u.s. health care system improving access, quality, and efficiency

U.S. Health Care System U.S. Health Care System Improving Access, Quality, and EfficiencyImproving Access, Quality, and Efficiency

A ChartbookA Chartbook

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ContentsContents

Overview

I. Need for Better Accessand Coverage

II. Need for Quality Enhancements

III. Need for GreaterEfficiency

Conclusion. The Time IsRipe for Improvement

References

• 3

• 6

• 28

• 57

• 80

• 86

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OverviewOverviewThe need for fundamental transformation of the U.S. health care system has become increasingly apparent. Research reveals a fragmented system fraught with waste and inefficiency. Among industrialized nations, the United States spends well over twice the per capita average (Reinhardt et al. 2004). High spending, however, has not translated into better health: Americans do not live as long as citizens of several other industrialized countries, and disparities are pervasive, with widespread differences in access to care based on insurance status, income, race, and ethnicity.

Particularly problematic is the large number of individuals lacking ready access to health services. Over a third of the population is uninsured, unstably insured, or underinsured (Schoen et al. 2005). With health care costs on the rise, affordability is a key concern for many working families. Gaps in insurance coverage and high out-of-pocket spending hinder patients' access to care and lead to skipped medical tests, treatments, and follow-up appointments. In turn, these access problems produce preventable pain, suffering, and death—as well as more expensive care.

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There are also significant issues with the safety and quality of care. As many as 98,000 deaths result annually from medical errors (Kohn et al. 1999), and U.S. adults receive only 55 percent of recommended care (McGlynn et al. 2003). Inefficiencies, such as duplication and use of unnecessary services, are costly and compromise the quality of care. High administrative costs in health insurance and health care delivery are also problems.

The following sections further illustrate the need to improve coverage, quality, and efficiency. The charts presented paint a stark picture of a health system in need of reform. Clearly, moving the nation toward a high performance health system will require collaboration. That is why The Commonwealth Fund has formed the Commission on a High Performance Health System: to identify public and private strategies, policies, and practices that would lead to improvements in the delivery and financing of health care for all Americans.

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I. Need for Better Access and CoverageI. Need for Better Access and CoverageIn 2004, 45.8 million individuals in the United States were uninsured (U.S. Census Bureau),* and projections indicate that the number of uninsured individuals may exceed 50 million by the end of the decade (Chart I-1). The following are findings pertaining to the uninsured:

– According to health care opinion leaders, the uninsured should be a top priority for Congress (Chart I-2).

– Between 2000 and 2004, the number of uninsured individuals increased by 5.8 million. Adults ages 18 to 64 comprised all of the increase (Chart I-3).

– Between 1987 and 2003, the working middle class saw the greatest increase in uninsured individuals (Chart I-4).

– Among the uninsured, low-income families and adults are disproportionately represented (Chart I-5).

– Uninsured rates vary widely by state (Chart I-6).

* The CPS asks about insurance coverage in the previous year. An individual is considered "uninsured" if he or she was not covered by any type of health insurance at any time in that year.

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Job-based premium increases, gaps in coverage, and underinsurance contribute to access problems.

In 2003, 45 million U.S. adults were uninsured at some point during the year (Schoen et al. 2005).** Contributing to problems with access are job-based premium increases overtaking wage increases. The year 2004 saw increases in premiums greatly outpace workers' earnings from the previous year (Chart I-7). The Commonwealth Fund Biennial Health Insurance Survey (2003) highlighted the growing problem of underinsurance:***

– 26 percent of U.S. adults 19 to 64 were either uninsured all year or part of the year (Chart I-8).

– Another 9 percent of adults, or 16 million people, were underinsured (Chart I-8).

– Added together, 61 million adults—one-third of adults under 65—were either uninsured or underinsured during the year (Chart I-8).

** Schoen et al. used the term uninsured to refer to individuals who had been uninsured for some time during the past year.*** An underinsured person is defined as one who has insurance all year but has inadequate protection, as indicated by one of three conditions: 1) annual out-of-pocket medical expenses amount to 10 percent or more of income; 2) among low-income adults (with income below 200 percent of the federal poverty level), out-of-pocket expenses amount to 5 percent or more of income; or 3) health plan deductibles equal or exceed 5 percent of income.

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Gaps in insurance coverage make it difficult for people to afford filling prescriptions; seeing a specialist when warranted; undergoing a medical test, treatment, or follow-up; or seeking advice for a medical problem. Of adults who were uninsured at the time of the survey, 61 percent reported encountering at least one of these access problems. Of those who were currently insured but had been uninsured at some point during the past year, a majority reported access problems. For those who had been insured all year, the percentage was much lower but still large (Chart I-9). The Institute of Medicine estimates that in 1999, being uninsured was the sixth-leading cause of death (Chart I-10).

Underinsured adults are also at high risk of going without needed care because of cost, as well as at high risk of experiencing financial stress. Rates on both access and financial indicators for the underinsured approach or equal those reported by the uninsured (Chart I-11). Even for adults covered all year by private insurance, barriers to access exist in several forms, including high out-of-pocket costs (Chart I-12).

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Disparities persist by income and race.

For low-income adults (with income below 200 percent of the poverty level), unstable health coverage is a prevalent concern. Analysis of health insurance coverage and employment patterns over the four years 1996-99 indicates that at some point during this period, 68 percent of low-income adults were uninsured, compared with 26 percent of adults with higher incomes (Chart I-13). In addition to income, access also varies by race and ethnicity. In 2000, 50 percent of Hispanic adults were uninsured for all or part of the year, compared with 35 percent of African Americans and 22 percent of whites (Chart I-14).

Inadequate access leads to reduced productivity and output.

Individuals with no insurance, only sporadic coverage, or insurance that exposes them to catastrophic out-of-pocket costs are more likely to go without care. Receipt of primary and preventive care is associated with job compensation, and workers in the lowest-compensated positions are less likely to have a regular physician and to receive preventive care screens (Chart I-15). The majority of employers believe that health insurance positively affects employee health and morale. In addition, more than one-third of employers link health benefits to enhanced employee productivity (Chart I-16).

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The effects of inadequate access go beyond individual health consequences, as gaps in coverage affect quality of care, health outcomes, and economic productivity. The Institute of Medicine estimated that preventable morbidity and mortality associated with being uninsured translates into a loss of $65 billion to $130 billion annually (Institute of Medicine 2003). Providing all workers with health insurance coverage would facilitate early treatment of acute illnesses and the ongoing management of chronic conditions, increase use of preventive care, and improve worker health and productivity (Davis et al. 2005).

The health of workers has economic implications.

More generally, substantial costs are incurred when workers are too sick to work or function effectively. According to the 2003 Biennial Health Insurance Survey, the majority of Americans experience reduced productivity, sick days, or health problems (Chart I-17). Affordable and comprehensive health insurance coverage and paid sick leave can improve the health of workers and their family members, which in turn could yield economic payoffs for working families and the economy as a whole (Davis et al. 2005). Since employers,and society as a whole, benefit from workers having insurance, it isimportant to strengthen employee coverage (Collins et al. 2005).

