Transcript Slide 1

Federal Legislative Issue Update
and
A Look at What the Future May Hold for
Health Care Financing
Presented by
Janet Trautwein,
National Association of Health
Underwriters
Lots of Unresolved
Business in 2008
• Reauthorization and possible expansion of or
changes to the STATE Children’s Health
Insurance Program (SCHIP)
• Mental Health Parity
• Long Term Care
• Various “reform” bills
• Presidential Candidates
State Children’s Health Insurance
Program
• NAHU’s current top federal legislative priority is the
SCHIP reauthorization, with our focus on increasing
access to private premium assistance programs to
minimize the effects of “crowd out.”
• Substitution of public for private health insurance
coverage occurs when public subsidies are provided.
Crowd out is inevitable. CBO estimates SCHIP
crowd out to be between 25-50%.
• The goal for policy makers should be to mitigate the
effects of crowd out, to ensure that SCHIP plays a
coordinated partnership role with existing private
sector health insurance coverage.
State Children’s Health Insurance
Program
• The 1st Session of the 110th Congress produced
a stalemate on SCHIP reauthorization
• Funding for SCHIP expired on September 30,
2007; Congress has passed short term
extension of current law to buy more time for
reauthorization agreement
• President Bush and many Republicans
objected to the size of SCHIP expansion being
proposed in Congress
State Children’s Health Insurance
Program
• In July 2007, both the House and the Senate passed
very different versions of SCHIP reauthorization
legislation
• The House measure H.R. 3162, significantly expanded
the scope of SCHIP, including providing coverage to
individuals up to age 25
• Rather than improving the current premium assistance
provisions of S-CHIP, it did just the opposite, by
allowing employers to buy into the S-CHIP program
• As a partial funding mechanism, it significantly cut
funding to Medicare Advantage plans.
• Passed mostly on party lines: 225-204
Senate S-CHIP
• The Senate-passed legislation, H.R. 976, also expands
program funding, but would do so in a more limited
way and primarily through an increase in the federal
tobacco excise tax
• Greatly improves current premium assistance
provisions would help reduce crowd-out by phasing
out SCHIP coverage of childless adults
• Senate bill passed with a veto-proof margin of 68-31
• President Bush promised veto of both the Senate
bipartisan measure and the House bill, citing too large
an expansion of the government program and
opposition to tobacco tax increases
House – Senate Compromise Agreement
• Congress attempted to send President Bush two
different versions of SCHIP reauthorization (H.R. 976
and H.R. 3963), essentially Senate bill’s $35 billion
expansion and tobacco tax funding increase
• Newer versions sought to tighten income eligibility
levels, speed termination of coverage of childless
adults, make stronger proof of eligibility rules
• President Bush vetoed both versions, and Congress
failed to override vetoes (2/3 of each chamber
needed)
S-CHIP
• Still possible reauthorization compromise
attempted again in 2008. But unlikely – Bush
says tobacco tax increase is non-starter, and he
objects to size of expansion ($35 billion)
• Good resource on S-CHIP and crowd-out
issues: Alliance for Health Reform “Toolkit”
www.allhealth.org/publications/Child_health_i
nsurance/Crowdout_and_SCHIP_toolkit_70.pdf
What Health Issues is Congress
Working on Now?
• Reauthorization and possible expansion of or
changes to the Children’s Health Insurance
Program
• Mental Health Parity
• Other Congressional Efforts
• Medicare for All and Various “reform” bills
• Presidential Candidates
Mental Health Parity
• Since 1996, current law has required parity for mental
health coverage
– Defines parity as no lower annual or lifetime dollar
limit for MH coverage than any annual or lifetime
dollar limits that may apply to medical and
surgical benefits covered by a plan
– Current law explicitly permits plans to have
separate cost sharing provisions, limits on the
duration of coverage and to define what benefits
the plan chooses to cover
– Also does not apply to coverage for substance
abuse at all
Mental Health Parity
• Current law included a 5-year sunset provision
• Each year since the sunset, Congress has extended the
1996 provisions by one year
• Proponents, led by the late Sen. Paul Wellstone (D-MN)
and Sen. Pete Domenici (R-NM) have pushed each year
to significantly expand current law to require parity in
plan cost sharing provisions, limits on the duration of
coverage of services, coverage of all conditions listed in
the so-called DSM-IV manual, and limit plans ability to
manage this benefit
• Employers and health plans have (previously) vigorously
resisted efforts to expand current law, leading to a
stalemate where the temporary extension of current law
was the only common ground action on which all sides
could agree.
Mental Health Parity
• 110th Congress -- Sen. Domenici and his new co-sponsors,
Sen. Ted Kennedy and Sen. Mike Enzi (R-WY) agreed to take
a fresh look at issue and work to find consensus.
