National Health Care Reform Overview

1. National Health Care Reform Overview Daniel B. McLaughlin Center for Health and Medical Affairs

2. The Best Health Care System in the World

3. The Best • Medical Research • Drug and Device Development • Innovative Care Delivery • Minute Clinic • Electronic Health Record • Health 2.0 • Health Services Research • Passionate and skilled caregivers • Engaged Consumers and Patients

4. Geographic Practice disparity Quality: over use, under use, misuse and safety Acute care model for Chronic disability Professions shortage Primary care Nursing Emerging public health problems Access problems: uninsured, underinsured, bankruptcy Insurance: pre existing conditions, deductibles & co-pays, lifetime limits Welfare payment for aged and disabled Most costly system in the World – 17% of GDP Paradox

5. Federal Reform 2010 Reduce cost growth,Improve access, andImprove quality andsafety In a way that is acceptable to the American Public With Liberty and Justice for All

6. Health Care – A Systems View Professional - Patient

7. Health System – Core Consumer Behavior Tools – Dx & Rx Professional - Patient Illness Burden Knowledge

8. Health System – Tools • Reform • - Improved payment forprimary care services • - More funding for training primary care providers Health Care Workers Facilities Medical Technology Information Technology Tools – Dx & Rx • Reform • $18 Billion for Health Information Technology (Stimulus bill) Professional - Patient • Reform • - $80 Billion in discounts over 10 years from drug companies + Medicaid rebates • The tradeoff – no direct negotiations with Medicare, extended patent protection • - Transparency on drug/device company relationships with providers • Reform: structure • Accountable CareOrganizations

9. Health System – Consumer Financial resources & goals Information Market/Clinical Past Experience – Personal, networks Consumer Behavior Tools – Dx & Rx • Environment:- Air, food, water • Economic • Cultural Professional - Patient Knowledge Illness Burden Genetics of the Individual

10. Consumer Behavior and Illness • Reform – Illness Burden • New funds and coverage for prevention • Payment for ChronicDisease Management • Payment for Medical home • Payment for Health IT to track chronic patients • Reform – Consumer behavior • Increased payment for health promotion and disease prevention • Medicare recipients get “health risk assessment” • Grants and tax incentives to employers for wellness programs (Safeway model) • Tort reform pilots (Malpractice)

11. Health System – Education & Research Consumer Behavior Tools – Dx & Rx Professional - Patient Continuing Education Knowledge Illness Burden Research Primary Education

12. Education and Research • Reform - Education • Revised Medicare funding for training to emphasize primary care • Increased funding for nursing education • Reform - Research • Funding for Comparative Effectiveness Research (Stimulus) • Cannot be used to direct payment policy

13. Health System – Financing Financial resources & goals Consumer Behavior Tools – Dx & Rx Financing Sources & Structure Professional - Patient Government Knowledge Illness Burden Employers Individuals

14. Total Health System Model Health Care Workers Financial resources & goals Information Market/Clinical Facilities Medical Technology Information Technology Past Experience – Personal, networks Consumer Behavior Tools – Dx & Rx Financing Sources & Structure • Environment:- Air, food, water • Economic • Cultural Professional - Patient Government Continuing Education Knowledge Illness Burden Employers Research Primary Education Genetics of the Individual Individuals

15. Employers Remain Primary Sponsor of Coverage Distribution of 307 Million People by Primary Source of Coverage Employer Direct 55m 18% Uninsured 49m 16% Medicaid 42m 14% Employer Direct 164m 53% Medicare 41m 13% Medicare 39m 13% Individual Direct 14m 5% Total Employer 164m (53%) Total Individual 14m (5%) Source: The Lewin Group, The Path to a High Performance U.S. Health System: Technical Documentation (Washington, D.C.: The Lewin Group, 2009).

16. Insurance Reform • Mandates insurance: bothemployers and individuals • Subsidies available forboth low income individuals and small business • Expands Medicaid income limitsto 133% – state match held harmless • Standardized benefit levels (Bronze – Platinum) • Eliminates pre existing condition, lifetime caps, recissions and other insurance practices • HSAs still available • Simplified and standardized billing

17. The Exchange

18. Financing Medicare Advantage –Health Plans Subsidies for individuals and small business Hospital Inflation (-1.5%), Re- admits, DSH Medicaid eligibility buy down Drug Discounts Personal Income Taxes> $250,000, 3.8% on unearned income Fix Medicare donut hole $ One Trillion System taxes: health plans, device companies, tanning, Cadillac Health plans MD fees – repeal SGR 4% of total NHE X 1099s for purchases > $600

19. Bending the cost curve Competition between Health Plans Delivery system Substitution of lower priced care Inpatient, clinic, home Increased availability and use of primary care Improved chronic care (Medical home, ACO etc.) Reduced system costs (billing, overhead) Comparative effectiveness research Medicare Innovations Center Consumers Prevention and Wellness and the Social Determinates of Health Tort Reform demonstrations Consumer Directed Health Care

20. Reform’s Impact on Stakeholders

21. Insurance Companies • Gain 30 million new customers • Cease most underwriting practices • Participate in state based insurance exchanges • No change with large employers • Agree to standardization • Benefits • Payment systems • Overhead less than 20%, 15% • Become more retail and consumer oriented

22. Government • Federal • Enforce Insurance mandate • Implement new Medicare payment policies • Implement Insurance Exchange (states or feds) • Continue to fund HIT, Comparative Effectiveness Research • Implement Medicare pilots (value purchasing, etc.) • Raise taxes • Implement fraud prevention • States • Expand Medicaid eligibility • Operate Exchanges

23. Direct providers of Care • Reduced uncompensated care • Bundled payments – value purchasing • Incentives to form largergroups and structures • Increased transparency andreporting • Reduction in growth of hospital payments • Incentives to purchase HIT • Higher payment for primary care • Changes in payment due to geographic variation (?)

24. Consumers • Negatives • Short term insurance rate increases • Insurance mandate • Higher taxes for some • Access issues to primarycare • Positives • Improved access to health insurance • Lowering of health care inflation • Elimination in Medicare donut hole • Improved information about system and provider performance • Eliminates job lock for entrepreneurs • e

25. Current Issues • Individual and employer mandate to have health insurance (State Attorney Generals) • State’s ability to control health insurance rate increases • Temporary high risk pools • No pre existing conditions for children • Payment to firms for early retirement coverage • Continuing health care inflation

26. Changes Possible • Insurance Mandate Methods • Open enrollment • Part D penalties • Standard Benefits • State Medicaid funding increases • Comparative Effectiveness Research • Independent Payment Advisory Board • Malpractice reform • State Waivers (e.g. public option in Vermont)

27. Unlikely to change • Health Insurance Exchanges • Quality • Workforce improvements – primary care • Fraud Prevention • Prevention and Wellness • Chronic Disease Management • ACOs, bundled Payments, Medical home • Total Repeal: due to provider/health plan resistance

28. “Americans always do what is right, but only after trying everything else.” Winston Churchill

29. The Best Health Care System in the World

30. Additional ReadingHealth Administration Press Further Information at: HAPMclaughlin.com

31. Thank You Dan McLaughlin www.Stthomas.edu/chma  Resources dbmclaughlin@stthomas.edu 651-962-4143