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Chart I-1. 46 Million Uninsured in 2004; Projected to Increase Chart I-1. 46 Million Uninsured in 2004; Projected to Increase SubstantiallySubstantially

* 1999–2004 estimates reflect the results of follow-up verificationquestions and implementation of Census 2000-based population controls.Note: Projected estimates for 2005–2013 are for nonelderly uninsured based on T. Gilmer andR. Kronick, "It's the Premiums, Stupid: Projections of the Uninsured Through 2013," Health Affairs Web Exclusive, April 5, 2005. Source: U.S. Census Bureau, March CPS Surveys 1988 to 2005.

31 33 33 35 3539 40 40 41 42 43 44

40 40 4144

56

45

0

20

40

60

1987 1990 1993 1996 1999* 2002 2005 2008 2011

Millions uninsured

Projected

2013

46

11Chart I-2. Uninsured Top Priority for CongressChart I-2. Uninsured Top Priority for CongressAccording to Health Care Opinion LeadersAccording to Health Care Opinion Leaders

6%

21%

24%

27%

30%

31%

35%

38%

48%

50%

69%

87%

Control Medicaid costs

Improve quality of nursing homes and LTC

Medicaid reforms to improve coverage

Administrative simplification and standardization

Malpractice reform

Address racial/ethnic disparities in care

Control rising cost of prescription drugs

Medicare payment reform to reward performance onquality and efficiency

Enact reforms to moderate rising costs of medicalcare

Medicare reforms to ensure long-run solvency

Improve quality of medical care, inc. increased use ofIT

Expand coverage to the uninsured

Source: The Commonwealth Fund Health Care Opinion Leaders Survey, November–December 2004.

"Which of the following health care issues should be the toppriorities for Congress to address in the next five years?"

12

Chart I-3. Number Uninsured Rose 5.8 Million Chart I-3. Number Uninsured Rose 5.8 Million from 2000 to 2004, with Adults Accounting for All of the from 2000 to 2004, with Adults Accounting for All of the

Increase Increase

8.6

8.3

30.9

37.5

0 10 20 30 40 50

2000

2004

Under age 18 Ages 18–64

Source: U.S. Census, March 2001 and March 2005 Current Population Surveys.

45.8 million

40million

13

Chart I-4. Uninsured Rates IncreasingChart I-4. Uninsured Rates IncreasingMost Sharply for Working Middle ClassMost Sharply for Working Middle Class

47%50%

48%

52%

48%

39%

35%

44%

33%

21%

15%18%

25%

8%6%9%

11%

2%5%

4%

5%

0%

20%

40%

60%

1987 1989 1991 1993 1995 1997 1999* 2001 2003

Lowestquintile

Second

Third

Fourth

Highestquintile

* In 1999, CPS added a follow-up verification question for health coverage.Source: Analysis of the March 1988–2004 Current Population Surveys byDanielle Ferry, Columbia University, for The Commonwealth Fund.

Percent of working adults uninsured, by household income quintile 1987-2003

14

Other children5%

Other parents7%

Low-income adults without

children34%

Low-income parents

17%

Low-income children

15%

Other adults without children

22%

Chart I-5. Two-Thirds of NonelderlyChart I-5. Two-Thirds of NonelderlyUninsured Are Low-Income, 2003Uninsured Are Low-Income, 2003

Total = 44.7 million

Note: Low-income is defined as below 200% of the federal poverty level($29,360 for a family of three in 2003). Source: Kaiser Commission on Medicaid and Uninsured and Urban Instituteanalysis of the March 2004 Current Population Survey.

15

15%–17.9%

Less than 12%

12%–14.9%

18% or more

WA

OR

ID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DC

HI

CO

GAMS

OK

NJ

SD

Chart I-6. Percent of Nonelderly UninsuredChart I-6. Percent of Nonelderly UninsuredPopulation Varies Widely by State, 2001–2003Population Varies Widely by State, 2001–2003

Source: Health Insurance Coverage in America: 2003 Data Update Highlights,Kaiser Commission on Medicaid and Uninsured/Urban Institute, September 27, 2004.Uninsured rates are two year averages, 2001–2003.

16

Chart I-7. Job-Based Premium Increases Greater than Chart I-7. Job-Based Premium Increases Greater than Wage IncreasesWage Increases

12%

5%

8%

11%

13%14%

11%

1%

9%

14%

18%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1988 1990 1992 1994 1996 1998 2000 2002 2004

Premiums

Workers' earnings

Source: "Employer Health Benefits 2004 Annual Survey," Kaiser Family Foundation/Health Research and Educational Trust, September 2004.

Percent change from previous year

2%

17

Chart I-8. Significant Percentage of Underinsured Adults Chart I-8. Significant Percentage of Underinsured Adults Indicates Access to Care Not Just Issue for UninsuredIndicates Access to Care Not Just Issue for Uninsured

Insured all year, not underinsured

65%

Underinsured9%

Uninsured all year13%

Uninsured part year13%

Source: C. Schoen et al., "Insured But Not Protected: How Many Adults Are Underinsured?" Health Affairs, June 2005, based on The Commonwealth Fund 2003 Biennial Health Insurance Survey.

Uninsured is defined as uninsured for some time during the past year.

18

12 13

2940

51

918

57

3935

18

40

61

2737

0

25

50

75

Did not fill a

prescription

Did not see

specialist when

needed

Skipped medical

test, treatment, or

follow-up

Had medical

problem, did not

see doctor or

clinic

Any of the four

access problems

Insured all year Insured now, time uninsured in past year Uninsured now

Chart I-9. Gaps in Insurance CoverageChart I-9. Gaps in Insurance CoverageHinder Access to CareHinder Access to Care

Source: S. R. Collins, M. M. Doty, K. Davis et al., The Affordability Crisis inU.S. Health Care: Findings From The Commonwealth Fund Biennial HealthInsurance Survey, The Commonwealth Fund, March 2004.

Percent of adults ages 19–64 reporting the following problems because of cost:

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Chart I-10. Being Uninsured Is aChart I-10. Being Uninsured Is aLeading Cause of DeathLeading Cause of Death Deaths of Adults Ages 25–64, 1999Deaths of Adults Ages 25–64, 1999

1. Cancer — 156,485

2. Heart disease — 115,827

3. Injuries — 46,045

4. Suicide — 19,549

5. Cerebrovascular disease — 18,369

6. Uninsured — 18,000

7. Diabetes — 16,156

8. Respiratory disease — 15,809

9. Chronic liver disease and cirrhosis — 15,714

10. HIV/AIDS — 14,017

Sources: U.S. Department of Health and Human Services, National Center for Health Statistics, Health, United States, 2002, Table 33, p. 132 — deaths for causes other than uninsured; Instituteof Medicine, Care Without Coverage, Appendix D, p. 162, deaths attributable to higher risks of uninsured adults 25–54.

20

Chart I-11. Underinsured and Uninsured Adults at Chart I-11. Underinsured and Uninsured Adults at High Risk of Access Problems and Financial StressHigh Risk of Access Problems and Financial Stress

25

117

35

59

44

28

4654

0

25

50

75

Went without care

because of costs

Contacted by collection

agency about medical bills

Changed way of life

significantly to pay

medical bills

Insured, not underinsured Underinsured Uninsured during year

Percent of adults ages 19–64

* Did not fill a prescription; did not see a specialist; skippedrecommended care; or did not see doctor when sick because of costs.Source: C. Schoen et al., "Insured But Not Protected: How ManyAdults Are Underinsured?" Health Affairs Web Exclusive, June 14, 2005.

