Federal Health Care Reform so far

1
Federal Health Care Reform (so far)

• Lisa T. Murphy, The Regence Group
• October 9, 2009

2
Health Care Reform Haiku

• Health care reform, how?
• Baucus and Obama Dance
• Now health care reform

3
Overview

• Current legislative landscape
• Key elements of reform legislative comparisons
• Access
• Cost and Funding
• Quality

4
House Bills

• Tri-Committee bill introduced 7/14
• Americas Affordable Health Choices Act of 2009
• Sent to three committees
• Ways and Means
• Energy and Commerce
• Education and Labor
• Awaiting action by full House

5
Senate Bills

• Health, Education, Labor, and Pensions Committee
  (HELP) bill passed in July
• Affordable Health Choices Act
• Senate Finance Committee issued chairmans mark
  9/16
• Americas Health Future Act of 2009
• About 400 proposed amendments
• Just received CBO estimate below 829 billion
• Bills will need to be merged for full
  consideration by Senate (probably by 10/12)

6
Next Steps

• Significant differences, especially over funding,
  between House and Senate
• Goal now is to pass legislation before
  Thanksgiving

7
Areas of Reform

• All reform proposals address
• Access
• Cost
• Quality

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Access

• Getting everyone under the tent
• Insurance pooling mechanisms
• Insurance reforms
• Individual mandate
• Employer requirements
• Public programs
• Premium subsidies
• Employer subsidies

9
Access Insurance Pools

• SFC
• State-based Exchanges (individual market)/SHOP
  (group market)
• Insurer participation required
• Foster CO-Ops
• Four benefit plans plus young invincibles
• Temporary high-risk pool until reforms in place

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Access Insurance Pools

• HELP
• State-based American Health Benefit Gateways
  combined for
• Small employers
• Individuals (not eligible if have
  employer-sponsored or government coverage)
• Community health insurance option through Gateway
• Three tiers of plans
• Funded with 4 surcharge on premiums

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Access Insurance Pools

• House
• National Health Insurance Exchange for
  individuals and employers
• Private plans and public plan
• Individuals not eligible if have
  employer-sponsored or government coverage
• Public plan and co-ops
• Four benefit categories
• State-based exchanges permitted

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Access Insurance Reforms

• All proposals
• Guarantee issue in individual and small group
  markets
• No pre-existing conditions
• No rescission
• Rate variations only for family composition,
  geography, value of benefits and age
• SFC age bands 4 to 1
• HELP and House age bands 2 to 1

13
Access Insurance Reforms

• SFC additional reforms
• Insurers report on of premium spent on items
  other than medical care
• Policies must be in four benefit categories (in
  and out of Exchange)
• States may merge individual/small group markets
• Insurers may offer national health plans (exempt
  from state mandates)
• State health care choice compacts (regional
  plans)

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Access Insurance Reforms

• HELP
• Insurers report medical loss ratio
• Insurers must offer incentives to providers re
  coordination of care, wellness, safety
• Dependent coverage up to 26
• Must notify insured if coverage does not meet
  mandate standards
• May sell out-of-Gateway plans

15
Access Insurance Reforms

• House
• Individual coverage must be purchased through
  Exchange
• Medical loss ratios limited to at least 85, with
  rebate to customers
• Uniform marketing and appeal procedures

16
Access Individual Mandate

• SFC tax penalty
• Phase-in 200 in 2014 . . . 750 in 2017
• Hardship exception coverage gt8 income
• Failure to pay no criminal or civil penalties
  no interest
• HELP tax penalty 750
• House tax penalty 2.5 AGI up to cost of
  average national premium

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Access Employer Requirements

• SFC No mandate, but free rider penalty for
  employers gt50
• Penalty average tax credit full time employees
  receive through the Exchange, up to 400 per
  employee
• 200 employees auto-enroll employees

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Access Employer Requirements

• HELP play or pay
• Play offer minimum benefits under Gateway and
  contribute 60 of premium
• Pay 750/350 per full/part-time employee
• Employers lt25 exempt
• Other employers no penalty for first 25
  employees
• Current plan grandfathered

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Access Employer Requirements

• House play or pay
• Play contribute 72.5/65 for individual/family
  coverage meeting essential package
• Pay 8 payroll penalty
• Phased reductions based on payroll
• Exempt below 500,000
• 8 starts at 750,00
• Auto-enroll employees
• Grace period until 2018 if plan offered in 2012

