U.S. Health Reforms to Improve Access, Outcomes and Value: International Insights and Innovative Policies Cathy Schoen Senior Vice President The Commonwealth Fund One East 75th Street New York, NY 10021 cs@cmwf.org http://www.commonwealthfund.org Invited Testimony Senate Special Committee on Aging September 30, 2009 This testimony draws on Commonwealth Fund work authored by Karen Davis and Commonwealth Fund colleagues and benefits from their comments. The research assistance of Kristof Stremikis and David Squires and the editorial assistance of Chris Hollander of The Commonwealth Fund are gratefully acknowledged. The views presented here are those of the author and not necessarily those of The Commonwealth Fund or its directors, officers, or staff. U.S. HEALTH REFORMS TO IMPROVE ACCESS, OUTCOMES, AND VALUE: INTERNATIONAL INSIGHTS AND INNOVATIVE POLICIES ORAL STATEMENT AND EXECUTIVE SUMMARY Thank you, Mr. Chairman and members of the Committee, for the invitation to testify regarding insights for the United States from international experiences with health care system reforms to improve access, outcomes, and value. As the U.S. confronts the urgent need for federal action to expand and improve access and to slow the increase in health care costs for families, employers, and the public sector, we might well ask how other countries insure everyone, achieve outcomes that rival or exceed those in the U.S., and yet spend far less than we do. The U.S. stands out among wealthy, industrialized nations for: our failure to cover everyone; our expensive, complex, and inefficient insurance system; our fragmented health care delivery systems with weak primary care foundations; our lack of information; and incentives to increase the volume of health services irrespective of quality of care or outcomes. We are the only country with high rates of uninsured and underinsured, where even the insured can face cost-related access barriers and financial stress or bankruptcy if they become sick. Such concerns are “made in America”—that is, virtually all other high-income, advanced industrialized countries have adopted health insurance policies that guarantee coverage for the entire population, access to care, and financial protection, with an emphasis on protecting those individuals who are vulnerable because of poor health or low income. Moreover, they do so at far lower cost, and achieve health outcomes that are often comparable to or better than those in the U.S. The U.S. leads the world in health spending, with costs projected to continue rising far faster than incomes over the next decade if trends continue. Health care spending, at $2.5 trillion or $7,290 per person, already consumes 17 percent of our nation’s gross domestic product (GDP), and it is more than twice what other major high- income, industrialized countries spend. If trends continue, health spending as a percentage of our GDP will likely reach 21 percent by 2020. Compared to other industrialized countries, we spend about twice as much per person. As a share of national resources (GDP), we spend from one-and-a-half to two times as much as other countries—and the gap has been widening since 1980, particularly in the past five years. Relatively higher-cost countries, such as Germany and Canada, have moderated their 2 spending growth relative to income, while countries with lower spending, such as the United Kingdom, have increased outlays as a matter of deliberate public policy. As other countries adopt innovative policies to improve performance, incorporate incentives to enhance value, and harness markets and competition in the public interest, we as a nation have opportunities to learn from these international strategies and reforms. The key question confronting U.S. policymakers contemplating national reforms is how to expand coverage to everyone and slow the growth in health care costs while maintaining or improving the quality of care. Looking at other countries, it is clear that each has developed, and continues to develop, its own approach, with policies and health systems evolving from their unique histories and institutions. Similarly, the U.S. will need to craft policies and adapt changes that fit our history, institutions, and values. Still, we can learn from the values and strategies that cut across diverse countries and from examples of incentives, policies, and practices that contribute to higher performance. The international experience provides insight regarding the potential direction and effectiveness of U.S. insurance, payment, and delivery system reforms. Five lessons from the international experience stand out: • Payment Policies: Prices, Purchasing Power, Information, and Incentives In addition to its health insurance gaps, the U.S. is notable for paying higher prices than other countries, including very high prices for more specialized care, and for incentives to do more irrespective of value. Unlike other countries with multiple payers and competing insurers—such as Germany, Switzerland, and the Netherlands—we lack a mechanism to coordinate payment policies so that price signals are coherent, or a way to use group purchasing power to move in the same direction. In more monopolized markets, U.S. private insurers often act as price-takers to maintain networks and pass through higher prices, with a mark-up for marketing, administrative costs, and margins. As a result, the U.S. tends to pay higher prices for specialized services, including prescription drugs—particularly brand-name drugs without generic options. A recent McKinsey study found the U.S., compared with other developed countries, pays 50 percent more for comparable drugs and pays for a more expensive mix of drugs, leading to total costs that are twice as high as expected—amounting to some $98 billion in excess spending per year. 3 • Primary Care: Payment, Incentives, and Infrastructure Overall, the U.S. stands out for its weak primary care foundation and poorly coordinated care. Most striking is that other countries have insurance systems that promote continuity in care, including long-term relationships with physicians, and provide the choice of all primary care practices in the community. Many encourage or require patients to identify a “medical home” to serve as their principal source of primary care and to coordinate specialist care when needed. After-hours cooperatives take over for primary care physicians at nights and on weekends in several countries. Most fundamentally, other countries make primary care financially and physically accessible to their residents. Insurance designs emphasize coverage of primary care with low or no cost-sharing for preventive care and essential medications for chronic illnesses. Such value-based benefit designs provide positive incentives for patients, lower financial barriers for highly effective care, and align patient incentives with efforts to hold clinicians accountable for high-quality, effective care. The U.S. relies on market incentives to shape its health care system, yet other countries are more advanced in providing financial support and incentives to primary care physicians that target quality of care. Incentives and targeted support for primary care in other countries include: extra payments for adding nurses to care teams, payment for e- mail consults, and enhanced visit payments for after-hours care. Providers receive financial incentives for enrolling patients and for offering chronic care services such as patient self-management education. Several countries pay physicians in a way that narrows the spread between primary care physicians’ and specialists’ income, especially compared to the widening gaps in the U.S. Countries that have traditionally paid on a fee- for-service basis are increasingly moving toward a mixed payment method that includes a per-patient monthly allotment for providing access, coordination, and team-based care and for serving as a “medical home,” as well as fees for visits or incentives for quality. • Information Systems to Inform, Guide, and Drive Innovation Other countries have made investments to promote the adoption and use of electronic health information technology with the capacity for information exchange. As of 2006, one-fourth of U.S. primary care physician report using electronic medical records, compared with nearly all primary care physicians in the Netherlands, New Zealand, and the U.K. Primary care physicians in other countries also increasingly have health IT featuring an array of functionality, a result of efforts by these countries to build on their IT capacity. When assessed against 14 different functions of advanced 4 information capacity, one of five U.S. primary care physicians reported having at least seven of the 14 functions, compared with 60 percent to 90 percent of physicians in the Netherlands, Australia, the U.K., and New Zealand. The wide differences reflect these other nations’ efforts to standardize and promote use of health IT, often through financial incentives. • Comparative Information and Transparency In addition to using assessments of clinical effectiveness to inform medical decisions and insurance benefit designs, several countries are developing rich comparative information systems on performance. In Germany, peers visit hospitals whose quality is substandard and enter into a “dialogue” about why that is the case. The Netherlands and the U.K. are also investing in transparency in reporting quality data, including patients’ experiences. In both countries, this information is posted on public Web sites and fed back to clinicians. The U.K. publishes extensive information on hospital quality and surgical results by hospital and surgeon. • Insurance-Related Complexity and Administrative Costs As currently structured, the U.S. health insurance system also generates high insurance-related administrative and overhead costs—for insurers as well as for doctors and hospitals. On a per-person basis, the U.S. spends more than twice as much for the net costs of insurance administration. Varying benefit designs, marketing costs, churning in and out of coverage, underwriting, and insurance profit margins also contribute to higher overhead costs. A recent McKinsey study