environmentalscan 2004

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2004 E N V I R O N M E N T A L S C A N

America Decides:The 2004 Elections: 

America Decides: The 2004 Elections

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W 2004

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Clear majority win-- first since 1988 More votes than any other candidates in U.S. history, with one of the largest turnouts in recent years GWB: 51 percent [59,834,737 votes] JFK: 48 percent [56,373,349 votes] Nader: inconsequential [406,935 votes]

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Red America sweeps Blue America to the North and to the coasts Bush wins 31 states to Kerry’s 20 Red counties = 150.9 million Americans Blue counties = 103.6 million Americans Only 293 counties were won by fewer than 5 percent

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BUSH KERRY Associated Press, ESRI Inc, 11/1/04 2004 Associated Press, CNN, Nov 2004

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BUSH GORE Associated Press, ESRI Inc, 11/1/04 2000 Associated Press, CNN, Nov 2004

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BUSH KERRY Associated Press, ESRI Inc, 11/1/04 200 4 Associated Press, CNN, Nov 2004

The Team Adjusts: 

Announced Departures: John Ashcroft (Attorney General): Alberto Gonzales nominated Colin Powell (Secretary of State): Condoleezza Rice nominated Don Evans (Secretary of Commerce) Rod Paige (Secretary of Education) Margaret Spellings nominated Spencer Abraham (Secretary of Energy) Ann Veneman (Secretary of Agriculture) There’s Been Talk About: Tommy Thompson (Secretary, Dept of Health and Human Services) Tom Ridge (Secretary, Department of Homeland Security) The Team Adjusts

More Republicans in Congress: 

Net gain of 4 Republican seats in the Senate More Republicans in Congress Net gain of at least 2 Republican seats in the House

The Players: Congressional Leaders: 

The Players: Congressional Leaders

The Players: Health Policy Leaders: 

The Players: Health Policy Leaders

The Players: Health Funding Leaders: 

The Players: Health Funding Leaders

More Money Than Ever: 

Total spent on 2000 Presidential and congressional campaigns BEFORE new campaign finance reform laws: $3.0 billion Total spent on 2004 Presidential and congressional campaigns WITH new campaign finance reform laws: $3.9 billion [est] Total rate of increase in federal campaign spending SINCE new campaign finance laws took effect: 30 percent Total spent by the new independent “527” organizations created by new campaign finance reform laws: $386 million Total Bush campaign was expected to raise: $150 million Total raised: $200 million+ Total spent (private + government) $306.3 million Total Kerry campaign was expected to raise: $60-80 million Total raised: $200 million+ Total spent (private + government) $241.7 million More Money Than Ever The Center for Responsive Politics, Oct. 2004

Presidential/Congressional Races 2000 2004: 

The Center for Responsive Politics, Oct. 2004 Presidential/Congressional Races 2000 2004 + + - - + + + - +

Political Action: 

Political Action Your new PAC will strengthen your hand in Washington and ensure that your voice is heard alongside [when possible] and independent of [when necessary] other medical groups

Key Health Care Ballot Initiatives: 

Coverage: [California] to uphold employer-mandate “play or pay” law DEFEATED Medical Liability Reform: [Florida, Nevada, Oregon, Wyoming] to limit non-economic awards FL, NV, PASSED; DEFEATED in OR WY PASSED MED. REVIEW, REJECTED $CAP Medical Licensing: [Florida] to bar physicians with 3 malpractice cases from being licensed to practice, public reporting of physician information PASSED Stem Cell Research: [Calif.] to authorize $3 billion for embryonic stem cell research PASSED Medical Marijuana: [Montana, Oregon, Alaska] PASSED in MT, DEFEATED in OR, AK Key Health Care Ballot Initiatives

Voting Issues: 

Voting Issues Top 2 voting issues aside from character; Public Opinion Strategies and Hart Research, Nov 2004 HOMELAND SECURITY 11% IRAQ 31% ECONOMY 23% MORAL VALUES 14% HEALTH CARE 15% WAR ON TERROR 13%

Domestic Priorities: 

Domestic Priorities Top 2 domestic priorities; Public Opinion Strategies and Hart Research, Nov 2004 41% Economy/Jobs Health Care/Rx 40% 29% 21% 18% 15% 12% 8% 7% SocSec/Medicare Education Moral Issues Taxes Deficit Immigration Environment

