Health Reform Is On The Way, Final 2 16 10

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Presentation on healthcare reform given to approximately 50 clients of SALO Group

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Health Reform Is On The Way, Final 2 16 10

  1. 1. Michael Morrow February 16, 2010
  2. 2. The context for reform Health reform WITH federal action Health reform WITHOUT federal action The road ahead Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 2
  3. 3. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 3
  4. 4. “ . . . more than 30 million American citizens who cannot get coverage.” “Those who do have insurance have never had less security and stability ” “We spend 1-1/2 times more per person on health care than any other country” “Finally, our health care system is placing an unsustainable burden on taxpayers.” Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 4
  5. 5. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 5
  6. 6. Adults 18‐64 Covered by Employer  Benefits 70.0% 69.3% 68.0% 66.0% 66.9% 64.0% 62.0% 63.1% 60.0% Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 6
  7. 7. 2003 Health Spending Per Capita U. S. A. $5,711 Canada $2,998 France $3,048 Germany $2,983 Italy $2,314 Japan $2,249 U.K. $2,317 Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 7
  8. 8. Source: CMS, Office of the Actuary Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 8
  9. 9. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 9
  10. 10. Estimated Distribution of the Uninsured How addressed in the  Category Millions* %‐age health reform legislation Near‐poor: <150% FPL** 21 46% Medicaid expansion Uninsurable 6 13% Insurance reform, subsidies Uninsured by choice 12 26% Mandates, subsidies Undocumented residents 7 15% Excluded from reform Total 46 100%   * Adapted from Boston Consulting Group analysis, 2009 . ** FPL stands for federal poverty level = $18,310 for family of 3 in 2009. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 10
  11. 11. From guaranteed issue to $329 billion in 3 easy steps 1) Require insurance companies to accept all applicants (“guaranteed issue”) 2) Mandate that all individuals carry health insurance or face penalties No employer mandate, but penalties for failure to offer coverage 3) Subsidize coverage for low income individuals and small businesses Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 11
  12. 12. More consumer-friendly coverage, but at a price Richer benefit Average Individual Premium Before & After Insurance Reform levels required Limited ability to $10,000  $10,000  $9,000  vary premiums $8,000  $8,000  $7,000  $6,000  Series4 $6,000  New rules on $5,000  Series3 $4,000  $4,000  $3,000  insurer conduct $2,000  $2,000  $1,000  $‐ $‐ Insurance exchange, Individual Individual Family Family but no public option Source: Oliver Wyman, Inc. 2009 Average increase = 54% Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 12
  13. 13. Pilot efforts & studies with potential to reduce costs Comparative effectiveness research Medicare/Medicaid “Innovation Center” Generic biologic drugs Administrative simplification Reforms passed in 2009 (HITECH Act): Reforms passed in 2009 (HITECH Act): •Incentives for electronic medical records •Incentives for electronic medical records •Electronic data interchange •Electronic data interchange •Tighter security and privacy rules (HIPAA) •Tighter security and privacy rules (HIPAA) Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 13
  14. 14. Employer impact: $236 B direct; up to $330 B indirect Medicare/Medicaid cost savings – independent payment advisory board “Cadillac” health plan excise tax Other new taxes and tax increases Health care sector annual fees Current Minnesota health care taxes Current Minnesota health care taxes •2% health care provider tax •2% health care provider tax •2% premium tax (insured only) •2% premium tax (insured only) •2.5% MCHA assessment (insured only) •2.5% MCHA assessment (insured only) Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 14
  15. 15. PROS CONS 31 million more people Too little effort to are covered control costs Core approach shares Premiums/prices will a broad consensus increase faster Serious effort to pay Too big or too little for reform Federal role Unable/unwilling to If not now, when? get bipartisan support Focus on side issues Deals to get 60 votes Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 15
  16. 16. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 16
  17. 17. State level reform efforts Demand side initiatives Supply side initiatives Greater focus on costs than in Federal effort Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 17
  18. 18. Proposals • Single payor plans • Insurance exchanges • Federal “opt-out” • Insurance mandates • Medicaid restructuring • Med malpractice • Regulatory reform • Health system reform • Regulatory reform Minnesota Health Reform Initiative – 2008 Minnesota Health Reform Initiative – 2008 • Statewide Health Improvement Program (SHIP) • Statewide Health Improvement Program (SHIP) • Health care homes • Health care homes • Payment reform/measurement/transparency • Payment reform/measurement/transparency • e-Health • e-Health • Insurance coverage & affordability • Insurance coverage & affordability Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 18
  19. 19. Increased consumer accountability Linking benefits to lifestyle, wellness Retiree health benefit caps New products to support consumers in managing their own health ◦ Insurance options ◦ Information and guidance ◦ Financial management ◦ Personal health records Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 19
  20. 20. Provider payment reform (public and private sectors) ◦ Global fee arrangements ◦ Health care homes/chronic disease management ◦ Increased transparency Care delivery innovations ◦ New types of providers ◦ Redesign of existing care models Increased horizontal/vertical integration ◦ Position the organization for reform ◦ Increase bargaining power Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 20
  21. 21. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 21
  22. 22. Short answer = Don’t know The “HillaryCare” precedent ◦ Costs dropped in the short term ◦ But bounced back up quickly Any success is likely to be qualified at best ◦ Employer-based coverage will continue to shrink ◦ Hard-to-insure individuals will still find coverage hard to find ◦ Any cost savings will be accompanied by job losses and other economic dislocation Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 22
  23. 23. Federal law currently governs key areas ◦ Medicare coverage and payment rules ◦ ERISA for self-insured employers ◦ Federal tax treatment of health insurance Federal action required to enforce national standards Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 23
  24. 24. Private insurance ◦ High-risk pools and/or reinsurance ◦ Pre-existing condition, lifetime maximums ◦ Increase portability ◦ Permit interstate competition Medicare ◦ Address Medicare Advantage rates ◦ Reduce payment differences between states ◦ Provider payment reform ◦ Comparative effectiveness Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 24
  25. 25. Reforming costs requires pain and dislocation Government cannot or will not do this Private sector candidates: Insurers Providers Technology Financials Retailers New entrants Healthcare Arbitrage Opportunity 2009 health expenditure $2.5 trillion Annual increase @ 6% $150 billion Excess over GDP @ 4.4% $40 billion Excess over CPI @ 3% $75 billion Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 25
  26. 26. Options ◦ Consumer-directed plans ◦ Plan design and contribution changes ◦ Employee wellness programs ◦ Shopping ◦ Premium-only Section 125 ◦ Stable benefits as a differentiator Retiree health benefits deserve specific attention Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 26
  27. 27. Comprehensive Federal health reform legislation now appears unlikely in the short term, although still possible Other public/private sector stakeholders are pursuing their own reform efforts Reform presents opportunities and dangers for employers Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 27
  28. 28. Questions? Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 2/16/2010 28
  29. 29. Contact Info Michael Morrow michaelmorrow_mn@yahoo.com www.linkedin.com/in/michaeljmorrow (651) 494-4762 (cell) SÁLO and its affiliates Oberon, NumberWorks, and SÁLO and its affiliates Oberon, NumberWorks, and LawgicSearch are professional staffing firms that LawgicSearch are professional staffing firms that provide specialized finance/accounting, human provide specialized finance/accounting, human resources and legal support to businesses in resources and legal support to businesses in Minneapolis/St. Paul. Minneapolis/St. Paul. Michael Morrow - Health Reform michaelmorrow_mn@yahoo.com 29

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