National Health Policy Conference

1. National Health Policy Conference February 12, 2007 Washington, D.C. Kim Belshe

2. Our Broken Health Care System 6.5 Million Uninsured 20% of Population Source: California Health Interview Survey, 2005

3. Emergency Departments Closing Source: Office of Statewide Health Planning and Development

4. The Hidden Tax Cost to Insured 10% of premium Actual Cost of Medical Care Uninsured 10% of premium Source: New America Foundation

5. The Hidden Tax Cost to Insured 17% of premium Actual Cost of Medical Care Uninsured 17% of premium Medi-Cal Underfunding Source: Administration Analysis of “Cost Shift Hydraulic,” Dobson

6. Hidden Tax Individuals: $455 Families: $1,186 Source: New America Foundation

7. Drivers of Cost: Chronic Diseases $153 $151 BILLION BILLION Smoking & Physical Inactivity Cancer & Diabetes Source: Centers for Disease Control and Prevention, 2003, U.S. Data

8. Drivers of Cost: Medical Errors 23,000 Deaths Cost: >$4 Billion Source: CA Department of Health Services

9. Fixing Our Broken System • Reduce the hidden tax; lower costs • Coverage for all; support better care • Healthy California

10. Governor’s Health Care Initiative • Prevention / Wellness • Shared Responsibility / Coverage for All • Affordability

11. Governor’s Health Care Initiative • Prevention / Wellness

12. Prevention & WellnessHealthier State – Long Term Affordability • Offer consumers incentives and rewards • Promote diabetes prevention and treatment • Reduce medical errors • Reverse obesity trends • Support tobacco cessation

13. Governor’s Health Care Initiative • Prevention / Wellness • Shared Responsibility / Coverage for All

14. Shared Benefit INDIVIDUALS Access to affordable coverage Healthier CA

15. Shared Benefit GOVERNMENT Healthy, productive & economically competitive state INDIVIDUALS Access to affordable coverage Healthier CA

16. Shared Benefit GOVERNMENT Healthy, productive & economically competitive state DOCTORS & HOSPITALS Expanded insured pop Fair compensation INDIVIDUALS Access to affordable coverage Healthier CA

17. Shared Benefit GOVERNMENT Healthy, productive & economically competitive state DOCTORS & HOSPITALS Expanded insured pop Fair compensation INDIVIDUALS Access to affordable coverage Healthier CA HEALTH PLANS Expanded market Fair compensation

18. Shared Benefit GOVERNMENT Healthy, productive & economically competitive state EMPLOYERS Affordable coverage Healthy, productive workforce DOCTORS & HOSPITALS Expanded insured pop Fair compensation INDIVIDUALS Access to affordable coverage Healthier CA HEALTH PLANS Expanded market Fair compensation

19. Fixing the Broken System Creating an efficient, competitive market dynamic

20. Payment Sources Commercial payer overpayment Medi-Cal/Uninsured Underpayment

21. Shared Responsibility INDIVIDUALS Obtain Health Coverage

22. Fixing the Broken System GOVERNMENT • INDIVIDUALS • Must secure health coverage for themselves and their children • Assume greater personal responsibility for health and wellness • Contribute to paying for their coverage DOCTORS & HOSPITALS EMPLOYERS HEALTH PLANS

23. Shared Responsibility GOVERNMENT Promote a functional health care system Provide access to affordable coverage Fairly compensate Medi-Cal providers INDIVIDUALS Obtain health coverage

24. Fixing the Broken System INDIVIDUALS • GOVERNMENT • Expand SCHIP/Medi-Cal for all children in families earning under $60K • Subsidies to families between $20K-$50K provided through new purchasing pool • County responsible for access for undocumented • Expand Medi-Cal to adults in poverty • $4 billion increase in Medi-Cal reimbursement rates DOCTORS & HOSPITALS EMPLOYERS HEALTH PLANS

25. Shared Responsibility GOVERNMENT Promote functional market Provide access to affordable coverage Fairly compensate Medi-Cal providers DOCTORS & HOSPITALS Provide affordable, quality care Share cost savings INDIVIDUALS Obtain health coverage

26. Redistribution to Providers New Funds to Providers $10 - $15 Billion $3.5 Billion Coverage Dividend from Providers

27. Fixing the Broken System GOVERNMENT • DOCTORS & HOSPITALS • 2% fee on physician revenues – 4% on hospital revenues • Participation in patient safety initiatives • At least 85% of hospital payments spent on patient care INDIVIDUALS EMPLOYERS HEALTH PLANS

28. Shared Responsibility GOVERNMENT Promote functional market Provide access to affordable coverage Fairly compensate Medi-Cal providers DOCTORS & HOSPITALS Provide affordable, quality care Share cost savings INDIVIDUALS Obtain health coverage HEALTH PLANS Guarantee access to affordable coverage

29. Fixing the Broken System GOVERNMENT • HEALTH PLANS • Guarantee coverage • Only base rates on age and geographic area in the individual market • 85% of premiums dedicated to patient care • Offer “Healthy Actions” rewards and incentives within benefit packages DOCTORS & HOSPITALS EMPLOYERS INDIVIDUALS

30. Shared Responsibility GOVERNMENT Promote functional health care market Provide access to affordable coverage Fairly compensate Medi-Cal providers EMPLOYERSSupport employee access to affordable coverage DOCTORS & HOSPITALS Provide affordable, quality care Share cost savings INDIVIDUALS Obtain health coverage HEALTH PLANS Guarantee access to affordable coverage Pass along savings

31. Fixing the Broken System GOVERNMENT • EMPLOYERS • Offer federal Section125 plans to allow employees to make pre-tax contributions to coverage • Contribute to the cost of coverage – non-offering employers with 10 or more employees will contribute 4% of payroll DOCTORS & HOSPITALS INDIVIDUALS HEALTH PLANS

32. Governor’s Health Care Initiative • Prevention / Wellness • Shared Responsibility / Coverage for All • Affordability

33. Affordability: Short Term • Reduce hidden tax • Tax breaks for individuals & businesses tied to purchase of health insurance • Enhance insurer & hospital efficiency by requiring 85% of premiums & hospital dollars on patient care • Remove regulatory barriers • Reduce regulatory red tape

34. Affordability: Long-Term • Promote prevention & wellness • Accelerate adoption of health information technology • Tie Medi-Cal rate increases to performance measures • Enhance health care quality & efficiency through transparency and performance measures • Monitor & evaluate market function & costs and revise as necessary

35. FISCAL IMPACT Prevention $300 Tax Incentive $900 Counties $2,000 Subsidized Coverage $2,270 Medi-Cal/HFP Coverage $2,638 Medi-Cal Rate Increase $4,039 $12 Billion Other - $203 Employer in lieu $1,000 County and Other Redirect $2,000 Physician/Hospitals Recapture $3,472 Federal Funds $5,474 Cost Funding in millions

36. Federal Funding: $5.47 Billion • $1.77 billion: Redirection of current federal funds used for programs for the uninsured • $3.7 billion: New federal funds • $3.45 billion: guaranteed under current federal statute (match for Medi-Cal reimbursement, Healthy Families parental match) • $250 million: Discretionary funds via 1115 waiver

37. Federal Role • Medicaid funding – Rates; Parental expansion • Section 1115 waiver • Deficit Reduction Act flexibility • Value-driven health care • Tax advantages – HSAs, Section 125 plan

38. Fixing Our Broken System:Shared Responsibility • Reduce the hidden tax; lower costs • Coverage for all; support better care • Healthy California