estimates such complexity—including multiple reporting requirements—accounts for some $90 billion in excess costs each year. And this does not count the internal costs to physician practices in time and staff resources to cope with complex variations. Conclusion In summary, several core strategies span diverse countries, although each country has evolved its own approach. These include: • Coverage for everyone: an explicit national goal and shared value o Insurance designs emphasize access, financial protection, and value o Insurance provides foundation for payment and system reforms • Payment policies that emphasize value and use group-purchasing power, and that promote primary care, prevention, and effective care of chronic disease 5 • System reforms that harness markets and competition in the public interest and provide information to spur improvement performance and innovation o Market rules that focus competition on quality and efficiency o In multipayer systems, joint efforts to move in the same direction o Information systems to inform, guide, and drive change and innovation • Leadership, goals, and targets o In countries with multiple payers and competing insurers, this includes provisions for public and private participation. Insurance reform is fundamental for access and financial protection. Other countries provide evidence that it also can serve as a base for a more rational payment system and for incentives that reward value, not volume. Coherent prices and payment policies that support effective and efficient care are critical for markets to work, as is information. Investing in comparative information and assessment and advanced clinical information systems are instrumental to inform, guide, and drive innovation. These core strategies cut across other countries and have fueled reforms designed to meet the health needs of their populations. The time has come for the U.S. to move forward on behalf of the health and economic security of current and future generations. We have the benefit of being able to draw from multiple examples of international strategies, as well as care systems here in the U.S. that achieve high quality at lower cost. We can learn from diverse international experiences as nations innovate to provide accessible, high-quality, and efficient care. By enacting national reforms that take strategic steps to put the nation on a path to high performance, we have the opportunity to reap a high return for the health of the population and the economy. 6 U.S. HEALTH REFORMS TO IMPROVE ACCESS, OUTCOMES, AND VALUE: INTERNATIONAL INSIGHTS AND INNOVATIVE POLICIES Cathy Schoen The Commonwealth Fund Thank you, Mr. Chairman and members of the Committee, for the invitation to testify regarding insights for the United States from international experiences in health care system reform to improve access, outcomes, and value. As the U.S. confronts the urgent need for federal action to expand and improve access and to slow the increase in health care costs for families, employers, and the public sector, we might well ask how other countries insure everyone, achieve health outcomes that rival or exceed those in the U.S., and yet spend far less than we do. The U.S. stands out among wealthy, industrialized nations for: our failure to cover everyone; our expensive, complex, and inefficient insurance system; our fragmented health care delivery systems and weak primary care foundation; our lack of information; and incentives that increase the volume of health services irrespective of quality of care or outcomes. We have opportunities to learn from international strategies and reforms as countries adopt innovative policies to improve performance, incorporate incentives to enhance value, and harness markets and competition in the public interest. Today, I’d like to review what we know about the U.S. health system compared to the health systems of other countries, and then highlight policies and examples of recent innovations that address concerns central to U.S. health reforms. Policies and practices as well as strategic approaches draw from Denmark, France, Germany, the Netherlands, and the United Kingdom. Recent reforms in these countries plus innovative practices illustrate a variety of approaches for addressing the challenge of simultaneously achieving better access, higher quality, and greater efficiency. The Only Major Industrialized Country Without Universal Coverage, the U.S. Spends Far More on Health Care but Does Not Get Commensurate Return in Value Currently, 46 million Americans are uninsured and at least 75 million adults and children are without coverage at some time during the year.1,2 If trends continue, we could see 61 million uninsured by 2020 (Figure 1).3 Twenty-five million more are underinsured, meaning their coverage leaves them exposed to high medical care costs compared to their incomes when they are sick.4 An estimated 42 percent of all adults under age 65 were 7 either uninsured or underinsured in 2007, before the start of the recession. Insurance is becoming ever-less affordable as premiums have doubled and incomes stagnated: premiums are up by 108 percent since 2000, compared to a 32 percent increase in workers’ wages and a 24 percent increase in general inflation (Figure 2). The steady rise in health insurance costs has occurred despite a marked increase in cost-sharing. Rising costs directly contribute to eroding coverage and stress businesses as well as federal, state, and local government budgets. With coverage eroding even for those with insurance, 72 million adults ages 18 to 64 face problems paying medical bills or are paying off past medical debt—including a sharp increase among middle-class families.5 Such concerns are “made in America”—that is, virtually all other high-income, advanced industrialized countries have adopted health insurance policies that guarantee coverage for the entire population, access to care, and financial protection, with an emphasis on protecting those who are vulnerable because of poor health or low income. Moreover, they do so at far lower costs and achieve outcomes that are often comparable to or better than those in the U.S. The U.S. leads the world in health care spending, with costs projected to continue rising far faster than incomes over the next decade, if trends continue. Health spending, at $2.5 trillion or $7,290 per person, already consumes 17 percent of the nation’s gross domestic product (GDP). If trends continue, health spending as a percent of GDP will likely reach 21 percent by 2020.6 Compared to other industrialized countries, we spend about twice as much per person. As a share of national resources (GDP), we spend from one-and-a-half to two times more—and the gap has been widening since 1980, particularly in the past five years (Figure 3).7 Relatively higher-cost countries, such as Germany and Canada, have moderated their health spending growth relative to income, while countries with lower spending, such as the U.K., have increased outlays as a matter of deliberate public policy. With such a high investment, the U.S. should expect to lead on health outcomes and care experiences. Yet we fall short of achievable benchmarks for access, quality, and efficiency.8,9 Indeed, on some key indicators we are falling behind, as other countries improve faster.10 The U.S. is now in last place, behind 18 other high-income countries, on mortality amenable to health care before age 75—in other words, deaths that are potentially preventable with timely, effective health care or early efforts to screen and prevent the onset of disease.11 Although U.S. death rates declined by 4 percent over five years (1997–98 to 2002–03), other countries achieved much faster declines, averaging 16 8 percent over the same period (Figure 4). The difference between the U.S. and the countries with the lowest mortality rates amounts to 100,000 premature, potentially preventable deaths each year. Within the U.S., mortality rates from conditions amenable to health care—such as diabetes—are higher in states with high uninsured rates, high rates of readmissions to hospitals, and low levels of preventive care.12 Our infant mortality rates are high and our healthy life expectancy is low by international standards.13 U.S. adults are also more likely than adults in other nations to report medical errors, duplicative tests, and care coordination gaps, and to lack rapid access to primary care or care after regular hours without going to the emergency room. These contrasts indicate the U.S. could improve health and promote healthy lives with insurance reforms, a stronger emphasis on prevention and primary care, and health care delivery system reforms.14 All advanced industrialized countries face rising costs from technological change, including costly new pharmaceutical products, and aging populations with often complex chronic disease. Indeed, the population in most European countries already has the age distribution that the U.S. will experience in 20 years. Nor is the difference in spending attributable to rationing care or shortages of physicians. In fact, the U.S. has lower rates of hospitalization and shorter hospital stays than most other countries and fewer visits to physicians each year.15 Physician-to-population ratios in the U.S. are also similar to or lower than what they are in other countries. At the same time, more U.S. physicians are specialists and subspecialists.16 Research both within the U.S. and across countries has shown that health care spending is higher and health outcomes worse when there is a lower ratio of primary care physicians to specialists and a weak, less-accessible primary care foundation.17 The resulting fragmented, highly specialized U.S. health care system generates poorly coordinated care that puts patients at risk and wastes resources. U.S. payment incentives reward doing more irrespective of health benefits or costs—a recipe for spending more without getting higher value in return. The fractured U.S. health insurance system further erodes performance and undermines efforts to move in a new direction. The U.S. stands out among other countries in its failure to provide everyone with health coverage, with benefits that ensure