National health reform proposals: Broad consensus but important disagreements National Health Journalism Fellowships October 6, 2009 Stan Dorn The Urban Institute [email_address] 202.261.5561

Overview Analysis focuses on Democrats and the handful of Republicans who might support reform legislation Consensus around the broad structure of reform Disagreement around key details Some “details” are really major – e.g., “How do you pay for it?” Discussion will focus on conceptual issues, rather than design details

Analysis focuses on Democrats and the handful of Republicans who might support reform legislation

Consensus around the broad structure of reform

Disagreement around key details

Some “details” are really major – e.g., “How do you pay for it?”

Discussion will focus on conceptual issues, rather than design details

Proposal elements Subsidies The exchange Individual and employer responsibility New rules for insurance companies Slowing cost growth Financing

Subsidies

The exchange

Individual and employer responsibility

New rules for insurance companies

Slowing cost growth

Financing

Subsidies Medicaid eligibility for the poorest uninsured. If, e.g., up to 133% FPL, 17.0 million uninsured qualify. Most important question: State financial responsibility

Medicaid eligibility for the poorest uninsured. If, e.g., up to 133% FPL, 17.0 million uninsured qualify.

Most important question:

State financial responsibility

BTW: What is the federal poverty level (FPL)? 22,050 4 3,740 Each additional person 18,310 3 14,570 2 $10,830 1 Annual income in 2009 Household size

Subsidies, continued New subsidies for those with incomes between Medicaid levels and 400% of FPL. Eligible would be, e.g., 16.3 million uninsured from 133% to 400% FPL. Questions: How much of a subsidy, for premiums and out-of-pocket costs? Is the subsidy provided as a tax credit? Or a “spending side” payment to health plans? What “firewalls” prevent subsidies from funding abortions? Do legal immigrants qualify during their first 5 years in the U.S.? What happens to CHIP?

New subsidies for those with incomes between Medicaid levels and 400% of FPL. Eligible would be, e.g., 16.3 million uninsured from 133% to 400% FPL. Questions:

How much of a subsidy, for premiums and out-of-pocket costs?

Is the subsidy provided as a tax credit? Or a “spending side” payment to health plans?

What “firewalls” prevent subsidies from funding abortions?

Do legal immigrants qualify during their first 5 years in the U.S.?

What happens to CHIP?

Affordability (4-person family; Dad, age 53) Note: shows 2009 costs as if proposal fully implemented. House (Tri-Cmt) HELP SFC $5,954 $5,226 $7,938 $66,150 300% FPL $2,205 $1,455 $3,087 $44,100 200% FPL $992 $0 $1,488 $33,075 150% FPL Premiums Annual income FPL

Health Insurance Exchange Consumers not offered employer-sponsored insurance (ESI) can select from multiple plan options. Small firms can pay premiums so their workers buy through the exchange. Consumers picking costly plans pay higher premiums. Is a public option available in the exchange? Can large firms access the exchange? Is the exchange run by the federal government? By a state-level entity? Does the exchange negotiate with health plans for lower prices and higher quality? Can undocumented immigrants or their employers buy coverage through the Exchange?

Consumers not offered employer-sponsored insurance (ESI) can select from multiple plan options. Small firms can pay premiums so their workers buy through the exchange. Consumers picking costly plans pay higher premiums.

Is a public option available in the exchange?

Can large firms access the exchange?

Is the exchange run by the federal government? By a state-level entity?

Does the exchange negotiate with health plans for lower prices and higher quality?

Can undocumented immigrants or their employers buy coverage through the Exchange?

Individual and employer responsibility Individual who lack health coverage are penalized, unless they cannot afford insurance How is affordability determined? Employers above a certain size must either offer coverage or pay the government Payroll tax or free rider charge?

Individual who lack health coverage are penalized, unless they cannot afford insurance

How is affordability determined?

Employers above a certain size must either offer coverage or pay the government

Payroll tax or free rider charge?

New rules for insurers All health insurance must meet federal minimum benefit standards (e.g., preventive care, lifetime or annual caps, actuarial value minimum) What rules apply to ESI? How extensive are the standards? (E.g., medical loss ratio, cultural competence, etc.) What happens to people who, today, have coverage that violates the new standards? Insurers face new limits on their ability to discriminate against costly consumers How much can premiums vary based on age? 2:1? 5:1? What happens before the individual mandate and subsidies come on line?

All health insurance must meet federal minimum benefit standards (e.g., preventive care, lifetime or annual caps, actuarial value minimum)

What rules apply to ESI?

How extensive are the standards? (E.g., medical loss ratio, cultural competence, etc.)

What happens to people who, today, have coverage that violates the new standards?

Insurers face new limits on their ability to discriminate against costly consumers

How much can premiums vary based on age? 2:1? 5:1?

What happens before the individual mandate and subsidies come on line?

Slowing cost growth With Medicare, Medicaid [and a public plan], experiment with innovations that shift incentives from volume to value, better manage chronic care, etc. Fund comparative effectiveness research to better inform decisions by insurers, providers, and patients Transparency – more info from providers, more usable info from insurers, conflict-of-interest reports, etc. Prevention initiatives Questions: Malpractice New investment in Health Information Technology

With Medicare, Medicaid [and a public plan], experiment with innovations that shift incentives from volume to value, better manage chronic care, etc.

Fund comparative effectiveness research to better inform decisions by insurers, providers, and patients

Transparency – more info from providers, more usable info from insurers, conflict-of-interest reports, etc.

Prevention initiatives

Questions:

Malpractice

New investment in Health Information Technology

Financing Health reform legislation will not add to the deficit. Slowed cost growth in Medicare and Medicaid, along with new revenue, will pay for the new costs What level of new costs is acceptable? How will Medicare cost-growth be slowed? Agreed: cut Medicare Advantage, change certain provider payment and drug rebate rules, reduce payments for uncompensated care Question: A base-closing-type commission for Medicare? How will revenue be raised? Taxing unusually expensive insurance? Taxing the wealthy? Taxing the health care industry?

Health reform legislation will not add to the deficit. Slowed cost growth in Medicare and Medicaid, along with new revenue, will pay for the new costs

What level of new costs is acceptable?

How will Medicare cost-growth be slowed?

Agreed: cut Medicare Advantage, change certain provider payment and drug rebate rules, reduce payments for uncompensated care

Question: A base-closing-type commission for Medicare?

How will revenue be raised?

Taxing unusually expensive insurance? Taxing the wealthy? Taxing the health care industry?

A final conundrum Insurance reforms are wildly popular Conventional wisdom: For insurance reforms, individual mandate needed For individual mandate, affordable coverage needed For affordable coverage, costly subsidies needed Bottom line: for insurance reforms, costly subsidies are needed Can you get there on $900 billion over 10 years?

Insurance reforms are wildly popular

Conventional wisdom:

For insurance reforms, individual mandate needed

For individual mandate, affordable coverage needed

For affordable coverage, costly subsidies needed

Bottom line: for insurance reforms, costly subsidies are needed

Can you get there on $900 billion over 10 years?