P1252428393tPBpo - PowerPoint PPT Presentation

Title: P1252428393tPBpo


1
The Pros and Cons of President Bush's 2nd Term
Prescribing Private Solutions for the Nation's
Healthcare Problems
Healthcare Visions, Inc. Creating the
Possible
Ronald E. Bachman FSA. MAAA President
CEO Healthcare Visions, Inc. 404-697-7376
ronbachman_at_healthcarevisions.net www.healthcarevi
sions.net   Sr. Fellow - Center for Health
Transformation Sr. Fellow - Georgia Public
Policy Foundation Fellow - Wye River Group on
Health
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The Ownership Society

• 2nd Term Agenda Theme The Ownership Society
• Home Ownership
• Business Ownership
• Pension Ownership
• Social Security Ownership
• Healthcare Ownership

3
The Presidents Stated AgendaHealthcare a
Part of the Ownership Society

• A market-based consumer-driven plan to address
  the problems of rising health care costs and the
  uninsured, which
• Makes health care coverage more affordable for
  Americans at all income levels
• Provides new coverage options, targeted to those
  who need it most -low-income children and
  families, employees of small businesses, and the
  self-employed and
• Provides real help to small businesses that are
  struggling with the high cost of health
  insurance.

4
Affordable Health Care for all Americans

• Medical Liability Reform
• Health Information Technology
• Cross-state selling of Health Insurance Policies
  (Shadegg Bill)
• Establish a health center in every poor county in
  America.

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Help for Low Income Families Too Little Too
Late? Too Costly?How Many Helped?

• HSA subsidy for Low-Income Families - 1,000
  directly to their HSA.
• Premium Tax Credit for Low-Income Families -
  2,000 refundable tax credit to help them buy a
  HDHP.
• HSA subsidy for Low-Income Individuals- 300
  directly to their HSA.
• Premium Tax Credit for Low-Income Individuals -
  700 refundable tax credit to help them buy a
  HDHP.
• Non-HSA Premium subsidy for Families - 3,000 tax
  credit to buy standard medical coverage instead.
• Non-HSA Premium subsidy for Individuals - 1,000
  tax credit to buy standard medical coverage
  instead.
• The low income health care credits will be
  advanceable and available immediately to
  qualifying families.

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Assistance to Self-Employed and Small
BusinessCost? Impact? Large Business?

• Top-line deductibility of HDHP premiums.
• Tax credit for contributions to the HSAs of small
  business employees - small business owners to get
  a tax credit on HSA contributions for the first
  500 per worker with family coverage and the
  first 200 per worker with individual coverage.
• 4 billion in grants to encourage states to
  create state run insurance pools to make sure
  low-income Americans get the most out of the
  credit.
• Allow Cross State selling allowing individuals to
  buy the best coverage they can find anywhere in
  the country.

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Estimated Budget Effects Of The Revenue
Provisions Contained In The President's Fiscal
Year 2006 Budget Proposal.

• Included are the JCT 10-year (2006-2015)
  estimates for the Administration's health care
  proposals
• refundable tax credit for purchase of health
  insurance 64.1 billion
• above-the-line deduction for certain high
  deductible insurance
  premiums. 32.8 billion
• refundable tax credit for contributions of
  small employers to employee
  HSAs 20.3 billion
• Total Proposed Budget Amount ...
  117.2 billion

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Health Policy Outlook 2005 Top 10

• Tax Credits for the Uninsured for HSA and other
  Plans
• Individual Deductibility of Premiums for
  HSA-qualified plans
• Small Business Tax Credits for HSAs (200/ind and
  500/fam)
• Association Health Plans (AHPs)
• Cross-state purchasing of health insurance
• Implementation of Medicare Drug Benefit
• Medicaid Reform
• Medical Liability Reform
• Health IT
• FDA Reform
• Other Patient Safety, LTC Tax break, FSA
  rollover
• Center for Health Transformation

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Senate Bill S.4. Healthy America Act in 2005,
and

