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IHC -- Health reform: What it means and what's next
1. Health Reform: What it
means and what’s next?
IHC Leaders Conference
Scottsdale, AZ
March 23, 2012
Grace-Marie Turner
Galen Institute
2.
3. Americans satisfied with own care
82% - Their health care is good to excellent
45% - U.S. has world’s best health system
51% - Major problems, needs major changes
18% - System in crisis, needs major overhaul
Robert J. Blendon, Sc.D., Drew E. Altman, Ph.D., John M. Benson, M.A., Mollyann Brodie, Ph.D., Tami Buhr, A.M., Claudia
Deane, M.A., and Sasha Buscho, B.A., "Voters and Health Reform in the 2008 Presidential Election," The New England Journal
of Medicine, November 6, 2008, at http://content.nejm.org/cgi/content/full/359/19/2050.
4. Early benefits of the law
– Allowing “children” up to age 26 on
parent’s policies
– New coverage for uninsured with health
risks
– Coverage for pre-existing conditions
– $250 for seniors with high drug costs
– “Free” preventive care
– No annual or lifetime limits on coverage
5. Key pillars of the new law
Strict federal regulation of health insurance
Mandates on individuals, states, employers
$500 billion in new taxes and penalties
$575 billion in cuts to Medicare
32 million more to get health coverage
– 16 million through Medicaid expansion
– 16 million through federally subsidized
private insurance
23 million remain uninsured in 2019
8. Higher costs…
Insurance rising 9% to $15,000/yr. in 2011
Foster: “False more so than true” that law will
lower costs for taxpayers
Latest CBO cost estimate: $1.76 trillion
Gruber: Premiums up to 30% higher than without
the law
Congressional Budget Office and the Joint Committee on Taxation, “An Analysis of Health Insurance Premiums Under the Patient
Protection and Affordable Care Act,” November 30, 2009, www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf. Chief
Medicare Actuary on President's health care claims: "I would say false, more so than true,“ House Budget Committee, January 26,
2011, http://www.youtube.com/watch?v=XC9rhGWJA2w. “2011 Employer Health Benefits Survey,” Kaiser Family Foundation/Health
Research & Educational Trust, September 27, 2011, http://www.kff.org/insurance/092311nr.cfm.
9. “If you like your health insurance…”
51 to 80% of Americans will lose current
coverage, according to Obama admin. estimates
CBO: Up to 20 million could lose job-based plans
Up to 80 million will be forced to change policies
Child-only policies vanish in 17 states
35 million more will move from job-based
insurance to taxpayer-subsidized exchanges
10. Rules, rules, rules…
States to decide contents of Minimum
Essential Benefits
States say they need more details with
exchange rules
Medical Loss Ratio rules and
exemptions teed up
11. Opportunities ahead
This is not settled policy
States resist, will try to reshape policy
This law must be changed, likely
significantly
The American people want private insurance,
and they want to be in charge of choices.
The goals:
Freedom. Innovation. Access.
12. Health care in 2012
Legislation: Challenges to the law –
CLASS and IPAB
Regulation: 11,000+ pages so far
Legal: U.S. Supreme Court decision
Political: 2012 campaigns and elections
13. What we need from reform
A more diverse, dynamic, information-
based approval system to pave the way for
personalized health coverage and medicine
The 2012 debate provides an opportunity to
reshape public policy in numerous ways
14. Starting a fresh conversation
Engaging patients as
partners in managing health
costs and getting the best
value for health care dollars
15. Total health benefit cost increases
per employee
16.0%
14.7%
14.0%
12.0% 11.2%
10.1%
10.0%
9%
8.1%
8.0% 7.5%
6.1% 6.1% 6.1% 6.3%
6.0% 5.5% 5.6%
4.0%
2.0%
0.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Mercer's National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April)
1990-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2009.
19. Percentage of Covered Workers Enrolled in a Plan
with a General Annual Deductible of $1,000 or More
for Single Coverage, By Firm Size, 2006-2011
* Estimate is statistically different from estimate for the previous year shown (p<.05).
Note: These estimates include workers enrolled in HDHP/SO and other plan types. Because we do not collect information on the
attributes of conventional plans, to be conservative, we assumed that workers in conventional plans do not have a deductible of $1,000
or more. Because of the low enrollment in conventional plans, the impact of this assumption is minimal. Average general annual health
plan deductibles for PPOs, POS plans, and HDHP/SOs are for in-network services.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2011.
