The Commonwealth Fund 2010 Annual Report A Private Foundation Working Toward a High Performance Health System The Commonwealth Fund, among the first private foundations started by a woman philanthropist—Anna M. Harkness—was established in 1918 with the broad charge to enhance the common good. The mission of The Commonwealth Fund is to promote a high performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults. The Fund carries out this mandate by supporting independent research on health care issues and making grants to improve health care practice and policy. An international program in health policy is designed to stimulate innovative policies and practices in the United States and other industrialized countries. Cover photo: Dwight Cendrowski ii The Commonwealth Fund 2010 Annual Report Working toward the goal of a high performance health care system for all Americans, the Fund builds on its long tradition of scientific inquiry, a commitment to social progress, partnership with others who share common concerns, and the innovative use of communications to disseminate its work. The 2010 Annual Report offers highlights of the Fund’s activities in the past year. 1 Realizing the Potential of Health Reform The landscape of American health care has changed dramatically since the Affordable Care Act was signed in March 2010. In her essay, President Karen Davis takes readers on a journey through the busy months leading to the passage of this historic law and the first stages of its implementation. 49 Modernizing the 990-PF to Advance the Accountability and Performance of Foundations: A Modest Proposal In this essay by Executive Vice President and COO John E. Craig, Jr., traces the history of the Form 990-PF tax return—an annual filing by private foundations—to reveal how its current structure and content came to be. It then analyzes the return’s shortcomings and discusses how the 990-PF could be transformed into a more effective instrument for promoting accountability and best practices in the foundation sector. 73 The Fund’s Mission, Goals and Strategy Program Highlights, 2010 87 Health System Quality and Efficiency 95 Long-Term Care Quality Improvement 102 Patient-Centered Coordinated Care 111 Fellowship in Minority Health Policy 118 Affordable Health Insurance 126 Commission on a High Performance Health System 132 Federal Health Policy 136 State Health Policy and Practices 142 Payment and System Reform 148 Health System Performance Assessment and Tracking 152 International Program in Health Policy and Innovation iii 167 Treasurer’s Report 177 Financial Statements 189 The Fund’s Founders and Benefactors 191 Directors and Staff 197 Grants Approved, 2009–2010 iv 2010 Annual Report President’s Message Realizing the Potential of Health Reform Karen Davis President The Commonwealth Fund Cover photo: Dwight Cendrowski Contents Preface: Realizing the Potential of Health Reform 5 What Is Affordable Health Care? 9 Why Health Reform Must Counter the Rising Costs of Health Insurance Premiums 12 The Costs of Failure: Economic Consequences of Failure to Enact Nixon, Carter, and Clinton Health Reforms 16 Committing to Improvement in All Areas of Health Care 19 Health Reform: Insights from Around the World 20 National Leadership to Achieve a Performance-Driven Health System 23 Forging Health Reform Consensus 27 The Way Forward with Health Reform 31 A New Era in American Health Care 35 Who Is Helped by Health Reform? 37 How Will the Health Care System Change Under Health Reform? 43 Realizing the Potential of Health Reform Karen Davis President Preface The landscape of American health care has changed Once the law passed, the Fund quickly mar- dramatically since the Patient Protection and shaled its resources to help realize the potential of Affordable Care Act was signed in March 2010. the comprehensive health reform by: helping health Federal and state agencies, the health insurance care leaders and the American people understand industry, and others are taking the first steps toward the changes and what they mean for them; inform- achieving the three goals President Obama set forth ing implementation of the reform package and when Congress began crafting reform legislation last assessing its potential to move the United States on year: a path to a high performance health system; and lay- • expand access to affordable health insurance ing the groundwork for future health care delivery for people without coverage; system reforms and health policy action. • make health insurance more affordable for Given the law’s scope and complexity, its poten- those who already have it; and tial is not yet assured. Success will depend on all parties coming together to put the pieces in place, • slow the rise in health care costs for individuals, families, and employers while as well as on careful oversight and tracking of health not adding to the federal budget deficit. system performance. It will also be important to swiftly apply new knowledge gained as innovations Over the course of the heated debate leading to are tested, so that best practices and models can be the health reform bill’s passage, Congress dealt with spread throughout the health system. many difficult political issues: whether to include Some of the long-term questions that need to be a public plan, how to regulate the health insurance addressed as experience is gained include: industry and make coverage affordable, how to • Will stronger measures be required to control Medicare costs, and how to finance reform. control health care costs? As these critical decisions were being made, The • Are the provisions designed to ensure Commonwealth Fund produced a steady stream affordability for families adequate? of timely, on-point research and analysis, while our staff lent their considerable expertise whenever • What is the shared responsibility of called upon. employers? 6 The Commonwealth Fund 2010 Annual Report • Will tighter regulation of the insurance The Costs of Failure: Economic Consequences industry be required? And will a public of Failure to Enact Nixon, Carter, and Clinton insurance plan be needed as a competitive Health Reforms made a powerful case for reform by alternative to private plans? examining trends in health spending over the past • What financing is needed to ensure long- 50 years. The analysis showed that if health reform term sustainability? measures proposed by previous presidents had been enacted and succeeded in slowing spending growth The following essays, published on The by as little as 1.0 or 1.5 percentage points annually, Commonwealth Fund Blog over a one-year period, spending trends in the U.S. would have been closer take readers on a journey through the busy months to those seen in other major industrialized coun- leading to the passage of this historic law and the tries. Moreover, fewer adverse health consequences first stages of its implementation. and economic burdens would have been borne by What Is Affordable Health Care? reviewed American families, businesses, and government. the affordability provisions in the three versions In addressing the stagnation of health plan qual- of the bill under consideration at the time: those ity, Commonwealth Fund Senior Research Advisor proposed in the House of Representatives, the Douglas McCarthy suggested in Committing to Senate Committee on Health, Education, Labor, Improvement in All Areas of Health Care that this and Pensions (HELP), and the Senate Finance plateau might “reflect the limits of what managed Committee. Parsing the bills’ differences in care plans can achieve without integration of care approaching Medicaid program expansion, essential delivery and support for physicians and patients insurance benefits, and premium subsidies for low- in improving quality, as well as the absence of and moderate-income families, this essay stressed a broader commitment to public reporting and the importance of “reaching consensus on what con- improvement.” stitutes affordability and committing the necessary In Health Reform: Insights from Around funds to achieve it.” the World, Fund Senior Vice President Cathy Why Health Reform Must Counter the Rising Schoen, Vice President Robin Osborn, and I dis- Costs of Health Insurance Premiums also tackled cussed how the health reform debate has been affordability, looking at how dramatically pre- informed by health systems in other countries. With mium inflation has outpaced wage increases over a Commonwealth Fund survey of primary care the last decade. Citing Commonwealth Fund and physicians in 11 countries finding U.S. shortcom- Congressional Budget Office analyses, I observed ings in access, quality, health outcomes, and value, that offering a public health insurance plan, along- we called for national leadership to make needed side private plans, to all individuals and employers is reforms in insurance coverage and health care our most effective weapon in combating health care delivery. costs. The essay also considered other cost-contain- National Leadership to Achieve a Performance- ment options, such as a mechanism for negotiating Driven Health System called for developing a set provider payments under all plans—public and of national performance goals and improvement private. targets, along with supporting policies, resources, Realizing the Potential of Health Reform 7 and actions. The