*

21

23

10

2

29

11

0

10

20

30

40

Total Less than

$20,000

$20,000–

$34,999

$35,000–

$59,999

$60,000 or

more

Chart I-12. Adults with Low and Moderate Incomes Spend Chart I-12. Adults with Low and Moderate Incomes Spend Greatest Share of Income on Out-of-Pocket CostsGreatest Share of Income on Out-of-Pocket Costs

Percent of adults ages 19–64 insured all year with private insurancewho spent 5 percent or more of income on out-of-pocket costs

Note: Income groups based on 2002 household income.

Source: S. R. Collins, M. M. Doty, K. Davis et al., The Affordability Crisis inU.S. Health Care: Findings From The Commonwealth Fund Biennial HealthInsurance Survey, The Commonwealth Fund, March 2004.

22Chart I-13. Low-Income Adults, Especially Hispanics, Have High Uninsured Rates over Chart I-13. Low-Income Adults, Especially Hispanics, Have High Uninsured Rates over

Four Years; Disparities Persist Across Income LevelsFour Years; Disparities Persist Across Income Levels

4131

2326

80

666368

2316

1012

64

464247

0

25

50

75

100

Total White African

American

Hispanic Total White African

American

Hispanic

Any time uninsured Uninsured more than one year

200% or more of poverty

Percent of population 19–64 uninsured, 1996–1999

Under 200% poverty

Source: M. M. Doty and A. L. Holmgren, Unequal Access: Insurance InstabilityAmong Low-Income Workers and Minorities, The Commonwealth Fund, April 2004.Data: 1996 panel of the Survey of Income and Program Participation.

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Chart I-14. Percent of Population Uninsured All Year or Chart I-14. Percent of Population Uninsured All Year or Part-Year Varies by Race and Ethnicity, 2000Part-Year Varies by Race and Ethnicity, 2000

9 7 917 15 11

213414

1320

16

14

111413

0

25

50

75

Total White African

American

Hispanic Total White African

American

Hispanic

Uninsured part year

Uninsured all year

23 20 23

37

2822

35

50

Adults ages 19–64

Percent of population uninsured all year or part-year, 2000

Source: M. M. Doty. Insurance, Access, and Quality of Care Among Hispanic Populations:2003 Chartpack, The Commonwealth Fund, October 2003. Data: MEPS 2000.

Children ages 0–18

24

Chart I-15. Preventive and Primary Care Varies by Workers' Job Chart I-15. Preventive and Primary Care Varies by Workers' Job Compensation LevelsCompensation Levels

64

74

54

74

84

66

89 9185

0

10

20

30

40

50

60

70

80

90

100

Regular doctor (ages 19–64) Blood pressure check in

past year (ages 19–64)

Cholesterol check in past

five years (ages 19–64)

Note: Lowest compensated are all workers with wage rate <$10/hr; mid-compensated are workers with wage rate $10-$15/hour and those >$15/hour but no employer-sponsored insurance; higher compensated are workers with wage rate >$15/hour and employer-sponsored insurance.Source: The Commonwealth Fund Biennial Health Insurance Survey (2003).

Lowest compensated Mid-compensated

Higher compensated

25Chart I-16. Majority of Employers Believe ThatChart I-16. Majority of Employers Believe That

Health Benefits Improve Employee Health and MoraHealth Benefits Improve Employee Health and Moralele

6760

39

0

20

40

60

80

Improves employee

health

Improves employee

morale

Increases employee

productivity

Source: S. R. Collins et al., Job-Based Health Insurance in the Balance: Employer Views of Coverage in the Workplace, The Commonwealth Fund, March 2004; Commonwealth Fund Supplement to the 2003 National Organization Study.

Employers who say health benefits contributea great deal or quite a bit

Percent of firms offering coverage

26

Chart I-17. Majority of Americans Experience Health Chart I-17. Majority of Americans Experience Health Problems, Sick Loss, or Reduced Productivity (all adults ages Problems, Sick Loss, or Reduced Productivity (all adults ages

19–64)19–64)

Working with 6 or more sick days or reduced-productivity days

27%

Working with no sick days or reduced-productivity days

18%

Not working for other non-health reasons

21%

Working with 1 to 5sick days or reduced-

productivity days

21%

Not working because of disability or other health reasons

12%

Note: Numbers may not sum to 100% because of rounding. Excludes self-employed adults and workers with undesignated wage rate. Sick-loss days are days of work missed because self or family member was sick. Reduced-productivity days are days unable to concentrate fully at work because not feeling well or worried about sick family member.

Source: K. Davis et al., Health and Productivity Among U.S. Workers, The Commonwealth Fund, August 2005; The Commonwealth Fund Biennial Health Insurance Survey (2003).

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II. Need for Quality EnhancementsII. Need for Quality EnhancementsQuality and cost of health care vary widely across the United States.

There are significant variations in the quality and cost of health care, both within the United States and internationally (Davis et al. 2004; Fisher et al. 2003). U.S. adults often do not receive the level of care that is recommended for a particular condition. One study indicates that overall, individuals received only 55 percent of recommended care, a proportion that varies based on the condition, as detailed below (McGlynn et al. 2003).

– Individuals being treated for breast cancer went without nearly one-fourth of recommended care, while those undergoing treatment for hypertension went without more than one-third of recommended care (Chart II-1).

– The figures for individuals being treated for asthma reflect even lower quality, with individuals receiving approximately half of the recommended care (Chart II-1).

– For those undergoing treatment for diabetes, pneumonia, or ahip fracture, the percentages of recommended care attainedwere even lower (Chart II-1).

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The provision of appropriate care varies across the United States(Chart II-2). In a study examining the quality of care provided to Medicare beneficiaries, the authors ranked the states on 22 quality indicators. Substantial discrepancies exist among states ranked in the first quartile and those ranked in the fourth quartile, with northern states and less-populous states performing better (Jencks, Huff, and Cuerdon 2003).

Preventive care is often overlooked.

The 2004 Commonwealth Fund International Health Policy Survey indicates that 49 percent of respondents in the United States do not receive reminders for preventive care (Chart II-3). The proportions of young children and their families who receive preventive and developmental services are relatively low: only 30 to 40 percent of parents of young children reported receiving services such as anticipatory guidance, parental education, psychosocial assessment, or screening for tobacco and substance use (Chart II-4).

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Medication errors and medical mistakes compromise quality of care.

Medication errors and medical mistakes also compromise quality of care.A 2002 Commonwealth Fund survey indicates that nearly one-fifth of sicker adults in the United States reported a serious medical mistake or medication error in the past two years (Chart II-5). A 2004 Fund survey found that 15 percent of contacted individuals had received incorrect test results or had experienced delays in receiving notification about abnormal results (Chart II-6). The United States compares unfavorably with other industrialized countries.

Communication affects quality of care.