access and financial protection. Those with insurance increasingly face high cost-sharing or benefit limits that put them at risk. The fractured insurance system and benefit designs together undermine health system 9 performance by erecting cost barriers to timely, effective care and weakening primary care. Half of chronically ill U.S. adults report not getting needed care because of the cost—a rate far higher than seen in other countries (Figure 5). And sicker patients in the U.S., whether insured or uninsured, are far more likely to report high out-of-pocket costs (Figure 6).18 Forty-two percent of chronically ill U.S. adults who were insured all year went without needed care because of the cost. Among all U.S. adults, 30 percent of those with insurance and 34 percent of those without spent more than $1,000 for the year in 2007—much higher than in any other country.19 In addition to failing to guarantee financial access to care, the U.S. also fails to ensure accessible and coordinated care. The U.S. stands out for the proportion of its adults who report either having no regular doctor or having been with their physician for a short period.20 This reflects in part high churning in and out of health plans: one third (32%) of U.S. adults changed plans in the past three years, and 14 percent did so more than once in a 2007 cross-national survey. In the U.S., coverage linked to employment, in addition to managed care plans with restricted networks, exacerbates poor continuity of care, since people often need to change physicians when they change jobs or their employers change coverage. Keys to Reform: Lessons from the International Experience The key question confronting U.S. policymakers contemplating national reforms is how to expand health insurance coverage to everyone and slow the growth in health care costs while maintaining or improving the quality of care. Looking at other countries, it is clear that each has developed, and continues to develop, its own approach, with policies and health systems evolving from their unique histories and institutions. Similarly, the U.S. will need to craft policies and adapt changes that fit its history, institutions, and values. Still, we can learn from values and strategies that cut across diverse countries and from examples of incentives, policies, and practices that contribute to higher performance. The international experience provides insight regarding the potential direction and effectiveness for U.S. insurance, payment, and delivery systems reforms. Payment Policies: Prices, Purchasing Power, Information, and Incentives In addition to its health insurance gaps, the U.S. is notable for paying higher prices than other countries, including very high prices for more specialized care, and for incentives to do more irrespective of value. Unlike other countries with multiple payers and competing insurers—such as Germany, Switzerland and the Netherlands—the U.S. lacks a mechanism to coordinate payment policies so that price signals are coherent, or a way to 10 use group purchasing power to move in the same direction. In more monopolized markets, U.S. private insurers often act as price-takers to maintain networks and pass through higher prices, with a mark-up for marketing, administrative costs, and margins. As a result, the U.S. tends to pay higher prices for specialized services, including prescription drugs, particularly brand-name drugs without generic options.21 Studies indicate that higher prices plus a more expensive mix of prescription medications have contributed to rapid increases and higher spending per person in the U.S. than in other countries over the past decade (Figure 7). Although in 1995 the U.S. started out near what other countries spend per capita on prescription drugs, by 2007 we were far higher than the next-highest country. In all countries, advances in medical treatments and technology, including medications, create an upward pressure on costs. Many countries have responded by using group purchasing power and “reference pricing” to moderate increases, particularly where alternatives exist (Figure 8). A recent McKinsey study found the U.S. pays 50 percent more for comparable drugs and pays for a more expensive mix of drugs than do other developed countries, leading to total costs that are twice as high as expected—some $98 billion per year.22 Other nations’ governments typically either negotiate on behalf of all residents to achieve lower prices or use reference-pricing differentials in insurance designs to drive the market to lower prices.23,24 The U.S. also tends to pay specialists more and pay more for surgical devices, such as hip and knee prostheses.25 Increasingly, other countries are assessing comparative information on clinical effectiveness and costs to inform insurance benefit design and develop incentives for markets to work while ensuring access. For example, France covers prescription drugs at multiple cost-sharing levels, with the lowest tier for highly effective medications, including expensive drugs if these are the only options (Figure 9). Germany and Denmark use reference pricing where multiple medications exist in a class—with full coverage at the reference price.26 This practice has helped gain lower prices from manufacturers, with regular updates. In the U.S., private insurers regularly use formularies and vary cost- sharing without disclosing the rationale or underlying prices. However, other countries with independent comparative assessment centers share information with all insurers and make assessments publicly available to physicians and patients, with regular updates.27 Countries with multiple payers, such as Germany, the Netherlands, and Switzerland, have also established mechanisms for paying for care that allow more 11 coherent policy changes over time. These policies also make it possible to ask what the price is or the total cost of care is for patients and providers. Such information is essential for markets to function. In contrast, prices in the U.S. vary for the same service in the same community by insurer and by hospital, with little rational relationship to resource costs or value and outcomes. Using several state examples, one observer notes the result in the U.S. is “chaos” behind a veil of secrecy.28 Primary Care: Payment, Incentives, and Infrastructure Overall, the U.S. stands out for its weak primary care foundation and poorly coordinated care.29 Studies indicate that inadequate primary care undermines timely access to care, preventive care, and control of chronic conditions and contributes to the avoidable use of emergency rooms or hospital admissions and readmissions stemming from preventable complications. The contrast between the U.S. and other countries reflects insurance and payment policies, including the relative value placed on primary care, prevention, and promoting health rather than treating disease. Most strikingly, other countries have insurance systems that promote continuity in care and provide patients with the choice of all primary care practices in the community. Many encourage or require patients to identify a “medical home,” which is their principal source of primary care and is responsible for coordinating specialist care when needed. When U.S. adults are asked whether they would value having a central source of care where the staff knows them and helps coordinate their care, their responses are similar to those of adults in other countries—with 80 percent saying having such a relationship is very important (Figure 10). Country differences in care arrangements and the relative undersupply of primary care physicians show up in patterns of care. Along with Canada, which also faces primary care concerns, U.S. adults are less likely to report having same-or next-day access to their physicians when sick and are more likely to seek care in emergency rooms (Figure 11). Only one-fourth of U.S. and Canadian adults with chronic illness said they saw their doctor the same day the last time they needed medical attention, compared with nearly half or more in the U.K., New Zealand, and the Netherlands. In contrast, the U.S. has comparatively shorter waiting times for elective surgery or specialists than some other countries, although German and Dutch adults also report rapid access to specialized care in recent surveys.30 12 U.S. adults are also more likely than those in several other countries to find it difficult to get care on nights and weekends without going to the emergency room. Forty percent of U.S. adults say getting such care is very difficult, compared to less than one of five in several other countries (Figure 12). In the U.S., 59 percent of adults reported going to the ER during the year, often several times. The contrast with the Netherlands is notable. Just 15 percent of Dutch adults report it is difficult to get care after-hours without going to the emergency room, and Dutch ER use is relatively low. In a 2006 survey of primary care physicians, only 40 percent of U.S. physicians said that they have an arrangement for after-hours care, compared with nearly all primary care physicians in the Netherlands (Figure 13). The sharp differences reflect Dutch payment policies that emphasize primary care, plus recent initiatives that established after-hour cooperatives to provide round-the-clock access.31 U.S. patients face a fragmented health care system with often poor care coordination. More things can go wrong when care is provided by multiple parties and coordination is lacking. In a 2008 survey of chronically ill patients in eight countries, U.S. adults were more likely to report medical errors—particularly errors related to incorrect lab and diagnostic tests and delays in hearing about abnormal results (Figure 14). They were also more likely to report duplicative tests and records and test results that were not available at the time of their appointments.32 In a separate survey, nearly half (47%) of U.S. adults reported one of the following experiences in the prior two years: their physician ordered a test that had already been done; their physicians failed to provide important medical information or test results to other doctors or nurses involved in their care; or