Voters’ Health Care Priorities: 

Voters’ Health Care Priorities Top health care priorities; Public Opinion Strategies and Hart Research, Nov 2004

Physicians’ Health Care Priorities: 

Physicians’ Health Care Priorities Top 2 domestic priorities; Public Opinion Strategies and Hart Research, Nov 2004 [voters]

America Decides:Policy Implications: 

America Decides: Policy Implications

President Bush: 

Will he be a uniter? President Bush

President Bush: 

“A new term is a new opportunity to reach out to the whole nation. We have one country, one Constitution, and one future that binds us. And when we come together and work together, there is no limit to the greatness of America.” - November 3, 2004 President Bush

President Bush: 

…or a divider? President Bush

President Bush: 

“ I feel it is necessary to move an agenda that I told the American people I would move. I earned capital in the campaign – political capital – and now I intend to spend it.” - November 4, 2004 [the morning after] President Bush

President Bush: 

Challenges he will face Budget deficits and the conflicting agendas of fiscal conservatives and social conservatives A new era of spending cuts dawns on Capitol Hill GOP players have begun positioning for 2008 2006 mid-term elections are coming! 17 Dem, 15 GOP Senate seats up Do Democrat-leaning 527s become permanent opposition players? Republican base insisting on a hard line President Bush

The Parties Are Diametrically-Opposed on Health Care: 

Republican Agenda Market strategies Tax credits for Health Savings Accounts More managed care in Medicare Association Health Plans for small businesses Caps on Medical Liability, Tort Reform Medicare Rx market pricing The Parties Are Diametrically-Opposed on Health Care Democratic Agenda Public programs Expand Medicaid and SCHIP, Medicare No managed care in Medicare Tax credits for small businesses Strong opposition to Medical Liability Reform Medicare Rx price negotiation

Lack of Leadership and Public Will Prevent The Transformation Necessary to Fix Health Care: 

Lack of Leadership and Public Will Prevent The Transformation Necessary to Fix Health Care

Medical Liability Reform: 

The President says he wants it… but the votes aren’t there yet in the Senate 2004 votes were 48-45, 49-48 [60 votes needed for cloture] New Congress will have three new Senate supporters Republican Senators Mike Crapo, Arlen Specter, Lindsey Graham, Mel Martinez are likely to continue to oppose reform It is questionable whether the President will spend his capital here The focus is likely to intensify on state-level reforms Medical Liability Reform

Medicaid Reform: 

Medicaid now accounts for 30 percent of state budgets, increasing markedly in recent years A push to restructure Medicaid is likely Cash-strapped Governors want fewer mandates, more flexibility and more federal money Medicaid Reform

Continuing Impact of Medicare Reform: 

Continuing Impact of Medicare Reform Medicare Rx discount program is not successfully signing up seniors Only 51 percent of seniors know about the reforms, and their opinion is decidedly mixed signed up haven’t signed up APPROVE DISAPPROVE strongly somewhat strongly somewhat American Viewpoint, Healthcare Leadership Council, Nov 2004 [2% don’t know] don’t know

Prescription Drugs: 

Budgetary impact of Medicare Prescription Drug program may push Republicans to revisit Democrats are likely to push for program changes as implementation year [2006] approaches Americans under 65 say: What about me? Pressure for imports from Canada mount Republican peel away from partisan opposition during campaign States, cities move to allowing imports from Canada WV, MI, IL, OH, MN, IA, VT, ME, WI Burlington, VT; New York, NY; Boston, Springfield, Somerville, Worcester and Cambridge, MA Prescription Drugs

Prescription Drugs: 

Medicare formulary The next big policy fight FDA reform Backlash against rush of drugs to market Comparative drug effectiveness Flu vaccine shortage May reinvigorate fight for manufacturers’ liability protections Prescription Drugs

Medicare Reimbursement: Physicians at Risk: 

Moratorium ends at end of 2005 Medicare reform bill and overall budgetary pressures will make it harder to gain a permanent “fix” This Congress will be focused on cutting discretionary spending programs CMS and key Congressional leaders are looking to tie formula changes to pay-for-performance Medicare Reimbursement: Physicians at Risk

Rising Costs Drive Changes in Health Care Arena: 