• Making Health Care More Affordable
• Reforming the medical liability system
• Promote Rapid adoption and widespread use of
  individually owned, privacyprotected EHRs
• Improving patient safety and reducing medical
  errors
• Reducing waste, fraud, and abuse in public
  private heath programs
• Establish a Mandate Review Commission
• Expanding Access to Affordable Health Coverage
• Above the line tax deduction for HDHP premiums
  and support for low income
• Provide tax credits and for those not qualifying
  for er-provided health coverage
• Above the line tax deduction for LTC insurance
  and support for family care givers
• Increasing availability options for health
  coverage under Trade Adj. Assist. Act
• Allow health insurance costs of self-employed to
  be a business expense
• Reward states for signing up eligible low income
  children in public health programs
• Support association health plans (AHPs)
• Provide support for state high risk pools

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HR 1872 - Health Coverage for the Uninsured Act
of 2005

• H.R. 1872 has three main parts
• Premium deductibility. The legislation would
  allow an individual who purchases a
  high-deductible health plan to deduct from his or
  her taxable income the amount of the premium. 
• Small business tax credit. Under this proposal,
  small businesses of up to 100 employees would
  receive a refundable tax credit for contributions
  they make to their employees' health savings
  accounts
• Low-income tax credit for the purchase of health
  insurance. This credit would be refundable,
  advancable, and assignable - meaning the money
  would go straight to the insurer of their choice
  to pay for their health care, on a monthly
  basis. 

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HR 1872 and S.4. (As of 8/2005)

• The bill (HR 1872), aimed at expanding health
  savings accounts, is no longer on the July
  to-do list because party leaders have concluded
  it is too expensive, sponsor Sam Johnson,
  R-Texas, said Thursday.
• They have decided not to do it this year. The
  score was too big, Johnson said. A House GOP
  aide said the measure was scored to cost the
  Treasury an estimated 124 billion over 10 years.
• 
  
• The White House states that this bill will
  resurface in September 2005. The program is
  included in the Senate version S.4. that is
  proceeding through Committees.

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HR 2355 and Senate 1015Health Care Choice
ActAvoidance of State Laws and Mandates? NAIC?
Loss of Regulatory Oversight?

• Allows individual and small-group health policies
  to be sold across state lines.
• allows an insurance company to go through one
  process in one state and sell to people in all 50
  states.
• Empowers individuals to make the best choice for
  themselves and their families
• Health Insurer or Health Plan would
• choose a "primary" state of domicile for
  licensure.
• sell in any secondary state nationwide any health
  policies that met the primary domiciliary state's
  laws
• pre-empt any mandates imposed in the
  policyholder's home state
• Must file the policy form in any secondary state
  in which it will be used
• policies could be sold over the Internet, by
  telephone or by agents

13
Public Opinion on Cross-State Selling

• The Zogby International Poll
• 72 think people should have the option of buying
  a policy that is approved and available in
  another state.
• 86 of Hispanics, and 85 of African Americans,
  were greatly in favor of this option.
• 80 of single adults and low income families
  support crossing state lines.

14
Basic Principles

1. Personal Responsibility
2. Self-Help, Self-Care
3. Individual Ownership
4. Portability
5. Transparency (the Right to Know)
6. Consumerism (Empowerment)

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Healthcare Consumerism

• Healthcare Consumerism is about transforming a
  health benefit plan into one that puts economic
  purchasing powerand decision-makingin the hands
  of participants.
• Its about supplying the information and decision
  support tools they need, along with financial
  incentives, rewards, and other benefits that
  encourage personal involvement in altering health
  and healthcare purchasing behaviors.

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What Is a 21st Century Intelligent Health System?

• In a 21st Century Intelligent Health System, the
  individual has
• Accurate, timely knowledge of personal health
  needs,
• Access to the best information about how to
  maintain personal health,
• Knowledge of whom to see and where to go for
  health services,
• And confidence that health providers are
  practicing medicine using best practices based on
  the most up-to-date understanding of
  outcomes-based medicine.
• In a 21st Century Intelligent Health System, the
  individual has the right to know the price and
  quality information about health services in the
  most accurate, least expensive, and most
  convenient manner possible.
• In a 21st Century Intelligent Health System, the
  individual is the center of knowledge and
  decision-making and has responsibility for his or
  her own health.