they did not hear about results of diagnostic tests (Figure 15).33 The weak U.S. primary care foundation reflects the way we insure and pay for care as well as the way we organize care. A rich array of international policies and reforms aims to strengthen and transform primary care and improve care for those with chronic disease. Most fundamentally, other countries make primary care financially and physically accessible to their residents. Insurance designs emphasize coverage for primary care, with low or no cost-sharing for preventive care and essential medications for chronic illness. In countries with cost-sharing at the point of care, insurance designs typically limit or cap total cost exposure. France lowers or eliminates cost-sharing for those with low-income, the disabled, and for specific chronic, severe illnesses—especially for chronic care 13 treatment plans. Germany limits cost-sharing to 2 percent of income for the general population and 1 percent for people with chronic conditions (Figure 16). Denmark and France lower cost-sharing for very effective yet expensive drugs. In effect, these policies strive for value-based benefit designs that ensure access and provide incentives for essential effective care. By providing positive incentives for patients to seek effective care, such designs align patient incentives with efforts to hold clinicians accountable. Many countries, including the Netherlands, Denmark, and the U.K., encourage or require patients to identify a “medical home,” which is their principal source of primary care and is responsible for coordinating specialist care when needed. Similar to the U.S., Germany and France have historically operated with care systems with self-referrals to specialists. To encourage stronger relationships with primary care providers and enable new payments for accountable primary care practices, France and Germany have recently introduced incentives for both patients and physicians. French and German patients opting to designate a primary care source to coordinate care face lower cost-sharing when they need more specialized care, and their physicians receive extra payments.34 The U.S. relies on market incentives to shape its health care system, yet other countries are more advanced in providing primary care doctors with financial support and incentives targeted on quality of care. Only 30 percent of U.S. primary care physicians report having the potential to receive financial incentives targeted on quality of care, including the potential to receive payment for: reaching clinical care targets, achieving high patient ratings, managing chronic disease or patients with complex needs, providing preventive care, or undertaking quality improvement activities (Figure 17). In contrast, nearly all primary care physicians in the U.K. and over 70 percent in Australia and New Zealand report the availability of such incentives. The high rates in the U.K. and other countries reflect direct incentives as well as supplemental support for primary care practices. The U.K. General Practitioner Contract in April 1, 2004, provided bonuses to primary care physicians for reaching quality targets, including improved outcomes for chronic disease (Figure 18). Follow-up studies indicate that financial incentives change physician behavior and support improvement.35,36 Incentives and targeted support for primary care in the Netherlands include extra payments to add nurses to care teams, payment for e-mail consults, and enhanced visit 14 payments for after-hours care. Recent Dutch national reforms blend capitation, fees for consultations, and payments for performance. The Maastricht Transmural Diabetes Organization in the Netherlands also started a program that offers financial incentives to general practitioners as well as patients to encourage participation in a system of chronic care designed to improve coordination of care and appropriate provision. In 2006, this was adapted to a number of disease management pilots. In 2000, Germany launched disease management programs and clinical guidelines for chronic care. Providers receive financial incentives for enrolling patients and for offering chronic care services, such as patient self-management education. Early results show positive effects on quality (Figure 19).37 Also, an experiment involving an all- inclusive global fee for paying for cancer care is under way in Cologne. In addition to a blend of capitation and consultation fees (including fees for e-mail consults), Denmark and the Netherlands have initiated after-hours cooperatives that take over for primary care physicians at night and on weekends. These cooperatives rely on community physicians and nurses to provide off-hours services. A patient’s personal physician receives a record of care and contact the next day. Although the Danish and Dutch systems work differently, both are integrated with community practices to provide 24/7 access to advice and care. The Dutch cooperatives are recent, set up by national legislation in 2000/2003 (Figure 20).38 The U.K. and several other countries are also looking to urgent care centers, with efforts to link care through information systems.39 Several countries also pay physicians in a way that narrows income differences between primary care physicians and specialists, especially compared to the widening gaps in the U.S. Denmark may be the extreme, in that it is seeking roughly similar net income levels. Danish specialists are salaried and employed by hospitals; primary care physicians own their own practices. Countries that have strong primary care foundations, such as the Netherlands and Denmark, tend to pay for care on a per-patient basis, with primary care physicians serving as gateways for referrals to more specialized care. These countries, as well as others that have traditionally paid providers on a fee-for-service basis, are increasingly moving toward a mixed-payment method that includes a per-patient monthly allotment 15 for providing access, coordination, and team-based care and for serving as a “medical home,” as well as fees for visits or incentives for quality. These and other payment innovations and infrastructure efforts increase the attractiveness of primary care practice to medical students and support a focus on prevention and population health. In contrast, the U.S. tends to pay mainly for visits or procedures and fails to pay in a way that supports care teams, 24-hour access, time spent with patients, or efforts to coordinate care. Without payment reforms and incentives to strengthen and transform primary care, the U.S. health system is at risk of further weakening an already fragile community care system. Medical students are increasingly choosing to specialize, deterred by the hours, multiple demands, and relatively lower pay of primary care.40 Information Systems to Inform, Guide, and Drive Innovation In the U.S., physicians are highly trained, and hospitals are well equipped compared with hospitals in some other countries.41 Similar to the U.S., many other countries operate with small physician practices and an organizational divide across sites of care. In fact, fully integrated care systems rare. To bridge the divide and support clinicians, other countries have made investments to promote the adoption and use of electronic health information technology with the capacity for information exchange. As of 2006, one-fourth of U.S. primary care physician report using electronic medical records (EMRs), compared with nearly all primary care physicians in the Netherlands, New Zealand, and the U.K. Primary care physicians in other countries also increasingly have health IT featuring an array of functionality, a result of efforts by these countries to build on their IT capacity. When assessed against 14 different functions of advanced information capacity (EMR, EMR access to other doctors, access outside office, access by patient; routine use electronic ordering tests, electronic prescriptions, electronic access to test results, electronic access to hospital records; computerized reminders; prescription drug alerts; prompts for test results; easy to list diagnosis, medications, patients due for care), one of five U.S. primary care physicians reported having at least seven of the 14 functions, compared with 60 percent to 90 percent of physicians in the Netherlands, Australia, the U.K., and New Zealand (Figure 21). The wide differences reflect national efforts to standardize and promote use, often with financial incentives. An assessment of information systems in 10 countries ranks Denmark at the top, and concludes that countries with a single unifying organization to set standards and be responsible for serving as an information repository have the highest rates of information 16 system functionality.42 Danish physicians, whether seeing patients through the off-hours service or during regular hours, are supported by a nationwide health information exchange featuring a portal supported by government funds and standards set by a nonprofit organization MedCom (Figure 22). The portal is a repository of electronic prescriptions, lab and imaging orders and test results, specialist consult reports, and hospital discharge letters—all accessible to patients and authorized physicians and home health nurses. It captures 87 percent of all prescription orders, 88 percent of hospital discharge letters, 98 percent of lab orders, and 60 percent of specialist referrals. Denmark is rated as one of the best countries on primary care, as measured by high levels of first- contact accessibility, patient-focused care over time, a comprehensive package of services, and coordination of care when services have to be provided elsewhere.43 All Danish primary care physicians (except a few near retirement) are required to have an EMR system, and 98 percent do. Danish physicians are paid about $8 for e-mail consultations with patients, a service that is growing rapidly. The easy accessibility of physician advice by phone or e-mail together with electronic systems for prescriptions and refills have cut down markedly on both physician time and patient time. Primary care physicians save an estimated 50 minutes a day from information systems