Health Care Reform? ACA vs. Single Payer

1. Health Care Reform?ACA vs. Single Payer Oliver Fein, M.D. Professor of Clinical Medicine and Healthcare Policy Associate Dean Office of Affiliations Office of Global Health Education Weill Cornell Medical College ofein@med.cornell.edu Retiree chapter Professional Staff Congress November 3, 2014

2. DISCLOSURES Dr. Oliver Fein has no relevant financial relationships with commercial interests Dr. Oliver Fein is Chair of the NY-Metro Chapter and past President of Physicians for a National Health Program (PNHP), a non-profit educational and advocacy organization. He receives no financial compensation from PNHP.

3. PRESENTATION OUTLINE The Politics behind the ACA Challenges facing the U.S. Health Care System 3. Policy Options: ACA vs. Single Payer

4. HEALTH REFORM:OBAMA’S FATEFUL CHOICE • He did not want to “start from scratch” • He had two fundamental choices: 1) to build on the private sector or 2) to build on the public sector (Medicare) • Which did he choose?

5. Progress(?) of US Health Reform Employer mandate Medicare Individual mandate* ?? * “each eligible individual must enroll in an applicable health plan for the individual and must pay any premium required with respect to such enrollment.” (S.1775) Public option** ** “you can choose to enroll in the new public plan”

6. WHAT HAPPENED TO THEPUBLIC OPTION? The original “robust” Plan – March 2009 • Open enrollment: “Medicare for everyone who wants it” • Medicare rates, backed by the government • 119 million members (Lewin) • But maintained multiple payers

7. $1.2 Billion Spent on Health Care Lobbying! Center for Public Integrity, March 26, 2010

8. WHAT HAPPENED TO THEPUBLIC OPTION? The House Plan – November 2009 • Restricted enrollment (only the uninsured) • 6 million members (<2% of thepopulation) • Negotiated rates, self sustaining The Senate Plan – December 2009 • No public option

9. THE PATIENT PROTECTION AND AFFORDABLE CARE ACT(ACA) March 23, 2010

10. The Structure of the Affordable Care Act (Partial) Delivery Reform Insurance Reform More People Better Coverage Integrated Care Innovation Quality Focus Cost: MLR, Rate Review, M’Care Adv. Medicaid Expansion CMMI ACOs, Bundles, Value- Based Payment Prevention Funds Exchanges Dual Eligibles Transparency & Data Sharing Prevention Benefits Pricing Reforms Guaranteed Issue Care Transitions Fraud and Abuse Prescription Drugs Kids < 26 FQHCs

11. ACA(a MANDATE MODEL) Everyone is required to have health insurance or pay a penalty. Individual mandate: penalty =$695 for singles; $2,085 for families Employer mandate (50 or more employees): penalty =$2,000/employee Necessary for the survival of private HI. Private HI lost 3.2% (6.3 million) enrollees in 2009 and more than 15 million in the last decade.

12. Improved MEDICARE FOR ALL(a Single Payer Model) Build on the original Medicare 1. Expand Medicare to the entire population Improve Coverage: preventive services, dental care, long term care Eliminate deductibles and co-payments Expand drug coverage: public administration 5. Re-design physician reimbursement

13. CHALLENGES FACING HEALTH CARE REFORM • Declining access • Escalating costs • Lack of comprehensive benefits • Restricted choice • Uneven Quality • Insufficient primary care • How to pay for reform

14. CHALLENGE #1 DECLINING ACCESS

16. Number of people spending more than 10% of income on health care (Millions) MILLIONS

17. RISE IN PERSONAL BANKRUPTCIES 62% of personal bankruptcies are due to medical expensesand over 75% had health insurance at the outset of their bankrupting illness.* * Himmelstein, et.al. Am J Med, August, 2009

18. ImprovedMEDICARE FOR ALL • Automatic enrollment • Federal guarantee • All residents of the United States • “Everybody in, nobody out”