17
The Evolution of Healthcare and
ConsumerismFuture Generations of Consumer
Directed Healthcare

2nd Generation CDHC Focus on Behavior Changes
Traditional Plans with ConsumerInformation
1st Generation CDHC Focus on
Discretionary Spending
4th Generation CDHC Personalized
Health Healthcare
3rd Generation CDHC Integrated Health
Performance
Traditional Plans
Behavioral Change and Cost Management
Potential Low Impact ---- ---- ---- ---- ----
---- ---- ---- ---- High Impact
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Major Building Blocks of Consumerism

Personal Accounts
It is the creative development, efficient
delivery, efficacy, and successful integration of
these elements that will prove the success or
failure of consumerism.
Wellness/Prevention Early Intervention
Disease Management
Information Decision Support
Incentives Rewards
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2nd Generation CDHC Focus on Behavior Changes

1st Generation CDHC Focus on
Discretionary Spending
4th Generation CDHC Personalized
Health Healthcare
Summary A peek into the future of Consumerism
3rd Generation CDHC Integrated Health
Performance
Personal Accounts
Initial Account Only Activity Compliance Rewards Indiv. Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME
100 Basic Preventive Care Web-based behavior change support programs Worksite wellness, safety, stress error reduction Genomics, predictive modeling push technology
Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to-Work Wireless cyber support, cultural DM, Holistic care
Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health performance info, integrated health work data Arrive in time info and services, information therapy
Cash, tickets, Trinkets Zero balance acct, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related
Wellness/Prevention Early Intervention
Disease Management
Information Decision Support
Incentives Rewards
20
Important Differences between Use of HRAs and
HSAs for Supporting Behavioral Change
Generation 1 Initial Account Only Generation 2 Activity Compliance Rewards Generation 3 Indiv. Group Corporate Metric Rewards Generation 4 Specialized Accts, Matching HRAs, Expanded QME
Personal Care Accounts
Health Reimbursement Arrangements
1. Any Amount 2. Notional Acct 3. Employer Determined 4. Employer Only Contributions 1. Flexible Activity Compliance Rewards 2. Employer Determined 3. Can not be cashed out 4. Must be used for healthcare 1. Flexible Indiv Group Rewards 2. Employer Determined 3. Can not be cashed out 4. Must be used for healthcare 1. Specialized Notional Accts, 2. Can terminate by employer rules 3. Potential IRS Expanded QME
Health Savings Accounts
1. Amounts Set by law 2. Real Dollars in Acct 3. Er or Ee Contrib 4. Contributions up to plan deductible of 1000-2650 Single 2000-5250 Family 1. Ltd Potential 2. Must give Cash Option 3. Awards must be same amt or same of deductible 3. HSA can be used (with 10 penalty) for non- healthcare expenses 1. Ltd Potential 2. All participants must receive same amount or same of deductible 3. Difficult to use for Group Incentives 1. Ltd Potential 2. 100 Vested Portable 3. Can use matching HRAs, 4. Potential IRS Expanded QME
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Divergent / Convergent Futures ?HRAs Best for
Larger Groups?HSAs Best for Individuals and
Small Groups?