Rising Costs Drive Changes in Health Care Arena

National Health Expenditures per Capita: 

National Health Expenditures per Capita $6,000 $4,500 $3,000 $1,500 $0 Centers for Medicare and Medicaid Services, Office of the Actuary, Health Statistics Group

Health Care Spending: 

Health care spending - up 7.4 percent Slower growth than 2002 – 9.5 percent Insurance Premiums – up 12 percent Slower growth than 2002 – 15 percent But five times the rate of growth in wages and inflation Center for Health System Change, June 2004 Kaiser Family Foundation, Health Research and Educational Trust, Sept. 2004 USA Today, April 13, 2004 Health Care Spending

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20% 15% 10% 5% 0 Note: Data on premium increases reflect the cost of health insurance premiums for a family/4. Kaiser Family Foundation/Health Research and Education Trust, Employer Health Benefits, 2003 Annual Survey.

Where the Money Goes: 

Where the Money Goes Kaiser Family Foundation calculations using data from Centers for Medicare and Medicaid Services, Office of the Actuary, Health Statistics Group. 40% 30% 20% 10% 0%

Growth in National Health Expenditures by Segment, 1992-2002: 

Growth in National Health Expenditures by Segment, 1992-2002 Kaiser Family Foundation calculations using data from Centers for Medicare and Medicaid Services, Office of the Actuary, Health Statistics Group. Other 15.8% Hospital care 25.4% Physicians & clinical services 20.6% Prescription drugs 15.7% personal care 14.4% Nursing home care 5.6% Home health care 2.5%

Employers Feel a Direct Impact: 

Cost for employer-based insurance premiums up 59 percent since 2001 Costs of health benefits expected to rise 11.3 percent in 2005 Kaiser Family Foundation & HRET, Oct. 2004 Employers Feel a Direct Impact Health Care Costs Per worker $8,000 $6,000 $4,000 $2,000 $0

Health Care Costs Impact Bottom Line: 

General Motors cuts earnings forecast Earnings rise by only 3.5 percent Rising health care costs cited In 2003, Ford Motor Company's total health care bill was $3.2 billion Health benefits are increasingly viewed as a tariff on America’s competitiveness Wall Street Journal, Oct 2004 Health Care Costs Impact Bottom Line

Health Care Costs Impact Bottom Line: 

Health Care Costs Impact Bottom Line “The struggle by American businesses to rein in health care costs is nearing crisis levels…” “Health care is just out of control. It’s a system that’s broken. It really scares me enormously.” Wall Street Journal, July 13, 2004 Bill Ford Jr. Chairman and CEO, Ford Motor Company

Shifting Costs to Employees: 

Workers are paying 27 percent more for coverage than previous year PPO deductibles up 40 percent since 2001 “Employees with employers picking up the whole tab” has fallen from 34 percent to 21 percent [individual] and from 14 percent to 7 percent for family coverage since 2001 69 percent have tiered drugs plans, up from 27 percent in 2001 Average co-payments for brand name drugs rise from $17 to $44, generics from $7 to $10, since 2000 Shifting Costs to Employees Center for Studying HSC, May 2004; Kaiser Family Foundation, October, 2004

Employer-Based Coverage Falls: 

5 million fewer workers covered by employer plans since 2001 60.4 percent of Americans are covered by employer-based plans – down from 61.3 percent in previous year 12.4% Medicaid; 13.7% Medicare; 15.6% uninsured Fewer workers who are offered employer-based coverage are choosing to participate Down two percent overall (88 percent) from previous year Down 5.8 percent among low-income workers (66.8 percent) from previous year Kaiser Family Foundation Oct. 2004, U.S. Census August 2004, Urban Institute, July 2004 Low income defined as individuals with incomes of less than $17,720 and families of four with annual household incomes of less than $36,200 Employer-Based Coverage Falls

Industry Players Taking Larger Role: 

Ford Motor Co. Chief Executive Officer Bill Ford assigned Vice Chairman Allan Gilmour to craft a proposal for fixing the nation's health care system National Business Coalition on Health hires Watson Wyatt to evaluate health plans for member companies to restrain cost increases Employers use market clout to pursue pay-for-performance and quality standards in clinical settings as well as in hospitals Insurers get directly involved in patient care through disease management programs Industry Players Taking Larger Role