20. Among Firms Offering Health Benefits, Percentage
That Offer an HDHP, by Firm Size, 2005-2011
* Estimate is statistically different from estimate for previous year shown (p<.05).
‡ The 2011 estimate includes 1.8% of all firms offering health benefits that offer both
an HDHP/HRA and an HSA-qualified HDHP. The comparable percentages for
previous years are: 2005 [0.3%], 2006 [0.4%], 2007 [0.2%], 2008 [0.3%], 2009
[<0.1%], and 2010 [0.3%].
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005-2011.
21. Percentage of Covered Workers Enrolled in a Plan with
a General Annual Deductible of $2,000 or More for
Single Coverage, By Firm Size, 2006-2011
50% All Small Firms (3-199 Workers)
All Large Firms (200 or More Workers)
All Firms
40%
30% 28%*
20%
20%
16%
12%* 12%*
10%
10% 7% 7%*
6% 5%* 5%
3% 4%
3%*
3% 2%
0% 1% 1%
2006 2007 2008 2009 2010 2011
* Estimate is statistically different from estimate for the previous year shown (p<.05).
Note: These estimates include workers enrolled in HDHP/SO and other plan types. Because we do not collect information on the
attributes of conventional plans, to be conservative, we assumed that workers in conventional plans do not have a deductible of $2,000
or more. Because of the low enrollment in conventional plans, the impact of this assumption is minimal.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2011.
22. Dispelling CDHC Misconceptions
Misconception Truth
Members pay an average of $35 less per year out of
“Shifts costs to employees”
pocket vs. traditional plans
“CDHC doesn’t save $$” Cumulative savings were 26% by the fifth year
8-10% higher use of preventive care
96% same or better care compliance
“People will avoid care”
21% more likely to use disease management programs
14% better compliance with EB recommended care
“People don’t understand
83% satisfied with service (vs. 82% traditional plans)
or like the plans”
Source: 2010 Fifth Annual Cigna Choice Fund Experience Study
24. New Incentives
McKinsey & Co. says CDHC plans increase
consumer awareness of cost and value. In this 2005
study, consumers were:
20% more likely to comply with treatments for chronic
conditions
25% more likely to engage in healthy behaviors
30% more likely to get annual physicals
50% more likely to seek less expensive care
“If I catch an issue early, I’ll save money in the long
run.”
McKinsey & Company. “Consumer-Directed Health Plan Report – Early Evidence is Promising.” June 2005.
Available online at http://mckinsey.com/clientservice/payorprovider/Health_Plan_Report.asp.
25. Common themes
Focus on:
Personal responsibility by recipients
Better coordination of care
Incentives for patient participation
Data collection and outcomes reports
Wellness and prevention services
Greater focus on disease management
26. CDHC plans are moderating costs
Consumer-directed health plans show
that realigning incentives can help
employers and consumers save money
while boosting prevention and wellness
It’s important for these options to be
protected under the new health law
27. Caution Ahead
No instant success
Political criticism,
resistance
Some employees “do not
appreciate the long-term
potential these savings
accounts hold and remain
mired in the old 'use it or
lose it' mentality of flexible
spending accounts."
Towers Perrin
http://www.towersperrin.com/tp/jsp/masterbrand_webcache_html.jsp?webc=HR_Services/United_S
tates/Press_Releases/2007/20070522/2007_05_22.htm&selected=press
29. A global move toward consumerism
Doctor/patient
relationship
Decentralized
decision-making
Value of private
enterprise and
competition
30. Who said this?
“You should never try to tell people what they
ought to do because all of their circumstances
are different.
“But if you give them very good timely
information, they are going to make their own
decisions in ways, in general, that are going to
be better for them and better for the system as
a whole.”
― Ron Kirby, transportation planning coordinator for the
Metropolitan Washington Council of Governments
Ashley Halsey III and Ed O’Keefe, “Earthquake illustrates colossal challenge
of evacuating Washington, D.C.” The Washington Post, August 24, 2011.
31. What we know for sure
CHOICE: Americans value innovation,
diversity and choice to accommodate
different needs of 300 million people
FOCUS ON THE PATIENT: They want
doctors and patients, not government, to
make health care decisions
VALUE IN HEALTH SPENDING: To realize
the promise of personalized medicine and
achieve overall cost saving, we must allow
more choice and competition
32. The future?
The global move toward
consumerism is real, driven
by greater patient demand
for more control over
decisions.
Health overhaul is law and
will fundamentally change
the U.S. health sector. But I
believe choice, innovation,
and expanded access will
continue to drive reform.