Health System Reform in the USA – What Medical Students Need to Know

1. Health System Reform in the USA – What Medical Students Need to Know Pauline Vaillancourt Rosenau Management , Policy, and Community Health School of Public Health University of Texas Health Science Center Houston, Texas, USA For Baylor College of Medicine; Dr. Stephen Whitney’s class October 18, 2011 www.prosenau.com Email: pauline.rosenau@uth.tmc.edu P. Rosenau; US Health Reform 2011

2. The “Agenda” • Do we need health system reform? (3-6) • History of reform in the USA (8-9) • Why does healthcare cost so much? (10-11) • What is in the bill ? (an 8 min. video) (12) • MD community: mixed opinion but clear compensation effects (13-16) • Public Health, Medicare, and Medicaid (17-23) • The Public (25) • Repeal or Revise: Congress and the Supreme Court (27-33) • Conclusion (34) P. Rosenau; US Health Reform 2011

3. Do We Need Health System Reform in the USA? • Most expensive system in the world • Outcomes are better in other countries • Mortality amenable to health care is poorest in the USA compared to other countries • But variations across the states – very large P. Rosenau; US Health Reform 2011

4. See slide : Commonwealth Fund International Health Policy Survey: Adults’ Health Experiences in seven Countries, 2007 – for methodology P. Rosenau; US Health Reform 2011

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8. A Short History of Failed Efforts to Reform the US Health System • 1912: Teddy Roosevelt – single national health service; opposition from Unions and Doctors • 1930: FD Roosevelt – social security enacted but not health insurance • 1945: Harry Truman • Richard Nixon • Jimmy Carter • 1993: Bill Clinton P. Rosenau; US Health Reform 2011

9. Exhibit 9. National Health Expenditures (NHE) Under Alternative Scenarios, U.S. Constant 2010 Dollars, 1960–2010 NHE in billions $2,624 5.2% annual growth 4.8% annual growth $2,110 $1,702 $1,583 4.3% annual growth 4.2% annual growth Data: The Centers for Medicare and Medicaid Services; Bureau of Labor Statistics, Office of Management and Budget, Congressional Budget Office. P. Rosenau; US Health Reform 2011

10. Why Does the US Health System Cost So Much? • Administration accounted for the largest p/p difference between cost US and Canada, 39%. • Payments to MDs and hospitals accounted for 31% • More intensive provision of medical services accounted for 14% of the difference • Alexis Pozen, David M. Cutler (2010) Medical Spending Differences in the United States and Canada: The Role of Prices, Procedures, and Administrative Expenses. Inquiry: Summer 2010, Vol. 47, No. 2, pp. 124-134. P. Rosenau; US Health Reform 2011

11. Pozen and Cutler. Inquiry. 2010 Summer;47(2):124-34 P. Rosenau; US Health Reform 2011

12. What’s In the Bill – Brief Review • Health Reform Hits Main Street; http://healthreform.kff.org/the-animation.aspx • 1000 pages - summarized in 8 minutes! • 480 major changes P. Rosenau; US Health Reform 2011

13. Does the Medical Provider Community Support the 2010 Health Insurance Reform Bill and Why? • AAMC (Association of American Medical Colleges) • AMA– ACOG “qualified support” – lots to like http://www.ama-assn.org/ama/pub/health-system-reform/hsr-impacts-practice.shtml • Increased access and demand for services – “strain complain” is being heard now • Improve insurance competition and choice • Eliminate lifetime coverage caps and pre-existing conditions restraints • Encourages prevention and wellness programs • Practitioner professional associations also wanted malpractice reform and a promise to rescind Medicare cuts • Informal promise to rescind Medicare cuts P. Rosenau; US Health Reform 2011

14. Who Does Not Support • Texas Medical Association – Austin American- Statesman 22-23 March 2010 • The Reform Bill will increase insurance costs • It will increase federal government interference in health care • It will create incentives for patients to pay a fine for not having insurance • It fails to address malpractice issues • Physicians for a National Health Program, http://www.pnhp.org/. • Medical device manufacturers (2.3% tax ; starts in 2013) P. Rosenau; US Health Reform 2011

15. Policy Implications for MD Compensation • Increased demand may not translate into a need for more primary care physicians (Massachusetts experience) • Better pay for primary care; but longer hours possible • Competition from physician substitutes • Payment systems: more “innovative”, complex, varied… • More MDs on salary- example FQHC • Fewer fee-for-service systems & more capitation payments • Better incentivized Pay-4-Performance including in ACOs • Higher % reimbursement of bills issued because more patients with insurance (MDs receive 67% of each $1.00 billed now ) P. Rosenau; US Health Reform 2011

16. MD Compensation Considerations ….. Continued • Payment for Medicaid patients will be better in 2013-2014 • Compensation from Medicare unlikely to remain as high as it is now . • If doctors refuse Medicare/Medicaid patients these patients may move to Federally Qualified Health Centers and Community Health Centers for some of their basic needs P. Rosenau; US Health Reform 2011

17. What’s Included for Public Health • Access increased; 32 million more with insurance and subsidies for those with lower incomes levels • Encourages primary care • Council on Prevention to prepare a national plan • Expansion of public programs: CHIP, Medicaid, • HUGE Expansion of Federally Qualified Health –10-11 billion over 5 years (note: doctors are on salary at FQHCs) • Improves payment for wellness and prevention (500 million) P. Rosenau; US Health Reform 2011

