A Bird’s Eye View of the Patient Protection and Affordable Care Act (PPACA)

1. A Bird’s Eye View of the Patient Protection and Affordable Care Act (PPACA) Claudia Chaufan, M.D., PhD Physicians for a National Health Program-California

2. Outline • 1) Measuring “goodness” in health care • 2) US health care through March 23, 2010 • 3) US health care after March 23, 2010

3. Question • 1) Who knows people who do not have health insurance and cannot financially afford their medical needs? • 2) Who knows people who have health insurance and cannot financially afford their medical needs?

4. In the U.S., healthinsurance without health care not exception but norm www.pnhpcalifornia.org

5. U.S. world leader in…Medical Bankruptcies! • In 2007, 62% of personal bankruptcies were medical • Increase of ~50% from 2001 • Most debtors well educated, homeowners, middle class occupation • 75% had health insurance at time of filing The American Journal of Medicine, 2009

6. How do we assess “goodness” in health care systems? • Overall attainment • Health measures (e.g. life expectancy, infant and maternal mortality) • Financial fairness (e.g. whether people go broke when they actually need care) • Overall performance • How much you do with the money you spend The World Health Report, World Health Organization, 2000

7. Quick overview of US health care (circa March 2010) www.pnhpcalifornia.org

8. Poor qualityLowest life expectancy www.pnhpcalifornia.org

9. Poor qualityHighest rates of infant mortality www.pnhpcalifornia.org

10. Poor qualityHighest rates of maternal mortality www.pnhpcalifornia.org

11. Poor qualityWorst mortality treatable causes www.pnhpcalifornia.org

12. Huge financial barriers (lousy access) www.pnhpcalifornia.org

13. U.S. world leader in…Medical Bankruptcies! • In 2007, 62% of personal bankruptcies were medical • Increase of ~50% from 2001 • Most debtors well educated, homeowners, middle class occupation • 75% had health insurance at time of filing The American Journal of Medicine, 2009

14. Decline in employer-sponsored health coverage accelerated three times as fast in 2009, Elise Gould, September 16, 2010http://www.epi.org/publications/entry/decline_in_employer-sponsored_health_coverage_accelerated Erosion of employer-sponsored commercial insurance

15. Most expensive www.pnhpcalifornia.org

16. Mediocre Performance Note: U.S. Just above Slovenia and below Costa Rica

17. Summing up • Lousy quality (poor health indices) • Very unfair (54th in easing financial access) • Most expensive (1st in the world!) • Poor performance (37th bang for buck) World Health Organization, 2000

18. Patient Protection and Affordable Care Act, March 23 2010 WASHINGTON — With the strokes of 22 pens, President Obama signed his landmark health care overhaul — the most expansive social legislation enacted in decades — into law on Tuesday, saying it enshrines “the core principle that everybody should have some basic security when it comes to their health care.”New York Times www.pnhpcalifornia.org

19. Promise • Patients will be protected (from the financial burden of health care) • Health care will be affordable (for federal government and individual patients) www.pnhpcalifornia.org

20. Major strategies • Expand coverage: MEDICAID + SUBSIDIES TO PURCHASE COMMERCIAL INSURANCE • Contain costs: EXCHANGES, ELECTRONIC MEDICAL RECORDS, PAY 4 PERFORMANCE, FRAUD AND ABUSE, ETC. • Guaranteed issue: NO PRE-EXISTING CONDITIONS • Mandate coverage: EVERY NEEDS TO CARRY INSURANCE TO SPREAD RISK www.pnhpcalifornia.org

21. Promises & Realities of PPACA www.pnhpcalifornia.org

22. Promise-reality 1 • Promise: • “32 million will gain health coverage” • Reality: • “Gain” obligation to buy commercial insurance under penalty of a fine (~ driver’s insurance). • Medicaid (Medical) expansions: “poor people’s programs”, underfunded, politically unpopular, threatened by budget cuts, losing health providers to low reimbursement rates www.pnhpcalifornia.org

23. Gain coverage through Medicaid? Senate Panel OKs Medi-Cal Cost Increases, Reimbursement Cuts,increase Medi-Cal beneficiaries' costs for certain health care services; cut Medi-Cal reimbursement by 10%.(California HealthLines February 17, 2011) HS Staff to Help States Reduce Medicaid Costs, Retain Coverage Levels,by cutting optional services such as dental services, eyeglasses, prescription drugs, hospital admissions.(California Healthlines, February 23, 2011) www.pnhpcalifornia.org

