2010 Healthcare Reform Update

1. 2010 Healthcare Reform Update Greg Poulsen Senior Vice President and Chief Strategy Officer Intermountain Healthcare

3. Mortality Amenable to HealthcareDeaths per 100,000 Population Utah Source: World Health Organization, Nolte and McKee, Rutgers Center for State Health Policy Standardized for age (1998) Utah from 2003, normalized for general US change from 1998 3

4. Uwe Reinhardt: A Modest Proposal For Healthcare Reform • Section 1001: No later than January 14, 2011, all Americans are mandated to become Mormons and, henceforth, live like Mormons. • Section 2001: On December 31, 2013, the entire U.S. health system will be sold in a leveraged buyout to Utah’s Intermountain Healthcare. Goldman Sachs will help Intermountain finance the purchase with a U.S. government-guaranteed debt issue floated in Shanghai, China.

5. How do we “encourage” people to change lifestyle? In Afghanistan, alcohol is illegal except for industrial and medicinal purposes Industrial Alcohol Medicinal Alcohol

6. Niels Bohr 6

7. A Remarkable Series of Events Allowed the Senate Win on Christmas Eve. • Democrats gained 9 Senate seats (given that only about 1/3 of Senators are up for election on any given cycle, this is a remarkable swing). Even Democratic optimists only predicted a 7 seat gain • Ted Stevens (R) lost under unusual circumstance in a very conservative state • Al Franken’s (D) very tight win • Etc.

8. Senator Edward KennedyFebruary 22, 1932 – August 25, 2009 Special Election, January 19, 2010 8

9. News Flash: January 10, 2010 “Democrat Martha Coakley, buoyed by her durable statewide popularity, enjoys a solid, 15-percentage-point lead over Republican rival Scott Brown as the race for US Senate enters the homestretch, according to a new Boston Globe poll of likely voters.” 9

10. News Flash: January 15, 2010 “…in the last two days the bottom has fallen out of her poll numbers.” 10

11. News Flash: January 19, 2010 Mr. Brown Goes to Washington 11

12. Political Party Mood Chart Euphoric Happy Sad Miserable

13. The Bills – With Reconciliation

14. What’s In The Bill: Insurance Individual mandate Premium and cost-sharing subsidies Employer responsibility “Guaranteed Issue” Insurance exchange Expand Medicaid/CHIP Payment reform

15. CBO Estimated Cost and Revenues Billions Source: CBO Report, March 18, 2010

18. What’s In The Bill: Delivery Generate comparative effectiveness research Create “Independent Payment Advisory Board” Enhance Medicare primary care payment by 10% Reduce other Medicare payments Develop approaches to enhanced quality evaluation and reporting Dramatically modify Medicare Advantage payment Payment reform pilots for Medicare Medical Home Bundled Payment Accountable Care Organization

19. Payment Reform – Accountable Care Organizations • Allow providers to organize as accountable care organizations (2012) • Accountable care organizations are groups of physicians and other providers that take responsibility for all of a patient’s needs • For Medicare purposes, accountable care organizations only “share” savings (they are not premium or capitation based entities) • These must meet organization, quality and scope of coverage requirements

20. Accountable Care Organization Requirements • Take overall accountability for quality, cost and overall care for individuals • Make a 3-year commitment to participate • Have a formal legal structure to accept and distribute savings • Have adequate primary care coverage to serve the assigned population (5,000 beneficiaries minimum) • Adequate additional professionals • Leadership and systems (clinical and administrative) in place • Provide evidence based medicine; report quality and cost; coordinate care • Demonstrate “patient-centeredness”

23. Worry Beads – Potential Unintended Consequences • Likely increase in the uninsured population for the next 5 years • Insurance mandates (penalties) phase in between 2014 and 2016 • Guaranteed issue becomes effective this year for children, and in 2014 for everyone • The option to join later may lead some to choose to drop insurance now (life insurance analogy) • A subsidized national high risk pool (in effect 2010-2014) in the intermediate term may also encourage some current recipients to discontinue insurance • Small employers (under 50) are not required to offer insurance; this could lead to current small employers dropping coverage – impacting both number of uninsured and subsidy expense • Part-time workers are excluded from mandates; this could have unintended consequences in employment

24. Worry Beads – Potential Unintended Consequences (continued) • Probable increase in insurance premiums in the short term • Elimination and modification of lifetime and annual coverage limits • Additional coverage of preventive services (first dollar) • Eliminate certain preexisting condition exclusions (children and some adults) • Limits on insurance “profits” may reduce incentives to invest and innovate. Combined with “rate increase review,” this may limit insurer participation or expansion • IT incentives are not aligned with our vision of what is most important to maximize value • Possible harm to the most efficient states and organizations if implementation mechanisms focus on across-the-board reductions

25. Reincarnation of Managed Carevs.Individual Accountability

26. “Shared Accountability Organization”

27. Life Expectancy vs. Wealth JA SW CN IT FR IS SZ SP US NE AU UK GE TW AG ME SK PO MA CH HU TK BZ RU SA IN

28. Health Status – Infant Mortality

29. Level 1 ER Service - Intensity Adjusted Mortality Source: Journal of Emergency Medicine (France), 2001

30. Premature Infant Mortality:All Neonates Under 1500 grams Source: OECD, 1998

31. UK DK NTH FIN SP CAN AUS SW JP US GER BEL FR Primary Care Prevalence vs. Health Care Expenditures, 1997 Source: Starfield, 10/08

32. Primary Care Strength and Premature Mortality in 18 OECD Countries Source: Macinko, et al, Health Serv. Res 2003; 38:831-865 Adjusted for GDP, age, doctors/capita, average income, alcohol and tobacco use. R2=0.77

33. Improving Health – Participating Entities Quick Myopia Celiac Appendicitis Ulcerative Colitis HIV Crohn’s Back Pain Consequences Type 1 Diabetes Osteoporosis Type 2 Diabetes Obesity Hypertension Slow Addiction Low Degree of Behavior Change Needed High

34. Improving Health – Participating Entities User Networks Quick Myopia Celiac Appendicitis Ulcerative Colitis HIV Back Pain Consequences Type 1 Diabetes Type 2 Diabetes Osteoporosis Obesity Hypertension Slow Addiction Low Degree of Behavior Change Needed High

35. Improving Health – Participating Entities Quick Myopia Celiac Appendicitis Ulcerative Colitis HIV Back Pain Consequences Type 1 Diabetes Employers / Schools Type 2 Diabetes Osteoporosis Obesity Hypertension Slow Addiction Low Degree of Behavior Change Needed High

36. Improving Health – Participating Entities Medical System User Networks Quick Myopia Celiac Appendicitis Ulcerative Colitis HIV Back Pain Consequences Type 1 Diabetes Employers / Schools Type 2 Diabetes Osteoporosis Obesity Hypertension Slow Addiction Low Degree of Behavior Change Needed High

37. The Future is Bright (and Challenging)!