South Metro Denver Chamber of Commerce Healthcare Taskforce

1. South Metro Denver Chamber of Commerce Healthcare Taskforce Healthcare Reform: A Proposal from the Business Community

2. Outline Healthcare in America – a Broken System Why should business be involved in this discussion? Why should the So Metro Chamber be involved? Background on the Chamber Task Force Healthcare Reform in Colorado – the 208 Commission The South Metro Denver Chamber Taskforce Proposal Next Steps Questions/Discussion 2

3. We need to “Kill the Myth” that the US has the best healthcare system in the World* Quality: “We have Islands of Excellence in the midst of a Sea of Mediocrity.” The US is: 29th in Infant Mortality 24th in Women’s Health 31st in Life Expectancy 37th in Outcomes (Below Costa Rica but ahead of Slovenia) If the US were 37th in Olympic Medal Count, how long would the American public tolerate that? Cost: GM spends more on healthcare than on steel Starbucks spends more on healthcare than on coffee – *Tom Daschle, US Health/Human Services Secretary Designee, Speaking at the Colorado Healthcare Summit, 12/5/2008

4. Some Alarming Metrics 47 million un-/underinsured in the US Estimated 770,000 in Colorado 30¢ – 40 ¢ of every healthcare dollar has nothing to do with actual healthcare 1 out of every 7 employed people in the US economy works in some aspect of healthcare 1.7 million jobs have been added in healthcare since 2001, yet there are shortages of physicians, nurses and others who actually “deliver” healthcare 4

5. US Healthcare got a “D” grade from the Commonwealth Fund in 2006 Based on 37 measures including outcomes, quality of care, access to care and efficiency, etc. Relative to other nations, the report says the US has: Among the lowest life expectancy at both birth and age 60 An infant mortality rate of 7 per 1,000, versus 2.7 in top 3 Only 49% of adults receiving recommended preventive and screening tests for their age and sex Administrative costs 3X higher than other countries GDP costs of ~16% versus ~10% in other countries Colorado ranks 22nd in this report (~average) 5

6. The results in Colorado mirror the nation: Colorado Health Foundation “Health Report Card” (Denver Post, 10-18-07) gave the following grades: A minus - Senior Citizens B - Adults B minus - Colorado Residents for obesity, smoking and high blood pressure. B minus - Adolescents C minus- Infants and Children for health insurance coverage, access to medical care, and vaccinations 6

7. US Healthcare First, but not Best 7 US health expenditures as % of gross domestic product exceeds every other industrialized country. We in America collectively spend more on health care than Canada or the U.K. spends on all their goods and services combined. According to Organisation for Economic Cooperation & Development (OECD): Average %GDP for industrialized countries is 9% (vs. our 16%). Switzerland, Germany, and France follow the US in % GDP, with 11.6%, 10.9%, and 10.5%, respectively Per capita (2004) was $6,100, more than twice the average OECD countries’ average of $2,550 Luxembourg was second after the U.S., with per capital spending of $5089, followed by Switzerland and Norway, with spending of about $4,000 per person. Per capita for 2006 projected to be $7,129 per person (OECD Health Data 2006). US spends over half (53%) of what the entire world spends on health care U.S. is the only industrialized country, except for Mexico and Turkey, without some form of universal heath care So, we’re getting the best clinical outcomes for all this spending, right?US health expenditures as % of gross domestic product exceeds every other industrialized country. We in America collectively spend more on health care than Canada or the U.K. spends on all their goods and services combined. According to Organisation for Economic Cooperation & Development (OECD): Average %GDP for industrialized countries is 9% (vs. our 16%). Switzerland, Germany, and France follow the US in % GDP, with 11.6%, 10.9%, and 10.5%, respectively Per capita (2004) was $6,100, more than twice the average OECD countries’ average of $2,550 Luxembourg was second after the U.S., with per capital spending of $5089, followed by Switzerland and Norway, with spending of about $4,000 per person. Per capita for 2006 projected to be $7,129 per person (OECD Health Data 2006). US spends over half (53%) of what the entire world spends on health care U.S. is the only industrialized country, except for Mexico and Turkey, without some form of universal heath care So, we’re getting the best clinical outcomes for all this spending, right?

