managed care is dead…. long live managed care a quick history and overview of americas private...
TRANSCRIPT
Managed Care is Dead…. Long Live Managed Care
A quick history and overview of America’s private health
insurance plans
Jonathan P. Weiner, Dr. P.H.Professor or Health Policy & Management
Johns Hopkins Bloomberg School of Public Health([email protected])
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At lightning speed, this primer session will:
• Provide a brief history and nuts-and-bolts overview of health insurance and managed care in the US.
• Highlight some reasons for and effects of the recent “Managed Care Backlash.”
• Help provide a context for understanding health care reform proposals presented at this conference.
All slides copyright the Johns Hopkins University - 2008
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0
500
1000
1500
2000
2500
1962 1966 1970 1974 1978 1982 1986 1990 1995 1998 2000 2008
Year
Dol
lars
(bill
ions
)
Source: HCFA, CMS
Of course its all about the money -- US health care spending: 1962-2008
4
0500
100015002000250030003500400045005000550060006500
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70
Per capita GDP (thousands $PPP)*
Per
cap
ita h
ealth
Spe
ndin
g ($
PP
P)*
Luxembourg
NorwaySwitzerland
Ireland
Iceland
Turkey MexicoPoland
Slovak Republic
HungaryKorea
Czech Republic
Portugal
United States
Greece
New Zealand
SpainJapan
Finland
Italy
Germany
France
United Kingdom
Sweden
Netherlands Denmark
Canada
Austria
Australia
Belgium
Source: OECD in Figures, 2006, 2007
*Purchasing power parity
Health spending vs GDP in OECD nations:The US is the outlier
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Alternative approaches for financing / organizing health care
• Government employed providers• Government “social insurance”
– Mandatory buy-in
– Entitlement for special populations
• As “benefit” of employment
– Insurance
– Direct care or access to contract providers
• Union/worker collectives• Privately purchased health insurance • Out of pocket / private pay• Charity care
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Proportion of Americans with health insurance: 1940-2008
0
10
20
30
40
50
60
70
80
90
100
Year
% I
nsur
ed
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US Health Insurance: Some Historical Highlights
• 1930’s -- Blue-Cross/ Blue Shield and Hospital Association.
• 1930’s – Prepaid-Group Practices (PGPs) and Union/Employers
• 1950’s – Commercial insurers get into the act
• 1960’s -- Federal “great society” – Medicare and Medicaid
• 1970’s - The “Health Maintenance Organization” (HMO) Act (the unholy alliance of AMA sponsored IPAs and union friendly PGPs)
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Why Employers Got Involved In Health Care in the US
• Healthy employees are productive employees
• European immigrant / union expectations
• Tax advantage
• Attracts good employees
• Employers filled the vacuum in the 1930-50’s, (now “stuck” in this role).
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Health Insurance Coverage in the U.S., 2006
Medicaid/ Other Public
12%
Medicare14%
Private Non-Group5%
Uninsured16%
Employer-Sponsored Insurance
54%
SOURCE: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of March 2007 CPS.
Total = 296.1 million
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55.655.155.255.657.058.259.561.160.859.957.0 57.357.4 56.3 56.1 56.0 55.355.6 54.7
45.344.744.444.043.943.742.740.1 39.2 38.9 40.5 41.8 43.0 44.4 44.8 44.9 44.4 43.0 42.6
0%
10%
20%
30%
40%
50%
60%
70%
Most Americans get health insurance “privately,” but the public sector bankrolls almost half of all care
.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group,
Private Funds
Public Funds
(% Distribution of Personal Health Expenditures by Payer, 1980-2006)
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The Most Important Chart in this Presentation: (Private Health Insurance Premiums, Worker’s Earnings and General Inflation, 1988-2007)
.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2007;
18.0%
14.0%
8.5%
0.8%
11.2% *
12.9% *13.9%
10.9% *
8.2% *
5.3% *
9.2% *
12.0%
7.7% *
6.1% *
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20% Health Insurance Premiums
Workers' Earnings
Overall Inflation
3.7%
2.6%
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The “Rise and Fall” of Managed Care is Embodied in this Trend Line
In the late 1980’s the bankrollers of the system said enough was enough, and the era of “managed care” was born. HMOs and their techniques served as the model.