24. Promise-reality 2 • Promise: • The law will make coverage affordable, establish annual limits to on your medical expenses • Reality: • “Coverage” (i.e. policies) affordable (maybe!) by increasing out of pocket costs to you -- “coverage” without care • “No annual limits” illusory! (only services included in policy!) www.pnhpcalifornia.org

25. Massachusetts @ 3 years of “health care overhaul” • Least expensive individual policy 56 yr. male, annual income $32,670, 300% of poverty, no subsidies (taxpayers’ $$$!) • $5,616 (policy) • $ 2,000 (deductible) • 20% of next $15,000 for covered services • Total: $10,616 • Uncovered services (e.g. physical therapy, drugs, home health) are on you!

26. “Coverage” does not protect from bankruptcy

27. Control costs…? California Healthlines, March 14, 2011: Some Blue Shield Members To Face Dramatic Rise In Premiums About 900 Blue Shield of California members with individual policies could see their premiums rise by 80% or more cumulatively as a result of two recent rate hikes and a third premium increase scheduled to take effect on May 1. www.pnhpcalifornia.org

28. Promise-reality 3 • Promise: “Achieves (near) universal health care” • Reality: • Not universal: • ~50 million uninsured next three years (CBO)-- 50,000 estimated preventable deaths per year, 1,000 per million uninsured) • 23 million will remain uninsured by 2019 (CBO) • Not health care: • Insurance is means to end; commercial insurance is defective (pushes paper around to avoid the sick!) www.pnhpcalifornia.org

29. Promise-reality 6 • Promise: • No more health discrimination • Reality: • Discrimination (price “adjustments”) continues, by • Age • Geographical location (occupation and poverty rates) • Fitness (some penalties if you flunk “wellness” tests) • Residency status (undocumented immigrants can’t buy from “exchanges”, even with own money) www.pnhpcalifornia.org

30. No discrimination based on health status..? California Healthline, October 14, 2010, Insurers Can Set Higher Rates for Kids Who Have Pre-Existing Conditions On Wednesday, HHS said that health insurers can charge higher premiums to cover children with pre-existing conditions, in an attempt to persuade companies to offer child-only policies, the New York Times reports (New York Times, 10/13/2010). www.pnhpcalifornia.org

31. Wait a minute… • Something must be good!! • Children can stay in parents’ plans until age 26 (assuming parents have plan and money to pay)? • Why should it be “either” current mess “or” PPACA? • Why 26? Age is irrelevant in other health care systems that cover everybody, automatically, from cradle to grave! And they do not need to pay $400 billion in subsidies so that millions of captive customers buy commercial insurance! www.pnhpcalifornia.org

32. But is PPACA not better than nothing?A step in the right direction..? www.pnhpcalifornia.org

33. Groups divided by actuarial risk/income • Pay according to plan • Services according to plan • Profit ok for medically necessary services US health care before March 2010 $$$$$$$$ Private insurers Employer Market 55% $$$$ Employed, health coverage Young, healthy, secure jobs (?)c Private insurers Individual Market $$ Self-employed $$$ Working poor Unemployed • Public insurers • ~30% • Medicare • Medicaid • Private Medicare • /Medicaid • SCHIP Elderly (poor and non-poor) Disabled Renal Failure Out of pocket $$$$$$$ (Near) poor kids Working (near) poor Self-employed Black hole (uninsured) ~15%

34. Groups divided by actuarial risk/income • Pay according to plan • Services according to plan • Profit ok for medically necessary services US health care after March 2010 EXCHANGES IND.MARKET $$ $$$$$$$$ Private insurers Employer Market 55% $$$$ • TAXPAYER FUNDED SUBSIDIES • TAXPAYER EXPANSIONS OF PUBLIC • HEALTH CARE (MEDICAID) • MANDATE TO PURCHASE COMMERCIAL INSURANCE • REGULATIONS / REGULATIONS / REGULATIONS Employed, health coverage Young, healthy, secure jobs (?)c Self-employed $$$ Working poor Unemployed • Public insurers • ~30% • Medicare • Medicaid • Private Medicare • /Medicaid • SCHIP Elderly (poor and non-poor) Disabled Renal Failure Out of pocket $$$$$$$ (Near) poor kids Working (near) poor Self-employed Uninsured circa 2019, 23 million? (7%)