Communication plays a critical role in quality of care. The 2004 Commonwealth Fund International Health Survey reveals missed opportunities by physicians to communicate effectively, involve patients in treatment decisions, and recognize patients' concerns or preferences (Schoen et al. 2004). In the United States, more than 50 percent of individuals did not feel that their doctor always spends adequate time with them. Approximately 40 percent of U.S. respondents indicated that their doctor does not always listen carefully and does notalways explain things clearly (Chart II-7).

30

The 2002 International Health Policy Survey examined the views of sicker adults and found that nearly one-third of those surveyed in the United States had in the past two years left a doctor's office without getting an important question answered. An even larger percentage of U.S respondents reported not adhering to a doctor's advice (Chart II-8). Research indicates that minorities face greater difficulty in communicating with physicians (Chart II-9).

Studies point to a link between patient-physician communication and a patient's acceptance of advice, adherence to treatment regimens, and satisfaction. Moreover, the quality of communication may also affect outcomes of care (Stewart 1995; Stewart et al. 2000). In an examination of interpersonal quality of care, middle-age adults gave lower rankings than seniors on the following measures: health providers listened carefully, health providers showed respect, and health providers spent enough time. When asked if the health provider always explained things clearly, only about 60 percent of seniors and middle-aged adults answered affirmatively (Chart II-10*).

* To access Leatherman and McCarthy's Chartbook on the Quality of Care for MedicareBeneficiaries, please visit http://www.cmwf.org/usr_doc/MedicareChartbk.pdf.

31

Expanding the use of information technology could facilitate communication and benefit both patients and physicians. The health care sector, however, has been slow to implement information technology, with the percentages of physician groups using electronic medical records remaining low(Chart II-11).

Physicians not as readily accessible as patients would hope.

In the 2004 Commonwealth Fund International Health Policy Survey, only a third of U.S. adults reported they were able to schedule a same-day appointment when sick or in need of medical attention (Chart II-12). Use of the emergency department (ED) as a substitute for regular physician care is a problem: 16 percent of U.S. respondents reported visiting the ED for a nonemergent condition (Chart II-12). Overall ED use in the United States was significant, with approximately one-third of respondents indicating they had used it in the past two years (Chart II-13).

32

Having a regular physician is important for quality.

When a patient builds a relationship with a physician, the result is enhanced care, increased trust, and patient adherence to treatment regimens (Parchman, M. and S. Burge 2004; Hall et al. 2001). Yet, only 37 percent of individuals in the United States surveyed in a 2004 Commonwealth Fund survey had a physician whom they had seen for more than five years(Chart II-14).

Debates continue regarding disclosure of quality information.

Around the world, there is debate about whether and how to disclose quality-of-care information to the public. The percentage of U.S. hospital CEOs who do not wish to disseminate certain information to the public varies according to the type of information under consideration (Chart II-15). Among consumers, it is apparent that more information is desired. The majority of Americans would like information pertaining to their health and the care they receive (Chart II-16).

33

Life expectancy and survival rates for certain medical conditions indicate need for improvement.

The United States spends more on health care than most countries, but its results lag behind.

– Five-year survival rates for kidney transplant and colorectal cancer in the United States are relatively low (Charts II-17 and II-18).

– The five-year survival rate for patients diagnosed with cancer varies based on race and ethnicity. Even greater variations exist based on socioeconomic status (Charts II-19 and II-20).

– The United States ranks below a number of other industrialized nations for life expectancy at birth and at age 65 (Charts II-21 and II-22).

34

Chart II-1. U.S. Adults Receive Half of Recommended Chart II-1. U.S. Adults Receive Half of Recommended Care, and Quality Varies Significantly by Medical Care, and Quality Varies Significantly by Medical

ConditionCondition

Source: E. McGlynn et al., "The Quality of Health Care Delivered to Adults in the United States,"The New England Journal of Medicine (June 26, 2003): 2635–2645.

55

7665

5445

39

23

0

20

40

60

80

Overall Breast

cancer

Hypertension Asthma Diabetes Pneumonia Hip fracture

Percent of recommended care received

35

Chart II-2. Provision of Appropriate Care Varies by StateChart II-2. Provision of Appropriate Care Varies by State

Source: S. F. Jencks, E. D. Huff, and T. Cuerdon, "Change in the Quality of CareDelivered to Medicare Beneficiaries, 1998–1999 to 2000–2001," Journal of theAmerican Medical Association 289 (Jan. 15, 2003): 305–312.

Note: State ranking based on 22 Medicare performance measures.

Performance on Medicare Quality Indicators, 2000–2001Performance on Medicare Quality Indicators, 2000–2001

First

Third

Fourth

Second

WA

OR

ID

MT ND

WY

NV

CAUT

AZ NM

KS

NE

MN

MO

WI

TX

IA

ILIN

AR

LA

AL

SC

TNNC

KY

FL

VA

OH

MI

WV

PA

NY

AK

MD

MEVT

NH

MA

RI

CT

DE

DCCO

GAMS

OK

NJ

SD

Quartile Rank

HI

36

Chart II-3. U.S. Performs Relatively WellChart II-3. U.S. Performs Relatively WellBut Emphasis on Prevention is Still LackingBut Emphasis on Prevention is Still Lacking

62 6155

50 49

0

25

50

75

Australia Canada New Zealand United

Kingdom

United States

Percent who DID NOT receive reminders for preventive care

Source: 2004 Commonwealth Fund International Health Policy Survey.

37

Chart II-4. Gaps Exist in Provision of Preventive and Chart II-4. Gaps Exist in Provision of Preventive and Developmental ServicesDevelopmental Services

Percent

Source: C. Bethell et al., Analysis of FAACT Surveys PHDS-Plus ofParents of Medicaid Children in Seven States. Unpublished data 2004.

50 48

69 7160

0

20

40

60

80

100

Parentalanticipatoryguidance

Parentalassessment forpsychosocial

issues

Parental screenfor tobacco and

substanceabuse

Family-centeredcare

Follow-up forchildren at risk

38

Percent of sicker adults reporting a serious error in past two years

Chart II-5. Medication or Medical MistakeChart II-5. Medication or Medical MistakeCaused Serious Health ConsequencesCaused Serious Health Consequences

in Past Two Yearsin Past Two Years

Source: The Commonwealth Fund 2002 International Health Policy Survey of Sicker Adults.

1315 14

9

18

0

10

20

30


Kingdom

United States

39

Chart II-6. Incorrect Test Results andChart II-6. Incorrect Test Results andDelays in Notification of Abnormal Results Raise Safety Delays in Notification of Abnormal Results Raise Safety

ConcernsConcerns

8

14 1512

9

0

10

20

30


K ingdom

United States

Percent of adults with test in past two years


40

Chart II-7. Opportunities ExistChart II-7. Opportunities Existfor Enhanced Doctor–Patientfor Enhanced Doctor–Patient

Communication and InteractionsCommunication and Interactions

Percent saying doctor: AUS CAN NZ UK US

Always listens carefully 71 66 74 68 58

Always explains things so you can understand

73 70 73 69 58

Always spends enough time with you

63 55 66 58 44


41

Chart II-8. Significant Share of Adults Report Nonadherence, Chart II-8. Significant Share of Adults Report Nonadherence, Questions Left UnansweredQuestions Left Unanswered

In the past two years: AUS CAN NZ UK US

Left a doctor's office without getting important questions answered

21 25 20 19 31

Did not follow a doctor's advice

31 31 27 21 39


Views of Sicker Adults*

* Sicker adults are individuals who met at least one of four criteria: reported their health asfair or poor; or in the past two years had a serious illness that required intensive medical care, major surgery, or hospitalization for something other than a normal birth.