that simplify their tasks, a return that easily justifies their investment in a practice information technology system (Figure 23).44 Comparative Information and Transparency In addition to assessing clinical effectiveness to inform clinical decisions and benefit designs, several countries are developing rich comparative information systems on performance. Germany’s national hospital quality benchmarking provides real-time quality information on all 2,000 German hospitals, with over 300 quality indicators for 26 conditions (Figure 24). Peers visit hospitals whose quality is substandard and enter into a “dialogue” about why that is the case. Typically, within a few years all hospitals come up to high standards. The Netherlands and the U.K. are also investing in transparency in reporting quality data, including patient experiences. In both countries, this information is posted on public Web sites and fed back to clinicians (Figure 25). The U.K. publishes extensive information on hospital quality and surgical results by hospital and surgeon. These countries emphasize choice and look to competition as well as collaboration to improve. The combination of payment incentives focused on value, 17 information, group purchasing power, and insurance for the entire population are systemic policies that seek to make markets work in the public interest. Insurance-Related Complexity and Administrative Costs The complex and fragmented U.S. insurance system makes it difficult to bring about such cohesion among payers. In addition, the U.S. insurance system as currently structured generates high insurance-related administrative and overhead costs—for insurers and for doctors and hospitals. On a per-person basis, the U.S. spends more than twice as much for the net costs of insurance administration (Figure 26). Varying benefit designs, marketing costs, churning in and out of coverage, underwriting, and insurance profit margins also contribute to higher overhead costs. In the Netherlands and Switzerland, countries that operate with multiple, competing private insurance plans, insurers average about 5 percent of premiums for overhead and margins, compared to an average 15 percent or more in the U.S.45 Studies of insurance-related administrative costs for U.S. health care providers indicate that insurance complexity is also taking a toll on medical practices’ time and resources and is driving up their costs as well. Recent studies estimate physician practices spend $31 billion—the equivalent of 10 to 12 percent of total practice revenue—on billing and insurance-related administrative costs, which include three weeks a year of physician time per practitioner (Figure 27).46 Hospitals spend 6 to 10 percent on just these two items of insurance-related administrative activities. If standardization could cut such overhead in half, there would be $15 billion to $20 billion in savings per year for physicians and $25 billion to $40 billion in savings per year for hospitals.47 The recent McKinsey study estimates that such complexity—including multiple reporting requirements—accounts for some $90 billion in excess costs per year.48 Other countries with competing insurers, including Germany, the Netherlands, and Switzerland, have enacted market reforms, including more-standardized benefit designs and a prohibition on health-risk rating, to focus insurer competition on total costs and quality—rather than risk segmentation. The much lower costs reflect simpler design and insurance market mechanisms that make it easy to compare and choose among competing options. All three countries define national core benefits, with insurance designs that ensure financial protection. All require insurers to accept everyone and prohibit premium variations based on health risks. Each has adopted a form of risk- adjustment to avoid penalizing a plan with a reputation for high quality and positive outcomes for sicker patients. In the Netherlands, for example, the risk-fund mechanism 18 pays a plan more if it attracts older, chronically ill, or otherwise high-health-risk beneficiaries. The risk adjustment can be substantial (Figure 28). Each of these countries operates a type of insurance exchange that offers a choice of plans. National policies provide market oversight and transparent posting of benefits and premiums that facilitate choice. By simplifying benefit designs and precluding underwriting for health risks, these countries operate with much lower insurance marketing, underwriting, and related administrative costs than in the U.S. In Germany, insurance cards, for example, are bar-coded, which makes it easy to track cost-sharing and facilitates the payment of providers. Conclusion We have the world’s costliest health care system, yet we fail to provide everyone with access to care—and we fall far short of what should be possible given our health workforce and medical care resources. The good news is there is ample room to improve, and we have international as well as internal examples of health systems and policies that yield equivalent or better outcomes and better experiences at lower cost.49 Several core strategies span diverse countries, although each country has evolved its own approach. These include: • Coverage for everyone: an explicit national goal and shared value o Insurance designs emphasize access, financial protection and value o Insurance provides foundation for payment and system reforms • Payment policies that emphasize value and use group purchasing power, and that promote primary care, prevention, and effective care of chronic disease • System reforms that harness markets and competition in the public interest and provide information to spur improvement performance and innovation o Market rules focus competition on quality and efficiency o In multipayer systems, joint efforts to move in the same direction o Information systems to inform, guide, and drive change and innovation • Leadership, goals and targets o In countries with multiple payers and competing insurers, this includes provisions for public and private participation. These strategies are strikingly similar to key strategies identified by The Commonwealth Fund’s Commission on a High Performance Health System in its call to 19 action and vision of concrete policies that could move the U.S. in a new, more positive direction.50,51 Insurance reform is fundamental for access and financial protection. Other countries provide evidence that it also can serve as a base for a more rational payment system and for incentives that reward value, not volume. Coherent prices and payment policies that support effective and efficient care are critical for markets to work, as is information. Investing in comparative information and assessment and advanced clinical information systems are instrumental to inform, guide, and drive innovation. These core strategies cut across other countries and have fueled reforms designed to meet the health needs of their populations. Moving forward in other countries required bold action; many of the initial foundation reforms were difficult to achieve politically. But national governments and policy leaders responded to the needs of their populations at historic moments and took action. By covering everyone and incorporating incentives and reforms that focus on value, other countries have continued to invest and innovate to provide access to high– quality, innovative care systems with an emphasis on patient-centered, effective, and efficient care. There is an urgent need for the U.S. to take bold steps to address the rising costs of health care and to ensure everyone access to care with financial security. We cannot afford to continue on our present course as rising costs undermine federal as well as family and business budgets and put the nation’s health and productivity at risk. The time has come for the U.S. to move forward on behalf of the health and economic security of current and future generations. We can learn from diverse international experiences as nations innovate to provide accessible, high-quality, and efficient care. By enacting national reforms that take strategic steps to put the U.S. on a path to a high performance system, there is the opportunity to reap a high return for the health of the population and the economy. 20 Notes 1 C. DeNavas-Walt, B. D. Proctor, and J. C. Smith, Income, Poverty, and Health Insurance Coverage in the United States: 2008 (Washington: U.S. Census Bureau, Sept. 2009). 2 K. Davis, K. Stremikis, C. Schoen, S. R. Collins, M. M. Doty, S. D. Rustgi, and J. L. Nicholson, Front and Center: Ensuring that Health Reform Puts People First (New York: The Commonwealth Fund, June 2009). 3 Commonwealth Fund Commission on a High Performance Health System, The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way (New York: The Commonwealth Fund, Feb. 2009). 4 C. Schoen, S.R. Collins, J. L. Kriss, and M. M. Doty, “How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007,” Health Affairs Web Exclusive, June 10, 2008:w298–w309. 5 S. R. Collins, J. L. Kriss, M. M. Doty, and S. D. Rustgi, Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families: Findings from the Commonwealth Fund Biennial Health Insurance Surveys, 2001–2007 (New York: The Commonwealth Fund, Aug. 2008). 6 Commonwealth Fund Commission on a High Performance Health System, The Path to a High Performance U.S. Health System. 7 Data from OECD 2009. 8 Commonwealth Fund Commission on a High Performance Health System, Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2008 (New York: The Commonwealth Fund, July 2008). 9 P. S. Hussey, G. F. Anderson, R. Osborn et al., “How Does the Quality of Care Compare in Five Countries?” Health Affairs, May/June 2004 23(3):89–99; C. Schoen, R. Osborn, P. T. Huynh, M. M. Doty, J. Peugh, and K. Zapert, “On the Front Lines of Care: Primary Care Doctors’ Office Systems, Experiences, and Views in Seven Countries,” Health Affairs Web Exclusive (Nov. 2, 2006):w555–w571; C. Schoen, R. Osborn, M. M. Doty, et al., “Toward Higher-Performance Health Systems: Adults’ Health Care Experiences in Seven Countries, 2007,” Health Affairs Web Exclusive (Oct. 31, 2007):w717–w734; C. Schoen, R. Osborn, S. K. H. How, M. M. Doty, and J. Peugh, “In Chronic Condition: Experiences of Patients with Complex Health Care Needs, in Eight Countries, 2008,” Health Affairs Web Exclusive (Nov. 13, 2008):w1–w16. 