Transcript Health Care Reform: What is it and What Does it Mean for Us

Health Care Reform?
P-PACA
vs
Single Payer
Oliver Fein, M.D.
Professor of Clinical Medicine and Public Health
Associate Dean
Office of Affiliations
Office of Global Health Education
Weill Cornell Medical College
Internal Medicine Residency Program
Columbia University Medical Center
NewYork-Presbyterian Hospital
February 3, 2012
PRESENTATION OUTLINE
1. History of recent U.S. Health Reform
2. Challenges facing U.S. Health Care
System
3. Comparison of Single Payer and
2010 Health Reform (P-PACA)
DISCLOSURES
Dr. Oliver Fein has no relevant financial
relationships with commercial interests
Dr. Oliver Fein is immediate past President of
Physicians for a National Health Program
(PNHP), a non-profit educational and advocacy
organization. He receives no financial
compensation from PNHP.
Disclosure Information
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HEALTH REFORM:
OBAMA’S FATEFUL CHOICE
• He did not want to “start from scratch”
• He had two fundamental choices:
1) to build on the public sector (Medicare)
or
2) to build on the private sector
• Which did he choose?
Progress(?) of US Health Reform
Employer mandate
Medicare
Individual mandate*
??
* “each eligible individual must
enroll in an applicable health plan
for the individual and must pay any
premium required with respect to
such enrollment.” (S.1775)
Public option**
** “you can choose to enroll
in the new public plan”
WHAT HAPPENED TO THE
PUBLIC OPTION?
The original “robust” Plan – March 2009
• Open enrollment: “Medicare for
everyone who wants it”
• Medicare rates, backed by the
government
• 119 million members (Lewin)
The greatest lobbying effort in
history
June 29, 2009
$1.2 Billion Spent on Health Care
Lobbying!
Center for Public Integrity, March 26, 2010
WHAT HAPPENED TO THE
PUBLIC OPTION?
The House Plan – November 2009
• Restricted enrollment (only the uninsured)
• 6 million members (<2% of the population)
• Negotiated rates, self sustaining
The Senate Plan – December 2009
• No public option
THE PATIENT PROTECTION
AND
AFFORDABLE CARE ACT
(P-PACA)
March 23, 2010
P-PACA
(a MANDATE MODEL)
Everyone is required to have health
insurance or pay a penalty.
1. Individual mandate: penalty =$695 for
singles; $2,085 for families
2. Employer mandate (50 or more
employees): penalty =$2,000/employee
3. Necessary for the survival of private HI.
Private HI lost 3.2% (6.3 million) enrollees
in 2009 and more than 15 million in the
last decade.
Improved
MEDICARE FOR ALL
(a Single Payer Model)
Build on the original Medicare
1. Improve Coverage: preventive services,
oral surgery, long term care
2. Reduce or eliminate deductibles and copayments
3. Expand drug coverage: eliminate the
“donut hole”
4. Re-design physician reimbursement
CHALLENGES FACING
HEALTH CARE REFORM
1.
2.
3.
4.
5.
6.
7.
Declining access
Escalating costs
Lack of comprehensive benefits
Restricted choice
Uneven Quality
Insufficient primary care
How to pay for reform
CHALLENGE #1
DECLINING ACCESS
The Epidemic of Underinsurance
Number of people spending more than 10% of income on health care (Millions)
70
60
50
40
30
20
10
Insured
Uninsured
0
2000
2007
Source: Too Great a Burden, Families USA, December 2007
RISE IN PERSONAL
BANKRUPTCIES
62% of personal bankruptcies are due
to medical expenses and over 75% had
health insurance at the outset of their
bankrupting illness.*
* Himmelstein, et.al. Am J Med, August, 2009
Improved
MEDICARE FOR ALL
• Automatic enrollment
• Federal guarantee
• All residents of the United States
• “Everybody in, nobody out”
HEALTH INSURANCE REFORM
(P-PACA)
• Mandates purchase of private HI (2014)
• Expands Medicaid eligibility to 133% FPL
(2014) - single $14,403; family $19,378
• Subsidizes premiums up to 400% FPL
(2014) - single $43,320; family $88,200
• Insurance market reforms: Coverage up
to age 26; no pre-existing condition
exclusions; no annual/lifetime limits
Millions Will Remain Uninsured (and
Millions More Poorly Insured)
Millions
80
Current law
PPACA
60
51
51
50
51
51
52
53
53
54
23
23
23
23
2016
2017
2018
2019
50
40
35
28
20
0
2012
2013
2014
2015
Note: The uninsured include about 5 million undocumented immigrants.
