National Health Reform Proposals

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Broad Consensus But Important Disagreements

Broad Consensus But Important Disagreements

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  • 1. 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
  • 2. 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
  • 3. Proposal elements
    • Subsidies
    • The exchange
    • Individual and employer responsibility
    • New rules for insurance companies
    • Slowing cost growth
    • Financing
  • 4. 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
  • 5. 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
  • 6. 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?
  • 7. 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
  • 8. 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?
  • 9. 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?
  • 10. 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?
  • 11. 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
  • 12. 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?
  • 13. 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?