Exhibit ES-1. Synergistic Strategy: Potential Cumulative Savings
Compared with Current Baseline Projection, 2013–2023
Net impact in $ billions*
Total
NHE
State
Federal
and local
government government
Private
employers
Households
2013–2018
–$686
–$345
–$84
–$66
–$192
2013–2023
–$2,004
–$1,036
–$242
–$189
–$537
Note: NHE = national health expenditures.
* Net effect does NOT include potential impact of spending target policy.
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that
the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are
instead increased by 1% in 2013 and held constant from 2014 through 2023.
Exhibit ES-2. Projected National Health Expenditures (NHE), 2013–2023:
Potential Impact of Synergistic Strategy
NHE in $ trillions
$6.0
Current baseline NHE projection
$5.5
Projected NHE net of policy impacts
$5.0
$5.1
$4.0
$2.9
$3.0
$2.0
$1.0
NHE as percentage of GDP—
Current projection: 18% in 2013→21% in 2023
Under unified strategy: 18% in 2013→19% in 2023
Cumulative NHE savings under synergistic strategy: $2.0 trillion
$0.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Note: GDP = gross domestic product.
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that
the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are
instead increased by 1% in 2013 and held constant from 2014 through 2023.
Exhibit ES-3. Cumulative Net Impacts of Payment, Engaging Consumers,
and Systemwide Policies, 2013–2023
Net savings in $ billions
2013–
2018
2019–
2023
Total
2013–2023
Payment reforms to pay for value to
accelerate delivery system innovation
–$442
–$891
–$1,333
Policies to expand and encourage
high-value choices by consumers
–$41
–$148
–$189
Systemwide actions to improve how
health care markets function*
–$203
–$279
–$481
Cumulative NHE impact**
–$686
–$1,318
–$2,004
Note: NHE = national health expenditures. Totals may not add because of rounding.
* Net savings do NOT include the potential impact of the spending target policy. Malpractice savings included in impact of
provider payment reforms.
** Cumulative NHE impact adjusted for potential overlap of component policy impacts.
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that
the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are
instead increased by 1% in 2013 and held constant from 2014 through 2023.
4
Exhibit 1. International Comparison of Spending on Health,
1980–2010
Average spending on health
per capita ($US PPP)
Total health expenditures as
percent of GDP
18
$8,000
US
$7,000
16
SWIZ
NETH
$6,000
14
CAN
12
GER
FR
10
AUS
UK
8
JPN
US
NETH
FR
GER
CAN
SWIZ
UK
JPN
AUS
Notes: PPP = purchasing power parity; GDP = gross domestic product.
Source: Commonwealth Fund, based on OECD Health Data 2012.
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
1988
$0
1986
2
1984
$1,000
1982
4
1980
$2,000
1980
6
2010
$3,000
2008
$4,000
2006
$5,000
Exhibit 2. Medicare Spending per Enrollee Projected to Increase More
Slowly Than Private Insurance Spending per Enrollee and GDP per Capita
Annual rate of growth (percent)
8.0
GDP per capita
7.0
6.0
Medicare spending per enrollee
Employer-sponsored insurance spending per enrollee
5.0
3.7
4.0
3.0
4.6
4.5
3.8
2.9
2.7
2.0
1.0
0.0
2008–2011
2011–2021 (projected)
Note: GDP = gross domestic product.
Source: CMS Office of the Actuary, National Health Expenditure Projections, 2011–2021, updated June 2012.
Exhibit 3. Premiums Rising Faster Than Inflation and Wages
Cumulative changes in insurance
premiums and workers’ earnings,
1999–2012
Projected average family premium as a
percentage of median family income,
2013–2021
Percent
Percent
200
Health insurance premiums
175
180%
Workers' contribution to premiums
150
Workers' earnings
125
Overall inflation
35
30
172%
25
22 23
20
100
15 12 13
75
50
25
47%
10
38%
5
15
17
18 18 18 18
19
24
26
25 26
27
28 29
30
31
20
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
0
Projected
Sources: (left) Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Annual Surveys, 1999–
2012; (right) authors’ estimates based on CPS ASEC 2001–12, Kaiser/HRET 2001–12, CMS OACT 2012–21.
