusions) • Portability • Eliminate medical underwriting (No health status rating) • Expand safety net programs • Personal coverage requirement • Continuity of coverage • Targeted assistance to low and moderate income individuals, families and small businesses Providing predictability, security, and transparency • Essential benefits plan available nationwide for individuals and small businesses • Create a standard platform for consumers in each state to compare coverage options Improving quality and value • Build on health plans’ strategies to reward value not volume • Ensure patients get the right care at the right time in the right setting • Promote consumer decision making w/ clear concise information about safety and effectiveness • Administrative simplification

Determining Which Architecture Meets the Public’s Objectives § What is the best blend of public and private sector responsibilities? § Can comprehensive market reforms and consumer protections solve the problem? § What can we learn from FEHBP? § What can we learn from European models? § What are true administrative costs?

Comparing Design Choices Government-run plan added to the offerings ? Key elements Market reforms and fundamental regulatory changes Cost containment Ensure access to quality coverage Keep your plan you like it Administrative savings Encourage competition if ?

Impact of a government-run plan Employer provided coverage (small and large) Individual market 100 million + people moved 120 million people moved into government-run plan Providers ? Federal Budget ? Families/ Individuals ?

Assessing the Potential to Achieve 21 st Century Reforms Public Sector Today • • Administered pricing Fee-for-service platform Volume vs. value Rejection of SGR cap Political aspect to demos, and difficulty moving to market adoption Political impact on coverage decisions Inability to assess high risk patients and target supportive programs Private Sector Today • • • Infrastructure to identify health risk, coordinate outreach and track outcomes Encourage healthy behaviors: health coaching/wellness, smoking cessation, physical fitness Access to health information & performance transparency Nurse call lines – trouble shooting, respond with timely information Flexibility to tailor DM programs to meet individual needs § Nurse case managers to monitor patient adherence, complications and provide tools and support to manage care § Use information technology to improve care coordination (PHRs, registries) § Hi-touch tools: phone/web based innovations, state of the art interactive voice response to support self management § Assess/reduce social and home factors that contribute to poor health care § Alerts to physicians and patients, re: drug interactions and missed opportunities Training in cultural competency and translation services High quality service facilities (e. g. radiology) and Centers of Excellence Payment models that incentivize value not volume “At-risk” and “pay for performance” type arrangements with manufacturers and providers of specialty services

Assessing Private-Sector Performance MA HMO Performance Relative to FFS

True Administrative Costs If a government-run plan were to perform functions of health plans… Prevention and wellness programs Fraud and abuse detection and prevention Cost of capital Care coordination and management Regulatory compliance and reporting Reserve requirements Disease management Claims processing Develop and monitor performance of provider networks Health information technology investment $?

Cost Containment Potential associated with bending the cost curve

Cost Containment Potential associated with bending the cost curve 24, 0% National Health Expenditures as a Percentage of GDP 22, 0% 20, 0% 18, 0% 16, 0% current 2009 projections minus 2012 1% 2013 minus 2014 1. 5% 2015 minus 1. 7%2017 2018 2007 2008 2010 2011 2016

Achieving Affordable and Effective Health Care Reform Karen Ignagni President & CEO April 27, 2009