8. Cost Trend: a Personal View 8 It’s not 1 year but the cumulative effectIt’s not 1 year but the cumulative effect

9. Cost Spend 9

10. How did business get involved? Healthcare provided by employers started out as: Temporary response to post-WWII wage/price controls Optional, part of an overall compensation package Was considered a “nice-to-have,” a benefit Employees used to say, “You can’t eat (or pay the rent) with healthcare benefits” But now employer-sponsored healthcare has become: Essentially universal (has led to portability issues) A right, an entitlement, a given, an automatic 10

11. Business is significantly and adversely impacted: Costs are growing at 2-5x the inflation rate >16% of the GDP and accelerating Business viability and competitiveness suffering Costing employers more in both dollars and time Employees are frustrated with their employers’ plans Employers and managers are intimately involved with healthcare discussions and decisions All governmental budgets severely strained, looking to businesses to pick up even more of the tab 11

12. Business must be involved in solutions The major stakeholders in healthcare are: Consumers (employees, dependents, unions) Providers (e.g., physicians, hospitals, pharma, diagnostics, etc.) Payers (insurance companies, state/federal government agencies) Employers In today’s healthcare reform discussions, the first 3 stakeholders are typically involved, but not the 4th Most reform plans are PFBO – Paid For By Others The “Others” are typically employers If you’re not “at the table” then you are probably “on the menu” 12

13. Why this task force? The South Metro Denver Chamber of Commerce represents a cross-section of business and consumers Small/medium business owners Large employers Insurance companies and insurance plans Providers – hospitals, physicians, surgeons Government (through elected officials, appointees) Businesses involved directly or indirectly with healthcare The Chamber has a history of getting things done 13

14. The South Metro Chamber Task Force Started ~4 years ago Upwards of 100 people involved at various times Viewpoints covered the entire ideological/experience spectrum The task force met at least monthly for over 4 years In early 2007 the 208 Commission provided an audience and a target for our efforts We have continued our efforts independently from the 208 Commission process 14

15. Business Priorities for Health Care Reform – Cost, Quality, Access, Individual Responsibility Access for All Colorado Residents Individuals must be accountable for Lifestyle Choices, Treatment and Cost Decisions Employers should be separated from making Health Care Decisions for employees Increased access and better quality can be achieved with dollars already being spent Free Market Dynamics are the best means to reduce Cost and increase Quality – Transparency and Portability Appropriate Regulatory oversight of Quality 15

16. Elements of Reform 16

17. The 208 Commission – an example of the Health Care Reform discussion Chartered by legislature, approved by two administrations Bi-Partisan group of 27 commissioners Impressive credentials/healthcare backgrounds Very limited involvement from business, especially SMB 31 plans received and reviewed 11 semi-finalists (including the South Metro Chamber’s) 4 Finalists Selected and modeled for cost; none of them were from business sector 5th, Hybrid Proposal was developed Page 17

18. Common elements of 208 Commission “finalist” plans All plans were heavily PFBO – Paid For By Others They focused primarily on payment, not on costs Focus is on access for the un-/under-insured (do they care?) Funded by tax increases and/or employer mandates Cost control through mandate only No Free-Market Forces or Competitive Factors Essentially NO individual responsibility/payment factors Limited attention to Quality and Transparency Limited focus on lifestyle and preventative issues Page 18

19. Many elements are not consistent with Business’ Priorities Employer mandates and limiting available plans frustrates Free Market Dynamics No direct relationship between health care costs and personal lifestyle decisions Little substance or funding mechanism for preventative and wellness initiatives No effective mechanisms for cost containment and risk sharing of catastrophic care Cost and Quality addressed through mandate, not by the market 19

20. South Metro Denver Proposal The current system is fundamentally flawed and needs significant reform at all levels Merely “tweaking” the existing system will lead to more of the same There must be appropriate attention to: Cost Quality Access Outcomes Individual choice and accountability 20

21. Mike Leavitt, Former Secretary of Health and Human Services: “We need a uniquely American approach to health care, based on a free, competitive marketplace …to make private health insurance affordable for all Americans.” “…we need to empower the states to organize the marketplace… states are much more fiscally responsible than the federal government.” - Editorial, “Reforming health care,” The Washington Times, July 9, 2007. 21

22. Cost – Business Perspective There is already plenty of money in the system By contrast, with the PFBO approach: Three of the final 208 Commission plans had costs ranging from +$595 Million to +$1.2 Billion A single-payer proposal claimed no cost increase, but required a 6% employer tax The Obama plan would cost from $150 Billion to $250 Billion per year 22

23. Business Priorities for Health Care Reform – Access for all Colorado residents Individuals must be accountable for Lifestyle Choices, Treatment and Cost Decisions Employers should be separated from making Health Care Decisions for employees Free Market Dynamics are the best means to reduce Cost and increase Quality – Transparency Appropriate Regulatory oversight of Quality 23