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Access Public Programs

• Medicaid all individuals
• SFC and House up to 133 FPL
• HELP all individuals up to 150 FPL
• CHIP expanded eligibility
• SFC 250 FPL
• HELP CHIP eligibles enroll in Gateway plan
• House CHIP eligibles enroll in Exchange

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Access Premium Subsidies

• SFC
• Premium credits on sliding scale
• Incomes between 133-400 FPL
• Tied to second lowest-cost silver plan
• Cost-sharing subsidies based on FPL
• 100 FPL or lower Medicaid (no credits)
• No credits for those with employer insurance,
  unless non-qualifying plan or premium greater
  than 13 of employee income

22
Access Premium Subsidies

• HELP
• Premium credits on sliding scale up to 400 FPL
• No credits for those with employer insurance,
  unless premium is greater than 12.5 of employee
  income

23
Access Premium Subsidies

• House
• Credits up to 400 FPL
• Cost-sharing credits based on FPL

24
Access Employer Subsidies

• SFC lt25 employees, lt 40k average wage
• Phase I 2011-2012
• Tax credit of 35 of premium contribution if
  employer pays at least 50 of premium
• Full subsidy at lt10/ 20k average wage
• Phase II 2013 and later
• 50 tax credit only if coverage purchased through
  Exchange
• Credit available for two years

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Access Employer Subsidies

• HELP lt50 employees, lt50k average wage
  (beginning 2010)
• Must pay at least 60 of employee health expenses
• Maximum credit of 1,000/2,000 employee/family
• Maximum at lt10 employees, phased out up to 50
• Bonus for each addl 10 of coverage

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Access Employer Subsidy

• House lt25 employees, lt 40k average wage
• Credit is 50 of premium costs paid
• Full credit at lt 10/20k, phases out
• Credit not available for any employee earning
  more than 80k

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Cost Funding by Taxation

• SFC new taxes/changes
• Excise tax on insurers for group plans that
  exceed 8,000/21,000 individual/family
• 40 of value that exceeds threshold
• Imposed on issuer (self-funded and insured not
  individual)
• Seniors/high risk jobs 9,850/26,000
• Fees on segments of health care sector
• 2.3 billion Rx manufacturers
• 4 billion medical device manufacturers
• 6 billion health insurers
• 750 million clinical labs
• Limit tax deductions for exec comp gt500k

28
Cost Funding by Taxation

• House new taxes
• Surtax on wealthy
• 1 for AGI gt 350,000
• 1.5 for AGI gt 500,000
• 5.4 for AGI gt 1 million

29
Cost Containment

• Medicare Changes
• Benefit/premium changes to Parts A and B
• Eliminates cost-sharing for preventive benefits
• SFC only Freezes threshold for Part B
  income-related premium through 2019 (85k/170k
  ind/fam)
• Part D
• House eliminates coverage gap by 2023
• Both provide 50 discount on brand name drugs
  in gap for most
• SFC Reduces Part D premium subsidy for high
  incomes enrollees

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Cost Containment

• Increases physician payments to prevent 21.5 in
  fees in 2010
• SFC - no change in formula for future years
  House new physician payment formula
• Bonuses to some primary care physicians or
  physicians in underserved areas (House 5, SFC
  10)
• Medicare Advantage
• SFC Restructure MA plan payments based on
  average bids in each area
• House Phases MA payments to equal traditional
  Medicare by 2010
• Both Bonus for quality, performance
  improvement, care coordination

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Quality

• Studies
• Strategies
• Work Groups
• Agencies

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Quality Wellness

• SFC
• Medicare recipients access to health risk
  assessment
• Only proven preventive services covered for
  Medicare/Medicaid
• Health home for Medicaid enrollees with chronic
  conditions
• No cost-sharing for preventive services

33
Quality Wellness

• HELP
• National prevention and health promotion strategy
• Grants to states/community-based orgs for
  preventive health activities
• Employer wellness programs that permit varying
  premium to employees

34
Quality Wellness

• House
• National strategy re improving nations health
• Task forces
• Cover only proven preventive services for
  Medicare/Medicaid

35
Conclusion

• Common Ground
• Individual mandate
• Insurer reforms
• Reduce costs
• Differences
• Public option, co-op
• Employer mandate
• How to pay for it

36
Resources for Following Reform

• Kaiser Family Foundation
• Politico.com
• Politico Pulse and Politico Live Pulse