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“ At present the United States has the unenviable distinction of being the only great industrial nation without compulso

“ At present the United States has the unenviable distinction of being the only great industrial nation without compulsory health insurance”. The U.S. Healthcare “System”. Richard L. Elliott, MD, PhD Professor and Director, Medical Ethics Mercer University School of Medicine

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“ At present the United States has the unenviable distinction of being the only great industrial nation without compulso

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  1. “At present the United States has the unenviable distinction of being the only great industrial nation without compulsory health insurance”

  2. The U.S. Healthcare “System” Richard L. Elliott, MD, PhD Professor and Director, Medical Ethics Mercer University School of Medicine Adjunct Professor Mercer University School of Law

  3. Outline of Presentation • What we have now • Summary of the U.S. healthcare “system” • How we got here • Brief history of healthcare in the U.S. • Where we are going • Brief look at the Affordable Care Act

  4. Goals • Describe key events in the evolution of U.S. Health care • State why reforming U.S. Health care has been so hard? • Distinguish universal health care from socialized medicine • Describe the breakdown of expenditures in each of the major components in the U.S. healthcare system • Describe the major goals of the Affordable Care Act • The role of the individual mandate in the ACA • Describe Medicare, Medicaid, and SCHIP

  5. Where are we now? • How are health care dollars spent? • How is care paid for? • What do Americans get for their money?

  6. Is US Healthcare socialized?

  7. How we pay for health care • Employer-based insurance • Individual insurance policies • Medicare • Medicaid • Uninsured • Other (VA, military, HIS, etc.)

  8. Employer-sponsored insurance • Offered by employers as part of benefits package • Administered by private insurance companies (for-profit and non-profit) • Employer pays bulk of premium; employee pays remainder • Significant erosion of employer-sponsored insurance in recent years

  9. Employer-Based and Individual • Tax policy favors employee-based benefit • Companies that spend money in employee health benefits have incentive. • They do not pay tax on the “profit” of the money spent on health care benefits. • Employees are not taxed on benefits • “Adverse selection” and individual Insurance • People who know they are sick are more likely to buy health insurance. • Leads individually-purchased health care to be MUCH more expensive than what an individual would pay for a “group rating” employer based health care.

  10. Medicare- “Old” • A federally-funded program • Beneficiaries • Ages 65 and older • ESRD, ALS, other disabilities • Eligibility:http://www.socialsecurity.gov/pubs/10043.html#a0=2 • Part A Hospital, Skilled Nursing Facility costs • Part B Physician, RN, equipment, tests, other • Part C Medicare Advantage Plans • Part D Prescription Drug Plan

  11. Beneficiaries can enroll in regular fee-for-service program OR in a Medicare Advantage (MA) plan MA include HMOs, PPOs and other private health plans Some plans offer extra benefits and have lower cost-sharing requirements than traditional Medicare Access to doctors and other health care providers is typically limited to those in the plans network Plans are paid a fixed amount per enrollee On average, 14 percent more than it would pay under traditional Medicare This extra payment will increase overall costs to Medicare by about~$150 b over 10 years Medicare Advantage (Part C) Medicare Advantage Enrollment (in millions) 25% of beneficiaries are enrolled in Medicare Advantage plans in 2009

  12. Medicare offers important coverage, but with high cost-sharing and benefit gaps Does not cover all medical benefits Very limited long-term care coverage No dental, hearing aids or eyeglasses Has relatively high cost-sharing requirements Deductibles for Part A, Part B, and Part D Coinsurance/copayments Part D coverage gap (“doughnut hole”) No limit on out-of-pocket spending Unlike typical plans offered by large employer Pays about half of beneficiaries’ total health and long-term care spending

  13. Median out-of-pocket health spending as a percent of income for Medicare beneficiaries is on the rise – especially for those with modest incomes NOTES: In 2005, federal poverty level: $9,570/individual and $12,830/couple. SOURCE: Kaiser Family Foundation. “Skin-in-the-Game,” November 2008.

  14. Medicare Financial Challenges Part A Trust Fund - The hospital insurance trust fund is projected to be insolvent by 2026 – with insufficient funds to pay for all promised benefits Worker to retiree ratio – The number of workers per beneficiary is projected to decline as the Medicare population grows in the future GDP – Medicare spending is projected to double from 3.5% of GDP in 2010 to 5.6% of GDP by 2035. The Congressional Budget Office indicates most of the growth is due to rising health costs, rather than the aging of the Baby Boom generation.