Source: Congressional Budget Office.
CHALLENGE #2
ESCALATING COSTS
Insurance Premiums • Workers’ Earnings • Inflation
1999-2008
140%
Health Insurance Premiums
120%
119%
Workers' Earnings
Overall Inflation
100%
80%
60%
40%
34%
20%
29%
0%
1999
2000
2001
2002
2003
Kaiser/HRET Survey of Employer-Sponsored Health
Benefits, 2000-2008. Bureau of Labor Statistics,
Consumer Price Index
2004
2005
2006
2007
2008
High Cost of Health Insurance
Premiums: It’s Even Too Expensive for
the Middle Class Today
National Average for Employer-provided Insurance
Single Coverage
Family Coverage
$ 5,503 per year
$15,073 per year
Note: 31% high-deductible ($1,000-2,000) policies
Source: Kaiser Family Foundation/HRET Survey of Employee Benefits, 9/27/2011
Improved
MEDICARE FOR ALL
Low Administrative Costs = Single Payer
• Administrative cost and profit
- Medicare: 2-3 %
- Private insurance: 16-30%
• $400 billion* redirected to cover the uninsured
and to expand coverage for the underinsured
* NEJM 2003:349;768-775 updated to 2010
Covering Everyone and Saving Money
through Medicare for All
Additional costs
Covering the uninsured and poorly-insured
Elimination of cost-sharing and co-pays
+6.4%
+5.1%
Total Costs
Savings
Reduced insurance administrative costs
Reduced hospital administrative costs
Reduced physician office costs
Bulk purchasing of drugs & equipment
Primary care emphasis & reduce fraud
$B
134
107
+11.5% 241
-111
-5.3%
-1.9%
-3.6%
-2.8%
-2.2%
-21
-76
-59
-46
Total Savings -15.8% -313
Net Savings - 4.3% - 72
Source: Health Care for All Californians Plan, Lewin Group, January 2005
Private insurers’ High Overhead
SINGLE PAYER OFFERS TOOLS
TO BEND THE COST-CURVE
• Global budgeting of hospitals
• Capital investment planning
• Emphasis on primary care; coordination of
care; alternative ways of paying for care
• Bulk purchasing of pharmaceuticals
HEALTH INSURANCE REFORM
(P-PACA)
Market Theory:
Mandate the young, healthy uninsured
buy private health insurance
(they usually don’t get sick and don’t get
health insurance = low risks)
Then, the premiums for everyone will
go down.
WILL MARKET THEORY WORK?
Premiums*
Single Coverage $5,503 per year
Family Coverage $15,073 per year
*national average for employer-provided insurance
Penalties under P-PACA
Individuals
$695 per year
Families
$2,085 per year
Employers $2,000 per employee
HEALTH INSURANCE REFORM
(P-PACA)
Offers unproven tools to contain costs
• Health Information Technology (HIT)
• Chronic Disease Management
• Payment reforms (e.g., ACOs, bundled
payments, value-based purchasing)
…and Costs Will Keep On Rising
National Health Expenditures (trillions)
$5.0
PPACA (CMS Actuary)
$4.5
Current projection
$4.0
PPACA (Commonwealth Fund)
6.6% annual
growth
$4.7
$4.67
$4.5
6.4% annual
growth
$3.5
6.0% annual
growth
$3.0
$2.5
$2.0
National Health Expenditures as Percent of GDP
$1.5
$1.0
17.8 17.9 18.0 18.2 18.8 19.3 19.8 20.2
20.5 21.0
2010
2018
$0.5
$0.0
2009
2011
2012
2013
2014
2015
2016
2017
2019
Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization of
services by previously uninsured.
Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center for
American Progress and The Commonwealth Fund, December 2009. Estimated Financial Effects of PPACA as
Amended, Richard Foster, CMS Actuary, April 2010
CHALLENGE #3
THE DEFINITION OF ESSENTIAL
HEALTH BENEFITS
• Service Coverage: Doctors, NPs,
Hospitals, Drugs; Dental, Mental
Health, Home care/nursing home
• Financial Coverage: Copays and
deductibles
Improved
MEDICARE FOR ALL
Comprehensive coverage
- Preventive services
- Hospital care
- Physician services
- Nurse practitioner services
- Dental services
- Mental health services
- Medication expenses
- Reproductive health services
-Home Care/nursing home care
“All medically necessary services”
Any exclusions? How decided?
Improved
MEDICARE FOR ALL
Eliminates Co-Pays or Deductibles
• Reduce use of needed and unneeded
services equally
• Result in under use of primary care services
• Not as effective in reducing over use of
technology intensive services, as
- Eliminating self-referral to MD owned facilities
- Reducing defensive medicine
HEALTH INSURANCE REFORM
(P-PACA)
• No Standard Benefit Package mandated
• Eliminates co-pays and deductibles, but only on
preventive services
• No regulation of the magnitude of premiums,
deductibles and co-pays – just the stipulation
that benefits have an actuarial value of 60% or
higher
• Stipulation that health insurers have medical lost
ratios (MLR) of 80-85%
HHS DEFINES
“ESSENTIAL HEALTH BENEFITS”
(January 2012)
States choose a benchmark plan that reflects the scope of services
offered by a “typical employer plan”
Four benchmark options:
•One of the three largest small group plans in the state by
enrollment;
•One of the three largest state employee health plans by
enrollment;
•One of the three largest federal employee health plan options by
enrollment;
•The largest HMO plan offered in the state’s commercial market by
enrollment.
If states choose not to select a benchmark, HHS intends to propose
that the default benchmark will be the small group plan with the
largest enrollment in the state.
Consequence: 50 Different Benefit Packages
CHALLENGE #4
RESTRICTED CHOICE
• 42% of employees have no choice
• Private health insurance limits choice to
the network of doctors and hospitals with
whom they have negotiated contracts
• You pay more to go out of network
Improved
MEDICARE FOR ALL
Expands Choice for Everyone
• No limit to a network of providers
• Free choice of doctor and hospital
• Delinks health insurance from
employment
HEALTH INSURANCE REFORM
(P-PACA)
Creation of HI Exchanges Expands Choice
for Some
• Limited to the individual and small group market
• Market-place of private HI plans
• No public option
• State-based with federal backup
• No state single payer until 2017
VERMONT’S PATHWAY TO
SINGLE PAYER
• Elected Peter Shumlin governor: 11/6/2010
• William Hsiao, Ph.D., Harvard economist,
reports 3 options: 2/2011
- Option 3: Public-private hybrid single payer
• Standard benefit package
• Uniform prices
• Administered by a public benefit corporation
• Pathway legislation passed: 5/25/11
HEALTH INSURANCE REFORM
(P-PACA)
Restricts Choice: The case of abortion
• Allows states to prohibit abortion coverage
in state-run exchanges
• If states allow abortion coverage, requires
enrollees or employers to send two checks
• Insurers must keep abortion coverage money
separate from federal subsidies
CHALLENGE #5:
UNEVEN QUALITY
• In 2008, U.S. was last among 19
industrialized nations in
mortality amenable to health
care.
• In 2006, we were 15th.
* Commonwealth Fund (2011)
Improved
MEDICARE FOR ALL
• National data on health care quality vs.
proprietary data held by private HI
• National standards and public reporting
• HIT for the nation with patient protections –
every patient their own medical record on a
“credit” card
HEALTH INSURANCE REFORM
(P-PACA)
• Comparative Effectiveness Research
• Innovation Center in CMS to test new payment
and service delivery models – PCMH + ACOs
(2011)
• Value based purchasing – hospital payments
based on quality reporting measures (2013)
• Readmission penalties (2013)
• Reduce hospital payments for hospital-acquired
conditions (2015)
CHALLENGE #6:
LACK OF PRIMARY CARE
• Average medical school debt =
$160,000
• Primary care is under-reimbursed
• Medical school graduates going
into specialties
Improved
MEDICARE FOR ALL
• Debt forgiveness for primary care
• Malpractice payment for primary care
providers (MDs, NPs and PAs)
• Patient-Centered Medical Homes (team
based care, open access, coordination of
care; phone/internet medicine)
HEALTH INSURANCE REFORM
(P-PACA)
• 10% Primary Care Bonus Payments (20112017) – estimate = $4,000/provider/year
• Increase Medicaid payment to Medicare
rates for primary care (2013)
• Independent Payment Advisory Board –
I-PAB (2014)
CHALLENGE #7
HOW TO PAY FOR REFORM
Improved
MEDICARE FOR ALL
• Public funding
- Payroll tax
- Corporate taxes
- Income taxes
- Tax on unearned income (stocks, bonds, etc.)
