Health Reform: Past, Present and Future

1. Health Reform: Past, Present and Future Bob Doherty Senior Vice President, Governmental Affairs and Public Policy Regional SWAN meeting Jackson, WY September 1, 2011

2. Health reform: early 20th century • 1912: Theodore Roosevelt believed that no country could be strong whose people were sick and poor, campaigned on a platform that called for mandatory health insurance for workers • AMA originally supported universal coverage, but by 1920, many physicians viewed compulsory insurance as threat to private practice, paternalistic, and “un-American” and AMA House of Delegates voted to oppose.

3. Health reform: mid 20th century • FDR spoke in favor of a right to medical care, but did not push compulsory HI over fear that it would endanger other Social Security reforms • Bill after bill introduced to mandate coverage, but none passed the Congress

4. Health reform: mid-20th century • 1945: Truman proposed a single plan to provide coverage for all age groups financed by 4% rise in Social Security payroll taxes • AMA raised $3.5 million to oppose the bill, calling it “regimentation” and “totalitarianism”—even though Truman had no chance of getting it through a GOP-controlled Congress

5. Health reform: the 1960s • Kennedy campaigned for a comprehensive program of HI coverage for the elderly • AMA established AMPAC with goal of electing conservatives to Congress and opposing Medicare

6. Health reform: the 1960s • Assassination of JFK and LBJ’s ascendancy changed everything; LBJ believed in Medicare even more than JFK and knew how to get legislation through Congress • 1964 elections: LBJ trounced Goldwater and the Democrats gained a 2-1 majority in Congress

7. Health Reform: the 1960s • 1965 Medicare and Medicaid passed, providing hospital and medical care for the elderly and creating a State/Federal partnership to cover the very poor

8. Health reform: 1970s • Under Nixon, Medicare expanded to cover disabled, Wage and Price controls; beginning of limits on Medicare payments to physicians and hospitals, increased regulation of physicians and health care facilities • Nixon proposed mandatory employer-sponsored HI but didn’t pass Congress

9. Health reform: 1970s • 1976: Carter campaigns for catastrophic plan, but after election priority shifts to controlling health care costs • Sen. Kennedy offers new legislation for mandatory employer HI, government subsidies for poor, competition among private plans, and negotiated fees • Bills fail due to economic recession, rising health costs, Congressional committee restructuring, and failure of advocates for comprehensive coverage to compromise

10. Health reform: 1980s • Reagan favored repeal of many of the regulatory laws passed in the previous decade (e.g., National Health Planning Act and PSRO program); market-based “pro-competition” approach and tax credits favored for expanding HI • Medicare catastrophic and prescription drug coverage enacted, but repealed as seniors objected to paying for it • Growth in budget deficits led to new methods of paying doctors and hospitals

11. Health reform: 1990s • Rising health care costs and 46 million uninsured increased popular support for HI reform • Clinton administration became the first since Truman to pursue a comprehensive plan to provide universal coverage • Health Security Act called for mandated employer and individual coverage, managed competition, purchasing alliances, global budgets • Plan failed to pass congressional committees

12. Health reform: 1990s • Individual insurance mandate was offered as a conservative alternative to employer-mandate “Under this social contract, the federal government would agree to make it financially possible, through refund able tax benefits or in some cases by providing access to public-sector health programs, for every American family to purchase at least a basic package of, including catastrophic insurance. In return, government would require, by law every head of household to acquire at least a basic health plan for his or her family.” Heritage Foundation, Using Tax Credits to Create an Affordable Health System, 1990, www.heritage.org/Research/Reports/1990/07/Using-Tax-Credits-to-Create-an-Affordable-Health-System

13. Health reform: late-1990s • Following defeat of Clinton plan, more modest goals were set for expanding coverage, including S-CHIP program for low-income children • GOP take-over of Congress led to enactment of Balanced Budget Act of 1997, which mandated cuts in payments to hospitals, physicians, other providers and new “Medicare+Choice” program—first step toward goal of privatizing Medicare

14. Health reform: early 21st century • Ironically, Republican Congress passed and President George W. Bush sign into law the largest expansion of federal entitlements since 1965: Medicare Prescription Drug Program (Part D) • Decision to run the program through private insurers and PBMs put a conservative “stamp” on expansion of entitlements • No dedicated funding or offsets, adding to federal deficit

15. Health reform: the present • Obama campaigned for universal health care coverage, 2008 elections returned the Democrats to the White House and solidified control over Congress • After 18 months of contentious debate, Congress passes health care reform in March, 2010

16. Health reform: the present March 22, 2010: Almost 100 years after a U.S. President first proposed Health insurance for all, the Patient Protection and Affordable Care Act is signed into law