10 E. Nolte and C. M. McKee, “Measuring the Health of Nations: Updating an Earlier Analysis,” Health Affairs, Jan./Feb. 2008 27(1):58–71; E. Nolte, C. Bain, and M. McKee, “Diabetes as a Tracer Condition in International Benchmarking of Health Systems,” Diabetes Care, May 2006 29(5):1007–11. 11 E. Nolte and C. M. McKee, “Measuring the Health of Nations.” 12 J. C. Cantor, C. Schoen, D. Belloff, S. K. H. How, and D. McCarthy, Aiming Higher: Results from a State Scorecard on Health System Performance (New York: The Commonwealth Fund, June 2007); D. McCarthy, S. K. H. How, C. Schoen, J. C. Cantor, and D. Belloff, Aiming Higher: Results from the 2009 State Scorecard on Health System Performance (New York: The Commonwealth Fund, forthcoming Oct. 2009). 13 Commonwealth Fund Commission on a High Performance Health System, Why Not the Best? 14 C. Schoen et al., “In Chronic Condition.” 15 G. F. Anderson and B. K. Frogner, Health Spending in OECD Countries: Obtaining Value per Dollar, Health Affairs, Nov./Dec. 2008 27(6):1718–27. 16 G. Anderson and P. Markovich, Multinational Comparisons of Health Systems Data, 2008 (New York: The Commonwealth Fund, Nov. 2008). 17 J. S. Skinner, D. O. Staiger, and E. S. Fisher, “Is Technological Change in Medicine Always Worth It? The Case of Acute Myocardial Infarction,” Health Affairs Web Exclusive, Feb. 7, 2006, w34–w47.; B. 21 Starfield, L. Shi, and J. Macinko, “Contribution of Primary Care to Health Systems and Health,” The Milbank Quarterly, 2005 83(3):457–502. 18 C. Schoen et al., “In Chronic Condition.” 19 C. Schoen, R. Osborn, M. M. Doty, M. Bishop, J. Peugh, and N. Murukutla, “Toward Higher- Performance Health Systems: Adults' Health Care Experiences in Seven Countries, 2007,” Health Affairs Web Exclusive, Oct. 31, 2007, 26(6):w717–w734. 20 Ibid. 21 P. M. Danzon and M. F. Furukawa, “International Prices and Availability of Pharmaceuticals in 2005,” Health Affairs, Jan./Feb. 2008 27(1): 221–33. 22 G. F. Anderson et al., “Doughnut Holes and Price Controls,” Health Affairs Web Exclusive (July 21, 2004):w396–w404; Gerard Anderson et al., “It’s the Prices, Stupid: Why the United States is So Different from Other Countries,” Health Affairs, May/June 2003 22(3):89–105. 23 McKinsey Global Institute, Accounting for the Costs of U.S. Health Care: A New Look at Why Americans Spend More (New York: McKinsey Global Institute, Nov. 2008). 24 C. Sorenson, C. Mudsisill, E. Mossialos, and S. Glied, et al., Pharmaceutical Pricing and Coverage in Seven European Nations: Policy Levers and Mechanisms, Working Paper, Nov. 12–14, 2008, prepared for the 2008 Commonwealth Fund International Symposium on Health Care Policy. 25 L. W. Haase, The Century Foundation, presentation at Outpatient Outlook 2007: The Future of Healthcare on “Health Care Reform and Outpatient Care,” March 13, 2007. In 2004, U.S. payments for hip and knee implants were 50 percent to 200 percent higher than in Germany, France, Italy, or the U.K. Data based on Millennium Research, Bernstein Research, and MGI analysis. 26 For a brief description of Germany, see T. Cheng and U. Reinhardt, “Shepherding Major Health Systems Reforms: A Conversation with German Health Minister Ulla Schmidt,” Health Affairs, April 8, 2008. 27 S. Thomson and E. Mossialos, Primary Care and Prescription Drugs: Coverage, Cost Sharing, and Financial Protection in Six European Countries (New York: The Commonwealth Fund, forthcoming 2009); C. Sorenson, The Use of Comparative Effectiveness Research for Evidence-Based Policy and Value for Money: A Six-Country Comparison of Drug Coverage and Pricing Decisions (New York: The Commonwealth Fund, forthcoming 2009). 28 U. E. Reinhardt, “The Pricing of U.S. Hospital Services: Chaos Behind a Veil of Secrecy,” Health Affairs, Jan./Feb. 2006 25(1):57–69. 29 B. Starfield, L. Shi, and J. Macinko, “Contribution of Primary Care to Health Systems and Health,” Milbank Quarterly 2005 83(3):457–502. 30 C. Schoen et al., “Toward Higher-Performance Health Systems”; C. Schoen et al., “In Chronic Condition.” 31 R. Grol et al., “After-Hours Care in the U.K., the Netherlands and Denmark: New Models,” Health Affairs, Nov/Dec. 2006 25(6):1733–37. 32 C. Schoen et al., “Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries,” Health Affairs Web Exclusive (Nov. 3, 2005):w509–w525. 33 S. K. H. How, A. Shih, J. Lau, and C. Schoen, Public Views on U.S. Health System Organization: A Call for New Directions (New York: The Commonwealth Fund, Aug. 2008). 34 S. Thomson and E. Mossialos, Primary Care and Prescription Drugs; C. Schoen et al., “Focus on Health System Foundations: Primary Care Physician Experiences and Perspectives in Eleven Countries, 2009,” Health Affairs, forthcoming 2009. 35 T. Doran, C. Fullwood, H. Gravelle et al., “Pay-for-Performance Programs in Family Practices in the United Kingdom,” New England Journal of Medicine, July 27, 2006 355(4):375–84 22 36 S. Campbell, et al. “Effects of Pay for Performance on Quality of Primary Care in England,” New England Journal of Medicine, July 23, 2009:361(4):368–78. 37 M. Hallek, “Typical Problems and Recent Reform Strategies in German Health Care—With Emphasis on the Treatment of Cancer,” presentation to the Commonwealth Fund International Symposium, Nov. 2, 2006. 38 R. Grol et al., “After-Hours Care in the U.K., the Netherlands and Denmark.” 39 C. Schoen et al., “Taking the Pulse of Health Care Systems”; C. Schoen et al., “On the Front Lines of Care.” 40 T. Bodenheimer, K. Grumbach, and R. A. Berenson, “A Lifeline for Primary Care,” New England Journal of Medicine, June 25, 2009 360(26):2693–96. 41 C. Schoen et al., 2003 Commonwealth Fund International Health Policy Survey of Hospital Executives (New York: The Commonwealth Fund, Sept. 2004); R. J. Blendon, C. Schoen, C. DesRoches, R. Osborn, and K. Zapert, ”Common Concerns Amid Diverse Systems: Health Care Experiences in Five Countries,” Health Affairs, May/June 2003 22(3):106–21. 42 D. Protti, “A Comparison of Information Technology in General Practice in 10 Countries,” presentation to the Commonwealth Fund International Symposium on Health Care Policy, Nov. 3, 2006; D. Protti, “Comparison of Information Technology in General Practice in 10 Countries,” Healthcare Quarterly, 2007 10(2):107–16. 43 B. Starfield, “Why More Primary Care: Better Outcomes, Lower Costs, Greater Equity,” presentation to the Primary Care Roundtable: Strengthening Adult Primary Care: Models and Policy Options, Oct. 3, 2006. 44 I. Johansen, “What Makes a High Performance Health Care System and How Do We Get There? Denmark,” presentation to the Commonwealth Fund International Symposium, Nov. 3, 2006. 45 R. E. Leu, F. F. H. Rutten, W. Brouwer et al., The Swiss and Dutch Health Insurance Systems: Universal Coverage and Regulated Competitive Insurance Markets (New York: The Commonwealth Fund, Jan. 2009). 46 L. Casalino et al., “What Does it Cost Physician Practices to Interact with Health Insurance Plans?” Health Affairs, July/Aug. 2009 28(4):w533-w543; J. Sakowski et al. “Peering into the Black Box: Billing and Insurance Activities in a Medical Group,” Health Affairs, July/Aug. 2009, 28(4):w544–w554; and J. Kahn et al., “The Cost of Health Insurance Administration in California: Estimates for Insurers, Physicians and Hospitals,” Health Affairs, Nov./Dec. 2005 24(6):1629–39. 47 Authors’ estimate based on 2009 total hospital spending and physician practice estimates. C. Schoen, K. Davis, S. Guterman, and K. Stremikis, Fork in the Road: Alternative Paths to a High Performance U.S. Health System (New York: The Commonwealth Fund, June 2009). 48 McKinsey Global Institute, Accounting for the Costs of U.S. Health Care. 49 Karen Davis et al., Room for Improvement: Patients Report on the Quality of Their Health Care. (New York: The Commonwealth Fund, April 2002); K. Davis et al., Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care (New York: The Commonwealth Fund, May 2007). 50 Commission on a High Performance Health System, A High Performance Health System for the United States: An Ambitious Agenda for the Next President (New York: The Commonwealth Fund, Nov. 2007). 51 Commonwealth Fund Commission on a High Performance Health System, The Path to a High Performance U.S. Health System. 23 FIGURES Figure 1. Health Insurance Coverage and Uninsured Trends 46.3 Million Uninsured, 2008 Uninsured Projected to Rise Uninsured to 61 million by 2020 Military (15%) Employer Millions uninsured (4%) 70 (59%) 61 59 60 60 56 57 58 52 53 55 Individual 49 50 50 47 46 46 48 (9%) 45 42 43 43 40 40 38 Medicaid 30 (14%) 20 Medicare 10 (14%) 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Total population Projected Data: Analysis of the U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement 2001–2009; projections to 2020 based on estimates by The Lewin Group. THE COMMONWEALTH Source: K. Davis, Changing Course: Trends in Health Insurance Coverage, 2000–2008, Hearing on "Income, FUND Poverty, and Health Insurance Coverage: Assessing Key Consensus Indicators of Family Well-Being in 2008," Joint Economic Committee, U.S. House of Representatives, September 10, 2009. Figure 2. Premiums Rising Faster Than Inflation and Wages Cumulative Changes in Components of Projected Average Family Premium as U.S. National Health Expenditures and a Percentage of Median Family Workers’ Earnings, 2000–2009 Income, 2008–2020 Percent Percent 125 Insurance premiums 108% 25% 23% 24% 22% 22% 21% Workers' earnings 20% 21% 100 19% 19% 20% 20% 18% 18% 19% Consumer Price Index 75 15% 50 10% 32% 25 5% 24% 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009* 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 * 2008 and 2009 NHE projections. Data: Calculations based on M. Hartman et al., “National Health Spending in 2007,” Health Affairs, Jan./Feb. 2009 and A. Sisko et al., “Health Spending Projections through 2018,” Health Affairs, March/April 2009. Premiums, CPI and Workers’ earnings from Henry J. Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Annual Surveys, 2000–2009. THE COMMONWEALTH FUND Source: K. Davis, Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums, (New York: The Commonwealth Fund, August 2009). 