19. HEALTH INSURANCE REFORM (ACA) • Mandates purchase of private HI (2014) • Expands Medicaid eligibility to 138% FPL (2014) - single $15,856; family $26,951, but not in 24 states • Subsidizes premiums up to 400% FPL (2014) - single $45,960; family $78,120 • Insurance market reforms: Coverage up to age 26; no pre-existing condition exclusions; no annual/lifetime limits

20. Millions Will Remain Uninsured… Millions Note: The uninsured include about 5 million undocumented immigrants. Source: Congressional Budget Office

21. CHALLENGE #2 ESCALATING COSTS

22. Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2011 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011 (April to April).

23. High Cost of Health Insurance Premiums: It’s Even Too Expensive for the Middle Class Today National Average for Employer-provided Insurance Single Coverage $ 6,025 per year Family Coverage $16,834 per year Note: employee contribution: Single (19%) = $1,081 Family (28%) = $4,823 Source: Kaiser Family Foundation/HRET Survey of Employee Benefits, 2014

24. ImprovedMEDICARE FOR ALL Low Administrative Costs = Single Payer • Administrative cost and profit - Medicare: 2-3 % - Private insurance: 16-30% • $400 billion* saved by converting from for-profit private HI to Medicare-for-all (single payer) * NEJM 2003:349;768-775 updated to 2010

25. Covering Everyone and Saving Money through Medicare for All $ B Additional costs Covering the uninsured and poorly-insured +6.4% Elimination of cost-sharing and co-pays +5.1% Savings Reduced insurance administrative costs -5.3% Reduced hospital administrative costs -1.9% Reduced physician office costs -3.6% Bulk purchasing of drugs & equipment -2.8% Primary care emphasis & reduce fraud -2.2% 134 107 241 Total Costs +11.5% -111 -21 -76 -59 -46-313 Total Savings -15.8% Net Savings - 4.3% - 72 Source: Health Care for All Californians Plan, Lewin Group, January 2005

27. Private insurers’ High Overhead

28. SINGLE PAYER OFFERS TOOLS TO BEND THE COST-CURVE • Global budgeting of hospitals • Capital investment planning • Emphasis on primary care; coordination of care; alternative ways of paying for care • Bulk purchasing of pharmaceuticals

29. HEALTH INSURANCE REFORM(ACA) Market Theory: Mandate the young, healthy uninsured buy private health insurance (they usually don’t get sick and don’t get health insurance = low risks) Then, the premiums for everyone will go down.

30. WILL MARKET THEORY WORK? Premiums* Single Coverage $6,025 per year Family Coverage $16,834 per year *national average for employer-provided insurance Penalties under P-PACA Individuals $695 per year Families $2,085 per year Employers $2,000 per employee

31. HEALTH INSURANCE REFORM (ACA) Offers unproven tools to contain costs • Health Information Technology (HIT) • Chronic Disease Management • Payment reforms (e.g., ACOs, bundled payments, value-based purchasing)

32. …and Costs Will Keep On Rising National Health Expenditures (trillions) $4.7 6.6% annual growth $4.67 $4.5 6.4% annual growth 6.0% annual growth National Health Expenditures as Percent of GDP 17.8 17.9 18.0 18.2 18.8 19.3 19.8 20.2 20.5 21.0 Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center for American Progress and The Commonwealth Fund, December 2009. Estimated Financial Effects of PPACA as Amended, Richard Foster, CMS Actuary, April 2010

33. CHALLENGE #3LACK OF COMPREHENSIVE BENEFITS • Service Coverage: Doctors, NPs, Hospitals, Drugs; Dental, Mental Health, Home care/nursing home • Financial Coverage: Copays and deductibles

34. ImprovedMEDICARE FOR ALL Comprehensive coverage - Preventive services - Hospital care • Physician services • Nurse practitioner and Physician Assistants - Dental services - Mental health and substance abuse services - Medication expenses - Reproductive health services -Home Care/nursing home care “All medically necessary services” Any exclusions? How decided?

