New Update on National Health Reform: A Moving Target

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Presentation by Lynn Blewett to Mount Zion Temple and Jewish Community Action members in St. Paul, MN, October 11 2009.

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  • House leaders are considering limiting the surtax to singles who earn more than $500,000 and families who earn more than $1 million.Original cost of HELP bill was $615 billion.
  • House leaders are considering limiting the surtax to singles who earn more than $500,000 and families who earn more than $1 million.
  • New Update on National Health Reform: A Moving Target

    1. 1. New Update on National Health Reform: A Moving Target<br />Lynn A. Blewett, Ph.D. <br />State Health Access Data Assistance Center <br />University of Minnesota, Minneapolis, MN<br />October 11, 2009<br />Funded by a grant from the Robert Wood Johnson Foundation<br />
    2. 2. 2<br />Outline of Presentation<br />Drivers of Reform <br />Overview of Key Proposals<br />Broad Implications<br />Legislative Process<br />What’s Next?<br />
    3. 3. Why Is Health Care Reform Needed?<br />3<br />Cost<br />Access<br />Quality<br />Could be better!<br />
    4. 4. $2.5 trillion in 2009<br />$8,160<br />2009<br />
    5. 5. Increase in number of uninsured <br />New verification <br />question<br />15.4%<br />of Population<br />Millions of Uninsured, all ages<br />5<br />Source: U.S. Census Bureau, Current Population Surveys (March), 1989-2008<br />
    6. 6. Drop in Employer-Sponsored Coverage<br />6<br />Source: US. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2008.<br />
    7. 7. Quality<br />Patients receive the proper diagnosis and treatment only about 55% of the time*<br />WHO ranking of 37 behind Costa Rica, and close to Cuba at 39<br />Infant mortality rates that are higher than most European countries and three times the rate of countries such as Japan;<br />One of the lowest utilization rates of preventive healthcare services in the world<br />7<br />*McGlynn EA, et al NEngl J Med. 2003. <br />
    8. 8. Legislative Proposals <br />
    9. 9. Key Legislative Proposals<br />1. Kennedy’s Senate “Affordable Health Choices Act”<br /><ul><li>Senator Edward Kennedy (D-MA), Chair, Senate Health, Education, Labor and Pensions (HELP) Committee</li></ul>2. Baucus’s Senate “America’s Healthy Future Act”<br /><ul><li>Senator Max Baucus (D-MT), Chair, Senate Finance
    10. 10. No Republican support </li></ul>3. House Tri-Committee Bill: “America’s Affordable Health Choices Act” (H.R. 3200)<br /><ul><li>Three Committees: Energy and Commerce, Ways and Means, Education and Labor
    11. 11. Sponsor: Representative John Dingell (D-MI)</li></ul>9<br />
    12. 12. Provisions At a Glance <br />10<br />Co-ops<br />
    13. 13. Public Plan Option <br />Meets minimum essential creditable coverage<br />Paid for with plan premiums<br />Quasi-public administration <br />No profit, advertising and minimal administrative costs (minimal loading fees)<br />Offered along side other private plans through the exchange<br />11<br />Access<br />Senate Finance Rejected <br />9-29-09 <br />
    14. 14. Access<br />Health Insurance Exchange<br />State-based agency that assesses and approves “cretible coverage”<br />Meets some basic pre-set standards<br />Organize and displays health insurance options in consumer friendly way<br />Easy to shop and compare <br />Facilitate the premium subsidies for low-income families not eligible for Medicaid<br />Primarily for Individuals and small employers<br />12<br />
    15. 15. Premium Subsidies<br />Access<br />Refundable tax credits to low-income families not eligible for Medicaid<br />Administered through the Exchange<br />Incomes between 133% - 300% of poverty<br />Apx. $29,000 - $66,000 for family of four<br />To reduce cost of health insurance coverage for individuals and families<br />Tied to essential creditable coverage<br />13<br />
    16. 16. 14<br />Premium Subsidies and Medicaid Expansions (Family of Four FPL = $22,050 in 2009)<br />ReformProposal<br />$88,200<br />Family Income<br />
    17. 17. Employer-Mandate<br />Access<br />Employers either provide health insurance coverage or pay a penalty to fund access<br />Employers must pay 60-65% of family premiums or <br /> Penalty of $750 for each employee who is not offered coverage (HELP) or based on percent of payroll (House)<br />Small business exemption<br />Tax credits for small business<br />15<br />
    18. 18. Baucus Free-Rider Tax<br /><ul><li>“Free-rider” provision </li></ul>-charges employers who do not offer coverage a fee for each employee receiving a tax credit through the exchange<br /><ul><li>Small businesses (≤ 50employees) exempt
    19. 19. Tax credits for certain small employers </li></ul>- Less than 25 employees <br />-Average annual wage &lt; $40K <br />16<br />Access<br />
    20. 20. Insurance Reform<br />Restrictions on Premium Rating <br />cannot be rated on health status (Baucus)<br />Plus gender, class of business (House)<br />Plus claims experience (HELP)<br />Tightening of rate bands (Baucus)<br />-Rate can vary by age (4:1 max. ratio), <br /> -tobacco use (1.5:1 max. ratio), area, and <br /> -family composition<br />17<br />Access<br />
    21. 21. Overview of Impact of Three Main Proposals<br />
    22. 22. Key Legislative Proposals: CBO Cost Estimates-Over 10 years<br />Baucus/Finance<br />Kennedy/HELP<br />HouseTri-Committee<br />$856 Billion<br />Net $49 Billion deficit reduction<br />$1.34 Trillion<br />Net $1.04 Trillion deficit increase<br />19<br />$1.042 Trillion<br />Net $239 Billion deficit increase<br />
    23. 23. 20<br />
    24. 24. 21<br />Source: Center on Budget and Policy Priorities, February 2009<br />
    25. 25. Key Baucus Finance Provisions<br />Excise tax on high-premium health coverage in<br />Fees on manufacturers and importers of drugs and devices<br />Adjustments to Medicare Advantage payments <br />Reduction in Medicare payments to NHs <br />Reducing Medicare and Medicaid payments to hospitals that serve a large number of low-income patients - Disproportionate Share<br />22<br />
    26. 26. Key Legislative Proposals: Number of Uninsured in 2019<br />Baucus/Finance<br />Kennedy/HELP<br />HouseTri-Committee<br />Uninsured reduced to 25 million<br />Uninsured reduced to 36 million<br />23<br /><ul><li>Uninsured reduced to </li></ul>17 million<br />Currently there are 46 million uninsured with projections to reach <br />53 million by 2019 if no plan is enacted.<br />
    27. 27. Legislative Process<br />
    28. 28.
    29. 29. What Next?<br />Big hurdles<br />Public Plan <br />Financing<br />Politics!<br />Possibility –a high-level framework for reform with phased in time frame to allow for recovery of economy, development of the details, including payment reform for later…<br />States continue strategies for access and coverage without more detail and assurance of national reform<br />
    30. 30. 27<br />Outlook for Reform…<br />
    31. 31. 28<br />Contact Information<br />Lynn A. Blewett, Ph.D.<br />State Health Access Data Assistance Center <br />University of Minnesota, Minneapolis, MN<br />www.shadac.org<br />blewe001@umn.edu<br />612-624-4802<br />

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