Employers Demanding Cost-Saving Measures: 

Employers Demanding Cost-Saving Measures Insurers are: Reinstituting prior approvals for high cost/utilization drugs Implementing disease management programs and predictive modeling Introducing new products to incent patients to make cost-effective choices Introducing cost-sharing options so employers and employees can choose benefits based on a set of core services Consumers: Only 30 percent say managed care can reduce costs without hurting patients’ health. But as they assume more costs, they appear open to trade-offs: 47% say requiring referral to specialist is “good idea” 45% say requiring approval for new/expensive procedures is “good idea” 45% say requiring substitution of less expensive drugs is “good idea” 26% say paying doctors bonus for keeping costs down is “good idea” Center for Studying Health System Change, May 2004 Public Perceptions of Cost Containment Strategies. Health Affairs Nov. 2004

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Fundamental shift Market and policy changes are increasingly employer-driven Goal: cost savings Health care increasingly viewed as a commodity Focus on purchasing services, rather than assuring quality care Result of Employer Pressure

Obesity Is Being Redefined from Problem to Major Cost-Driver: 

27 percent of the growth in health care spending over the past 15 years is attributable to obesity Treating obesity-related illnesses costs about $93 billion a year 2004 IOM report calls for unprecedented national campaign to combat childhood obesity Washington Post, October 20, 2004 Obesity Is Being Redefined from Problem to Major Cost-Driver

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Medicare indicates obesity to be re-categorized as a treatable disease Insurers [Blue Cross Blue Shield of North Carolina] begin to provide comprehensive benefits package to prevent and treat obesity Programs like Academy’s Americans In Motion engage key stakeholders on multiple levels Public Policy & Marketplace Responds

Mounting Consumer Pressures Impact Coverage and Delivery Models: 

Mounting Consumer Pressures Impact Coverage and Delivery Models

Individuals Take Larger Role and Risk: 

3.5 percent of working Americans now being offered high-deductible coverage with a health savings account Companies now increasingly offering cafeteria-style health benefits eHealthInsurance reports 60 percent of their single customers chose plans with deductibles of $1,000 or more American HealthLine, 9/10/2004 Individuals Take Larger Role and Risk

The Consumer Mindset: 

The Consumer Mindset

The Consumer Mindset: 

Americans increasingly view the health care system through the eyes of a consumer rather than patient They seek convenience and demand more flexibility Primary care practices and clinics showing up in retail stores and workplaces Phone and web-based medical consultation Consumers seek consultation on lifestyle choices integrated with medical expertise The Consumer Mindset

Promise and Peril Ahead for Family Medicine: 

Promise and Peril Ahead for Family Medicine

Public Policy: 

Promise Medical liability reform gaining traction Peril Not enough votes for federal action on liability reform No comprehensive health care reform anywhere in sight Deficit reduction and spending cuts will send all the players scrambling Putting new pressures on funding for discretionary programs [like Title VII] No widespread appreciation for the role of family medicine Public Policy

Employer & Payers Drive Market Change: 

Promise Movement toward health promotion, health maintenance and chronic disease management Peril Employers and other payers driving reform based on costs Employers and payers going around doctors Health care as a commodity, doctors as vendors Pay for performance – designed to reward or punish? No widespread appreciation for the value of the family medicine model Employer & Payers Drive Market Change

Consumers Drive Market Change: 

Promise Consumers paying more of the bills and making more of the choices Consumers want a caring physician who listens Consumers want the “new model” the Academy has outlined Family physicians are leading on EHR – a key to quality, price and consumer convenience Peril Competitors are chipping away at both ends of family practice model: Disease management companies offer targeted approach with a personal relationship component Market competitors springing up offering primary care alternatives with convenience and price Increasingly price-sensitive consumers choosing between what they want and what they need No widespread consumer differentiation of family physicians New model of practice is not yet widely available in the marketplace Consumers Drive Market Change

The Key Challenge : 

To step up efforts to increase the understanding and perceived value of family medicine among policymakers, employers and other payers, and consumers The Key Challenge

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David Mitchell Partner J. Toscano Senior Vice President 1010 Wisconsin Avenue, NW Suite 800 Washington, DC 20007 202/338-8700 www.gmmb.com PRESENTED: November 19, 2004 FOR ADDITIONAL INFORMATION: