Transcript Slide 1

Health Care Reform and the
Work of the Super Committee
Peter C. Damiano
Director, Public Policy Center
University of Iowa
Johnson County Livable Community
November 14, 2011
Today’s Topics
• The Patient Protection and Affordable
Care Act (PPACA)
• What is already in place
• What’s yet to come
• ACA and public health
• IA Safety Net project
• Discussion
• What about the Super Committee
• What about the Election/Courts
What have we created?
The Patient Protection and
Affordable Care Act (PPACA)
• Signed into law March 2010
• Emphasis on:
Individual insurance market
Small business insurance market
• Few implications for large employerbased insurance
Already self-insured
Market-based reform
• Right of center approach to reform:
Similar to proposals by Richard Nixon,
Robert Dole and Mitt Romney
Left of center approach-single payer
• Uses primarily private insurance
companies:
Some Gov’t program expansion
Health care reform 2010-19 Style
Why Reform Health Care in US
• Cost
• Access to Care – right vs. privilege
• Quality
Coverage in
new plan
New insureds
16 million
•Net 32 million
more insured
•Decline of 3
million from
employers
•Decline of 5
million from
non-group
24 million
Private insurance
Public insurance
Source: CBO report to Congress, March 2010
Policies Already in Place
25 reforms enacted in 2010
18 of 21 enacted in 2011
Current policies (fall 2010)
• Cover children up to 26 on parent’s policies
• State/federal high risk pools
• Eliminate pre-existing conditions for children
• Can’t rescind coverage for illness
• Can’t impose yearly and lifetime caps
Pre-existing conditions removed?
Current policies (fall 2010)
• Small-business tax credits: Small
businesses (fewer than 25 employees
and average wages under $50,000) that
offer health care benefits eligible for tax
credits of up to 35% of premiums for 2
years
Current policies (fall 2010)
• Establish process to review premium
increases
• States must report trends in premium
increases for inclusion in Exchanges
• Establish Center for Medicare and
Medicaid Innovation
Current policies (2011)
• Discounts to fill doughnut hole
-50% discount on brand name drugs
• Minimum Medical Loss Ratios
-requires reporting proportion of dollars
spent on clinical services/quality
-must be at least 85% large group
-80% individual and small group
-debate about agent fees
Cost of reform
• Total cost: $940 billion first ten
years
• Impact on deficit:
$124 Billion in reductions in the deficit
first ten years
$1.2 Trillion second ten years
Source: Congressional Budget Office, March 2010
Cost of reform
• Impact on Medicare/SS solvency:
Extend Medicare trust fund solvency 12
years (2017 to 2029)
- higher payroll taxes (0.9%) on those
making over $200,000
- lower hospital payment rates
SS improved by taxing highest benefit
plans in 2018
Source: Medicare and Social Security Trustee Report, August 2010
Financing Reform
• 10% tax on Indoor Tanning Services
• Non-profit hospitals must conduct community
needs assessment and develop a financial
assistance policy or face $50,000 tax for failure
to meet this
• Reduced deductions for OTC drugs for Flex or
Health Saving Accounts
• Reduced deductions for non-medical
distributions from Flex or Health Saving
Accounts
So What’s Next
If the ACA goes through unchanged
2014-19
Future Financing of Reform
• Medicare payroll tax on
investments (2012):
3.8% on investment income for families
>$250,000
• Excise tax on investments (2019):
40% on “Cadillac” plans
Source: Congressional Budget Office, March 2010
Future policies (2014)
• Individual mandate begins.
• Large employer mandate begins (over 50
employees only)
• Medicaid expansion begins.
• Health insurance Exchanges begin to
operate.
Individual
Small businesses
Exchanges generally
• Health insurance marketplace (bazaar)
• Offer regulated products that meet
standards
• Require two multi-state plans in each
Exchange (federal employee plans)
• At least one plan must be offered by a
non-profit entity
Coverage for children
• Medicaid: up to 133% of FPL
No change for Iowa
• CHIP: up to state approved level
300% FPL in Iowa-no change
• Exchange: 300% of FPL and up
Coverage for Adults
• Medicaid: up to 133% of FPL
Gets rid of categorical eligibility
Eliminates IowaCare program (probably)
• Exchange: 133% of FPL and up
Income eligibility for subsidy (%FPL)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
400
400
Exchange
CHIP
Medicaid
300
133
Children
133
Adults
Health Insurance Exchange
• American Health Benefit Exchanges
Individuals
100-200% FPL: $1,983/individual and
$3,967/family;
200-300% FPL: $2,975/individual and
$5,950/family;
300-400% FPL: $3,987/individual and
$7,973/family
Health Insurance Exchange
• Small Business Health Options Program
(SHOP) Exchanges
Up to 100 employees
The ACA, Public Health and
the Iowa Safety Net
Preventive coverage
• All new group and individual health
plans will be required to provide free
preventive care for proven preventive
services. (2010)
• New Medicare prevention coverage
(2011)
Public Health and Prevention
$250 million (2010)
4 Activities
1. Community and Clinical Prevention: $126M
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Putting Prevention to Work: $74M
Primary and Behavioral Health Integration: 20M
Obesity Prevention and Fitness:$16M
Tobacco Cessation: $16M
1. Public Health Infrastructure: $70M
• Public Health Infrastructure: $50M
• Epidemiology and Lab Capacity: $20M
Public Health and Prevention 2010
3. Research and Tracking: $31M
• Surveillance: $21M
• Community Preventive Services Task Force: $5M
• Clinical Preventive Services Task Force: $5M
4. Public Health Training: $23M
• Public Health Workforce: $8M
• Public Health Training Centers: $15M
Public Health and Prevention 2011
• National Prevention, Health Promotion and
Public Health Council
• Senior officials across gov’t agencies
• Created by Executive Order June, 2011
Indirect ACA and Public Health issues
ACA creates changes and opportunities for safety
net providers-currently uncertain environment
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Increasing public and private coverage
Funds for FQHCs
Establishment of ACOs
Funds for HIT, HIE, EHRs and meaningful use
Medical home development
Iowa Safety Net, the ACA and Related
Primary Care Delivery System Changes
Iowa Safety Net and the ACA
Study goal: Use Iowa as a model to inform
policymakers about the impact of the ACA
and related delivery system changes on
safety net providers and payers
• Uses Iowa Safety Net Network and national
advisory committee to inform process
• Emphasis is on primary care
• Funded by The Commonwealth Fund with
additional support from Wellmark Foundation
Iowa Safety Net and the ACA
1. Conduct background inventory of
safety net providers/payers
2. Evaluate impact of the ACA as
implementation moves forward
3. Identify opportunities for collaboration
and coordination between public and
private providers to improve efficiency
Iowa Safety Net and the ACA
1. Safety net providers
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FQHCs
Rural health clinics
Title X funded family planning clinics
Comm. MH/SA centers
Free clinics
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Provider Networks/Financing/Patients
Iowa Safety Net and the ACA
2. Safety net payers
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Medicare
Medicaid
CHIP
Title V
Ryan White
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Financing/Patients
Major Goals of the Iowa Safety Net Project
• Assist policymakers and safety net providers to plan
for change-financial and organizational
• Conduct large scale strategic planning effort not
otherwise possible
• Using national and state-level experts with academic
assistance to evaluate the potential impacts of ACA
on states
• Identify opportunities for integration and coordination
in the health care delivery system.
Your Concerns, Benefits and Opportunities
regarding ACA in Iowa
Provider
Concerns
Benefits
Opportunities
RHC
Manpower shortage
Changes necessary to take advantage
Smaller clinics not prepared to take advantage
Reimbursed for services
Access to specialty care
Depends on RHC inclusion
Work with local boards
RHC affiliate with private
providers
Free Clinics
Concern about it being overturned
staff shortages
Access to affordable insurance
easier
People feel more welcome
Not hopeful
Local Public
Health Dept.
Certain groups and industries attempting to carve out
their piece to remain viable as ACA develops
Remove fragmentation and
streamlining will help make
better use of public $$
Benefits of partnerships
between private providers and
state/federal public health
programs
An FQHC
Congress won’t support ACA
Fewer uninsured
More resources
Integration and coordination
with private providers
An FQHC
Unfamiliarity in navigating system (patients)
Worker shortage (provider)
Funding stream uncertainty (primary care)
Disjointed funding stream (Care system)
Iowa as a leader
Health improvements with basic
primary care
Reimbursement for group
previously uncovered
Developing capacity
Managing chronic illness
improvements
Greater patient empowerment
Your Concerns, Benefits and Opportunities
regarding ACA in Iowa
Provider
Concerns
Benefits
Opportunities
Iowa Dept of
Public Health
Individual groups and industries will try to carve out
their “piece” in order to remain viable, as opposed to
integrating and de-fragmenting the system.
Family
Planning
How safety net providers who deal with specialty
areas of practice are incorporated and included.
2.PCP utilize expertise of family planning clinics
(collaboration is necessary)
3. What to do about undocumented workers, people
transitioning between jobs, life stages- not included?
How will FPA provide services?
Removing fragmentation should More partnering by IDPH with
make direct state/federal funding private providers for federal and
more efficient
state-funded public health
programs (i.e cancer screenings
and child wellness)
More opportunities for services
to be available to
If the ACA does not go through
as planned
1) Election
2) Supreme Court decision
If the ACA does not go through
as planned
The 2012 Election
How bad is the problem?
Attitudes toward HCR
If the ACA does not go through
as planned
Supreme Court Decision
“States’ Right?”
Supreme court challenge
• November 14-Supreme Court said it will hear
challenge
• Decision likely late June
• Focus:
1. Individual mandate
2. Jurisdictional issue: can they rule before a
tax goes into affect (the fine–1867 Antiinjunction act)
3. Medicaid expansion and cost to the state
4. Declined considering penalties to states
that they and other employers would face
(1985 ruling that states must comply with
employer-related laws)
Lower court rulings
• 30 lawsuits have been filed
• Half of the states have filed briefs against ACA
• Federal appeals courts (four rulings):
• Commerce clause at issue
• Two upheld the law
• One ruling it unconstitutional
• One saying ruling premature (not in place)
• Social security, civil rights acts, tax power
Supreme court case from:
• National Federation of Independent Business v.
Sebelius, 11-393; Department of Health and
Human Services v. Florida, 11-398; and Florida v.
Department of Health and Human Services, 11400.
DC Court of Appeal Ruling
November 7, 2011 ruling
• Majority opinion: Laurence H. Silberman
• 2-1 in support of individual mandate
“The right to be free from federal regulation is not
absolute, and yields to the imperative that Congress be
free to forge national solutions to national problems, no
matter how local — or seemingly passive — their
individual origins,” he wrote. The fact that Congress
may have never issued an individual mandate to
purchase something before, a central argument for
many opposing the law, “seems to us a political
judgment rather than a recognition of constitutional
limitations,”
NY Times, Nov. 8, 2011
The Super Committee and
Health Care Reform
The Budget Control Act (PL 112-25)
• Passed-August 2, 2011
• Increased debt ceiling by $2.1 trillion over 10 years
• Aimed to reduce deficit by $2.3 trillion over 10 yrs by:
1. Caps on Discretionary spending ($0.9 billion)
2. Super Committee deficit reduction plan charged to
find at least $1.2 trillion in deficit reduction to avoid
“sequestration”
• Sequestration is automatic, across the board
spending cuts
Redhead, CS. Budget Control Act: Potential Impact of Automatic Spending
Reductions on Health Reform. Cong. Research Services
The Super Committee
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Democrats
Sen. Patty Murray (D-Wash)
Sen. Max Baucus (D-Mont)
Sen. John Kerry (D- Mass)
Rep. Xavier Becerra (D-CA)
Rep. James Clyburn (D-SC)
Rep. Chris Van Hollen (DMD)
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Republicans
Sen. Jon Kyl (R-AZ)
Sen. Rob Portman (R-OH)
Sen. Pat Toomey (R-PA)
Rep. Jeb Hensarling (R-Tex.)