Exhibit 4. Projected U.S. National Health Expenditures (NHE) by Source,
2013–2023
NHE in $ billions
6000
$5.5 trillion
Federal
government
5000
$4.0 trillion
32%
State and local
government
4000
$2.9 trillion
31%
28%
18%
3000
2000
18%
24%
18%
25%
1000
26%
26%
28%
26%
2013
2018
2023
17.9%
18.7%
20.5%
0
% GDP:
Note: GDP = gross domestic product.
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund.
Private employers
(including "other
private revenue")
Households
Exhibit 5. High Performance Health System Criteria for
Developing Options to Stabilize Spending Growth
• Set targets for total spending growth
• Pay for value to accelerate delivery system reform for better outcomes,
better care, at lower costs
• Address the systemwide causes of health spending growth―not just
federal health costs
• Align incentives for providers and consumers across public and
private payers
• Protect access and enhance equity, but also engage and inform
consumers
• Invest in information systems to guide action
Exhibit 6. Synergistic Strategy: Potential Cumulative Savings
Compared with Current Baseline Projection, 2013–2023
Net impact in $ billions*
Total
NHE
State
Federal
and local
government government
Private
employers
Households
2013–2018
–$686
–$345
–$84
–$66
–$192
2013–2023
–$2,004
–$1,036
–$242
–$189
–$537
Note: NHE = national health expenditures.
* Net effect does NOT include potential impact of spending target policy.
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that
the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are
instead increased by 1% in 2013 and held constant from 2014 through 2023.
Exhibit 7. Synergistic Strategy: Cumulative Savings, 2013–2023
Payment reforms to accelerate delivery system innovation ($1,333 billion)
• Pay for value: replace the SGR with provider payment incentives to improve care
• Strengthen patient-centered primary care and support care teams
• Bundle hospital payments to focus on total cost and outcomes
• Align payment incentives across public and private payers
Policies to expand and encourage high-value choices ($189 billion)
• Offer new Medicare Essential plan with integrated benefits through Medicare, offering
positive incentives for use of high-value care and care systems
• Provide positive incentives to seek care from patient-centered medical homes, care teams,
and accountable care networks (Medicare, Medicaid, private plans)
• Enhance clinical information to inform choice
Systemwide actions to improve how health care markets function ($481 billion)
• Simplify and unify administrative policies and procedures
• Reform malpractice policy and link to payment*
• Target total public and private payment (combined) to grow at rate no greater than GDP
per capita**
Notes: SGR = sustainable growth rate formula; GDP = gross domestic product.
* Malpractice policy savings included with provider payment policies.
** Target policy was not scored.
Exhibit 8. Projected National Health Expenditures (NHE), 2013–2023:
Potential Impact of Synergistic Strategy
NHE in $ trillions
$6.0
Current baseline NHE projection
$5.5
Projected NHE net of policy impacts
$5.0
$5.1
$4.0
$2.9
$3.0
$2.0
$1.0
NHE as percentage of GDP—
Current projection: 18% in 2013→21% in 2023
Under unified strategy: 18% in 2013→19% in 2023
Cumulative NHE savings under synergistic strategy: $2.0 trillion
$0.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Note: GDP = gross domestic product.
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that
the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are
instead increased by 1% in 2013 and held constant from 2014 through 2023.
Exhibit 9. Impact of Synergistic Strategy on Projected Annual
Hospital and Physician Spending, 2013–2023
Spending in $ billions
$2,000
Hospital (baseline)
Hospital (net of policy impacts)
$1,750
$1,646
Physician (baseline)
$1,500
Physician (net of policy impacts)
$1,509
$1,250
$1,122
$1,000
$902
$750
$597
$1,055
Projected growth of hospital spending, 2013–2023:
• Baseline projection: 82% (6.2% annual)
• Net of policy impact: 67% (5.3% annual)
Projected growth of physician spending, 2013–2023:
• Baseline projection: 88% (6.5% annual)
• Net of policy impact: 77% (5.9% annual)
$500
$250
$0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that
the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are
instead increased by 1% in 2013 and held constant from 2014 through 2023.