Committee for Economic Development Comm 2000 L Street N.W., Suite 700 A StatementStatement bbyy tthehe Washington, D.C. 20036 RResearchesearch aandnd PPolicyolicy 202-296-5860 Main Number 202-223-0776 Fax CCommitteeommittee ooff tthehe 1-800-676-7353 CCommitteeommittee fforor EEconomicconomic DDevelopmentevelopment www.ced.org A Statement by the Research and Policy Committee of the Committee for Economic Development i Quality, Aff ordable Health Care for All Moving Beyond the Employer-Based Health-Insurance System Includes bibliographic references ISBN #0-87186-187-9 First printing in bound-book form: 2007 Printed in the United States of America COMMITTEE FOR ECONOMIC DEVELOPMENT 2000 L Street, N.W., Suite 700 Washington, D.C., 20036 202-296-5860 www.ced.org Contents Purpose of Th is Statement . xi Executive Summary . 1 I. Introduction. 9 Why Another CED Statement on Health Care?. 9 Is the U.S. Health-Care System Failing? Performance Standards for a Nation’s Health-Care System . 10 Does the American Health-Care System Meet Th ese Standards? . 11 Why Is Employer-Based Health Insurance Declining?. 12 Th e Causes of High and Rising National Health Expenditures . 12 EBI Costs Cause Major Problems for Employers . 14 Employer Responses to Date Have Not Solved the Problem . 15 Buyers Cannot Hold Th eir Health Expenditure to Sustainable Growth Rates. 16 Conclusion . 18 II. Why 35 Years of “Band-Aids” on a Fundamentally Flawed System Did Not Work. 21 Why One Popular Idea – the Consumer-Directed Health Plan – Will Not Work. 24 Consumer Direction . 24 High-Deductible Health Insurance. 24 Why Canada’s “Single-Payer” System or “Medical Care for All” Will Not Solve Our Health-Care Problems. 27 Many Other Current Favorite Ideas Are Being Oversold as Solutions in Th emselves; Others Would Not Work . 29 Conclusion . 31 III. What Might an Equitable, Effi cient, Universal Health-Care Financing and Delivery System Look Like?. 33 Goals. 33 Sustainability. 34 Incentives Alignment and Effi ciency . 34 Continuous Improvement and the Learning Organization . 35 Integration and Coordination of Care. 35 iii Match Resources Used to the Needs of the Population Served . 36 Supply-Chain Management . 36 Market Reorganization to Streamline Administration and Customer Service . 36 Quality and Eff ectiveness . 37 Reorganize Around Medical Conditions, Not Medical Specialties. 37 Reorganize for Chronic-Care Management . 37 Health Promotion and Disease Prevention . 38 Regional Centers for Complex Care . 38 End-of-Life Care. 38 Core Competencies Th at Are Not Encouraged by the Traditional Model Are Urgently Needed . 38 Eff ectiveness . 38 Access to Quality Coverage. 39 Conclusion . 40 IV. Essentials of Market-Based Universal Health Insurance with Consumer Choice of Health Plan . 41 Competitive Insurance Markets and Exchanges. 42 Th e Need for a Market Organizer. 42 What the Market Organizer Must Do. 43 Universal Premium Credits . 46 Health-Care Financing and Delivery Systems Pursue Quality and Aff ordability . 47 Th e Cost of a Reformed Health-Insurance System . 48 Eff ects on the Health-Care Industry . 49 Care Providers . 49 Insurers . 49 Employers . 50 Labor Unions . 50 States and Localities . 50 Conclusion . 51 V. How Might We Get Th ere? A Path to Consumer-Choice-Driven Universal Health Insurance in Feasible Incremental Steps. 53 Phase I: Building the Foundations for Responsible Choice . .53 iv Phase II: Progressively Expand Coverage . 58 Phase III: Achieve Market-Based Universal Health Insurance . 61 Conclusion . 62 Appendix A. CED’s 2002 Policy Statement – Has It Made a Diff erence for Health-Care Reform? . 65 Conclusion . 67 Appendix B. Th e Traditional Fee-for-Service-Indemnity Model of Health-Care Finance Is a Major Cause of Rising Costs . 69 How the Fee-for-Service Model Works . 69 Inappropriate Care and Variation in Practice Patterns . ..