CAHU’s Healthy Solutions

CAHU’s Healthy Solutions Central California Association of Health UnderwritersMay 3, 2007 Alan Katz, RHU Vice PresidentPublic Affairs

What We’re Up To Today • Health Care Reform: Current Status • CAHU’s Healthy Solutions: Overview • CAHU’s Healthy Solutions: Core Elements • What Agents Need to Do • Conclusion / Q&A CAHU Healthy Solutions -- CCAHU

Reform Proposals: Federal • President Bush, Congress and Presidential Candidates have put forward national health care reform proposals • Likely Outcome: Nothing • States won’t wait CAHU Healthy Solutions -- CCAHU

What’s On California’s Table • Four leading reform proposals: • Governor Arnold Schwarzenegger • Senate Republicans • Senate President Pro Tempore Don Perata • Assembly Speaker Fabian Nunez CAHU Healthy Solutions -- CCAHU

Governor’s Key Messages • Current System is Broken • Been a problem for a long time • Sacramento hasn’t addressed it – he will • Uninsured impose a “Hidden Tax” • Need to eliminate the tax if we’re gong to keep the state’s economy strong • Everyone is responsible for the solution and everyone has something to gain • The gain outweighs the pain for everyone CAHU Healthy Solutions -- CCAHU

Senate Republican’s Key Messages • Current System Needs Strengthening • Provide Californians with Access and Choice • Make the Health Care System More Reliable • Introduce No New Taxes • Or fees or whatever you want to call them CAHU Healthy Solutions -- CCAHU

Senator Perata’s Key Messages • Current System is Broken • Share Responsibility: No More “Free Riders” • Focus: 4.2 million uninsured in “working families” • Employers and employees share cost • Focus Competition on Price and Quality … … Not Underwriting • Through current plans or MRMIB-run “Connector” • Changes to AB 1672 CAHU Healthy Solutions -- CCAHU

Speaker Nunez’s Key Messages • Current System is Broken • Build on Existing Employer-based System • Single Payer not politically practical • The Insurance Marketplace Needs Reforming • Insist on Affordability for Working Families • Through public and private programs CAHU Healthy Solutions -- CCAHU

Ingredients for Positive Change Political Perception of a Need for Change + Well Designed Reforms = Opportunity CAHU Healthy Solutions -- CCAHU

Ingredients for Negative Change Political Perception of a Need for Change + An Overwhelming Desire to Be Perceived as Doing Something = Disaster CAHU Healthy Solutions -- CCAHU

CAHU’s Healthy Solutions Moves us from opposing everything to supporting something Creates a context in which our key issues can be addressed • The Cap • The Pool • The Mandate Provides a yardstick against which all proposals can be measured CAHU Healthy Solutions -- CCAHU

Agents: A Need for Focus Lots of Hot Button issues Lots of interest groups focused on each element of the plan For Agents, two key questions: • If the provision becomes law will it harm our profession or our clients? • Is changing the provision an absolute necessity for other stakeholders? Applying this means agents should focus on ……. CAHU Healthy Solutions -- CCAHU

Agents Focus: Issue #1 Carrier Administrative Expense Cap • Governor would require carriers to spend 85% of premium dollars on medical claims • Result: Little or no funds left for distribution Concern: • Limits funds available for distribution • Likely to deter new entrants into the market • Doesn’t guarantee lower costs, just eliminates agents and reduces customer service levels CAHU Healthy Solutions -- CCAHU

Agents Focus: Issue #2 • Purchasing Pool • Consumers 100-250% of the FPL receives subsidies usable only in a state purchasing pool (“Connecter”)and employers may place low income workers into the pool • Limited anti-crowd out provisions • E.g., 4% employer “in-lieu fee” paid to the pool and Employer contribution levels higher than employee-only premium contribution levels Concern: • Unlevel playing field • Ineffective anti-crowd out provisions CAHU Healthy Solutions -- CCAHU

Agents Focus: Issue #3 • Mandate to Issue: • Guarantee Issue in the individual market • Consumers can buy coverage at any time time • Assumption: Enforcement will work Concern: • Failure to enforce mandate to purchase will result in dramatic premium increases and commission reductions or eliminations • Current requirement for auto insurance is only 75% effective CAHU Healthy Solutions -- CCAHU

CAHU’s Key Messages All Californians deserve a health care system which • delivers both world class care and financial security • is accessible, affordable and fair • boosts the state’s economy, attracts new businesses and strengthens existing enterprises • is realistic about what one state can do CAHU Healthy Solutions -- CCAHU

