Health reform: What it means. What's next?


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May 24, 2012 presentation at the MedStar Montgomery Medical Center.

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Health reform: What it means. What's next?

  1. 1. A not-for-profit health and tax policyresearch organization Health Reform: What it means. What’s next? Grace-Marie Turner May 24, 2012 MedStar Montgomery Medical Center /GalenInstitute
  2. 2. Americans’ views of Supreme Court decision • 25% think the law should be upheld in full • 38% would like the entire law thrown out • 29% would like the court to strike down the individual mandate • 39% support health care overhaul in generalSource: Washington Post-ABC News Poll, April 8, 2012,
  3. 3. “The mandate was a mistake” “Democrats managed to get themselves the worst possible result: a law that enflames the opposition on the basis of overreaching federal power but may not work in practice because there is no real power behind it. Whether or not the Court strikes it down, the individual mandate has been one of the most serious political and policy mistakes of recent decades.”Source: Princeton Professor (and ObamaCare advisor) Paul Starr, “The Health Care Mandate Really Was a Mistake,” January 2, 2012, The NewRepublic,
  4. 4. Overwhelming majorities say ObamaCare will Increase: taxes, the federal deficit, premiums, and health care costs, and will decrease quality of
  5. 5. Do you think the health care reform plan that Congress passed recently will increase, decrease, or have no effect on each of the following: Taxes Federal Deficit Health Care Costs Insurance Premiums Health Care QualitySource: AM&A, Resurgent Republic 1st Anniversary Survey of Likely Voters, April 25-27, 2010
  6. 6. 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., Claudia Deane, M.A., andSasha Buscho, B.A., "Voters and Health Reform in the 2008 Presidential Election," The New England Journal of Medicine, November6, 2008, at
  7. 7. Americans agreed on goals for health reform… • The U.S. needs health reform to: – make coverage more affordable – assure quality, and – expand access to insurance • Most people rate their own coverage as good or excellent • They want stability. Change is for
  8. 8. Early provisions of the new health law • “Free” preventive care • Allowing “children” up to age 26 on parent’s policies • No annual or lifetime limits on coverage • Pools for pre-existing condition policies • $250 for seniors with high drug costs • Insurance regulations and
  9. 9. What it really does • Significant new federal control over health insurance and medical practice • At least 159 new programs and agencies • Mandates on citizens, employers, & states • $552 billion in new taxes and penalties • $575 billion from
  10. 10. The new health overhaul law A vast expansion of subsidized insurance • “32 million” more to get health coverage – 16 (or 25?) million through Medicaid – 16 (35+?) million through federally subsidized private insurance exchanges • 87 million on Medicaid this decade • 23 million remain
  11. 11. The health law’s main features• Expands coverage to 30 million uninsured• A new system of Exchanges created to deliver subsidies• States required to expand Medicaid• Citizens required to purchase approved health insurance• Most employers required to offer coverage• Significant new federal regulation of the health sector (with 159 new regulatory agencies and programs)• Medicare changesFinanced by• $575 billion in payment reductions to Medicare• $550 billion new taxes and
  12. 12. New taxes and fees in the health law
  13. 13. Studies show law fails to meet goals • Health costs and health spending increase • One-third of businesses may drop insurance • Young people worried about high cost of policies • Doctors concerned about Medicaid expansion and fraying the safety net • Seniors are concerned about access to care through Medicare and Medicare Advantage • Up to 25 million will remain
  14. 14. Independent Studies Obama administration actuary Rick Foster: • $120 billion in fines for companies and individuals • Government spending will increase by $311 billion • Many on Medicare will have trouble getting care CBO: The law will raise some family premiums by $2,100 in 2016 above what they would have been without the reform law Richard S. Foster, Chief Actuary, “Estimated Financial Effects of the Patient Protection and Affordable Care Act, as Amended,” U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Office of the Actuary, April 22, 2010, Congressional Budget Office and the Joint Committee on Taxation, “An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act,” November 30, 2009,
  15. 15. 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/10 yrs. • 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 Patient Protection and AffordableCare Act,” November 30, 2009, Chief Medicare Actuary on Presidents health care claims: "I wouldsay false, more so than true,“ House Budget Committee, January 26, 2011, “2011 Employer Health BenefitsSurvey,” Kaiser Family Foundation/Health Research & Educational Trust, September 27, 2011,
  16. 16. More could drop coverage As many as 30 – 40 million Americans are likely to drop coverage and pay the fine instead 23 million still will be uninsured under ObamaCare‟s best estimates Amita Parashar, "Checking In With Dr. Robert Kocher On Who Might Stay Uninsured In Spite of the Individual Mandate," Kaiser Health News, December 20, 2010, Richard S. Foster, Chief Actuary, “Estimated Financial Effects of the Patient Protection and Affordable Care Act, as Amended,” U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Office of the Actuary, April 22, 2010,
  17. 17. “If you like your health insurance…” • 51 to 80% of Americans will lose current coverage, according to Obama admin. estimates • CBO: Up to 20 million could lose job-based plans • McKinsey: Up to 80 million will be forced to change policies • Child-only policies will vanish in 17 states • 35 million more will move from job-based insurance to taxpayer-subsidized exchanges“Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and „Grandfathered‟ Health Plans,” U.S. Department of Health and HumanServices,,"CBO and JCTs Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance," Congressional Budget Office, March2012, Singhal, Jeris Stueland, and Drew Ungerman, “How US health care reform will affect employee benefits,” McKinsey Quarterly, June2011,“Health Care Reform Law‟s Impact on Child-Only Health Insurance Policies,” Senate Committee on Health, Education, Labor and Pensions, August2, 2011,,%202011.pdf.Douglas Holtz-Eakin and Cameron Smith "Labor Markets and Health Care Reform: New Results," American Action Forum, May27, 2010,