• No premiums: regressive
• No increase in overall health care spending,
because of administrative savings
Improved
MEDICARE FOR ALL
Non-profit/private delivery system under
local control
- Doctors not salaried by government
- Hospitals not owned by government
- This is not “socialized medicine”
A publicly funded-privately delivered
partnership
HEALTH INSURANCE REFORM
(P-PACA)
1.
Increased taxes
- Excise tax on “Cadillac” health insurance plans (2018)
- Medicare payroll tax increase from 1.45% to
2.35% if income greater than $200-250K
- 3.8% tax on investment income
2.
Savings from Medicare
- Advantage: ($132 bill over 10 yrs)
- Cut DSH payments ($36 million)
- Cut Medicare payments to hospitals
($136 bill over 10 yrs)
- Cut payments for home care/nursing homes ($60 bill)
3.
Revenue from cracking down on fraud and abuse
HEALTH REFORM (P-PACA)
1.
Expanded coverage, but not universal
2.
Cost control by market means
3.
No definition of benefits
4.
Choice thru State-based exchanges,
but no public option
5.
Limits on abortion
6.
Primary care/ACO pilots
7.
Funding: Excise tax on high cost (comprehensive
coverage) private HI and Medicare cutbacks
Single Payer
MEDICARE FOR ALL
THE PHYSICIANS’ PROPOSAL
(JAMA, August 13, 2003 p. 798-805)
1.
2.
3.
4.
5.
6.
7.
Universal coverage/automatic enrollment
Low administrative costs=single payer
Comprehensive coverage without co-pays
and deductibles
Maximum choice of Doctor, NP, Hospital
Improved quality through nationwide HIT
Expanded primary care
Publicly-funded/privately delivered
MEDICARE 2.0
Conyers HR 676
Expanded and improved
MEDICARE-FOR-ALL
“Single Payer NH Care”
(55 Co-sponsors in House of Rep)
•
•
•
•
•
•
Automatic enrollment
Comprehensive benefits
Free choice of doctor and hospital
Doctors and hospitals remain independent
Financed through progressive taxes
Costs contained through capital planning, budgeting,
quality reviews, primary care emphasis
Sanders (& McDermott):
American Health Security Act
S 915 (HR 1200)
1.Automatic enrollment
2.Comprehensive benefits
3.Operated by States using Federal standards
4.Free choice of doctor and hospital
5.Doctors and hospitals remain independent
6.Public agency processes and pays bills
7.Financed through payroll taxes
April 14, 2010
Overall, do you think the benefits from government
programs such as Social Security and Medicare are worth
the costs of those programs for taxpayers, or are they not
worth the costs? (results in %)
Worth It
National Sample
76
Tea Party Sample
62
Not Worth ItDK/NA
19
33
5
6
Summary
• A system based on private insurance plans
-- will not lead to universal coverage
-- will not create affordable insurance
• A Medicare for All System
-- can lead to universal, comprehensive coverage
without costing more
-- has the greatest potential to increase choice,
improve quality and expand primary care
-- can be financed fairly
Will We Get Real Health Care Reform
Before the Premium Takes All our Income?
Today
Source: American Family Physician, November 14, 2005
CONTACTS AND REFERENCES
• PNHP National: www.pnhp.org
• PNHP-NY Metro: www.pnhpnymetro.org
• Bodenheimer TS, Grumbach K, Understanding Health
Policy: A Clinical Approach. McGraw-Hill, 2005
• Fein O, Birn AE. (editors), Comparative Health Systems. Am
Jour Public Health 2003; 93: 1-176
• O’Brien ME, Livingston M (editors), 10 Excellent Reasons
for National Health Care. New Press, 2008
• Potter W, Deadly Spin: An Insurance Company Insider
Speaks Out on How Corporate PR Is Killing Health Care
and Deceiving Americans. Bloomsbury Press, 2010