Indicators of Healthy Reform Key Questions for All Reform Plans • AffordabilityCan the state afford the plan? Can the people afford it? • Universal ParticipationDoes it ensure that every Californian has access to basic health care coverage? • Cost ContainmentDoes is constrain rapidly rising medical costs • Consumer ChoiceDoes it empower Californians to find and choose the health care coverage that best fits their unique needs? • Evolving NeedsDoes it enable health care coverage to evolve with changes to the state’s population, their needs and expectations? CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Enroll the one million Californians eligible for state programs who fail to participate in them • At least 15% of the uninsured • Improve outreach through: • Enrollment when accessing public health care • Enrollment when signing up for school • Coordinate qualifications with other programs (e.g., Section 8 Housing and food stamps). • Create single point of entry to private and public health care coverage programs by enabling employers and health plans to create common applications CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Expand state programs to: • Children up to 300% of FPL • Single Adults up to 100% of FPL • Responsible Reform: Expand only after 85% of those currently eligible enroll in state programs and as state finances permit CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Provide subsidies to Californians below 250% percent of the FPL. • Expand subsidies to those earning up to 400% as state finances permit • Allow those receiving premium subsidies to use them in the open market – no segregation into state-run risk pools • Allow assignment to employers to encourage companies to buy coverage CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All • Subsidies should be set at average cost of basic coverage • Subsidized individuals should be required to accept qualified employer-sponsored coverage if offered • Subsidies should be offered on a sliding scale Household IncomePercent Subsidized 101-150% of FPL 90% 151-200% of FPL 70% 201-250% of FPL 50% 251-300% of FPL 30% 301-350% of FPL 20% 351-400% of FPL 10% CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Mandate to Purchase: Require all Californians to obtain health care coverage • Encourage and Enforce through: • Making all health insurance premiums tax deductible • Rationalize California and federal tax codes (e.g., HSA compatibility) • Tax penalty of five percent of gross income for failure to demonstrate coverage • Prorated for time spent insured • Proof of enrollment to obtain state provided privileges (e.g., drivers license) CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Mandate to Sell: After90% comply, require carriers to issue policies to all applicants (guarantee issue) Challenge: Only 75% compliance with auto insurance requirement Until 90% comply, expand MRMIP to be the insurer of last resort CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Need to protect system from those “gaming” the system: • Permit rating bands and pre-existing condition exclusions on those who violated law by avoiding coverage Previously Uninsured for:Rating BandPre-Existing Exclusion Period: More than 24 months: +/- 30% for 3 years 36 months 19-to-24 months: +/- 25% for 3 years 24 months 13-18 months: +/- 20% for 3 years 18 months 12 months or less: +/- 20% for 2 years = to months uninsured CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All Meeting the Basic Coverage Requirement: • state provided health care coverage (Healthy Families, MediCal and MRMIP) • HSA-eligible high deductible plans • catastrophic coverage • core coverage Carriers are free to offer any design which satisfies these criteria MRMIP has to offer catastrophic and core coverage CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All CatastrophicCoverage: • $7,500 maximum annual out-of-pocket • minimum of four doctor visits per year • negotiated hospital expenses • generic drugs • preventive care • at least $5,000,000 in lifetime coverage CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Access for All CoreCoverage: • Annual deductible of no more than $500 • minimum of twelve doctor visits per year • negotiated hospital expenses for up to $50,000 per year • prescription drugs with varying cost sharing arrangements for generic, brand and non-formulary drugs • Maximum $500 prescription deductible • preventive care CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Financing Selecting revenue sources is a political decision – some to considered: • Health plan fees • based on carrier’s overall market share • Taxes on hospital operating revenues and physician gross revenues • or other mechanism reaching self-insured plans • Taxes on products known to increase health care costs such as: • tobacco products • alcoholic beverages • handguns and ammunition • food products that contribute inordinately to obesity through high fat and/or sugar content and fast-food restaurant meals CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Constraining Costs Constraining skyrocketing medical costs is the most critical – and vexing – aspect of health care reform Key reason for health insurance premiums increases Reasons medical care costs skyrocket, including: • an aging population • new medical technologies and drugs • changing consumer expectations and values CAHU Healthy Solutions -- CCAHU

Healthy Solutions: Constraining Costs CAHU supports several initiatives put forth by others to control costs: • Pay for performance programs • Electronic health records • Electronic prescription programs • Evidence-based medicine • Hospital error reduction programs • Healthy lifestyles and wellness programs CAHU Healthy Solutions -- CCAHU

What’s Required: Stay Informed • Helpful publications: • Health Underwriter newsletters and magazines • California Broker • Helpful web sites: • Health Underwriters: • www.CAHU.org • My Blog (a shameless plug): • www.AlanKatz.WordPress.com CAHU Healthy Solutions -- CCAHU

What’s Required: Get Involved • Join Health Underwriters – Today! • Contribute to CAHU PAC – Today! • Be a communicator • Inform clients of what’s at stake • Respond to articles in your local paper and other media • Speak out in your community • Get involved in local campaigns • Meet with legislators in their districts CAHU Healthy Solutions -- CCAHU

What’s Required: Perspective We’ve faced challenges like this before: • 1990-1993: AB 1672 • 1993-1994: ClintonCare • 1996: Single Payor Initiative Agents have unsurpassed grassroots strength CAHU helps us speak with one voice CAHU Healthy Solutions -- CCAHU

A Healthy Opportunity • If we work together … • If we stay focused … • We can make it a change for the better for our clients and our profession CAHU Healthy Solutions -- CCAHU

CAHU’s Healthy Solutions Alan Katz, RHU Vice PresidentPublic Affairs

CAHU’s Healthy Solutions