18. Continued…. What’s Included for Public Health • $1.5 billion for visiting nurse programs for pregnant teens and new moms • Student education repayment programs for public health • Prevention and Public Health Fund – 7 Billion from 2010-2015 and then 2 billion per year (includes research) • Taxes indoor tanning shops • Require chain restaurants/vending machines to disclose the nutritional content including calories P. Rosenau; US Health Reform 2011

19. What’s Included – Medicare • Medicare matters: because it sets the payment scales that influence other payers • Medicare’s fiscal life is expanded by 10 years via increase new taxes on the wealthy • More preventive care without co-pays and deductibles; includes annual physicals (starts in 2011) • Improved pharmaceutical benefits: • 2011 – 50% discount on brand name drugs purchased in the Doughnut Hole (NYT 3/22/10 p A 18) • Doughnut Hole of the Pharmaceutical Part D Rx insurance program will disappear in 2020 • Reductions in Medicare fraud which may be about 10% (20% in Florida ?) P. Rosenau; US Health Reform 2011

20. . Continued… Medicare • Medicare Advantage: • More closely regulated and federal government subsidy reduced • Unfair aspects curtailed; “you can still have it but you will have to pay for it “ • Benefits will be lower in some areas and increased in others • The 455 billion Medicare spending cuts over 10 years are mostly from Medicare Advantage • UPDATE: As of 2011 enrollment has increased and premiums are lower despite predictions to the contrary • Medicare’s Accountable Care Organizations (ACOs) must agree to take responsibility for overall care of their Medicare beneficiaries; more below…. P. Rosenau; US Health Reform 2011

21. Medicaid • Federal eligibility rules imposed on the states to curtail wide variation across states on eligibility • States may not reduce their current Medicaid eligibility rules between 2014-2019 but waivers for some states are easing the pain • In 2014 all those at or below 133% the Federal Poverty Level (FPL) will be eligible for Medicaid • Federal government pays for most of the costs of the newly enrolled in Medicaid -- states obliged to pay for 10% after 2019 • States with the highest number of new enrollees in Medicaid gain the most - that’s Texas P. Rosenau; US Health Reform 2011

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23. continued… Medicaid • There will be many many more patients with Medicaid in the future • Doctors likely to do more preventive medicine for this population because they will have insurance policies with no out-of-pocket cost. • Doctors will worry less about whether or not these patients can “afford” the medication or prescribed procedure – big change in practice patterns P. Rosenau; US Health Reform 2011

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25. Public Support for the ACA • 20% think the ACA was already repealed; 36% aren’t sure…. • Over the last year between 40% and 70% indicated they were against it. • Most components of the bill individually are popular! • Mandate – less than 50% and going lower • Exchanges - 92% and going higher • A family of four making $33,525 could save up to $14,900 a year on the cost of coverage in 2014 since they will qualify for tax credits and subsidies. • Those who will get large subsidies will be a real bargain yet they don’t support it. Why: • don’t know about it • know about it but say it will take too long- 2014 P. Rosenau; US Health Reform 2011

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27. 2013 Congress Will Decide the future of Medicine P. Rosenau; US Health Reform 2011

28. Congress Can withhold funding for implementation? • It already has for some elements • Pilot programs have gone unfunded • Not all new elements require funding • Absence of funding results in delay or “repeal” without the hassle P. Rosenau; US Health Reform 2011

29. Congress AND the ACA • Congress can repeal the bill after 2013 if there is a Republican President • Reduce subsidies to help low income people buy insurance • Who’s against? • Who’s for? • Congress can reduce funds to the States for Medicaid expansion and start-up funds to establish exchanges P. Rosenau; US Health Reform 2011

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31. When will the Supreme Court Act? • Can take the case anytime: October through December 2011 - likely • Could rule before the 2012 election? • Could rule the mandate unconstitutional • Could declare the entire bill is unconstitutional P. Rosenau; US Health Reform 2011

32. Intrade: Individual Mandate to be ruled unconstitutional by US Supreme Court…. • before midnight ET 31 Dec 2012 • 25.0%chance • http://www.intrade.com/v4/markets/contract/?contractId=745353 • before midnight ET 31 Dec 2013 • 42.0%chance • http://www.intrade.com/v4/markets/contract/?contractId=745354 P. Rosenau; US Health Reform 2011

33. If the Mandate Is Unconstitutional …. • Pressure from insurers is on! • Congress could fix it…. • Buy now or pay more later ; late enrollment penalties, no uncompensated care reimbursed • Open enrollment expanded to two years or longer (Uccello) • Opt out without a penalty, for 5 years but results in big limits on individual (Starr) • Encourage the states to adopt a mandate. Good luck…. • Status quo – not required to purchase but 2 year preexisting conditions in effect P. Rosenau; US Health Reform 2011

34. Conclusion: Important Points: • The most important element in the reform bill that has not received much attention: insurance regulation! • Health system reform is never final • But the current legislation sets the basis for future change • Legislation is constantly being revised after it is adopted • The rules for implementation are very important; many are still being written and some are already being changed • Are stakeholders supporting legislation: • that they can live with? • that they think they can weasel out of, get around, find loopholes in, etc? P. Rosenau; US Health Reform 2011