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Managed Care Organization's Approximate Share of the Health Insurance Market in 1988 & 2008
1988
FFS 75%
MCO 25%
FFS 75% MCO 25%
2008
FFS 15%
MCO 85%
FFS 15% MCO 85%
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The US Health Insurance / “Managed Care” Models (and approx market share in 2008)
• Traditional Fee-for Service (Unmanaged)
– 15% (Mainly Medicare)
• Preferred Provider Organization (PPO) and other “loose” managed care plans
– 47% (includes “consumer defined health plans” / “high deductible health plans”)
• Health Maintenance Organization (HMO)
– 38% (includes “point of service” “open-HMO”)
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The Key “Ingredients” of Managed Care
• Care “management”
– aka, utilization/disease management
• Vertical integration / coordination of independent providers
• Financial risk sharing with providers and consumers
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Types of health plans have shifted over the years (employer based plans)
* Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2007; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988.
73%
46%
27%
10%
8%
7%
4%
5%
5%
3%
25%
21%
20%
21%
11%
26%
28%
39%
42%
46%
52%
54%
55%
61%
60%
57%
7%
14%
24%
21%
23%
18%
17%
15%
15%
13%
13%
4%
5%
3%
3%
16%
21%
31%
28%
29%
24%
27%
24%
0% 20% 40% 60% 80% 100%
1988
1993
1996
1999
2000
2001
2002
2003
2004
2005
2006
2007
ConventionalHMOPPOPOS-HMOCDHP/HDHP
*
*
*
*
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Private managed care plans care for the majority of Medicaid / S-CHIP enrollees (Trends ‘90-’04)
2.3 2.7 3.6 4.8 7.8 9.813.3 15.3 16.6 17.8 18.8 20.8 23.1 25.3 26.923.0
25.627.3
28.6 25.8 23.619.9 16.7 14.3 14.2 14.9
15.817.0
17.5 17.4
0
5
10
15
20
25
30
35
40
45
50
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Number Enrolled in Traditional Medicaid Programs
Number Enrolled in Medicaid Managed Care
Enrollment (in millions)
25.3
28.3
30.9
33.4
33.6
33.4
33.2
32.1
30.9
31.9
33.7
36.6
40.1
42.7
44.4
Source: KFF
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0%
5%
10%
15%
20%
25%
30%
35%
1992 1994 1996 1998 2000 2002 2004 2006 2008
% of Beneficiaries in MCOs
Medicare’s Private MCO (“Medicare Advantage”) Enrollment has Waxed and Waned
Source: CMS
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The managed care backlash and public perceptions
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US Consumer Perceptions
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US Public’s Perception on Regulation and Managed Care
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Consumers Don’t Really Understand Why Health Care Costs are Rising
Percent who say each is a “one of the single biggest factors in rising health care costs”:
Drug/insurance companies making too much money
Fraud and waste in the health care system
People getting treatments they don’t really need
Administrative costs in handling insurance claims
Too many medical malpractice suits
Doctors/hospitals making too much money
People needing more care due to unhealthy lifestyles
37%
50%
37%
36%
30%
30%
29%
28%
23%
12%
SOURCE: ABC News/KFF/USA Today Health Care in America Survey (conducted September 7-12, 2006)
Use of expensive new drugs/treatments/technology
The aging population
More people are getting better medical care
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The “backlash” has not had much impact on MD / MCO financial relations (Trends in Physician Contracting and Managed Care Revenue, 1996-2005)
1996-97 1998-99 2000-01 2004-05
Physicians with No Managed Care Contracts
9.4% 8.6% 9.2% 11.5%*
Average Number of Managed Care Contracts Among Physicians with ≥1 Managed Care Contract
12 13 13 13
Physicians with No Managed Care Revenue
5.7% 5.2% 5.8% 8.6%*
Revenue from Managed Care Among Physicians with ≥1% Managed Care Revenue (Mean)
42% 45% 45% 44%
*Change from 2000-2001 is statistically significant at p<.001.
Source: Center for Studying Health System Change, Community Tracking Study
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The three decades of private health insurance: The solutions must be here somewhere??
FFS HMO MCOOpen
AccessConsumer Driven HC
Provider Dominance
Costs out of
Control
MCO Product Expansion
MC Backlash
We gotta try
Something new