35. ImprovedMEDICARE FOR ALL Eliminates Co-Pays or Deductibles • Reduce use of needed and unneeded services equally • Result in under use of primary care services • Not as effective in reducing over use of technology intensive services, as - Eliminating self-referral to MD owned facilities - Reducing defensive medicine

36. HEALTH INSURANCE REFORM (ACA) • No Standard Benefit Package mandated • Eliminates co-pays and deductibles, but only on preventive services • Stipulation that health insurers have medical lost ratios (MLR) of 80-85% • No regulation of the magnitude of premiums, deductibles and co-pays – just the stipulation that benefits have an actuarial value of 60% or higher

37. Average employer plan 87% actuarial value http://www.whatmattersbywellmark.com/premiums.php

38. NY State of Health – Standard Bronze Plan (Family) • $6,000 deductible • Out-of-pocket maximum: $12,700 for a family with income-based adjustments … • 50% coinsurance after deductible for: • “Ambulance services” • Emergency department (unless admitted) • Urgent Care Center • “Advanced imaging” • “Diagnostic tests” • Dialysis • Hospice care • Inpatient care for end of life care (preauthorization required) Source: NY State of Health Standard Products; courtesy of Len Rodberg

39. CHALLENGE #4RESTRICTED CHOICE • 42% of employees have no choice • Private health insurance limits choice to the network of doctors and hospitals with whom they have negotiated contracts • You pay more to go out of network

40. ImprovedMEDICARE FOR ALL Expands Choice for Everyone • No limit to a network of providers • Free choice of doctor and hospital • Delinks health insurance from employment

41. HEALTH INSURANCE REFORM (ACA) Creation of HI Exchanges Expands Choice for Some in 2014 • Enrollment is limited to those in the individual and small group market • Market-place of private HI plans • No public option • State-based, but no standard national plan • No state single payer plan allowed until 2017

42. Vermont is using its Exchange to facilitate transition to Single Payer:

43. Health Care Reform in New York State:Gottfried’s New York Health BillA7860/S5425 Universal coverage Comprehensivebenefits Coordination of care, but no gatekeeping No cost sharing No private insurance that duplicates New York Health Funding by graduated payroll tax

44. CHALLENGE #5:UNEVEN QUALITY • In 2014, U.S. was last among 11 industrialized nations in health system performance (quality, access, efficiency, equity and healthy lives). • In 2004, we were 5th. * Mirror, Mirror on the Wall Commonwealth Fund (2014)

45. ImprovedMEDICARE FOR ALL • National data on health care quality vs. proprietary data held by private HI • National standards and public reporting • HIT for the nation with patient protections – every patient their own medical record on a “credit” card

46. HEALTH INSURANCE REFORM (ACA) • Comparative Effectiveness Research • Innovation Center in CMS to test new payment and service delivery models – PCMH + ACOs (2011) • Value based purchasing – hospital payments based on quality reporting measures (2013) • Readmission penalties (2014) • Reduce hospital payments for hospital-acquired conditions (2015)

47. CHALLENGE #6:INSUFFICIENT PRIMARY CARE • Average medical school debt = $170,000 • Primary care is under-reimbursed • Medical school graduates going into specialties

48. ImprovedMEDICARE FOR ALL • Free tuition/GME payback • Debt forgiveness for primary care • Malpractice payment for primary care providers (MDs, NPs and PAs) • Patient-Centered Medical Homes (team based care, open access, coordination of care; phone/internet medicine)

49. HEALTH INSURANCE REFORM (ACA) • 10% Primary Care Bonus Payments (2011-2017) – estimate = $4-10,000/provider/year • Increase Medicaid payment to Medicare rates for primary care (2013) • Independent Payment Advisory Board – I-PAB (2014)

50. CHALLENGE #7 HOW TO PAY FOR REFORM