Health Reform: What itmeans and what’s next? IHC Leaders Conference Scottsdale, AZ March 23, 2012 Grace-Marie Turner Galen Institute
Americans satisfied with own care 82% - Their health care is good to excellent 45% - U.S. has world’s best health system 51% - Major problems, needs major changes 18% - System in crisis, needs major overhaulRobert J. Blendon, Sc.D., Drew E. Altman, Ph.D., John M. Benson, M.A., Mollyann Brodie, Ph.D., Tami Buhr, A.M., ClaudiaDeane, M.A., and Sasha Buscho, B.A., "Voters and Health Reform in the 2008 Presidential Election," The New England Journalof Medicine, November 6, 2008, at http://content.nejm.org/cgi/content/full/359/19/2050.
Early benefits of the law– Allowing “children” up to age 26 on parent’s policies– New coverage for uninsured with health risks– Coverage for pre-existing conditions– $250 for seniors with high drug costs– “Free” preventive care– No annual or lifetime limits on coverage
Key pillars of the new law Strict federal regulation of health insurance Mandates on individuals, states, employers $500 billion in new taxes and penalties $575 billion in cuts to Medicare 32 million more to get health coverage – 16 million through Medicaid expansion – 16 million through federally subsidized private insurance 23 million remain uninsured in 2019
Higher costs… Insurance rising 9% to $15,000/yr. in 2011 Foster: “False more so than true” that law will lower costs for taxpayers Latest CBO cost estimate: $1.76 trillion Gruber: Premiums up to 30% higher than without the lawCongressional Budget Office and the Joint Committee on Taxation, “An Analysis of Health Insurance Premiums Under the PatientProtection and Affordable Care Act,” November 30, 2009, www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf. ChiefMedicare Actuary on Presidents health care claims: "I would say false, more so than true,“ House Budget Committee, January 26,2011, http://www.youtube.com/watch?v=XC9rhGWJA2w. “2011 Employer Health Benefits Survey,” Kaiser Family Foundation/HealthResearch & Educational Trust, September 27, 2011, http://www.kff.org/insurance/092311nr.cfm.
“If you like your health insurance…”51 to 80% of Americans will lose currentcoverage, according to Obama admin. estimatesCBO: Up to 20 million could lose job-based plansUp to 80 million will be forced to change policiesChild-only policies vanish in 17 states35 million more will move from job-basedinsurance to taxpayer-subsidized exchanges
Rules, rules, rules…States to decide contents of MinimumEssential BenefitsStates say they need more details withexchange rulesMedical Loss Ratio rules andexemptions teed up
Opportunities ahead This is not settled policy States resist, will try to reshape policy This law must be changed, likely significantlyThe American people want private insurance, and they want to be in charge of choices. The goals: Freedom. Innovation. Access.
Health care in 2012Legislation: Challenges to the law –CLASS and IPABRegulation: 11,000+ pages so farLegal: U.S. Supreme Court decisionPolitical: 2012 campaigns and elections
What we need from reform A more diverse, dynamic, information- based approval system to pave the way for personalized health coverage and medicineThe 2012 debate provides an opportunity toreshape public policy in numerous ways
Starting a fresh conversation Engaging patients as partners in managing health costs and getting the best value for health care dollars
Total health benefit cost increases per employee16.0% 14.7%14.0%12.0% 11.2% 10.1%10.0% 9% 8.1%8.0% 7.5% 6.1% 6.1% 6.1% 6.3%6.0% 5.5% 5.6%4.0%2.0%0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Mercers National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April)1990-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2009.
Sources: AHIP Center for Policy and Research, U.S. Census Bureau.
Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage, By Firm Size, 2006-2011* Estimate is statistically different from estimate for the previous year shown (p<.05).Note: These estimates include workers enrolled in HDHP/SO and other plan types. Because we do not collect information on theattributes of conventional plans, to be conservative, we assumed that workers in conventional plans do not have a deductible of $1,000or more. Because of the low enrollment in conventional plans, the impact of this assumption is minimal. Average general annual healthplan deductibles for PPOs, POS plans, and HDHP/SOs are for in-network services.Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2011.
