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Why We Need Health Care Reform Presented by David W. Hood Former Secretary LA Department of Health and Hospitals

The Patient Protection and Affordable Care Act : How will ACA Impact Small Business? Sponsors: St. Tammany Democratic Parish Executive Committee ( DPEC ) Louisiana Center for Health Equity August 27, 2012. Why We Need Health Care Reform Presented by David W. Hood

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Why We Need Health Care Reform Presented by David W. Hood Former Secretary LA Department of Health and Hospitals

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  1. The Patient Protection and Affordable Care Act:How will ACA Impact Small Business?Sponsors: St. Tammany Democratic Parish Executive Committee (DPEC) Louisiana Center for Health EquityAugust 27, 2012 Why We Need Health Care Reform Presented by David W. Hood Former SecretaryLA Department of Health and Hospitals

  2. Major Issues • Why we need national reform • How Louisiana compares to other states • Will the Affordable Care Act (ACA) continue to be ignored by Louisiana and other states? • Making sense of the administration’s plan • What can small business in Louisiana expect?

  3. Why We Need Reform • Coverage—Cost—Quality • Access to good healthcare for entire population • Need an efficient system that controls cost • Need to always strive for quality • A matter of “national security” • Global competition • Don’t spend it all on healthcare

  4. U.S. Healthcare • Positives: best physicians, hospitals, medical schools, research and innovation • Negatives: • Medical and admin costs very high and rising fast • 40 million uninsured • Lacks cohesive care delivery “system” • 1,300 private plans & 50 jurisdictions • Wide variation in cost, quality and outcomes

  5. 25 Million Adults Underinsured in 2007,Up from 16 Million in 2003 Uninsured during the year 45.5 (26%) Uninsured during the year 49.5 (28%) Insured all year, not underinsured 110.9 (65%) Insured all year, not underinsured 102.3 (58%) Insuredall year, underinsured 25.2 (14%) Insuredall year, underinsured 15.6 (9%) 2003 Adults ages 19–64 (172.0 million) 2007 Adults ages 19–64 (177.0 million) *Underinsured defined as insured all year but experienced one of the following: medical expenses equaled 10% or more of income; medical expenses equaled 5% or more of income if low-income (<200% of poverty); or deductibles equaled 5% or more of income. Source: C. Schoen, S. R. Collins, J. L. Kriss, and M. M. Doty, “How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007,”Health Affairs Web Exclusive, June 10, 2008. Data: Commonwealth Fund Biennial Health Insurance Surveys (2003 and 2007).

  6. Projected Economic Impact of Health Spending Growth

  7. Total National Health Expenditures (NHE), 2009–19:Before and After Reform NHE in trillions 6.3% annual growth $4.6 $4.3 5.7% annual growth $2.5 Notes: * Estimate of pre-reform national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington, D.C., and New York: Center for American Progress and The Commonwealth Fund, May 2010).

  8. Determinants of Health in Select OECD Countries, 2009

  9. Spending on Basic Medical and Diagnostic Services,per Capita in 2006Adjusted for Differences in Cost of Living *2005 Source: OECD Health Data 2008, “June 2008.”

  10. Drug Prices for 30 Most Commonly Prescribed Drugs, 2006–07US is set at 1.0 Source: IMS Health.

  11. MRI Scan and Imaging Fees, 2009 Dollars US high-end 1,500 US average Source: International Federation of Health Plans, 2009 Comparative Price Report.

  12. Insurance Administrative Costs as a Percent of Total Private and Public Insured Spending on Health Services and Supplies, 2007 Percent Private admin. expenses as % of privately insured personal health spending Public admin. expenses as % of publicly insured personal health spending Public admin. expenses as % of publicly insured personal health spending, excluding Medicare Part D Part D admin. expenses as % of drug spending Private drug plan admin. expenses as % of drug spending Medicare Advantage private drug plan admin. expenses as % of drug spending Source: Authors’ calculations from M. Hartman, A. Martin, P. McDonnell et al., “National Health Spending in 2007: Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998,” Health Affairs, Jan./Feb. 2009 28(1):246–61.

  13. Trends in Total Payments to Medicare Advantage (MA) Plans in Excess of Fee-for-Service (FFS) Costs, 2004–2010 Total payments to MA plans in excess of FFS costs (in $ billions) Year Sources: George Washington University analysis of CMS Medicare Advantage enrollment and payment rate data for 2004–2010; estimated plan payments for 2010 based on plan bids and local benchmarks; and MedPAC analysis of MA plan bids for 2006–2009.

  14. Louisiana Medicaid Spending • Medicaid spending growing rapidly: • $2.1 billion state funds • $7.4 billion total for current year (FY 2013) • Total increase of $670 million over last year • Comparing current year to FY 2007: • Total spending increased $2.2 billion • State spending increased $770 million

  15. Medicaid Budget Cuts Severe • Congressional action in July reduced Louisiana’s federal Medicaid revenues • Total funds lost: $895 million • LSU hospitals were cut 24% while other Medicaid providers cut 2% • Cuts at mid-year devastating for some providers • Revenue forecast for coming year not encouraging

  16. Jindal Administration Budget Plan • Administration was “surprised” by Congressional action on Medicaid FMAP • Most reductions were at LSU hospitals • Administration is working to privatize services at each LSU hospital • These hospitals are the main safety net for the uninsured • ACA remedy for uninsured ignored by the uninsured

  17. Jindal Administration Budget Plan • The Affordable Care Act provides for an expansion of Medicaid to cover more than 30 million uninsured • Louisiana would benefit but opted out, as did several other states • Compounding the problem is the massive budget cut against LSU • What was the administration thinking?

  18. Jindal Administration Budget Plan • The ACA Medicaid expansion offers states a significant reduction in the state match needed for the coverage • Louisiana would cover 400,000 uninsured adults by 2023 at reduced state match to save $5.7 billion over 10 years

  19. Health Insurance Exchanges Also in Limbo • Exchanges promoted by a conservative think tank (Heritage Foundation) to restore free market incentives to health care. • First used in Massachusetts as a key element of “Romney Care” and later included in “Obama Care.” • However, most Republican governors (but not all) opted out of creating an exchange, leaving the task to the feds. • Louisiana should at least be a partner in this effort. • Insurance Commissioner Jim Donelon (R) favors exchanges to improve competition between health plans.

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