42

19%16%

23%

33%

27%

0%

20%

40%

Total White African

American

Hispanic Asian

American

Chart II-9. Minorities Face Greater Difficulty in Chart II-9. Minorities Face Greater Difficulty in Communicating with PhysiciansCommunicating with Physicians

Base: Adults with health care visit in past two years.* Problems include understanding doctor, feeling doctor listened, had questions but did not ask.

Source: Commonwealth Fund 2001 Health Care Quality Survey.

Percent of adults with one or more communication problems*

43

Chart II-10. Interpersonal Quality of Care Lacking for a Chart II-10. Interpersonal Quality of Care Lacking for a Number of PatientsNumber of Patients

56 59 59

46

6559

66

54

0

20

40

60

80

100

Health providers

always listened

carefully

Health providers

always explained

things clearly

Health providers

always showed

respect

Health providers

always spent

enough time

Source: S. Leatherman and D. McCarthy, Quality of Health Care for Medicare Beneficiaries:A Chartbook, 2005, The Commonwealth Fund. www.cmwf.org; Medical Expenditure PanelSurvey (AHRQ 2005).

Percent of community-dwelling adults in 2001who visited doctor’s office in past year

Ages 45–64 Age 65+

44

87%

46%

57%

27%27%

59%

79%

14%

36%

68%

13%

25%

85%

61%

23%

35%37%

66%

84%77%

Electronic billing* Access to test results* Ordering of tests* Electronic medicalrecords*

All Physicians

1 Physician

2–9 Physicians

10–49 Physicians

50+ Physicians

Chart II-11. Physician Use of Electronic Technology Chart II-11. Physician Use of Electronic Technology Could Be ExpandedCould Be Expanded

* p < .01, Cuzick's test for trend

Base: All respondents (N=1837)

Percent indicating "routine/occasional" use

Source: Commonwealth Fund 2003 National Survey of Physicians and Quality of Care.

45Chart II-12. Substituting Emergency Department (ED) for Regular Care Chart II-12. Substituting Emergency Department (ED) for Regular Care

More Likely in U.S. and CanadaMore Likely in U.S. and Canada

54

9

18

60

7

41

6

33

16

27

0

25

50

75

Percent of adults who were sick or needed medical attention

AUS CAN NZ UK US

Same-day appointment available

Went to ED for condition that could have been treated by regular

physician if available


AUS CAN NZ UK US

46

Chart II-13. Emergency Department Use Rates Higher in the Chart II-13. Emergency Department Use Rates Higher in the U.S. and CanadaU.S. and Canada

Percent with any visits


29

3834

2927

0

25

50

Australia Canada NewZealand

UnitedKingdom

UnitedStates

47

Chart II-14. Continuity of Care with Same Chart II-14. Continuity of Care with Same Physician LackingPhysician Lacking

Percent: AUS CAN NZ UK US

Has regular doctor/place94 95 97 99 91

2 years or less 22 20 21 18 29

3 to 5 years 22 21 20 17 25

More than 5 years 50 53 56 63 37

No regular doctor/place5 5 3 1 9


48Chart II-15. Type of Information Influences Hospital CEOs’ Opinions Chart II-15. Type of Information Influences Hospital CEOs’ Opinions

Regarding Public DisseminationRegarding Public Dissemination

Source: 2003 Commonwealth Fund International Health Policy Survey of Hospital Executives.

Percent saying should NOT be released to the public: AUS CAN NZ UK US

Mortality rates for specific conditions 34% 26% 18% 16% 31%

Frequency of specific procedures 16 5 4 13 15

Medical error rate 31 18 25 15 40

Patient satisfaction ratings 5 2 0 1 17

Average waiting times for elective procedures 6 1 0 1 29

Nosocomial infection rates 25 10 25 9 29

49

3445

28

5140

37

42

354840

0

25

50

75

100

Australia Canada New

Zealand

United

Kingdom

United

States

Percent lacking access to own medical records but would like access

Percent with access to own medical records

Chart II-16. Majority of Americans Want Information Chart II-16. Majority of Americans Want Information About Their Health and the Care They ReceiveAbout Their Health and the Care They Receive


80 82 8070

88

50

Chart II-17. U.S. Performs Poorly on Kidney Chart II-17. U.S. Performs Poorly on Kidney Transplant Five-Year Relative Survival RateTransplant Five-Year Relative Survival Rate

100 104 104 106113

0

20

40

60

80

100

120

United

States

United

K ingdom

New

Zealand

Australia Canada

Standardized performance on quality indicator100 = Worst result; Higher score = Better results

Source: P. S. Hussey, G. F. Anderson, R. Osborn et al., "How Does the Qualityof Care Compare in Five Countries?" Health Affairs 23 (May/June 2004): 89–99.

51

Chart II-18. U.S. Lags on Colorectal Cancer Five-Year Relative Chart II-18. U.S. Lags on Colorectal Cancer Five-Year Relative Survival RateSurvival Rate

100108 113 116

123

0

20

40

60

80

100

120

140

United

K ingdom

United

States

Canada Australia New

Zealand

Source: P. S. Hussey, G. F. Anderson, R. Osborn et al., "How Does the Qualityof Care Compare in Five Countries?" Health Affairs 23 (May/June 2004): 89–99.

Standardized performance on quality indicator100 = Worst result; Higher score = Better results

52

61 6258 60

49 5246

54

0

40

80

All races White Black Hispanic

Low poverty, <10% High poverty, 20%+

Percent of male patients diagnosed with cancer, 1988–1994

Chart II-19. Five-Year Survival Rates forChart II-19. Five-Year Survival Rates forCancer Patients Vary by Race/EthnicityCancer Patients Vary by Race/Ethnicity

and Census Poverty Tractand Census Poverty Tract

Source: G. Singh et al., "Area Socioeconomic Variations in U.S. Cancer Incidence, Mortality,Stage, Treatment and Survival, 1975–1999," NCI, 2003. Figures 6.3 and 6.4.

53

63 6359

65

53 5548

60

0

40

80

All races White Black Hispanic

Low poverty, <10% High poverty, 20%+

Percent of female patients diagnosed with cancer, 1988–1994

Chart II-20. Five-Year Survival Rates for Cancer Patients Vary Chart II-20. Five-Year Survival Rates for Cancer Patients Vary by Race/Ethnicityby Race/Ethnicity

and Census Poverty Tractand Census Poverty Tract

Source: G. Singh et al., "Area Socioeconomic Variations in U.S. Cancer Incidence, Mortality,Stage, Treatment and Survival, 1975–1999," NCI, 2003. Figures 6.3 and 6.4.

54

Chart II-21. Life Expectancy at BirthChart II-21. Life Expectancy at BirthLower in the United StatesLower in the United States

82.9 81.1 80.7 79.98181.382.182.885.3

74.576.276.375.575.577.277.875.878.4

0

10

20

30

40

50

60

70

80

90

Female Male

Source: OECD Health Data, 2005.

