2010-03-24-Health Reform Update, Capitol Club

March 2010 Reform Update Greg Poulsen

Niels Bohr 2

A Remarkable Series of Events Allowed the Senate Win on Christmas Eve. -  Democrats gained a shocking (even to them) 9 Senate seats in the 2008 election -  Ted Steven’s loss in a very conservative state -  Al Franken’s very tight win

Senator Edward Kennedy February 22, 1932 – August 25, 2009 Special Election, January 19, 2010 4

News Flash: January 10, 2010 “Democrat Martha Coakley, buoyed by her durable statewide popularity, enjoys a solid, 15- percentage-point lead over Republican rival Scott Brown as the race for US Senate enters the homestretch, according to a new Boston Globe poll of likely voters.” 5

News Flash: January 15, 2010 “…in the last two days the bottom has fallen out of her poll numbers.” 6

News Flash: January 19, 2010 Mr. Brown Goes to Washington 7

Are We Almost There Yet? July 28: Healthcare Endgame on Capital Hill (AP) August 21: Healthcare Endgame Near But Uncertain (Reuters) October 14: Senate, Administration Begin Healthcare Endgame (NBC) October 27: Health Care Endgame is in Sight (Politico) November 23: Healthcare Endgame is Here (NPR) January 10: Senate and House in Healthcare Endgame (Reuters) March 10: Obama Pushes for Healthcare endgame (AP) March 13: Health Care Endgame Begins (WSJ) March 21: This time we were not kidding

The Process – Where Are We Now? -  House passed the Senate bill 219 – 212 (Mar 21) -  House “Corrections” package passed 220 – 211 -  “Deem and Pass” was not utilized -  Bill now goes to the President for signature – The Senate bill will become law (at least temporarily) -  The Senate will take up the Corrections bill -  Republicans will certainly challenge anything that is not directly budget related since it uses “reconciliation” -  If even a single word is changed in the Senate, then the bill must go back to the House -  Idaho, South Carolina and Virginia have enacted legislation pushing court challenges on the legality of federal mandates. 34 other states are considering similar legislation

The Bills

The Bills – With Reconciliation

What’s In The Bill: Insurance •  Individual mandate •  Employer responsibility •  “Guaranteed Issue” •  Insurance exchange •  Premium and cost-sharing subsidies •  Expand Medicaid/CHIP •  Payment reform

Trend in the Number of Uninsured Nonelderly, 2012–2019:Current Trend the Reconciliation Bill Millions 80 Current Trend Reconcilliation 60 53 53 54 50 51 51 51 51 51 52 50 51 50 50 40 32 26 22 22 20 22 22 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Note: The uninsured includes unauthorized immigrants. With unauthorized immigrants excluded from the calculation, nearly 94% and 96% of legal nonelderly residents are projected to have insurance under the Senate and House proposals, respectively. Data: Estimates by The Congressional Budget Office.

Family Premiums Under Reconciliation Bill After Premium Subsidies (National Average) $12,000 $10,000 $8,000 $8,644 $6,000 $6,483 $4,000 $2,778 $2,000 $1,505 $0 $0 100% 133% 150% 200% 250% 300% 350% 400% ($22,050) ($29,327) ($33,075) ($44,100) ($55,125) ($66,150) ($77,175) ($88,200) Income for a Family of Four % FPL (Annual Income) * For a family of four in a medium-cost area in 2009 (age 40). Premium estimates are based on: Senate Silver Plan, actuarial value = 0.70; House Basic Plan, actuarial value = 0.70. Actuarial value is the average percent of medical costs covered by a health plan. ** Senate bill exempts individuals with premium contributions in excess of 8 percent of income from requirement to buy insurance. Note: FPL refers to Federal Poverty Level. Under the Senate bill, people are eligible for Medicaid up to 133% FPL; under the House bill, people are eligible for Medicaid up to 150% FPL. CBO estimated an average family premium of $14,400 in 2016 for the Senate Finance bill, approximately $10,000 in 2009. Source: Commonwealth Fund analysis of proposals. Premium estimates are from Kaiser Family Foundation Health Reform Subsidy Calculator – Premium Assistance for Coverage in Exchanges/Gateways, http://healthreform.kff.org/Subsidycalculator.aspx.