Current State
Combination Accounts
FSAs
HRAs
HSAs
Employer-based Healthcare Traditional (Ltd
Carry-over?) Special Purpose Non-Plan
Employer-based healthcare Special Purpose
Accounts Incentive Matching
Employer-based Healthcare with Individual
Accountability
Individual-based Healthcare Employer-based Define
d Contribution Developments
22
Growth of Personal Care Accounts

• HRAs HSAs
• 2000 None None
• 2001 19,000 None
• 2002 53,000 None
• 2003 394,000 None
• 2004(est) 1-1.5M 400,000
• 2005(est) 3.2 M 1.0-1.5M
• 2006(est) 6.0M ???
• 2007(est) 12-15M ???
• Deliotte Consulting

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Incentive Awards - Three Very Different Personal
Care Accounts

• FSAs Traditional Group Plans
• Health Reimbursements Arrangements (HRAs)
  Employers choice for cash flow flexible
  incentive based medical plan benefit designs
  (best suited for self-insured groups)
• Health Savings Accounts (HSAs) Employees
  choice for funded portable triple tax advantaged
  with High Deductible Health Plans (best suited
  for individuals and small groups)
• Combination Accounts creative but confusing

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The Answer ? Flexible Health Savings Accounts
(FHSAs)

• FHSAs would have the tax advantages of HSAs and
  the key flexibilities of HRAs.
• Basic Principles
• Retain personal responsibility goal of HSA/HDHPs
• Focus on Behavior Change
• Recognize value of Pay for Compliance as a driver
  for behavior change and shared savings with
  personal responsibility
• Expand adoption and funding of HSAs by large
  employers

25
Flexible Health Savings Accounts (FHSAs)The Next
Generation

• Four needs that would allow FHSAs the flexibility
  to
• 1. Provide financial Rewards and Incentives for
  Behavioral Change.
• 2. Encourage Employer/Carrier FHSA contributions
  towards healthcare
• 3. Be provided with plan designs other than HDHPs
• 4. Address FHSA/HSA Technical Issues

26
FHSA Flexibilty to Provide Financial Rewards and
Incentives for Behavioral Change

• 1.  Allow for compliance incentives under disease
  management programs (e.g. diabetes, asthma, CHF)
  and wellness initiatives (e.g. wellness
  assessments, smoking cessation, etc.).
• 2. Change Comparability Rule to mean all members
  under a given program of care or treatment, such
  as, a disease management or wellness program.
• 3. Rewards and/or incentives should not be
  limited by the deductible limit, but should be
  consistent with expected savings from programs
  for which participation is being rewarded.

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FHSA Flexibility to Encourage Employer
Contributions to Healthcare

• 1. Allow employers/carriers to voluntarily
  contract with employees to require
  employer/carrier funded FHSAs to be used only for
  healthcare expenses while employed and covered
  under the plan.
• 2. Remove cap on employer/carrier funded FHSA
  contributions or expand to at least the plans
  Maximum Out-Of-Pocket total exposure in a given
  calendar year. 

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FHSAs Flexibility to be Provided with Plan
Designs Other than HDHPs

• 1. Preventive drugs include maintenance drugs.
  Drugs now defined as preventive by the Treasury
  Dept. can be covered below the deductible, while
  the cost of maintenance drugs is now included in
  the deductible.
• 2. Allow Rx to exist as carve out benefits at
  least for prescription drugs associated with
  chronic and persistent disease states
• 3. Allow incentive only based FHSAs for
  employer/carrier only funding under non-HDHPs
  (i.e. no initial FHSA funding or employee
  funding)
• 4. Allow some mental health and substance abuse
  benefits (besides EAPs) to be included under
  preventive care.

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FHSA Flexibility - Technical Issues

• 1. Allow FHSA/HSAs to go into effect on the first
  day of coverage is effective.
• 2. Allow FHSA/HSA contributions for a full
  calendar year regardless of when a plan is
  effective.
• 3. Allow FHSA/HSAs to be used to pay for health
  coverage premiums (other than current limited use
  for (1) Premiums for coverage under the
  Consolidated Omnibus Budget Reconciliation Act
  (COBRA), and (2) premiums for HDHP coverage for
  those who receive federal or state unemployment
  compensation).
• 4. Allow Flexibility to "post-date" the FHSA/HSA
  effective date so that FHSA/HSA dollars can cover
  expenses incurred before the account was
  established. Allow the account to be opened under
  a "provisional status" until the necessary
  paperwork is filed, at which time the account
  becomes active.