Policy Proposals Health Care Coverage, Costs, and Financing

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Policy Proposals Health Care Coverage,
Costs, and Financing
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Outline

• Benefit Design/Coverage
• Paying for Care
• Incremental vs. Comprehensive Health Care Reform

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Benefit Design/Coverage

• What does health insurance coverage look like
  today?
• Historically, most policies have covered
• Hospital
• Physician
• Some preventive care
• Some cost-sharing, possibly with catastrophic cap
• If the goal is to expand coverage to more
  individuals
• Who receives coverage (all, low income, kids,
  disabled, workers)?
• Bare-bones policies or comprehensive health
  insurance?
• One standard benefit package, standardized
  packages, or tailored plans?
• How much cost-sharing (deductibles, coinsurance,
  maximum per year)?

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Paying for Care

• How is health insurance financed today?
• Employer-sponsored Employee/employer
  contributions/foregone wages, tax exclusion
• Medicare Payroll taxes, federal income taxes,
  enrollee premiums (Part B income-related in
  2007), and beneficiary cost-sharing
• Medicaid Federal income taxes and state tax
  revenues, nominal cost-sharing
• If the goal is to expand coverage to more
  individuals
• How should it be financed? Should premiums be
  related to a persons income? Should the current
  tax exclusion for employer coverage be limited?
• Stretch limited resources by offering less
  generous benefits?
• Note Strategies for increasing efficiency
  (Health IT, P4P, etc.) to be discussed in January
  

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Incremental vs. Comprehensive Reforms

• If the goal is to reform the health care system,
  how do we get there?
• Comprehensive
• Focus Achieve coverage for all
• Examples Individual mandates Single payer
  systems Voucher system
• Incremental
• Focus Expand coverage to certain populations,
  improving insurance markets, promoting quality
  reforms, etc., but not achieve coverage for all
• Examples Subsidies for individually-purchased
  insurance Medicare or Medicaid expansions
  Employer mandates Health Savings Accounts
  (HSAs) Quality incentives (January materials)

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Combining Incremental Reforms

• Comprehensive reforms can be built on frameworks
  that combine multiple incremental strategies
  (addressing quality, efficiency, cost, as well as
  access)
• However, comprehensive reforms have stated
  principal goal of guaranteeing coverage for all
• Features must include
• Formal structure that ties parts together
• Public commitment
• Accountability

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Incremental Reforms
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Subsidies

• Goal Reduce number of uninsured by subsidizing
  purchase of health insurance, often through tax
  credits
• Examples of subsidy proposals
• Provide tax credits to low and middle-income to
  buy insurance on individual market
• Create a tax deduction for purchase of individual
  insurance
• Provide tax credits for businesses who offer
  health insurance to employees

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Medicare or Medicaid Expansions

• Goal Reduce number of uninsured by expanding
  eligibility for existing government programs
  (e.g., Medicaid, Medicare)
• Examples of expansion proposals
• Raise income ceiling for Medicaid and SCHIP
  eligibility
• Extend public coverage to all uninsured children
• Offer Medicare to more adults (e.g., age 55-64)
  without insurance

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Employer Mandates

• Goal Increase access to health insurance for
  workers and their families, by requiring
  employers to offer health insurance
• Examples of employer mandate proposals
• Require employers to cover percentage of premium
  small employers in purchasing pools
• Impose free rider surcharges on employers and
  employees

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Health Savings Accounts

• Goal HSAs and other forms of consumer-directed
  care have a goal of making health coverage more
  affordable by encouraging consumers to be more
  cost-conscious and focus on healthier behaviors
• Features of HSAs
• People set aside their own money, before taxes,
  to pay for health care
• Usually combined with high-deductible health
  insurance
• Examples of HSA and other consumer-directed care
  proposals
• Tax credits for employer contributions to HSAs
• Revise tax definition to include deduction for
  HSAs and allow people to carry up to 500 in
  unused flexible spending account (FSA) money over
  from year to year

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Comprehensive Reforms
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Individual Mandates

• Goal Achieve universal coverage using current
  system as base
• Examples of individual mandate proposals
• Require individuals to buy insurance, and provide
  tax credits to do this those with the lowest
  income would pay zero premium
• Mandate that everyone have health insurance or
  pay modest penalties
• Create incentives for uninsured to buy into
  proposed Medicare Plus program, but later
  impose individual mandate if high number of
  uninsured persons remains

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Single Payer

• Goal Achieve universal coverage and reduce
  administrative costs
• Examples of single payer model proposals
• Physicians for a National Health Insurance
  Program
• Comprehensive benefits (medical, dental, LTC, Rx,
  mental health)
• Medicare, Medicaid, private health insurance
  restricted or eliminated
• For-profit hospitals phased out hospitals given
  set budget for year
• Doctors salaried or paid on fee-for-service basis
  by federal government
• Global budget that grows each year with GDP
• Copayments, deductibles low or zero financed
  through variety of taxes
• State-designed comprehensive insuranceCA, NY,
  MA...

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Voucher System

• Goal Achieve universal coverage for basic
  services
• Example of voucher system (Emanuel Fuchs
  proposal)
• Guaranteed enrollment and renewal of
  risk-adjusted voucher
• Choice of plans offering basic services
• Additional services available for higher premium
  with after-tax dollars
• Financing through value added tax (VAT)
• Employer-sponsored health insurance, Medicaid,
  Medicare eliminated

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Combining Incremental Reforms
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Oregon Business Council

• Package of incremental strategies
• Changes to control cost growth ? system savings
  ? increased coverage
• No formal integration of public and private
  initiatives
• Employers strategies
• HSAs, increase cost-sharing, etc. to make
  consumers more cost-conscious
• Quality incentives (P4P, health ITto be
  discussed in January)
• Increase information on quality, costs, etc. (To
  be discussed in January)
• Governments role
• Streamline regulation for Medicare and Medicaid
• Support for health IT development and standards
• Malpractice and insurance market reforms
• Public health initiatives and consumer education

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Massachusetts Health Care Trust (S. 755)

• Integrated package leading to comprehensive
  reform
• Single payer eliminates private insurance
  coverage for basic benefits
• Coverage for all Massachusetts residents
• Legislative timetable
• Governments role
• Oversee delivery of health care services to
  Massachusettss residents
• Collect and disburse funds
• Negotiate methods and rates of compensation with
  health care providers and facilities, and approve
  capital expenditures in excess of 500,000
• Support for health IT development and standards
• Support development and implementation of health
  quality standards
• Support development of innovative approaches to
  health promotion, health education, and research