24 Figure 3. International Comparison of Spending on Health, 1980–2007 Average spending on health Total expenditures on health per capita ($US PPP) as percent of GDP 16 7000 United States Canada 14 6000 Netherlands France 12 Germany 5000 Australia 10 United Kingdom 4000 8 3000 6 United States France 2000 4 Germany Canada 1000 2 Netherlands Australia United Kingdom 0 0 1980 1984 1988 1992 1996 2000 2004 1980 1984 1988 1992 1996 2000 2004 THE COMMONWEALTH FUND Data: OECD Health Data 2009 (July 2009). Figure 4. Mortality Amenable to Health Care U.S. Rank Fell from 15 to Last out of 19 Countries Deaths per 100,000 population * 150 1997/98 2002/03 130 134 128 116 115 113 115 109 106 99 97 97 100 88 89 89 88 81 84 76 103 103 104 110 50 93 96 101 84 84 90 77 80 82 82 71 71 74 74 65 0 li a ria nd es Ca y d n ay d m l ce Au an Sw s en da e k y ga l nd an ai an ec ar an It a do ra at rw an st p ed na la Sp r tu nm nl al re Ja m la St st Ire Au ng No Fr Ze er Fi G er Po De d Ki th G i te w Ne d Ne Un i te Un * Countries’ age-standardized death rates before age 75; from conditions where timely effective care can make a difference. Includes: Diabetes, asthma, ischemic heart disease, stroke, infections screenable cancer. Data: E. Nolte and C. M. McKee, “Measuring the Health of Nations,” Health Affairs, Jan/Feb 2008). THE Source: The Commonwealth Fund Commission on a High Performance Health System, Why Not the Best? Results COMMONWEALTH FUND from the National Scorecard on U.S. Health System Performance, 2008, (New York: The Commonwealth Fund, July 2008). 25 Figure 5. Cost-Related Access Problems Among the Chronically Ill, in Eight Countries, 2008 Base: Adults with any chronic condition Percent reported access problem due to cost in past two years* 60 54 40 36 31 25 26 23 20 13 7 0 NETH UK FR CAN GER NZ AUS US * Due to cost, respondent did NOT: fill Rx or skipped doses, visit a doctor when had a medical problem, and/or get recommended test, treatment, or follow-up. THE Data: The Commonwealth Fund International Health Policy Survey of Sicker Adults (2008). COMMONWEALTH FUND Source: C. Schoen et al., “In Chronic Condition: Experiences of Patients with Complex Healthcare Needs in Eight Countries, 2008,” Health Affairs Web Exclusive, Nov. 13, 2008. Figure 6. Out-of-Pocket Medical Costs in Past Year, 2008 Base: Adults with any chronic condition Percent 100 100 More than US $1,000 Under US $500 81 80 80 72 61 60 57 57 60 43 41 40 40 31 25 20 20 14 20 13 8 4 0 0 UK NETH NZ CAN GER AUS US N Z S S K ER H N U A U U ET C A G N THE Data: 2008 Commonwealth Fund International Health Policy Survey of Sicker Adults COMMONWEALTH FUND Source: C. Schoen et al., “In Chronic Condition: Experiences of Patients with Complex Healthcare Needs in Eight Countries, 2008”, Health Affairs Web Exclusive, November 13, 2008. 26 Figure 7. Pharmaceutical Spending per Capita: 1995, 2007 Adjusted for Differences in Cost of Living $210 NETH $422 1995 $228 AUS 2007 $431 $317 GER $542 $335 FR $588* $319 CAN $691 $385 US $878 $0 $200 $400 $600 $800 $1,000 THE *2006 COMMONWEALTH FUND Source: OECD Health Data 2009. Figure 8. Pharmaceutical Price Indices, 2005 Manufacturer Prices at Exchange Rates Relative to US Prices (US = 100) 120 111 102 100 100 81 80 75 74 72 69 69 67 59 56 60 40 20 0 lia ile l ly in y n o ce a S. K. i az ad an ic pa Ita a U. ra U. Ch an Sp ex Br m n Ja st Fr Ca M er Au G Data: World Development Indicators, 2005; and authors’ calculations based on data from IMS Health MIDAS THE database, 2005. COMMONWEALTH FUND Source: P.M. Danzon and M.F. Furukawa, “International Prices And Availability Of Pharmaceuticals In 2005,” Health Affairs, 27, no. 1 (2008): 221-233. 27 Figure 9. Cost Sharing and Protection Mechanisms for Outpatient Prescription Drugs in Six European Countries, 2008 Country Outpatient prescription drugs Exemptions Annual caps on out-of- pocket spending Denmark Deductible: DKK520 ($93) per 12-month period. Children <18. People with very low income and terminally-ill Chronically-ill people: Co-insurance: varies depending on 12-month drug costs above people can apply for financial assistance. The reimbursement DKK 3,805 ($678). the deductible; DKK520-1,260 ($225): 50%; DKK1,260-2,950 rate may be increased for some very expensive drugs. ($526): 25%; >DKK2,950 ($526): 15%. England Co-payment: £7.10 ($10) per prescription. Children <16, people aged 16-18 in full-time education, people Annual pre-payment aged 60 or over, people with low income, pregnant women and certificate: £102.50 ($147). women who have given birth in the last 12 months; war pensioners, people with certain medical conditions and disabilities, prescribed contraceptives, drugs administered by a GP or at a walk-in centre, drugs for treatment of sexually- transmissible infections. France Co-insurance: 0% for highly effective drugs; 35%, 65% and Co-insurance: People receiving invalidity and work injury Non-reimbursable co- 100% for drugs of limited therapeutic value. benefits, people with one of 30 chronic or serious conditions payments: €50 ($66) per Non-reimbursable co-payment: €0.50 ($0.6) per prescription. (for that condition only), low income people. person per year for all Non-reimbursable co-payments: Children <18 and low income health care, not just people. prescription drugs. Germany Co-insurance with minimum and maximum co-payment: 10% of Children <18. No charge for drugs that are at least 30% below For all cost sharing: 2% of the cost of drugs priced between €50 ($66) and €100 ($130), with the reference price (around 40% of drugs). household income (1% for a minimum of €5 ($6.5) and a maximum of €10 ($13) per chronically-ill people). prescription, plus costs above a reference price (about 7% of Household income is drugs). calculated as lower for dependants. Netherlands None. N/A N/A Sweden Deductible: SEK900 ($105) in a 12-month period. None. 12-month cap: SEK4,300 Co-insurance: varies depending on 12-month drug costs above ($500). the deductible; SEK900-1,700 ($198) – 50%; SEK1,700-3,300 ($384) – 25%; SEK3,300-4,300 ($500) – 10%; >SEK4,300 ($500) – 0%. THE COMMONWEALTH FUND Source: S. Thompson and E. Mossialos, Primary Care and Prescription Drugs: Coverage, Cost Sharing and Financial Protection in Six European Countries, (New York: The Commonwealth Fund, forthcoming 2009). Figure 10. Strong Public Support for Having A “Medical Home”: Accessible, Personal, Coordinated Care When you need care, how important is it that you have one practice/clinic where doctors and nurses know you, provide and coordinate the care that you need? Percent very or somewhat important Very Important Somewhat Important 100 15 17 18 12 15 20 16 75 50 80 78 78 78 84 80 74 25 0 AUS CAN GER NETH NZ UK US THE Source: 2007 Commonwealth Fund International Health Policy Survey. C. Schoen, et al. “Toward Higher COMMONWEALTH FUND Performance Health Systems: Adults’ Experiences in Seven Countries, 2007,” Health Affairs Web Exclusive, Oct. 31, 2007. 28 Figure 11. Access to Doctor When Sick or Needed Care, 2008 Base: Adults with any chronic condition Percent Same-day appointment Any ER use in past 2 years 80 80 60 64 59 60 54 60 53 48 43 42 45 39 40 41 40 36 40 26 26 26 20 20 0 0 TH NZ UK GER FR AUS CAN US TH GER UK FRA NZ AUS US CAN NE NE THE Data: 2008 Commonwealth Fund International Health Policy Survey of Sicker Adults COMMONWEALTH FUND Source: C. Schoen et al., “In Chronic Condition: Experiences of Patients with Complex Healthcare Needs in Eight Countries, 2008”, Health Affairs Web Exclusive, November 13, 2008. Figure 12. Difficulty Getting Care After Hours Without Going to the Emergency Room Base: Adults with any chronic condition who needed after-hours care Percent reported very difficult getting care on nights, weekends, or holidays without going to ER 60 40 40 33 34 29 20 20 20 15 15 0 NETH GER NZ UK FR CAN AUS US THE Data: 2008 Commonwealth Fund International Health Policy Survey of Sicker Adults COMMONWEALTH FUND Source: C. Schoen et al., “In Chronic Condition: Experiences of Patients with Complex Healthcare Needs in Eight Countries, 2008”, Health Affairs Web Exclusive, November 13, 2008. 29 Figure 13. Primary Care Doctors: Practice Has Arrangement for After- Hours Care to See Nurse/Doctor, 2006 Percent 100 95 90 87 81 76 75 50 47 40 25 0 NETH NZ UK AUS GER CAN US THE Data: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians. COMMONWEALTH FUND Source: Schoen et al., “On The Front Lines of Care: Primary Care Doctors' Office Systems, Experiences, and Views in Seven Countries,” Health Affairs Web Exclusive, Nov. 2, 2006. Figure 14. U.S. Chronically Ill Patient Experiences: Access, Coordination & Safety, 2008 Base: Adults with any chronic condition Percent reported in past 2 years: AUS CAN FR GER NETH NZ UK US Access problem due to cost* 36 25 23 26 7 31 13 54 Coordination problem** 23 25 22 26 14 21 20 34 Medical, medication, or lab error*** 29 29 18 19 17 25 20 34 *Due to cost, respondent did NOT: fill Rx or skipped doses, visit a doctor when had a medical problem, and/or get recommended test, treatment, or follow-up. **Test results/records not available at time of appointment and/or doctors ordered test that had already been done. ***Wrong medication or dose, medical mistake in treatment, incorrect diagnostic/lab test results, and/or delays in abnormal test results. THE Data: 2008 Commonwealth Fund International Health Policy Survey of Sicker Adults COMMONWEALTH FUND Source: C. Schoen et al., “In Chronic Condition: Experiences of Patients with Complex Healthcare Needs in Eight Countries, 2008”, Health Affairs Web Exclusive, November 13, 2008. 