17. How did Obama do it? • Passion: “No president gets very far unless he is deeply invested. Obama cared about health reform far more than his cool demeanor suggested.” • Persistence: “Obama insisted on pursuing health reform despite the current economic crisis, surging deficits . . .When Scott Brown, a Republican, stunned Washington by winning Ted Kennedy’s Senate many Democrats were ready to back off a reform that seemed to have grown toxic. Instead, the president plunged ahead.” • Unfaltering Commitment: “The lesson is unambiguous: A reform this difficult requires total and unfaltering presidential commitment.” Marone, James A. Presidents And Health Reform: From Franklin D. Roosevelt To Barack Obama, Health Affairs, June, 2010

18. ACA: Coverage • No pre-existing condition exclusions • Children (2010) • Adults: Temporary high risk pool (2010), then all plans must cover (2014) • No rescissions (2014) • Up to age 26 covered by parents’ plan (2010) • Preventive services with no-cost sharing (2010 for new plans, 2014 for all HI)

19. ACA: Coverage • Medicare Part D doughnut hole: $250 rebate (2010), 50% discount on brand name drugs (2011), to be completely phased out by 2020 • Individual and small business tax credits applied to purchase of HI through state exchanges (2014) • Qualified health plans must offer basic benefits packages: bronze, silver, gold, platinum, plus low cost-plan for under age 30 (2014)

20. ACA: Coverage • Large employers must pay a penalty if their employees obtain coverage through an exchange (2014) • Individuals required to buy coverage or pay penalty (2014) • Medicaid expanded to 133% of FPL with 100% of cost initially paid for by federal government (2014), phases down to 90%

21. ACA: Coverage • When fully implemented, 34 previously uninsured Americans will have coverage (94% of legal residents) • Half by HI offered through exchanges, half by Medicaid • But most Americans will continue to obtain coverage through employer-sponsored HI

22. ACA: Workforce • Primary Care Incentive Program: 10% bonus for designated services by primary care physicians (2011-2015) • Medicaid primary care parity: states can pay no less than Medicare rates for visits and vaccines by primary care physicians (2013, 2014) • Workforce Commission (appointed 2011, not yet funded) to project workforce needs and addresses barriers to primary care

23. ACA: Workforce • Unused residency slots redistributed to primary care (2011) • GME offered through Teaching Health Centers (2011) • NHSC: more slots for scholarships and loan forgiveness, higher maximum awards, and part-time awards (2011) • Community Health Centers (2011)

24. ACA: Workforce • Title VII funding for primary care training programs, scholarships, faculty and curricula development (2011) • State workforce grants (2011) • State grants for primary care extension program (2011) • Grants for health teams to support smaller practices become PCMHs (2011)

25. ACA: Cost and Quality • Center on Medicare and Medicaid Innovation (ongoing) • ACOs • Bundling • Other voluntary pilots to align incentives with value • Must include models to reform primary care payments • Pay-for-performance (ongoing) • Review of Mis-valued services (ongoing)

26. ACA: Cost and Quality • Insurers must spend at least 85% of premium dollar on direct patient care or pay a rebate (80% for small employers), 2011 • Insurers will be required to streamline and reduce paperwork on patients and physicians, including enrollment, electronic funds transfers, and authorization requirements or pay a fine (rules to be rolled out starting in 2011)

27. ACA: Cost and Quality • Patient-Centered Outcomes Research Institute (ongoing) • Wellness and prevention trust fund (ongoing) • National Quality Strategy (2011) • IPAB (2013) • Employers may offer 50% premium discount for employees who achieve personal health goals (2014)

28. How is the ACA funded? • Annual fee on health insurers and excise tax on high cost health plans • Excise tax on medical devices and fee on drug manufacturers • Tanning salon tax • Tax on earned/unearned income of higher wage persons • Pay cuts to hospitals, home health and MA plans

29. ACP and the ACA • ACP continues to support the key programs in the ACA to provide HI coverage to nearly all Americans, to expand workforce, to lower costs and improve quality, based on long-standing policies • ACP supports changes and improvements in the law, including giving states more options to design their own approaches as long as they cover as many people, allowing Congress to override IPAB with simple majority vote, and repeal of rule that physicians authorize OTCs for flexible spending accounts

30. ACP and the ACA • ACP is influencing implementation of the law by submitting comments on proposed rules, everything from ACOs to health exchanges to required benefits to administrative simplification • ACP has created a dedicated website for chapters on state implementation issues • ACP has developed educational resources for members and their patients

32. Consumer-friend website www.healthcareandyou.org

33. Will the ACA survive new political challenges? • GOP gained an historic number of seats in the November, 2010 mid-term elections, gaining a majority in the House of Representatives, and gaining control of a majority of the states, fueled by the Tea Party • The GOP’s “Pledge to America” included “repeal and replace” the Affordable Care Act • Legal challenges have led to split decisions by federal judges on its constitutionality, which likely won’t be resolved until the Supreme Court take it up (2012) • Meantime, the administration is proceeding with implementation, and states have to decide when and if they would move forward.