• More moderate bipartisan agreement reached (S. 558) -requires parity on all cost sharing and duration of coverage
limits, but leaves plans and employers the ability to define
benefits and to use medical management practices to control
health costs, make sure enrollees receive the right care for their
conditions.
• The House sponsors of H.R. 1424 proceeded into the new
Congress with essentially the same, highly restrictive version
of parity legislation as before.
Major Differences in the Bills
• Mandated Benefits
– Definition of Mental Illness
• Medical Management
– The right care at the right time
• Network Management
– Requirement of out-of-network services
• Expanded Remedies
– State vs. federal
• Effective Dates
– January 1, 2008 vs. 12 months from enactment
What Health Issues is Congress
Working on Now?
• Reauthorization and possible expansion of or
changes to the Children’s Health Insurance
Program
• Mental Health Parity
• Other Congressional Efforts
• Medicare for All and Various “reform” bills
• Presidential Candidates
Other Issues Congress is Working On
• Trade Adjustment Assistance Act
– Authorization expired in 2007, but Congress extended
current law for a few months to allow time for agreement
– Trying to make it easier for states with purchasing options
– Possible expansion to other populations – S. 1848 was
introduced by Sen. Baucus to modify the bill and expand it
to service workers and others
• High-Risk Pools
– FY08 appropriations bill provides $49 million in federal
funding
Other Issues Congress is Working On
• Health Information Technology (IT)
– Significant interest in House and Senate to employ greater
Health IT to improve the quality of patient care and lower costs
– House and Senate measures would seek to establish national
standards, provide grants and loans to health care providers and
to states to spur adoption of health information technology
– Failure to reach agreement in past couple of years due to funding
amounts and privacy issues
• E-Prescribing
– S. 2048 and other measures being promoted as first step to
Health IT -- would require all doctors to use electronic
prescriptions for Medicare patients, starting in 2011
– Proponents seek to make this part of any “physician fee
schedule” fix under Medicare Part B
Other Issues: Long-Term Care
• NAHU is working with a coalition to pass
legislation to allow long-term care insurance to
be sold pre-tax under cafeteria 125 and FSA
arrangements
• Senators Grassley and Lincoln have sponsored
S. 2337 and Rep. Pomeroy sponsored H.R.
3363
• Bipartisan but cost of bill must be paid for in
other tax increases or spending reductions
Other Issues Congress is Working On
• Insurance Producer Oversight in Medicare Sales /
Ethics
– Widespread press reports in 2007 of “bad apples” in our
industry who have been behaving in what appears to be an
unethical manner
– NAHU led the way in getting out in front in
communications with CMS and Congress, touting and
reinforcing considerable time, effort and resources
educating our membership about the rules concerning
Medicare-related product sales. Also working closely with
CMS and state regulatory agencies.
What Health Issues is Congress
Working on Now?
• Reauthorization and possible expansion of or
changes to the Children’s Health Insurance
Program
• Mental Health Parity
• Genetic Discrimination
• Other Congressional Efforts
• Various “reform” bills
• Presidential Candidates
Health Reform Proposals
• Senator Wyden — Dismantles existing employer-based
system, state pooling arrangements, community rating and
guarantee issue, Individual Mandate, Employer Mandate
• Senator Kennedy/Representative Dingell — Medicare for All
• Senator Bingaman/Representative Baldwin -- Grants to states
to carry out any of a broad range of strategies to increase
health care coverage
• Senator Enzi — Individual mandate, guarantee issue and tight
rating requirements on all products, pooling of individual and
group markets, required community rated and price-controlled
products from each carrier, small business health plans, and
standard deduction to pay for individual or employer coverage.
• Senator Harkin — Allows employers a 50% tax credit for the
costs of providing employees with a qualified wellness
program
• Bush Tax Proposal – Removing employer paid benefit tax
exclusion and replacing it with a deduction
Changing Tax Exclusion of
Employer-Sponsored Insurance
• Health benefits a big potential target for
raising revenue
• Currently, the amount that employers
contribute toward health benefits and health
insurance is generally excluded, without limit,
from workers’ payroll and income taxes.
• Tax treatment of health benefits established in
the tax code through a series of laws and
rulings that date back to the 1920s.