  18. 18. The AMA and practicing physicians • The SGR Medicare payment fix was its key bargaining chip • The chance for a permanent fix is missed; the president got the AMA endorsement for an empty promise • Budget concerns in the Congress mean short-term fixes are likely to
  19. 19. Physician concerns • Questions about Accountable Care Organizations • Authority of HHS Secretary to set new rules for quality of care • Regulatory requirements that make private practice much more difficult • More burdensome
  20. 20. Anna Wilde Mathews, “When the Doctor Has a Boss,”, The Wall Street Journal Nov.8, 2010,
  21. 21. CRS previews impact of health law on physicians PPACA has the potential to change fundamental aspects of how physicians organize, practice, and deliver care in the future. • Some of these provisions create new structures and entities, like the CMS Center for Medicare and Medicaid Innovation and the Patient-Centered Outcomes Research Institute • Others seek to develop alternatives to traditional fee-for-service payment, such as the National Pilot Program on Payment Bundling, the shared savings program (including the accountable care organization, or ACO, model), or the value-based payment modifier under the physician fee schedule In the long run, these provisions combined have the potential to be the most substantial of the PPACA and the Reconciliation Act modifications affecting physicians and related providers.Patricia A. Davis, Jim Hahn, Paulette C. Morgan, Julie Stone, and Sibyl Tilson, “Medicare Provisions in the Patient Protection and Affordable CareAct, (PPACA): Summary and Timeline,” November 3, 2010,
  22. 22. Specific changes to watch • IPAB — the Independent Payment Advisory Board • Patient-Centered Outcomes Research Institute • Physician Quality Reporting
  23. 23. Action items • Government requirements for use of EMR • Comparative effectiveness “guidelines” • Payment policies that penalize those with the top 10% of
  24. 24. Predictions of the Medicare actuary Under current law, CMS actuary Richard Foster says Medicare is on track to pay physicians less than Medicaid does, and this would lead to “severe problems with beneficiary access to care.” He predicts many Medicare providers will go bankrupt if policies are unchanged. More than 40% eventually would end up “shifting to negative profit margins” and will either go out of business or stop seeing Medicare patients altogether.“House Budget Committee Hearing Highlights,” House Budget Committee, July 13, 2011, “Statement of Actuarial Opinion,” 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and FederalSupplementary Medical Insurance Trust Funds, The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medicare Insurance Trust Funds,May 13, 2011,
  25. 25. “I paid for my Medicare!” Consider this… A couple retiring today with both spouses earning an average wage throughout their careers would have paid $109,000 in total Medicare payroll taxes during their lifetimes. Yet the expected spending by Medicare on the couple will be $343,000.C. Eugene Steuerle and Stephanie Rennane, "Social Security and Medicare Taxes and Benefits Over a Lifetime," Urban Institute, June2011,
  26. 26. Medicare’s Cash Shortfall• In 2011, Medicare spent $549.1billion on medical services forAmerica‟s seniors but only collected$260.8 billion in payroll taxes andmonthly premiums Medicare deficit in 2011: $288.3 billion
  27. 27. Medicare is becoming a black hole,and we must start now to fight its gravitational pull
  28. 28. Push-back coming from • Doctors and patients Losing control over medical decisions • Small businesses and big employers New taxes, penalties, and mandates • States Higher costs for Medicaid • Consumers Higher costs for insurance and fewer choices • Seniors Cuts to
  29. 29. Some
  30. 30. The health law is not settled policy • 55% want the health overhaul law repealed • 51% say it will reduce the quality of care • 56% object to cuts to Medicare • Two-thirds say it will increase the national debt • Just 12% think the bill should go into effect in its current form • 60% believe it will increase health costs • 71% say it will increase taxes“55% Favor Repeal of Health Care Law,” Rasmussen Reports, December 12, 2011, “56% Oppose Medicare Cuts in Health Care Proposal,” Rasmussen Reports, March19, 2010,
  31. 31. "The economy, as important as it was, was not the decisive factor this election. Health care was…The American people found this a crime against democracy…they want it repealed, and this issue is gonna go on and on." ― Democratic pollster Pat CaddellSource: Grace-Marie Turner, “Obamas Strategy of Silence,” The American Spectator, September 2011,
  32. 32. Health care in 2012 • Legislation Challenges to the law: 1099, CLASS and IPAB • Regulation 12,000+ pages so far • Legal U.S. Supreme Court decision in late June • Political 2012 campaigns and
  33. 33. Europeans going the other way • Consumerism • Value of private enterprise and competition • Doctor-patient relationship • Decentralized decision-making • NHS
  34. 34. Caution ahead • Political criticism, resistance, no matter what the Court decides • Physicians and hospitals will remain the central players and your participation in health reform will be vital to successful reform.Source:
  35. 35. 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 it will be amended significantly before
  36. 36. What we know for sure Choice Americans value innovation, diversity, and choice to accommodate different needs of 300 million people Focus on the patient They want doctors and patients, not government, to make health care decisions Value in health spending To realize the promise of personalized medicine and achieve overall cost saving, we must allow more choice and
  37. 37. Grace-Marie Turner A not-for-profit health and tax policyresearch organization Galen Institute 703-299-8900 Subscribe to our free email alerts at /GalenInstitute
  38. 38. Why ObamaCare Is Wrong for America How does the health care law drive up costs? Is your doctor really in charge of your health care decisions? Are your Constitutional rights threatened? Discover the law’s impact on your life in a new book from four nationally recognized health policy experts Published by Broadside Books, an imprint of HarperCollins