34. And will it survive the drive to cut federal spending? • Budget Control Act of 2011 requires that Congress enact trillions of dollars in deficit reduction over next 10 years, enforced by caps • Poses a direct challenge to funding of key reforms in the Affordable Care Act, as well as existing mandatory and discretionary federal health programs

36. Phase II

37. Joint Select Committee on Deficit Reduction

38. Sequestration Process

39. You can’t solve the budget deficit without lowering health care spending “The single greatest threat to budget stability is the growth of federal spending on health care—pushed up both by increases in the number of beneficiaries of Medicare and Medicaid (because of the aging of the population) and by growth in spending per beneficiary that outstrips growth in per capita GDP. Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020, January 2010 https://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter1.shtml]

40. Options for deficit reduction (CBO) • Add public plan to health exchanges • Limit malpractice torts • Convert Medicaid to block grant • Reduce federal Medicaid match • Consolidate and reduce GME payments • Raise Medicare eligibility to age 67

41. Options for deficit reduction (CBO) • Require manufacturers to Pay a Minimum rebate on Medicare Part D drugs for low-income beneficiaries • Reduce Medicare payment rates across-the-board in high spending areas • Increase Medicare Part B premium from 25 to 35% of program costs • Combine Medicare Part A and B deductible

42. Options for deficit reduction (CBO) • Limit Medigap coverage • Reduce NIH funding • Accelerate excise tax on high cost plans • Increase tax on alcoholic beverages • Tax high fructose beverages • Increase Part A payroll tax • Repeal the individual insurance mandate

43. ACP’s advocacy on deficit reduction • Per capita health spending must be reduced, but not by defunding critical programs to ensure access, coverage and workforce! • Congress should instead target key cost-drivers, including supporting efforts by physicians to reduce reducing marginal and ineffective care, engage patients in shared decision-making, reduce costs of defensive medicine, and reform payment and delivery systems

44. ACP’s payment reform proposal • Stage 1 (CYs 2012-16): eliminate SGR, set updates by statute, ensure no cuts for any services and higher update for primary care • During period of stability, engage in broad testing and evaluation of new payment models • Stage 2 (CYs 2015-19) physicians transition to new payment and delivery models that meet certain specified criteria

45. ACP advocacy on deficit reduction • Permanent solution to Medicare SGR cuts must be included in any deficit reduction agreement! • Or the price tag will soon increase to half a trillion dollars! • Congress should preserve and improve GME funding, not cut it! • Broaden financing base, weight GME payments based on assessment of workforce needs, and support pilot testing of innovative training models

46. Health care reform: the future • ACA won’t be repealed (as long as Obama is president) but will key programs be de-funded? • Will the states set up the health exchanges by 2013? And if they don’t, will the federal government run them as required by the ACA? • Will the Supreme Court decide the individual insurance mandate is unconstitutional, and if it does, what will replace it? • How will Medicare and Medicaid be reformed to ensure long-term solvency and to reduce impact on budget deficit?

47. Health care reform: the future • How will health care costs be controlled, by cutting benefits and payments to “providers” or by ensuring effectiveness of care provided? • Will the 2012 elections decide the future of the ACA and health care reform? • Will physicians take the lead in controlling health care costs, or leave it to the Washington?

48. What Washington might learn from Dr. Seuss “ ‘I say! You are blocking my path. You are right in my way. I’m a North-Going Zax and I always go north. Get out of my way, now, and let me go forth!”’ ‘Who’s in whose way?’ snapped the South-Going Zax. ‘I always go south, making south-going tracks. So you’re in MY way! And I ask you to move and let me go south in my south-going groove.’ Then the North-Going Zax puffed his chest up with pride. ‘I never,” he said, ‘take a step to one side. And I’ll prove to you that I won’t change my ways if I have to keep standing here fifty-nine days!”’ ‘And I’ll prove to YOU,’ yelled the South-Going Zax, ‘That I can stand here in the prairie of Prax for fifty-nine years! For I live by a rule That I learned as a boy back in South-Going School. Never budge! That’s my rule. Never budge in the least! Not an inch to the west! Not an inch to the east! I’ll stay here, not budging! I can and I will f it makes you and me and the whole world stand still!’ From Dr. Seuss, The Sneetches and other Stories, 1961