Among Firms Offering Health Benefits, Percentage That Offer an HDHP, by Firm Size, 2005-2011* Estimate is statistically different from estimate for previous year shown (p<.05).‡ The 2011 estimate includes 1.8% of all firms offering health benefits that offer bothan HDHP/HRA and an HSA-qualified HDHP. The comparable percentages forprevious years are: 2005 [0.3%], 2006 [0.4%], 2007 [0.2%], 2008 [0.3%], 2009[<0.1%], and 2010 [0.3%].Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005-2011.
Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $2,000 or More for Single Coverage, By Firm Size, 2006-2011 50% All Small Firms (3-199 Workers) All Large Firms (200 or More Workers) All Firms 40% 30% 28%* 20% 20% 16% 12%* 12%* 10% 10% 7% 7%* 6% 5%* 5% 3% 4% 3%* 3% 2% 0% 1% 1% 2006 2007 2008 2009 2010 2011* Estimate is statistically different from estimate for the previous year shown (p<.05).Note: These estimates include workers enrolled in HDHP/SO and other plan types. Because we do not collect information on theattributes of conventional plans, to be conservative, we assumed that workers in conventional plans do not have a deductible of $2,000or more. Because of the low enrollment in conventional plans, the impact of this assumption is minimal.Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2011.
Dispelling CDHC MisconceptionsMisconception Truth Members pay an average of $35 less per year out of“Shifts costs to employees” pocket vs. traditional plans“CDHC doesn’t save $$” Cumulative savings were 26% by the fifth year 8-10% higher use of preventive care 96% same or better care compliance“People will avoid care” 21% more likely to use disease management programs 14% better compliance with EB recommended care“People don’t understand 83% satisfied with service (vs. 82% traditional plans)or like the plans” Source: 2010 Fifth Annual Cigna Choice Fund Experience Study
Source: 2010 Fifth Annual Cigna Choice Fund Experience Study
New IncentivesMcKinsey & Co. says CDHC plans increaseconsumer awareness of cost and value. In this 2005study, consumers were:20% more likely to comply with treatments for chronicconditions25% more likely to engage in healthy behaviors30% more likely to get annual physicals50% more likely to seek less expensive care“If I catch an issue early, I’ll save money in the longrun.”McKinsey & Company. “Consumer-Directed Health Plan Report – Early Evidence is Promising.” June 2005.Available online at http://mckinsey.com/clientservice/payorprovider/Health_Plan_Report.asp.
Common themesFocus on: Personal responsibility by recipients Better coordination of care Incentives for patient participation Data collection and outcomes reports Wellness and prevention services Greater focus on disease management
CDHC plans are moderating costs Consumer-directed health plans show that realigning incentives can help employers and consumers save money while boosting prevention and wellness It’s important for these options to be protected under the new health law
Caution AheadNo instant successPolitical criticism,resistanceSome employees “do notappreciate the long-termpotential these savingsaccounts hold and remainmired in the old use it orlose it mentality of flexiblespending accounts." Towers Perrin http://www.towersperrin.com/tp/jsp/masterbrand_webcache_html.jsp?webc=HR_Services/United_S tates/Press_Releases/2007/20070522/2007_05_22.htm&selected=press
A global move toward consumerism Doctor/patient relationship Decentralized decision-making Value of private enterprise and competition
Who said this?“You should never try to tell people what theyought to do because all of their circumstancesare different.“But if you give them very good timelyinformation, they are going to make their owndecisions in ways, in general, that are going tobe better for them and better for the system asa whole.” ― Ron Kirby, transportation planning coordinator for the Metropolitan Washington Council of Governments Ashley Halsey III and Ed O’Keefe, “Earthquake illustrates colossal challenge of evacuating Washington, D.C.” The Washington Post, August 24, 2011.
What we know for sureCHOICE: Americans value innovation,diversity and choice to accommodatedifferent needs of 300 million peopleFOCUS ON THE PATIENT: They wantdoctors and patients, not government, tomake health care decisionsVALUE IN HEALTH SPENDING: To realizethe promise of personalized medicine andachieve overall cost saving, we must allowmore choice and competition
The future? The global move toward consumerism is real, driven by greater patient demand for more control over decisions. Health overhaul is law and will fundamentally change the U.S. health sector. But I believe choice, innovation, and expanded access will continue to drive reform.