Penalties for Noncompliance with the Individual Mandate Reconciliation Bill $4,000 Penalty per Person $3,000 $3,000 2016 Rule $2,000 $1,750 $1,250 $900 $1,000 $750 2014 Rule = $95 $0 $20,000-$30,000 $40,000-$50,000 $50,000-$75,000 $75,000-$100,000 $100,000-$200,000 Income Note: The penalty under the Reconcilliation bill is implemented at $95 in 2014 and increases to $325 in 2015 and the greater of $695 or up to 2.5% of income, capped at the average national bronze plan premium, in 2016. Source: Commonwealth Fund analysis of the proposals; Urban-Brookings Tax Policy Center, “Average Modified Gross Income and Average Modified Adjusted Gross Income Across Cash Income Levels, 2009”, Oct 15, 2009 available at http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2486&DocTypeID=1.

Penalties for Noncompliance with the Employer Mandate Under Reconciliation Bill $2,500 $2,000 Penalty per Employee $2000 penalty $1,500 $1,000 $500 $0 10 12 18 25 50 100 500 1000 Number of Employees Note: House bill penalty is based on aggregate payroll. It is illustrated here using 2008 median earnings to estimate firm size. A firm with an aggregate payroll of $500,000 will have an average of 12 workers and a firm with an aggregate payroll of $750,000 will have an average of 18 workers. The payroll tax is implemented on a sliding scale from 2%–8% for payrolls between $500,000 and $750,000. The Senate bill penalty requires any employer with more than 50 full-time employees that does not offer coverage and has at least one full-time employee receiving the premium assistance tax credit to make a payment of $750 per full-time employee. An employer with more than 50 employees that offers coverage that is deemed unaffordable or does not meet the minimum benefit standard and has at least one full-time employee receiving the premium assistance tax credit must pay the lesser of $3,000 for each of those employees receiving the credit or $750 for each of their full-time employees total. Firms are exempt if they have: a payroll less than $500,000 (House), or fewer than 50 workers (Senate). Data: Median earnings among workers working 50–52 weeks annually was $41,030 (Table P–43, Historical Income Data, Current Population Survey). Source: Commonwealth Fund analysis of the proposals.

Trend in the Number of Uninsured Nonelderly, 2012–2019:Current Trend the Reconciliation Bill Billions 200 Net Cost of Coverage 180 Revenues 160 140 120 100 80 60 40 20 0 -20 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: CBO Report, March 18, 2010

What’s In The Bill: Delivery •  Enhance primary care payment by 10% •  Create “Comparative Effectiveness Institute” •  Develop approaches to enhanced quality evaluation and reporting •  Payment reform pilots •  Medical Home •  Bundled Payment •  Accountable Care Organization

Alain Enthoven, PhD “The United States does not have decades to wait for health system reform; in 2009 about $1.15 trillion of the federal budget was spent on health care. And health care expenditures are growing 2.7% per year faster than non-health care gross domestic product. Congressional reform bills do practically nothing to slow health expenditures.”

National Health Expenditures per Capita, 1980–2007 Data: OECD Health Data 2009 (June 2009).

State Rankings:Health Status vs. Health Cost Worst MA NY AK CT ME DE RI VT WV PA ND NJ MN OH WI Health Cost Rank NB MD FL KY TN MO NH KS IA SD IN IL WY NC AL SC WA MT MI MS LA HI OK OR AR VA CO CA TX GA NV NM ID AZ UT Best Best Worst Source: Health Status Rank http://www.americashealthrankings.org/measure/2009/overall.aspx and http://www.statehealthfacts.org/comparemaptable.jsp?ind=596&cat=5

Mortality Amenable to Healthcare SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

Ethnic Disparity: Mortality Amenable to Healthcare SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

Infant Mortality per 1,000 Births SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

Ethnic Disparity: Infant Mortality SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

30 Day Overall Hospital Readmission Rates SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

Number of First-Place Finishes (38 Total) SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

Much of the reform of health care as opposed to health coverage remains to be defined, and is anticipated to be tested with demonstration projects. Some of those projects will attempt to determine if the kind of care provided here can be replicated, while others will attempt to create new types of approaches and incentives

COULD WE BE PUNISHED FOR DOING WHAT’S RIGHT? Potentially Avoidable Use of Hospitals SOURCE: Aiming Higher, State Scorecard on Health System Performance, The Commonwealth Fund, October, 2009

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2010-03-24-Health Reform Update, Capitol Club

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2010-03-24-Health Reform Update, Capitol Club Presentation Transcript