Thinking about Healthcare Reform: Key Facts

The vast majority of Americans get their coverage through their employers. 1

• Over 160 million people (62 percent of the nonelderly) have employer coverage.

Most employers offer coverage to their employees. 2

• 99 percent of large employers with 200 or more employees and 94 percent of firms with 50-199 employees offer coverage.
• Even among smaller firms, most employers offer coverage, including 90 percent of firms with 25-49 employees and 78 percent of firms with 10-24 workers.

A government-run health plan is unnecessary in reform and will cause many people to lose the current employer coverage they are happy with.

• Lewin estimates up to 119 million people would shift into a new government plan almost overnight. 3
  

Employers heavily subsidize their employees’ coverage. 4

• The average employer subsidy is 84 percent for individual coverage and 73 percent for family coverage.

The employee share of premium costs has remained stable despite increases in actual payments.

• Employees are now responsible for a slightly lower percentage of total premiums for employee coverage compared with 10 years ago (16 percent in 2007 versus 20 percent in 1996). The percentage paid for family coverage has also been stable (28 percent in 2007 versus 27 percent in 1996). 5

The government will underpay providers either on day one or in a few years, resulting in long waits for services and difficulty finding providers.

• 29 percent of Medicare beneficiaries who responded to a survey said they had problems finding a doctor. 6
• Only 38 percent of Texas primary care doctors take new Medicare patients. 7
  

Government underpayments will continue to drive up the cost of private insurance and shift more people into the government plan - until it is the only option.

• Medicare provider payments are now 20 percent less for doctors and 30 percent less for hospitals than what private insurers pay. 8
• Cost shifting by the government currently increases the cost of private family coverage by $1,788 per year. 9
  

Variations in Cost and Quality

A large portion of U.S. healthcare spending goes toward substandard care.

• Approximately 30 percent of all healthcare dollars go toward ineffective, redundant or inappropriate care. 10
  
• Only 54 percent of acute care and 56 percent of chronic care conform to medical literature. 11
  
• Between 44,000 and 98,000 Americans die from medical errors annually. 12
  
• Medical errors kill more people per year than breast cancer, AIDS or motor vehicle accidents. 13
  
• An estimated 1.5 million preventable adverse drug events occur each year in the United States. 14
  

Healthcare utilization and spending vary widely across the United States.

• Medicare spending in New Jersey for the last two years of life is nearly $40,000, compared with $24,000 in Idaho. 15
  
• Use of beta blockers within 24 hours of admission for heart attack — a nationally recognized standard of care — occurs only 50 percent of the time in Alabama, compared with 86 percent of the time in New Hampshire. 16
  
• The average Medicare beneficiary in Mason City, Iowa, makes two visits to specialists in the last six months of life, compared with 25 visits for the average beneficiary in Miami, Fla. 17
  
• Knee replacement surgery occurs 50 percent more often in Eau Claire, Wis., than in Phoenix, Ariz. 18
  
• In Fort Myers, Fla., the rate of Medicare enrollees undergoing hip replacement procedures was 45 percent higher than the national average, while in Miami, the procedure rate was 37 percent lower than the national average. 19
  

Cost Impact of Chronic Disease

The prevalence of chronic disease is a key factor in escalating healthcare costs.

• Six in 10 adults over the age of 18 have at least one chronic condition. 20
  
• Current estimates indicate that one in three Americans will develop diabetes over the course of his or her lifetime. 21
  
• Healthcare expenditures for diabetics are estimated to be two-and-a-half times greater than healthcare expenditures for non-diabetics 22
• medical costs related to diabetes were over $92 billion in 2002. 23
  
• The cost of treating chronic illness accounts for 75 percent of healthcare spending. 24
  
• A 20 percent increase in the share of Medicare patients receiving treatment for five or more chronic conditions accounted for virtually all growth in Medicare spending from 1987-2002. 25
  
• Obesity costs $36.5 billion annually. 26
  
• 33 percent of adults are obese; 14 percent of children ages 2–5 are overweight, as are 18 percent of children ages 6–11 and 17 percent of those ages 12–19. 27
  
• With the current rise in obesity rates, one-fifth of all healthcare expenditures will go toward treating the consequences of obesity by 2020. 28
  

Preventing and managing chronic conditions saves money.

• Improvements in health-related behavior and treatment for the seven most common chronic diseases (cancer, diabetes, heart disease, hypertension, pulmonary conditions, stroke and mental disorders) could cut the annual cost impact by $217 billion in 2023. 29
  

Overview of the Uninsured

The uninsured population is a diverse group.

• Over half of the uninsured (25 million) are ineligible for public programs but may have difficulty affording coverage. 30
  
• One-fourth of the uninsured (12 million) are eligible but not enrolled in public programs such as Medicaid and SCHIP — and 74 percent of all uninsured children are eligible but not enrolled in public programs. 39
  
• One-fifth of the uninsured population earns relatively higher incomes and may be able to afford coverage on their own. 31
  
• The mortality rate for the uninsured is 25 percent higher than for people with health insurance. 32
  
• The aggregate, annualized cost of diminished health and shorter life spans of the uninsured is between $65 billion and $135 billion. 33
  

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Footnotes

1. EBRI Issue Brief No. 321, September 2008.
2. Kaiser/HRET Employer Survey, 2008.
3. Lewin Group, 2009.
4. Kaiser/HRET Employer Survey, 2008.
5. CMS, National Health Expenditures, 2006.
6. MedPAC, 2008
7. Texas Medical Association, 2008
8. Lewin Group, 2009
9. Milliman, 2008
10. McGlynn et al., 2003
11. Institute of Medicine, 2000
12. Institute of Medicine, 2000
13. Institute of Medicine, 2007
14. Dartmouth Atlas Project, 2006
15. Health Affairs, 2004
16. Wennberg and Skinner, 2002
17. Wennberg, 2007
18. Weinstein, Health Affairs, July 2004
19. Agency for Healthcare Research and Quality, 2008
20. Narayan, V. Journal of the AMA, Vol. 290, No. 14: 2003
21. Selby, J.V. et al. (199 7). Excess Costs of Medical Care for Patients with Diabetes in a Managed Care Population. Diabetes Care, 20(9). 1 396 -14 02.
22. Centers for Disease Control. National Diabetes Fact Sheet. Retrieved January 23, 2007 from http://www.cdc.gov/diabetes/pubs/estimates.htm.
23. Anderson and Knickman, 2001
24. Thorpe, et al., 2005
25. Thorpe, et al., 2005
26. Thorpe, et al., 2005
27. Sturm, R., et al. RAND Corporation, 2007. http://www.rand.org/pubs/research_briefs/RB9043-1/.
28. DeVol, Ross; Bedroussian, Armen. An Unhealthy America: The Economic Burden of Chronic Disease – Executive Summary and Research Findings, Milken Institute, October 2007. i-ii.
29. Urban Institute, 2006
30. Urban Institute, 2006
31. Urban Institute, 2006
32. EBRI. EBRI Issue Brief No. 310. October 2007.
33. EBRI. EBRI Issue Brief No. 310. October 2007.