National Health Reform

An Update on the Maelstrom: August 5, 2009

Peter Pratt Senior Vice President

The Impetus for Reform

 Increasing numbers of uninsured  Rising health care costs for individuals, businesses, and government  Wide variations in quality of care, inefficient use of resources (paying for quantity)  14,000 people a day are losing their health insurance  Families with HI pay $1,000 to subsidize care for the uninsured

Obama’s Principles for Reform

      Assure affordable, quality health coverage for all Americans  Reduce long-term growth of health care costs for businesses and government  Protect families from bankruptcy or debt because of health care costs Guarantee choice of doctors and health plans Invest in prevention and wellness Improve patient safety and quality of care Maintain coverage when you change or lose your job End barriers to coverage for people with pre-existing medical conditions

Sources of Major Proposals

 Senate Health, Education, Labor, and Pension (HELP) Committee (passed bill July 15)  Senate Finance Committee (negotiating as we speak on a separate bill)  Three House Committees: Education and Labor, Ways and Means, and Energy and Commerce (single bill passed by 1 st two committees; agreement between Waxman and Blue Dogs July 29 on amended bill)

Areas of Agreement

 (Most) everyone will be required to have health insurance —public or private  People with health insurance can keep it  Private insurers need more regulation (no denials for pre-existing conditions)  Health care costs are rising too rapidly and must be controlled  Health care quality must improve, and the way we pay providers must foster this improvement

Major Aspects of Reform

 Mandates for individuals and employers — and exemptions for smallest businesses  Expansion of public programs  Public plan option —or state-based nonprofit cooperatives  Health insurance exchanges and regulation  Cost containment and quality improvement  Prevention, wellness, and primary care  How to pay for reform

Mandates for Individuals and Employers

 Individuals o o o Must have coverage that meets minimum coverage standards If don’t, pay a penalty (minimum of $750/yr or 2.5% of income [Senate HELP], up to 11% [House E & C]) Sliding scale subsidies —tax credits—up to 400% FPL  Employers o Exemptions for smallest businesses ($500K payroll in House Energy & Commerce; $250K in original bill) o Employers required to pay share of premium (50%/60%/72.5%) o Credits for small businesses offering HI (50% of cost of premium costs paid by employer) o Maximum tax rate of 8% for employers not offering coverage ($750K payroll or more)

Expansion of Public Programs

 Expand Medicaid to all individuals (115% or 133% or 150% FPL) and SCHIP  Require SCHIP enrollees to obtain coverage through exchanges (Senate HELP and House)  Early Medicare buy-in at full cost (Senate Finance)

The Public Plan

 Offered through exchanges  Subject to same rating and risk adjustment rules as private plans  Could be administered by feds, states, or TPAs  Could pay providers at Medicare rates or negotiate rates as private plans do (House E & C agreed to latter)  Nonprofit cooperatives established in the states as alternative

Health Insurance Exchanges

 One national (House) or multiple regional (Senate Finance) HI exchanges /state based Health Benefit Gateways (Senate HELP)  Run by government or nonprofit  Individuals and employers can buy insurance from private or public plans  Standardization of presentation of insurance benefit options

Health Insurance Regulation

 Guaranteed issue and renewability  Prohibit pre-existing condition exclusions  Limit rating variation to family size, geography, age, tobacco use, and actuarial value of benefits  Essential benefits package (Senate HELP/House)  4 benefit categories (Senate Finance/House)  Medical-loss ratio limits (House, not Senate)

Cost Containment

 Encourage adoption and use of health IT  Reduce fraud, waste, and abuse  Simplify HI administration through standardization  Reduce payments to hospitals and physicians  Lower pmts to Medicare Advantage plans  Hard to quantify some of these

Quality Improvement

 Require insurers to provide incentive pmts to providers for coordinated care (Senate HELP)  Create innovation, quality, and patient safety centers   Require public reporting of quality measures Bundle payments for acute and post-acute care (Senate Finance)   Grants for H system efficiency improvements Medicare and Medicaid bonus payments for primary care and care coordination (House)  National strategy to collect and report quality measures and outcomes

Primary Care, Prevention, and Wellness

 Develop a national prevention strategy that sets specific goals for improving health (hmmm —I think we have such a strategy)  Cover only proven preventive services and offer incentives to M’care and M’caid beneficiaries (Senate Finance and House)  Award competitive grants to state and local govts for proven community preventive health activities  Eliminate cost-sharing for Medicare preventive services and pay providers more to deliver them

Primary Care Providers

 Reform GME to increase training of primary care providers, promote training in OP settings, and ensure availability of residency programs in rural and underserved areas (Senate Finance and House)  Increase number of CHCs and school based health centers (Senate HELP)  Support training of health professionals who will work in underserved areas — health corps (House)

Paying for Reform

 $1 trillion, give or take, over 10 years, mainly for subsidies and expansion of Medicaid  Half of cost financed through savings from Medicare and Medicaid: productivity improvements in Medicare, reducing payments to M’care Advantage plans, reducing preventable rehospitalizations, cutting M’caid DSH payments (House)  Half through surcharge on families with incomes over $350K and individuals over $280K (House)  Cost containment and quality improvement (CBO finds many hard to score)  Taxes on health benefits, especially policies with benefits over a certain threshold (under consideration)

The Politics of Reform

        Bipartisan solution? Senate Finance only place so far Social Security and Medicare/Medicaid —strong bipartisan support How necessary is bipartisanship? To pass, no; to take the heat if implementation is messy, yes Cost —to government, small biz, families Public plan —the ultimate bargaining chip—Dems not guaranteeing it’ll be in final plan Providers, health plans, drugmakers support reform —in general The public weighs in: support for reform slipping, how much will reform really cost, who’ll decide which treatments are allowed--the devil you know The public is torn and confused: 75% say their HC costs will rise without reform, 77% with reform

What’s Next

  Recess —taking the debate to the people—is this a ”government takeover of health care” Senate Finance working behind closed doors —3 Dems, 3 Reps —Reid expects bipartisan bill by 8/8  Senate HELP and Finance Committees will blend drafts into a single bill   Full House to vote in September Final legislation will include components of each of the major proposals  Obama wants Congress to send him bill by end of 2009