55

Chart II-22. United States Performs Poorly on Life Chart II-22. United States Performs Poorly on Life Expectancy at Age 65Expectancy at Age 65

19.6 19.119.519.62020.62121.323

16.116.61616.116.717.217.616.918

0

5

10

15

20

25

Female Male

Source: OECD Health Data, 2005.

56

III. Need for Greater EfficiencyIII. Need for Greater Efficiency

After a period of relatively stable growth in the 1990s, health care spending has exploded in recent years. Health care costs are concentrated among the sickest and most vulnerable Americans and are borne by those with private as well as public coverage.

– In 2002, U.S. health expenditures totaled 14.6 percent of gross domestic product, substantially higher than other developed nations. This percentage is projected to rise in the next decade (Charts III-1 and III-2).

– Ten percent of patients account for 69 percent of health expenditures (Chart III-3).

– Closer examination of the continued acceleration of health care spending indicates that private insurance premiums have historically outpaced Medicare spending per beneficiary (Chart III-4).

57

The United States far outpaces other countries in health care spending per capita (Chart III-5). Per capita out-of-pocket health spending in 2002 was more than double the OECD median (Chart III-6). Yet, the United States does not consistently use more services. In international comparisons of hospital discharges and average annual physician visits per capita, the United States sits on the lower end of the spectrum (Charts III-7 and III-8). Still, U.S. hospital expenditures exceed those in France, Canada, and Australia (Chart III-9), and use of expensive specialty services is much higher (Chart III-10).

Administrative costs are rising rapidly.

Health care coordination and administration are two areas that may greatly benefit from initiatives to raise efficiency. Growth in administrative costs has exceeded growth in national health expenditures (Chart III-11).

58

Enhancements in care coordination could foster cost savings.

A study examining elderly adults hospitalized for heart failure determined that transitional care provided by an advanced practice nurse reduced rehospitalization rates and lowered overall health care costs. Through discharge planning and home follow-up visits, the advanced practice nurse provided needs assessment, care planning, patient education, and therapeutic support. The average cost of care for the intervention group was 39 percent lower than for the group receiving usual care (Chart III-12).

Lack of care coordination can lead to the unavailability of test results or records at the time of the patient's appointment; duplication of testing; or provision of conflicting information by the patient's various physicians. The 2004 Commonwealth Fund International Health Policy Survey found that 31 percent of those surveyed in the United States had experienced at least one of the aforementioned issues (Chart III-13). Individuals lacking insurance are more likely to experience a care coordination problem (Chart III-14).

59

Substantial variations indicate a need for standardization of practices based on individual patient characteristics and conditions, not on geographic location.

Standardization of practices can create more effective care while decreasing costs. Currently, there are substantial variations within the health care system, including quantity of services and prices.

– Across large Pennsylvania hospitals, charges for medical management of acute myocardial infarction vary eightfold (Chart III-15).

– Medicare spending varies across the states; higher Medicare spending per beneficiary does not necessarily correlate with higher-quality care (Chart III-16).

– Quality and cost vary greatly across hospitals (Chart III-17).

– Drug prices are between 34 to 59 percent lower in Canada, France, and the United Kingdom than in the United States (Chart III-18).

– Doctors who practice more evidence-based medicine can be the ones whose costs per case are lowest, but they can also be the highest (Chart III-19). Strategies are needed to foster high-quality, high-efficiency practices.

60

Chart III-1. U.S. Spends Greater Percentage of GDP on Health Chart III-1. U.S. Spends Greater Percentage of GDP on Health Care Than Other NationsCare Than Other Nations

14.6

10.99.7 9.6 9.1 8.5 8.5

7.8 7.7

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

United

States

Germany France Canada Australia

(2001)

OECD

Median

New

Zealand

J apan

(2001)

United

Kingdom

Source: G. F. Anderson and P. S. Hussey, Multinational Comparisons of HealthSystems Data 2004, The Commonwealth Fund, October 2004. OECD data.

Percent of gross domestic product (GDP) spent on health care, 2002

61

1918

1616151514

13131313131313131313121111

0

5

10

15

20

Projected

Chart III-2. U.S. Health Expenditures as Share of GDP Expected Chart III-2. U.S. Health Expenditures as Share of GDP Expected to Rise Through Next Decadeto Rise Through Next Decade

Expenditures as percent of gross domestic product (GDP)

Source: Center for Medicare and Medicaid Services, Office of the Actuary, 1998–2003 from CMS Health Accounts data file nhegdp03.zip available at http://www.cms.hhs.gov/statistics/nhe/default.asp; 2004–2014 published in Heffler et al., "U.S. Health Spending Projections for 2004–2014," Health Affairs Web Exclusive (February 23, 2005): W5-74–W5-85.

62

Chart III-3. Health Care CostsChart III-3. Health Care CostsConcentrated in Sick FewConcentrated in Sick Few

0%

10%

20%30%

40%

50%

60%

70%80%

90%

100%

U.S. population Health expenditures

1%5%

10%

55%

69%

27%

Source: A. C. Monheit, "Persistence in Health Expenditures in the Short Run:Prevalence and Consequences," Medical Care 41, supplement 7 (2003): III53–III64.

Distribution of health expenditures for the U.S. population,Distribution of health expenditures for the U.S. population,by magnitude of expenditure, 1997by magnitude of expenditure, 1997

50%

97%

$27,914

$7,995

$4,115

$351

Expenditure Threshold

(1997 Dollars)

63

Chart III-4. Private Insurance PremiumsChart III-4. Private Insurance PremiumsHave Historically Outpaced Medicare Spending per Have Historically Outpaced Medicare Spending per

BeneficiaryBeneficiary

9.0

5.9

10.18.8

9.610.7

0

2

4

6

8

10

12

1969–2003 1999–2003

Medicare Private health insurance FEHBP*

Percent annual growth in per-enrollee spending

Source: Analysis by Office of the Actuary, Centers for Medicare and Medicaid Services, January 2005.

* FEHBP estimates are for 1969–2002 and 1999–2002 from Levit et al.,“Health Spending Rebound Continues in 2002,” Health Affairs 23 (Jan/Feb 2004).

64Chart III-5. Health Care Spending Per Capita in 2002 Illustrates Chart III-5. Health Care Spending Per Capita in 2002 Illustrates Higher U.S. SpendingHigher U.S. Spending

Adjusted for differences in cost of livingAdjusted for differences in cost of living

$553

5,267

$3,446

$2,931 $2,817$2,736$2,643$2,517 $2,504

$2,193 $2,160 $2,077$1,857

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Source: G. F. Anderson et al., "Health Spending in the United States and the Rest of the Industrialized World," Health Affairs 24 (July/August 2005): 903. OECD Health Data.

65

Chart III-6. Out-of-Pocket Health Care Spending Per Capita in Chart III-6. Out-of-Pocket Health Care Spending Per Capita in 2002 Highest in United States 2002 Highest in United States


$737

$483$445

$347 $342$298 $292 $288

$268 $266

$0

$100

$200

$300

$400

$500

$600

$700

$800

United States

Australia (2001)

Canada

OECD M

edian

J apan (2001)

New

Zealand

Germ

any

Mexico (2001)

France

Netherlands

Source: OECD Health Data.