35. Would it have been better with a public option?

36. Groups divided by actuarial risk/income • Pay according to plan • Services according to plan • Profit ok for medically necessary services US health care after March 2010 Public option 2% (6 million) ? EXCHANGES IND.MARKET $$ $$$$$$$$ Private insurers Employer Market 55% $$$$ Employed, health coverage Young, healthy, secure jobs (?)c • TAXPAYER FUNDED SUBSIDIES • TAXPAYER EXPANSIONS OF PUBLIC HEALTH CARE (MEDICAID) • MANDATE TO PURCHASE COMMERCIAL INSURANCE • REGULATIONS / REGULATIONS / REGULATIONS Self-employed $$$ Working poor Unemployed • Public insurers • ~30% • Medicare • Medicaid • Private Medicare • /Medicaid • SCHIP Elderly (poor and non-poor) Disabled Renal Failure Out of pocket $$$$$$$ (Near) poor kids Working (near) poor Self-employed Black hole (uninsured) ~15%

37. What’s the evidence that this model will work…? • None  • For profit insurance + subsidies + expansion of means-tested public insurance (Medicaid) + (mandate), have failed in: • 1988 Massachusetts, 1989 Oregon, 1992 Minnesota, Tennessee y Vermont, 1993 Washington State, 2003 Maine • 2003, 2006 Massachusetts Report from the United States, State Health Reform Flatlines, Steffie Woolhandler, Benjamin Day, and David U. Himmelstein, International Journal of Health Services, Volume 38, Number 3, p. 585–592, 2008

38. Massachusetts 2006 Window into future of PPACA • No reduction in medical bankruptcies from 2007 to 2009 (7,504 to 10,094), still around 50% • 89%had insurance at time of filing! • Least expensive individual policy 56 yr. male: $5,616 (policy) + $ 2,000 (deductible) + 80% of next $15,000 for covered services (annual income 300% of poverty $32,670) American Journal of Medicine, March 2011

39. Why…?

40. Social/Public vs. Commercial Insurance:Similar NAMES, different GOALS • Commercial (for-profit) insurance • Business of slicing and dicing patients according to risk categories and services contracted for, and collect as much money as possible while actively avoiding to pay for services, with the goal of yielding the maximum profit possible for shareholders • Health care as market good(TV/cell phone) • Social insurance (taxes / payroll ): • Marriage between social solidarity to protect from medical need and market forces to buy services in bulk, get better prices, and avoid waste (advertising, marketing, shareholders profit, fat CEO salaries) • Treats health care as a right and social good

41. Key problem of PPACA: Implements a health care system built upona defective product:commercial, for profit insurance, that survives and thrives the more it turns down “bad customers” and the less it pays for health care

42. Paradox: Health insurance without health care www.pnhpcalifornia.org

43. What’s the experience with guaranteed, universal, social (public) health insurance? www.pnhpcalifornia.org

44. International model:Social insurance / National Systems (general or dedicated taxes) • Everybody in, nobody out! (true universality) • Always a function of income, receive medical care according to need • Unified benefits package of “medically necessary services” • Profit banned from sale of insurance for medically necessary services “sellers” Patients “buyers” Public or private Health providers Pharmaceuticals Medical technology Financing Mutual funds (non profit) Germany, France, Japan Single payer Canada, Taiwan, UK www.pnhpcalifornia.org

45. MILLION DOLLAR QUESTION:How do they control costs for the system and for individuals? Power of Economies of Scale (Market Forces!) to pursue to goal of social solidarity • ADMINISTRATIVE OVERHEAD • BULK PURCHASES • SPREADING RISK IN LARGE POOLS www.pnhpcalifornia.org

46. Less administrative overhead, less waste

48. Bulk purchases, lower prices Japan United States Organization of Economic Cooperation and Development, OECD 2000/2003 www.pnhpcalifornia.org

49. Risk pooling allows to cross-subsidize for socially useful purposes In all insurance systems, for profit or non-profit, there is cross-subsidizing, i.e., collective contributions pay for whoever needs services HOW THE POWER OF CROSS-SUBSIDIZING IS USED DEPENDS ON GOAL OF SYSTEM In COMMERCIAL SYSTEM, profit! YOUR POOL MUST BE LARGE AND FULL OF HEALTHY PEOPLE In SOCIAL/PUBLIC SYSTEM, to pay for health care!YOUR POOL MUST BE LARGE AND INCLUDE ALL SICK AND HEALTHY Key problem of Medicare: all members of pool need a lot of health care 20% account for 80% of costs Agency for Healthcare Research and Quality, MEPS, 1999

50. Who pays more taxes for health care?Social vs. Commercial insurance Government-spent fraction in red Source: OECD Health Data 2005