Changing Tax Exclusion of
Employer-Sponsored Insurance
• Estimated value of the income tax exclusion: $100 billion per
year; payroll tax exclusion: $50 billion per year
• Tax exclusion reduces the after-tax cost of health insurance to
individuals and families: almost 70 percent of workers and
their dependents (more than 160 million individuals under age
65) are incentivized to acquire employment-based health
insurance. ESI has take-up rate of about 85%, with fewer than
5 percent of workers eligible for health benefits being
uninsured
• Growing discussion across ideological spectrum to end current
preferential tax treatment for employment-based health
benefits and replace it with some other tax preference
What Congress is Working On
• Reauthorization and possible expansion of or
changes to the Children’s Health Insurance
Program
• Mental Health Parity
• Genetic Discrimination
• Medicare for All and Various “reform” bills
• Other Congressional Efforts
• Presidential Candidates
Presidential Candidates
• Health care will be the top domestic policy issue
during this extended campaign cycle.
• Many candidates favor comprehensive reform that
could dismantle the private market
• Single payer, national exchanges, shift away from the
employer-based system all under serious debate.
• NAHU’s analysis of presidential health care reform
proposals is updated regularly and available online.
Presidential Platforms
Senator Barack Obama (D-IL)
•
Wants universal coverage by 2012
1) States, employers, and private plans to GI
2) Lower costs and improve quality
3) Focus on preventive care, wellness, and public health
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Create national “exchange” with federal coverage
standards
Mandate children covered up to age 25
Estimated $50-$60 B a year
Strengthen anti-trust laws for tort reform
Private insurers must invest % of premiums to
patient care in non-competitive areas
Presidential Platforms
Senator Hillary Clinton (D-NY)
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Individual/Employer mandate
Estimated $110 B a year
Cost Containment – preventive/chronic disease
mgmt, paperless IT, reduce admin. Costs
Private Insurance – insurers must cover preventive
care and meet MLR
GI and modified community rating
“Choice”
1) Keep current private coverage
2) Buy into expanded FEHBP
3) Health Care Choices (public FEHBP)
Presidential Platforms
Senator John McCain (R-AZ)
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Eliminate fed income tax exclusion for employersponsored insurance
Replace the exclusion with a tax credits - $2500/$5000
Portable health insurance plans/multi-year plans
Coverage across state lines
Purchase health insurance through any association or
organization they choose
Transparency with medical outcomes/quality of care
Expand the VA program to use benefits for timely highquality care
Making a Difference
Constraining Medical Costs
Behavior & Lifestyle: Weight Gain ’86-’06
No Country Can
Fund All the
Consequences:
Hypertension
Type 2 Diabetes
Osteoarthritis
Stroke
Coronary Heart
Gallbladder
Sleep Apnea
Respiratory
Issues
Some Cancers
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Obesity Trends Among U.S. Adults (BMI>30%)
No Data
<10%
10%–14%
15%–19%
20%–24%
25%–29%
≥30%
Centers for Disease Control & Prevention, 2006 Behavioral Risk Factors Surveillance System
Constraining Medical Costs
How Much Can Private Insurance Costs
Be Affected?
Administration
14%
Other Claims
Cost
45.1%
Behavior
15%
Inefficiencies
3.3%
Government
Cost Shift
Uninsured
9.5%
Cost Shift
8%
Malpractice
5%
Access For All
Most Uninsured Not A Crisis
46 Million Considered Uninsured:
Eligible for
Government
Program
(but not signed up)
34%
80%
$50,000+
Annual Income
32%
Temporarily
Uninsured
14%
Long-Term
Uninsured
20%
February 2005 Blue Cross Blue Shield Association analysis of Census Bureau’s “Income, Poverty and Insurance Coverage” report
Access for All
Smart State Reforms Make a Difference
Varying regulatory climates can have a profound impact on insurance affordability.
Consider the differences in individual rates for two 30-year-old males living in a
Philadelphia suburb located across the bridge from each other – in different states.
PA
September 2007
Lowest and Highest
Rates for PPO
Indemnity Plans:
NJ
$1000 Deductible
80/20% Coinsurance
$70 - $260
Wayne, PA
19087
In Neighboring
Philadelphia
Suburbs
$599 - $6,009
Haddonfield, NJ
08033
Who Will Pay For Health Care
In the Future?
Who Will Pay?
• Employers
– Will they be required to pay?
– Who will they be required to cover?
– What type of benefit will they be required to
provide?
– How much will they pay or will they have to pay?
Who Will Pay?
• Individuals
– Will the employer based health insurance system
change to one that is individually based?
– Will employers still contribute to the cost?
– How will that change markets?
– Will individuals be required to carry health
insurance?
Who Will Pay?
• The Government
– Will the government continue to provide coverage
primarily for those who are low income or elderly?
• Will the government also begin to subsidize the
purchase of coverage in the private market for those
with lower incomes
– Will the government begin to subsidize the cost of high risk
individuals?
– Will the government provide a basic level of coverage or
catastrophic coverage?
– Will the government be the provider for all coverage, i.e., a
single payer system?