66

252 247

201

159 156

11298 91

206

0

50

100

150

200

250

300

France

(2001)

United

Kingdom

New

Zealand

Germany

(2001)

OECD

Median

Australia J apan United

States

Canada

(2001)

Chart III-7. United States on Lower End of Spectrum for Chart III-7. United States on Lower End of Spectrum for Hospital Discharges per 1,000 Population in 2002Hospital Discharges per 1,000 Population in 2002

Source: OECD Health Data, 2004, from G. F. Anderson et al., "MultinationalComparisons of Health Systems Data, 2004" (forthcoming).

67Chart III-8. United States on Lower End of Spectrum for Chart III-8. United States on Lower End of Spectrum for

Average Annual Number ofAverage Annual Number ofPhysician Visits Per CapitaPhysician Visits Per Capita

2.52.9

3.64.4

4.96.26.26.2

6.97.3

14.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

J apa

n (200

1)

Ger

many

(200

0)

Fran

ce (2

001)

Austral

ia (2

002)

Canad

a (2

001)

OECD M

edian

Uni

ted K

ingd

om (2

000)

New

Zea

land

(200

1)

Uni

ted S

tate

s (2

001)

Swede

n (200

1)

Mexi

co (2

002)


68

Chart III-9. Per-Day Hospital Expenditures High in the United Chart III-9. Per-Day Hospital Expenditures High in the United StatesStates


$2,434

$902 $870 $848

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

United States

(2002)

France (2001) Canada (2001) Australia (2001)


69

416

158 157130

94 86 73

0

100

200

300

400

500

United

States

Canada

(2001)

France

(2001)

Australia OECD

Median

New

Zealand

United

Kingdom

Chart III-10. United States UsesChart III-10. United States UsesMore Expensive Specialty ServicesMore Expensive Specialty Services

Source: OECD Health Data 2004, from G. F. Anderson et al., "MultinationalComparisons of Health Systems Data, 2004" (forthcoming).

Percutaneous transluminal coronary angioplasty (PTCA) interventions per 100,000 population in 2002

70

Chart III-11. Administrative Cost Growth Outpaces Total Medical Chart III-11. Administrative Cost Growth Outpaces Total Medical Expenditure GrowthExpenditure Growth

6.2

9.78.5

12.5

9.3

16.3

7.7

13.2

0

5

10

15

20

National health expenditure Administrative costs of private

and public insurance

Annual growth 1997–2000




* Administrative costs totaled $119.7 billion in 2003, nearly double that of 1997.

Source: Smith et al., "Health Spending Growth Slows in 2003," Health Affairs 24 (Jan/Feb 2005).

Percent

71Chart III-12. Transitional Care ReducesChart III-12. Transitional Care Reduces

Rehospitalization for Heart Failure PatientsRehospitalization for Heart Failure Patients

61

48

0

20

40

60

80

100

162

104

0

50

100

150

200

$12,481

$7,636

$0

$4,000

$8,000

$12,000

$16,000

Percentage of patients who were rehospitalized or died

Number ofhospital readmissions

Average cost of care

Source: Medical records and patient interviews (N=239) (Naylor et al. 2004), S. Leathermanand D. McCarthy, Quality of Health Care for Medicare Beneficiaries: A Chartbook, 2005,The Commonwealth Fund. www.cmwf.org/usr_doc/MedicareChartbk.pdf.

Usual care group Intervention group

Resource use among congestive heart failure patients ages 65+ treated atsix Philadelphia hospitals during 1997–2001 who were randomly assignedto receive a three-month transitional care intervention or usual care

72

Chart III-13. Care Coordination Concerns AboundChart III-13. Care Coordination Concerns Abound

Percent saying in the pasttwo years: AUS CAN NZ UK US

Test results or records not available at time of appointment 12 14 13 13 17

Duplicate tests: doctor ordered test that had already been done 7 6 7 4 14

Received conflicting information from different doctors 18 14 14 14 18

Percent who experienced at least one of the above 28 26 25 24 31

Base: Have seen a doctor in past two years


73

Chart III-14. Uninsured in U.S. at Highest Risk for Care Chart III-14. Uninsured in U.S. at Highest Risk for Care Coordination ProblemCoordination Problem

3026 26 26

3328

44

0

20

40

60

Australia Canada New Zealand UnitedKingdom

Total Insured allyear

Uninsuredanytime

Percent ages 19–64 reporting any of three coordination problems*


*Coordination problems include duplication of tests, conflicting views,and medical record not available at time of appointment.

United States

74

Chart III-15. Charges for Medical Management of Acute Chart III-15. Charges for Medical Management of Acute Myocardial Infarction Vary Eightfold Across Large Myocardial Infarction Vary Eightfold Across Large

Pennsylvania HospitalsPennsylvania Hospitals

* This hospital demonstrated significantly lower than expected in-hospital mortality rates. Note: Hospital charge equals patient total charge excluding professional fees; all hospitals shown provided advanced cardiac services (angioplasty/stent procedures), had >100 cases, and <5% of cases transferred to another acute care facility. Source: Pennsylvania Health Care Cost Containment Council, Hospital Performance Results, Hospital discharges between January 1, 2003 and December 31, 2003, www.phc4.org.

88,457

64,627

43,636

10,59214,020 14,871

18,596 19,29424,012

29,672

$0

$20,000

$40,000

$60,000

$80,000

$100,000

Lowest mortality hospital

$21,846*

75

Chart III-16. Quality and Medicare Spending Vary Across States, Chart III-16. Quality and Medicare Spending Vary Across States, 2000–20012000–2001

Quality Expressed by Percent of Beneficiaries with Atrial FibrillationQuality Expressed by Percent of Beneficiaries with Atrial Fibrillation

Sources: K. Baicker and A. Chandra, "Medicare Spending, The Physician Workforce, and Beneficiaries' Quality of Care," Health Affairs Web Exclusive (April 7, 2004).

76

Chart III-17. Cost and Quality Vary WidelyChart III-17. Cost and Quality Vary WidelyAcross U.S. HospitalsAcross U.S. Hospitals

Coronary Artery Bypass Graft: Observed/Expected Cost vs. Observed/Expected Quality

Outcomes by Hospital

0.0

0.5

1.0

1.5

2.0

0.0 0.5 1.0 1.5 2.0 2.5

Poor Outcomes - Observed/Expected

Co

st p

er C

ase

- O

bse

rved

/Exp

ecte

d

High Quality Low Quality

High Cost

Low Cost

Source: S. Grossbart, "The Business Case for Safety and Quality: What Can Our Databases Tell Us," 5th Annual NPSF Patient Safety Congress, March 15, 2003.

77

Chart III-18. Pharmaceutical Prices in U.S. Exceed Those in Chart III-18. Pharmaceutical Prices in U.S. Exceed Those in Other CountriesOther Countries

Source: G. F. Anderson, D. Shea, P. S. Hussey et al., "Doughnut Holesand Price Controls," Health Affairs Web Exclusive (July 21, 2004).