30 Figure 15. Poor Coordination: Nearly Half of U.S. Adults Report Failures to Coordinate Care Percent U.S. adults reported in past two years: Your specialist did not receive basic medical information from your 13 primary care doctor Your primary care doctor did not 15 receive a report back from a specialist Test results/medical records were not 19 available at the time of appointment Doctors failed to provide important medical information to other doctors 21 or nurses you think should have it No one contacted you about test results, or you had to call repeatedly 25 to get results Any of the above 47 0 20 40 60 THE COMMONWEALTH FUND Source: Commonwealth Fund Survey of Public Views of the U.S. Health Care System, 2008. Figure 16. Cost Sharing Arrangements and Protection Mechanisms for Outpatient and Inpatient Care in Six European Countries, 2008 Country GP visit Outpatient Inpatient care Exemptions Annual cap on out- specialist visit of-pocket spending Denmark None. None. None. N/A N/A England None. None. None. N/A N/A France Co-insurance: Co-insurance: 30% Co-insurance: Co-insurance: People receiving Non-reimbursable 30% with gate with gate keeping 20%. invalidity and work injury benefits; co-payments: €50 keeping or or 50% Non- people with one of 30 chronic or ($66) for all health 50% Non-reimbursable reimbursable co- serious conditions (for that condition care including Non- co-payment: €1 payment: €16 only); low income people; some prescription drugs. reimbursable ($1.3) per visit ($21) per day up surgical interventions. co-payment: €1 to 31 days per Non-reimbursable co-payments: ($1.3) per visit year. Children <18 and low income people. Germany Co-payment: Co-payment: €10 Co-payment: €10 Children <18 (all cost sharing) and 2% of household €10 ($13) for ($13) for the first ($13) per people who choose gatekeeping income (1% for the first visit visit per quarter inpatient day up (doctor visits). people with chronic per quarter and and subsequent to 28 days per conditions). subsequent visits without year. Household income is visits without referral. calculated as lower referral. for dependants. Netherlands None. Deductible: €150 ($199) per year. Children <18, GP services, mother None. and child care, preventive care dental care for <22. Sweden Co-payment: Co-payment: Co-payment: Up Children <20 in most counties. Adults: SEK900 SEK100-150 SEK200-300 ($24- to SEK80 ($10) ($109) for health ($12-18) per 36) per specialist or per day in services. GP visit. emergency hospital. THE department visit. COMMONWEALTH FUND Source: S. Thompson and E. Mossialos, Primary Care and Prescription Drugs: Coverage, Cost Sharing and Financial Protection in Six European Countries, (New York: The Commonwealth Fund, forthcoming 2009). 31 Figure 17. Primary Care Doctors’ Reports of Any Financial Incentives Targeted on Quality of Care, 2006 Percent reporting any financial incentive* 100 95 79 72 75 58 50 43 41 30 25 0 UK NZ AUS NET GER CAN US * Receive of have potential to receive payment for: clinical care targets, high patient ratings, THE COMMONWEALTH managing chronic disease/complex needs, preventive care, or QI activities FUND Data: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians Figure 18. Effects of Pay-for-Performance on the Quality of Primary Care in England Mean Scores for Clinical Quality at the Practice Level for Aspects of Care for Coronary Heart Disease, Asthma, and Type 2 Diabetes That Were Linked with Incentives and Aspects of Care That Were Not Linked with Incentives, 1998–2007. Quality scores range from 0% (no quality indicator was met for any patient) to 100% (all quality indicators were met for all patients). THE COMMONWEALTH FUND Source: S. Campbell et al., “Effects of Pay for Performance on the Quality of Primary Care in England,” N Engl J Med 2009;361:368-378. 32 Figure 19. Disease Management in Germany • Conditions: Diabetes, COPD, coronary heart disease, breast cancer • Funding from government to 200+ private insurers (sickness funds) – Insurers receive extra risk-adjusted payments to cover patients with these conditions – Insurers pay primary care docs to enroll eligible patients into programs & provide periodic reports back to the docs (the closest to coordination) – Patients: reduced cost sharing if enrolled – Care guideline protocols plus patient education – Country-wide evaluation of results Barmer Ersatzkasse diabetic patients, Disease Management Program Type 1 and Type 2 Participants Non-participants n= 80,745 79,137 Hospitalization due to stroke (per 8.8 12.7 1,000 males) Hospitalization due to stroke (per 7.8 12.4 1,000 females) Need for amputations (per 1,000 5.6 9.1 males) Need for amputations (per 1,000 1.8 4.7 females) At least one eye exam (per 1,000 780 538 patients) THE COMMONWEALTH FUND Source: K. Lauterbach, “Population-based Disease Management Programs in the German Health Care System,” Presented at The Commonwealth Fund 2007 International Symposium on Health Care Policy, Nov. 1, 2007. Figure 20. Innovations in Access “After-Hours” Early Morning, Nights and Weekends • Denmark – County wide physician cooperatives with phone and visit center – Computer connections to medical records – Reduce physician workload • Netherlands – 2000/2003: Cooperatives evening to 8 AM and weekends; Nurse led with physician available – House calls for emergencies – Reduce physician workload and use of emergency rooms • United Kingdom – Some cooperatives developing; walk-in centers – 24 Hour Help Line: NHS Direct • Australia: After-hours primary care program • Multiple points of access: email, electronic medical records THE COMMONWEALTH FUND Source: Grol et al., “After-Hours Care In The U.K. Denmark, and the Netherlands: New Models,” Health Affairs Web Exclusive, Nov./Dec. 2006; Schoen et al., “On the Front Lines of Care,” Health Affairs Web Exclusive, Nov. 2, 2006. 33 Figure 21. Only 28% of U.S. Primary Care Physicians Have Electronic Medical Records; Only 19% Advanced IT Capacity, 2006 Percent reporting 7 or more out of 14 Percent reporting EMR functions* 100 98 92 100 89 87 83 79 75 75 72 59 50 50 42 32 28 25 23 25 19 8 0 0 NET NZ UK AUS GER US CAN NZ UK AUS NET GER US CAN *Count of 14: EMR, EMR access other doctors, outside office, patient; routine use electronic ordering tests, prescriptions, access test results, access hospital records; computer for reminders, Rx alerts, prompt tests results; easy to list diagnosis, medications, patients due for care. THE COMMONWEALTH FUND Data: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians. Source: Schoen et al., “On the Front Lines of Care,” Health Affairs Web Exclusive, Nov. 2, 2006. Figure 22. MedCom – The Danish Health Data Network Messages/Month 1500000 GP´s with EDI : 2120 = 100 % Prescriptions 1400000 1389023 84% 1039105 = 73% Specialists with EDI: 765 = 94 % 1300000 Hospitals with EDI : 63 = 100% 1200000 Pharmacies with EDI: 322 = 100 % Disch. Letters 1131750 85 % 682923 == 94 % 1100000 Doctors on Call : 5 = 100 % 1000000 Health Insurance : 5 = 100 % Lab. reports 102 messages /min 900000 988151 99 543040 = 82 % 800000 700000 600000 Lab Requests 500000 349840 = 85 % 400000 Referrals 300000 177525 = 65 % 200000 Reimbursement 100000 21049 = 99 % 0 92 93 94 95 96 97 98 99 20 O1 O2 O3 O4 O5 O6 O7 O8 THE COMMONWEALTH FUND 34 Figure 23. Why Invest in E-Health? Registries? Denmark Physicians and Patients Example • Doctors: – 50 minutes saved per day in GP practice – Information ready when needed – Telephone calls to hospitals reduced by 66% – E-referrals, lab orders – Patient e-mail consultation, Rx renewal • Patients: – Reduced waiting times, greater convenience – Info about treatments, number of cases – Patients access to own data – Preventive care reminders – Information about outcomes THE COMMONWEALTH FUND Source: I. Johansen, “What Makes a High Performance Health Care System and How Do We Get There? Denmark,” Presentation to the Commonwealth Fund International Symposium, November 3, 2006. Figure 24. National Quality Benchmarking in Germany Size of the project: Ideas and goals: • 2,000 German Hospitals (> 98%) define standards (evidence • 5,000 medical departments based, public) • 3 Million cases in 2005 define levels of acceptance • 20% of all hospital cases in document processes, risks Germany and results • 300 Quality indicators in 26 areas present variation of care start structured dialog • 800 experts involved (national and improve and check regional) THE COMMONWEALTH FUND Source: C. Veit, “The Structured Dialog: National Quality Benchmarking in Germany,” Presentation at AcademyHealth Annual Research Meeting, June 2006. 35 Figure 25. Benchmarking in the Netherlands THE COMMONWEALTH FUND Figure 26. High U.S. Insurance Overhead: Insurance Related Administrative Costs Spending on Health Insurance Administration • Fragmented payers + complexity per Capita, 2007 = high transaction costs and $600 overhead costs $516 – McKinsey estimates adds $500 $90 billion per year* • Insurance and providers $400 – Variation in benefits; lack $300 of coherence in payment $247 $220 – Time and people expense $198 $191 $200 $140 for doctors/hospitals $86 $100 $76 $0 US FR SWIZ NETH GER CAN AUS* OECD * 2006 Median Source: 2009 OECD Health Data (June 2009) THE COMMONWEALTH FUND * McKinsey Global Institute, Accounting for the Costs of U.S. Health Care: A New Look at Why Americans Spend More, (New York: McKinsey Global Institute, Nov. 2008). 36 Figure 27. Complexity Drains Resources: Total Annual Cost to U.S. Physician Practices for Interacting with Health Plans Is Estimated at $31 Billion1 Mean Dollar Value of Hours Spent per Physician per Year on All Interactions with Health Plans MDs $15,767 Clerical staff $25,040 Nursing staff Lawyer/Accountant $21,796 $2,149 Senior administrative $3,522 Total Annual per Practice Cost per Physician: $68,274 THE 1 Based on an estimated 453,696 office-based physicians. COMMONWEALTH FUND Source: L. P. Casalino, S. Nicholson, D. N. Gans et al., “What Does It Cost Physician Practices to Interact with Health Insurance Plans?” Health Affairs Web Exclusive, May 14, 2009, w533–w543. Figure 28. Dutch Risk Equalization System: Calculation of Allocation to Health Plan from Risk Fund Women, 40, jobless with Man, 38 , employed, prosperous disability income allowance, region, no medication or urban region, hospitalised last hospitalisation last year neither any In €’s / yr year for ostéoarthrite chronic disease Age / gender € 934 € 872 Income € 941 -/- € 63 Region € 98 -/- € 67 Pharmaceut. -/- € 315 -/- € 315 costgroup Diagnostic costgroup € 6202 -/- € 130 From Risk Fund € 7800 € 297 THE COMMONWEALTH FUND Source: G. Klein Ikkink, Ministry of Health, Welfare and Sport; Presentation to AcademyHealth Netherlands Health Study Tour on September 22, 2008, “Reform of the Dutch Health Care System.” 37