24. Our proposal accomplishes the following: Incorporates six guiding principles Improves access for all Colorado Residents Increases use of health information technology Improves care coordination Increases transparency (both cost and quality) Reduces administrative costs Requires Individual Accountability 24

25. Six Guiding Principles for an Effective Healthcare System: These guiding principles form a foundational framework against which any potential reform plan should be assessed: The fundamental player in healthcare transactions is the individual. He/she needs to be responsible for healthcare outcomes. The fundamental relationship is between the individual and his/her healthcare provider: Anything that facilitates or streamlines this relationship is to be encouraged ? Anything that frustrates or hinders this relationship is to be discouraged ? 25

26. Six Guiding Principles, cont. Healthcare services should be provided to an individual with limited and efficient outside intervention, and with maximum transparency The goal should be increased value for all participants. 26

27. Six Guiding Principles, cont. There should be no automatic connection between healthcare and employment. Movement towards an individual-based system will reduce dependency on third parties such as employers, government and payers, and increase personal responsibility for costs and portability of insurance. 27

28. Cost/Value Initiatives Inherent inefficiencies (confusing exchanges of information between/across episodes of care) Adopt more information technology and automation Evidence-based medicine and quality measures Set up, promote, and utilize data clearinghouses that aggregate treatment, diagnostic data, and outcome data The consumer does not manage the process Promote the creation and proliferation of processes, institutions and entities that help healthcare consumers evaluate quality measure systems and transparency There is currently no incentive for healthy lifestyle/ choices Provide incentives for preventative/good health initiatives and lifestyles 28

29. Payment Initiatives 3 Tier payment system Catastrophic: conditions with high costs (over ~100K). Funded by re-insurance pool from maintenance policy premiums. Middle Tier: Accidents/illnesses without a major cost. Funded by individual/personal policies (indemnity coverage). Preventative: promotes good health, treats conditions at an early stage prior to development of costlier problems. Funded by subset of maintenance policy premiums. Cherry-picking, exclusion/up-rating for hereditary and pre-existing conditions not allowed, but lifestyle choices may affect cost 29

30. Benefits of this Proposal Comprehensive – addresses both cost and payment/access side of equation Decrease costs, increase quality, and provide better value Unleash power and benefits of competition Bring consumer into the picture – front and center Improve health of consumers Reduce strain on business governmental budgets Improve physician & patient relationship New era of transparency and information sharing 30

31. Role of Business The business community needs to get and stay involved in healthcare reform We are not proposing removing businesses entirely, just reducing the automatic/mandated role Businesses should strive to stay competitive in the labor pool, by competitive/free-market principles, not by government fiat Other stakeholders – individuals, providers, insurance – are not excluded; in fact their roles are clarified and more focused 31

32. Next Steps Participate in, rather than “kill” reform Get involved Engage Business Groups across the state Use connections to lobby the Legislature and other regulatory processes Be “at the table” (to avoid being “on the menu”) Support turning this proposal into Legislation 32

33. Presentations/PR/Exposure by Healthcare Task Force 208 Commission Proposal Submission Republican Business Coalition Littleton Optimists Club Applewood Business Association NFIB State Leadership Board CMS Annual Retreat, Vail Medical Marketing Group Denver Business Journal KNUS Radio Chamber Leadership Retreat Chamber Board of Directors Chamber Expo Seminar Chamber membership meetings 33

34. Key Contributors to Final Proposal Paul Archer, business owner, current task force co-chair Leo Tokar, VP Kaiser Permanente, current task force co-chair David Crane, CEO of a Denver-area hospital, former task force chair David Laverty, Business Consultant, former task force chair Neil Ayervais, healthcare attorney Penny Baldwin, insurance expert/patient advocate Jeff Burns, business owner Marion Jenkins, business owner, healthcare focus Allan Kortz, MD, former surgeon, healthcare consultant Julie Taylor, COO of a Denver-area hospital Brian Vogt, Former SMDCC President, State Cabinet Officer 34

35. Many other taskforce contributors 35

36. Questions/Further Discussion Paul Archer, Automated Business Products parcher@abpcopy.com 720.283.6771 Leo Tokar, Kaiser Permanente Leo.tokar@kp.org 303-344-7242 Neil Ayervais, Alperstein and Covell nea@alpersteincovell.com 303.894.8191 Jeff Burns, Computer Skills Group jeffburns@csg-colorado.com 303.794.0694 Marion Jenkins, QSE Technologies marion.jenkins@qsetech.com 303.283.8400 36