Rep. Dave Camp (R-MI)
Rep. Fred Upton (R-MI)
The Super Committee
• Sept. 8:First organizational meeting
• Sept. 13: First public hearing,
• Oct. 14: House and Senate committees must
submit recommendations to the committee
• Nov. 23: Vote on a plan with at least $1.2 trillion
in deficit reduction.
• Dec. 2: Committee submits report and legislative
language to president/Congress.
• Dec. 9: Any House or Senate committee to
which the supercommittee bill is referred must
report it to the full House.
Super Committee Schedule
• Dec. 23: A majority vote (a “yes” vote by
seven of the panel’s 12 members) is required
Jan. 15, 2012: “trigger” leading to $1.2 trillion
of future spending cuts goes into effect
• February 2012: First $900 billion of debt
ceiling increase runs out.
• February/March 2012: During this period, 15
days after the president uses his authority in
the bill to increase the debt ceiling a second
time, is the deadline for Congress to consider
a resolution of disapproval for the second
tranche ($1.2-$1.5 trillion) of debt limit
increase.
Super Committee Schedule
• Fall/Winter 2012: The additional $2.1-$2.4
trillion of borrowing authority from this law
runs out.
• Jan. 2, 2013: OMB orders sequestrations for
defense and non-defense categories of
spending necessary to meet spending cuts
required by the “trigger."
Democratic proposal
• $2.3 trillion tax and cut proposal
• $1 Trillion in new taxes
• $350 billion in Medicare savings
• $250 billion from providers
• $100 billion from beneficiaries
• Fixes “Sustainable Growth Rate”
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Physician reimbursement cut
• $50 billion in Medicaid savings
• $8 billion from Prevention and Public Health
Fund
Republican proposal
1. Cut deficits by $1.2 trillion
2. $350 billion in new revenues, derived
largely from a revision to the tax code that
would limit some deductions and subsidies
3. Lowering the top tax rate to 28 percent.
If no proposal
If no proposal
Sequestration
1. BCA sets out discretionary spending limits
through FY 2021
2. Begins if no agreement or OMB determines
spending too high, president orders
sequestration
3. All accounts reduced proportionally within
category
4. $109.3 billion in cuts per year beginning
in FY 2013
• Half from defense
If no proposal
Sequestration Health Impact (9% first year)
1. Medicaid not automatically cut
2. CDC-cut $740 million in 2011 already
3. Medical research
4. Disease prevention-reducing prevention fund
5. HIV/AIDS drug and treatment programs
CBO Estimates if no proposal (2013-2021)
• Reductions from 10% (2013) to 8.5% (2021) in caps on
new discretionary appropriations for defense programs,
outlay savings $454 billion.
• Reductions from 7.8% (2013) to 5.5% (2021) in caps
on new discretionary appropriations for nondefense
programs, outlay savings $294 billion.
• Reductions of 2% each year in most Medicare
spending to providers, savings of $123 billion, and
• About $31 billion in outlays from reductions in
premiums for Part B of
• An estimated reduction of $169 billion in debt-service
costs.
Alternatives
1. Two step process
• Super Committee sets a figure for
increased revenue from tax reform• Set in legislation by congressional
committees
2. Turn off automatic cuts (President is
opposed)
Exempted Health Accounts
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All Veterans Affairs programs
Grants to States for Medicaid
Children’s Health Insurance Fund
Black Lung Disability Trust Fund Refinancing
Medical Facilities Guarantee and Loan
Department of Defense Medicare-Eligible Retiree Fund
Payments to Health Care Trust
Radiation Exposure Compensation Trust
Vaccine Injury Compensation
Energy Employees Occupational Illness Fund
Postal Service Retiree Health Benefits Fund
Retirement Pay and Medical Benefits for
Commissioned Officers, Public Health Service
Devil is in the details
• Implementation is critical
State and Federal level
• Cost containment critical
Care and premiums in the exchange
Discussion