Obama Administration Outline/Proposal

2. Obama Administration Outline/Proposal Broad Outline Only • Would retain employer based health insurance system • Includes a “play or pay” model • Creates a public/private plan mix – Insurance Exchange • Expands Medicaid to make more lower income people eligible • No individual mandate for coverage (families would be required to have children enrolled in a plan) • Attempts to increase access to lower cost generic drugs • Increases access to medications from other countries where deemed safe by FDA

3. Healthy Americans Act(Sen. Wyden (D-OR) & Sen. Bennett (R-UT)) • First introduced in Jan. ’07 • Shifts away from employer based model to one in which individuals purchase insurance from private insurers • No public plan • Mandates individual coverage • Eliminates employer federal tax deduction for health insurance to employees • Instead employers would increase wages because no longer paying insurance benefits • Employees get deduction for premiums on individual taxes • Features income based premium subsidies • Folds Medicaid and SCHIP into state based private insurance pools • Idea is that would result in more uniform quality of care and access to care if all folded into similar private insurance products.

4. Senate Finance Committee Policy Options • Chairman Sen. Max Baucus (D-MT) • Series of policy options the committee will consider in crafting its proposal rather than formal proposal • Mandates individual coverage • May or may not include employer “play or pay” (option A & option B) • Like Obama proposal calls for creation of a Health Insurance Exchange – public plan • “marketplace for insurance options including some public and some private options” • Exchange would perform regulatory function as well and would prohibit member plans from exclusions of coverage based on pre-existing conditions • Sen. Baucus has indicated that his public plan will “look and feel” more like a private plan – adhere to open market principles • Sen. Baucus has recently indicated that his committee’s proposal is unlikely to achieve universal coverage and will likely specifically exclude undocumented workers

5. HELP Committee Proposal(Sen. Kennedy D-MA) • Features government created public plan • Mandates individual coverage • Includes a “play or pay” provision for employers • Sliding scale of subsidized premiums – some subsidies up to 500% of FPL ($110,000 for family of four) • Proposes to reimburse physicians and hospitals at Medicare rates plus 10% • Creates new insurance program to provide home and community based care for 10 million people with severe disabilities

6. Massachusetts Reform Program • In 2006 passed plan for “universal” healthcare insurance coverage. Estimated over 440,000 additional covered. Uninsured rate fell from estimated 10% to estimated 3% • Program mandates individual coverage • Creates public/private insurance exchange • Estimated that around half of newly covered individuals are paying something towards premiums, rest are 100% subsidized • Underestimated number of uninsured poor prior to enactment of program • In the first year 176,000 – 40,000 more than predicted- enrolled in subsidized program, Commonwealth Care • Remains a significant segment of uninsured – individuals with income too high to qualify for subsidy but too low too afford private insurance options • For these individuals penalty for not obtaining insurance often less than cost of the private insurance option • New program has done little to assist with cost containment • In first two years forced twice to supplement program totaling extra $250 Million • Budget request for program increased $400 Million from 2008 to 2009 ($869 Million) and it is still believed the funding level will fall short • State Senate President Therese Murray quoted in 10/08 as believing that program costs can not be sustained at current rates • Has created an access to care problem • Shortage of primary care physicians • Wait to see a primary care physician has gone up significantly – some wait times of more than two months reported

7. Paying For Healthcare Reform • Cost estimates of various reform packages are in the neighborhood of $1 Trillion for the first 10 years • President Obama has committed to the reform package being “deficit neutral” • Achieved through combination of cost cutting, modernization and tax increases on Americans earning more than $250,000 per year • President recently proposed budget contains $635 billion “down payment” on healthcare reform • President has recently proposed an additional $313 Billion in cuts to Medicare & Medicaid • Incorporate productivity adjustments into Medicare payment updates • Reduce subsidies to hospitals for treating the uninsured • In FY 2013 payments begin to decrease. By FY 2019 funding would be at 25% of DSH funding in 2013. • Reduce Medicare payments for Advance Medical Imaging • Increase the equipment utilization factor from current 50% to 95% as per MedPAC “recommendation” • Reduce payments to SNFs, inpatient rehab facilities and LTC hospitals • As per MedPAC 2010 payment recommendations • Cut “waste, fraud & abuse” • “increased scrutiny” of physicians in high-risk areas or those that order a high volume of high-risk services (home health, DME, home infusion therapy)