100

4841

53

100

6052

66

0

20

40

60

80

100

120

United S tates Canada F ranc e United K ingdom

N o U .S. disc ount 20% U .S. disc ountPrice index

Note: Analysis of IMS health data.

Relative Prices of Thirty Pharmaceuticals in Four Countries, 2003

78Chart III-19. High Longitudinal EfficiencyChart III-19. High Longitudinal Efficiency

and Quality Are Compatibleand Quality Are Compatible(Applies to selections of providers and treatment options)(Applies to selections of providers and treatment options)

Higher LowerMD Longitudinal Efficiency Index

(total cost per case mix-adjusted treatment episode)

MD

Qu

ali

ty I

nd

ex

(ou

tco

me

s o

r %

ad

he

ren

ce

to

EB

M)

High QualityLow TCO(Dream Suppliers)

High QualityHigh TCO

L

ow

er

Hig

he

r

50th %ile

50th %ile

TCO is total cost of ownership. It refers to the average stream of total health care spending over the course of alongitudinal episode of care, adjusted for case mix/severity of illness incurred for a particular provider's patients.

Source: A. Milstein, "Restorers, Skin-grafters & Calibrators: A Five-Year Forecast for Large Employer Cost Sharing,"data from Regence Blue Shield; Health System Change Patient Cost Sharing Conference, 12/3/2003.

Low QualityHigh TCO(Nightmare Suppliers)

Low QualityLow TCO

79

Although there are numerous challenges facing the U.S. health care system, transformation is possible. In the minds of health care opinion leaders,* enhanced performance is not unrealistic, and viable policies for improving access, quality, and efficiency are attainable. Currently, 18 percent of the under-65 population is without health insurance. According to a Commonwealth Fund Health Care Opinion Leaders survey released in March 2005, the proportion of uninsured can and should be reduced by more than half in 10 years (Chart IV-1).

Respondents to the survey believe that health expenditures will need to increase somewhat as a percentage of GDP (Chart IV-1). But they also believe that there are effective ways to cut health care costs. According to a survey released in May 2005, these leaders consider pay-for-performance to be the most effective means to reduce health care costs.

Conclusion. The Time Is RipeConclusion. The Time Is Ripefor Improvementfor Improvement

* Health care opinion leaders answering the Fund's survey include widely recognizedU.S. experts in health care policy, finance, and delivery with a variety of perspectivesand expertise.

80

In addition, a majority of respondents believe enhanced disease management and primary care case management would effectively reduce unnecessary utilization of health care services. Respondents were also enthusiastic about use of evidence-based guidelines, and nearly half rated expanding the use of information technology as an extremely or very effective means of controlling use of unnecessary services (Chart IV-2).

Promising strategies for improving affordability and achieving savings also include the following:

– Management of high-cost care

– Selection of medical home and improved access to primary care and preventive services

– Better information on provider quality and total costs of care

– Development of networks of high-performing providers under Medicare, Medicaid, and private insurance

– Limits on family premium and out-of-pocket costs as a percent of income (e.g., 5 percent of income for low-income individuals)

– Expanded group coverage and reinsurance

81

Medicare, which comprised one-fifth of all personal health care spending in 2003 (MedPAC 2004), is a major payer and therefore an important driver of change. The Centers for Medicare and Medicaid Services (CMS) conducts and sponsors demonstration projects in order to evaluate the effect of new interventions and to inform policy decisions. Large majorities of respondents who participated in an online survey of U.S. health care experts favor leveraging Medicare to speed the adoption of electronic medical records and health information technology (Chart IV-3). Innovations in the private sector are also important for promoting high-quality, high-efficiency, and cost-effective care.

The Commission on a High Performance Health System will seek opportunities to change the delivery and financing of health care to improve system performance and will identify public and private policies and practices that would lead to those improvements. It will explore mechanisms for financing improved health insurance coverage and investments in the nation's capacity for quality improvement, including reinvesting savings from efficiency gains.

82

Chart IV-1. Transformation Is PossibleChart IV-1. Transformation Is Possible

18% 15%

63%

9%8%16%

65%

0%

20%

40%

60%

80%

Proportion of under-65population that has no

health insurance

Total cost of health careas a percentage of GDP

Percent of under-65population with

employer-providedinsurance

Maximum % of income aconsumer should spend

for out-of-pocketexpenses and

premiums

Current Goal

Source: Commonwealth Fund Health Care Opinion Leaders Survey, February 2005.

"What you would see as both an achievable anda desirable target or goal for policy action for the next 10 years?"

Note: Goal percentages represent median responses.

Asked as a current target, not a ten-year

goal

83Chart IV-2. Health Care Leaders: Pay-for-PerformanceChart IV-2. Health Care Leaders: Pay-for-Performance

Is Most Effective Way to Reduce Health Care CostsIs Most Effective Way to Reduce Health Care Costs

31%

44%

46%

52%

56%

57%

Have patients pay a substantially higher share of theirhealth care costs

Have all payers, including private insurers, Medicare,and Medicaid, adopt common payment methods and

rates

Expand the use of information technology

Use evidence-based guidelines to determine when atest or procedure should be done

Improve disease management and primary care casemanagement

Reward more efficient and high-quality medical-careproviders

Source: Commonwealth Fund Health Care Opinion Leaders Survey, April 2005.

"How effective do you think each of these possible actionswould be to reduce health care costs?"

(Percent saying extremely or very effective)

84Chart IV-3. Health Policy Experts Suggest Various Chart IV-3. Health Policy Experts Suggest Various Changes to MedicareChanges to Medicare

67%

67%

67%

67%

87%

89%

Eliminating the two-year waiting period for coverageof the disabled

Having Medicare offer its own comprehensive benefitpackage as an alternative to Medigap or Medicare

Advantage

Raising taxes to ensure Medicare’s long-termsolvency

Allowing those under age 65 to contribute to aMedicare savings account

Using Medicare’s leverage to reward providers forperformance on quality and efficiency

Using Medicare leverage to accelerate adoption ofelectronic medical records and health information

technology

Source: Commonwealth Fund Health Care Opinion Leaders Survey, July 2005.

"Do you favor or oppose changing Medicare in the following ways?"(Percent who favor…)

85

ReferencesReferences

Baile, W. and J. Aaron. “Patient–Physician Communication in Oncology: Past, Present, and Future.”Current Opinion in Oncology. 17(4). (July 2005): 331.

Collins, S. et al. “Opinion: Proposals for Health Policy.” Inquiry. 42. (Spring 2005): 6.

Cutler, D. and M. McClellan. “Is Technological Change in Medicine Worth It?” Health Affairs. 20(5). (Sept/Oct 2001): 11.

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Davis, K. et al. Mirror, Mirror on the Wall: Looking at the Quality of American Health Care Through the Patient’s Lens.(New York, The Commonwealth Fund, Jan. 2004).

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Gilmer, T. and R. Kronick. “It's the Premiums, Stupid: Projections of the Uninsured Through 2013.” Health AffairsWeb Exclusive. April 5, 2005.

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Schoen, C. et al. "Insured But Not Protected: How Many Adults Are Underinsured?" Health Affairs Web Exclusive.June 14, 2005.

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