National Health Reform Proposals

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Broad Consensus But Important Disagreements

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National Health Reform Proposals

  1. 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. 2. Overview <ul><li>Analysis focuses on Democrats and the handful of Republicans who might support reform legislation </li></ul><ul><li>Consensus around the broad structure of reform </li></ul><ul><li>Disagreement around key details </li></ul><ul><ul><li>Some “details” are really major – e.g., “How do you pay for it?” </li></ul></ul><ul><ul><li>Discussion will focus on conceptual issues, rather than design details </li></ul></ul>
  3. 3. Proposal elements <ul><li>Subsidies </li></ul><ul><li>The exchange </li></ul><ul><li>Individual and employer responsibility </li></ul><ul><li>New rules for insurance companies </li></ul><ul><li>Slowing cost growth </li></ul><ul><li>Financing </li></ul>
  4. 4. Subsidies <ul><li>Medicaid eligibility for the poorest uninsured. If, e.g., up to 133% FPL, 17.0 million uninsured qualify. </li></ul><ul><li>Most important question: </li></ul><ul><ul><li>State financial responsibility </li></ul></ul>
  5. 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. 6. Subsidies, continued <ul><li>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: </li></ul><ul><ul><li>How much of a subsidy, for premiums and out-of-pocket costs? </li></ul></ul><ul><ul><li>Is the subsidy provided as a tax credit? Or a “spending side” payment to health plans? </li></ul></ul><ul><ul><li>What “firewalls” prevent subsidies from funding abortions? </li></ul></ul><ul><ul><li>Do legal immigrants qualify during their first 5 years in the U.S.? </li></ul></ul><ul><ul><li>What happens to CHIP? </li></ul></ul>
  7. 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. 8. Health Insurance Exchange <ul><li>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. </li></ul><ul><ul><li>Is a public option available in the exchange? </li></ul></ul><ul><ul><li>Can large firms access the exchange? </li></ul></ul><ul><ul><li>Is the exchange run by the federal government? By a state-level entity? </li></ul></ul><ul><ul><li>Does the exchange negotiate with health plans for lower prices and higher quality? </li></ul></ul><ul><ul><li>Can undocumented immigrants or their employers buy coverage through the Exchange? </li></ul></ul>
  9. 9. Individual and employer responsibility <ul><li>Individual who lack health coverage are penalized, unless they cannot afford insurance </li></ul><ul><ul><li>How is affordability determined? </li></ul></ul><ul><li>Employers above a certain size must either offer coverage or pay the government </li></ul><ul><ul><li>Payroll tax or free rider charge? </li></ul></ul>
  10. 10. New rules for insurers <ul><li>All health insurance must meet federal minimum benefit standards (e.g., preventive care, lifetime or annual caps, actuarial value minimum) </li></ul><ul><ul><li>What rules apply to ESI? </li></ul></ul><ul><ul><li>How extensive are the standards? (E.g., medical loss ratio, cultural competence, etc.) </li></ul></ul><ul><ul><li>What happens to people who, today, have coverage that violates the new standards? </li></ul></ul><ul><li>Insurers face new limits on their ability to discriminate against costly consumers </li></ul><ul><ul><li>How much can premiums vary based on age? 2:1? 5:1? </li></ul></ul><ul><ul><li>What happens before the individual mandate and subsidies come on line? </li></ul></ul>
  11. 11. Slowing cost growth <ul><li>With Medicare, Medicaid [and a public plan], experiment with innovations that shift incentives from volume to value, better manage chronic care, etc. </li></ul><ul><li>Fund comparative effectiveness research to better inform decisions by insurers, providers, and patients </li></ul><ul><li>Transparency – more info from providers, more usable info from insurers, conflict-of-interest reports, etc. </li></ul><ul><li>Prevention initiatives </li></ul><ul><li>Questions: </li></ul><ul><ul><li>Malpractice </li></ul></ul><ul><ul><li>New investment in Health Information Technology </li></ul></ul>
  12. 12. Financing <ul><li>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 </li></ul><ul><ul><li>What level of new costs is acceptable? </li></ul></ul><ul><ul><li>How will Medicare cost-growth be slowed? </li></ul></ul><ul><ul><ul><li>Agreed: cut Medicare Advantage, change certain provider payment and drug rebate rules, reduce payments for uncompensated care </li></ul></ul></ul><ul><ul><ul><li>Question: A base-closing-type commission for Medicare? </li></ul></ul></ul><ul><ul><li>How will revenue be raised? </li></ul></ul><ul><ul><ul><li>Taxing unusually expensive insurance? Taxing the wealthy? Taxing the health care industry? </li></ul></ul></ul>
  13. 13. A final conundrum <ul><li>Insurance reforms are wildly popular </li></ul><ul><li>Conventional wisdom: </li></ul><ul><ul><li>For insurance reforms, individual mandate needed </li></ul></ul><ul><ul><li>For individual mandate, affordable coverage needed </li></ul></ul><ul><ul><li>For affordable coverage, costly subsidies needed </li></ul></ul><ul><li>Bottom line: for insurance reforms, costly subsidies are needed </li></ul><ul><ul><li>Can you get there on $900 billion over 10 years? </li></ul></ul>

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