  15. Increasing elderly population, decreasing numbers of workers to support them. “Medicare at a Glance,” (#1066-08), The Henry J. Kaiser Family Foundation, Sept 2005

  16. Looking to the Future… Medicare remains critical source of health coverage and economic security for many Addressing fiscal pressures without shifting more costs to beneficiaries Setting fair payment rates to providers and plans Medicare Sustainable growth rate (SGR) needs a permanent fix Monitoring and improving Part D drug benefit Assessing role of Medicare Advantage plans Improving care to meet needs of those with coverage and chronic illnesses and disabilities Ensuring affordability for lower-income beneficiaries Strengthening coverage for long-term care services

  17. Medicaid – “Poor” • 52 million recipients - $266 Billion in 2003 • Federal-State Partnership • Eligibility – varies by State. Generally poor + children, parents of dependent children, pregnant women, disabled • “Dual eligible” with Medicare – chronically ill, long-term care • Covers most clinical services + Rx “The Medicaid Program at a Glance,” (#7235), The Henry J. Kaiser Family Foundation, Jan 2005

  18. Medicaid – “Poor” • May contract as “Medicaid HMO” with non-government entity • Future – more cost limiting. • Possibilities: • Prescription drug limits • Utilization review: evaluate services for medical necessity • Prior review and authorization for referrals “The Medicaid Program at a Glance,” (#7235), The Henry J. Kaiser Family Foundation, Jan 2005

  19. State Children’s Health Insurance Program (S-CHIP) • Supplements Medicaid by covering low-income children who are ineligible for Medicaid • PeachCare for Kids in Georgia • Administered and financed similarly to Medicaid • Similar problems to Medicaid: • Low reimbursement rates → some providers refuse to accept S-CHIP • Under-enrollment • Eligibility varies by specific populations and states

  20. Other public insurance programs • Tricare • Uniformed service members, families, retirees • Veterans Health Administration • Health benefits plan available to all veterans • Services delivered through VA health care facilities (“socialized medicine”) • Financed by the federal government • Indian Health Service

  21. Profile of the uninsured • 47.0 million Americans • 81% from working families – jobs without benefits • 52-59% from low-income families (200% FPL) • 80% are adults • 50% are ethnic minorities • 79% are American citizens Source: Kaiser Commission on Medicaid and the Uninsured Source: US Census Bureau

  22. Most uninsured are in working families, but in jobs without benefits. “The Uninsured and Their Access to Health Care,” (#1420-05), The Henry J. Kaiser Family Foundation, Dec 2003

  23. How did we get here?

  24. How did we here? • 1800s – 1910 Scientific medicine • Anesthesia, antisepsis, asepsis, microbiology • X-rays, magic bullets • 1910-1920 Hospitals and education • 1910 Flexner report • 1919 ACS “Minimum Standard” • 1929-2010 Healthcare financing • 1929 Baylor plan and Blue Cross • 1912 -2009 Reforming healthcare

  25. Where are we going?

  26. Why is reforming U.S. healthcare hard? • Piecemeal approach to healthcare reform • Medicare, Medicaid, children, medications • Too many stakeholders in current system • Medical industry is so large – 17% of GDP • Too many have too much to lose • The more out of control medical expenses become, the harder it is to control them • Political campaigns are expensive • Too few underinsured • Piecemeal approach to reform • Underinsured do not impact campaign finances

  27. Goals for health care reform • Reduce number of underinsured • Improve coverage for insured • Reduce or eliminate exclusions/recissions • Improve access to and quality of care • Preventative care • Comparative efficacy • Control rising costs

  28. Promoting Health Coverage Universal Coverage Exchanges (subsidies 133-400% FPL) Medicaid Coverage (up to 133% FPL) Individual Mandate Health Insurance Market Reforms Employer-Sponsored Coverage Return to KaiserEDU Tutorials

  29. Expanding Health Insurance Coverage—Early Actions Create temporary Pre-existing Condition Insurance Plan for people with medical conditions who are uninsured To qualify, individuals must be uninsured for six months Federally funded Available in each state until 2014 Allow adult children to remain on their parents’ health insurance policy until age 26 Children do not have to live with parents, nor be students May be married, but spouses and children not eligible Return to KaiserEDU Tutorials

  30. Expand Medicaid to all individuals under age 65 with incomes up to 133% of the poverty level ($14,400/individual or $29,300/family of 4) Create new Health Insurance Exchanges where individuals and small employers can purchase coverage Provide premium subsidies to eligible individuals and families with incomes up to 400% of the poverty level ($43,300/individual or $88,200/family of 4) through the Exchanges Expanding Health Insurance Coverage—in 2014 Return to KaiserEDU Tutorials

  31. Estimated Health Insurance Coverage in 2019 Total Nonelderly Population = 282 Million SOURCE: Congressional Budget Office, March 20, 2010 Return to KaiserEDU Tutorials

  32. Improving Health Insurance Reform the health insurance market Prohibit insurers from denying coverage or charging people more because they are sick Prohibit insurers from rescinding coverage or placing annual or lifetime limits on coverage Improve benefits for those with insurance Ensure coverage of preventive services with no cost-sharing Establish minimum benefit standards Limit out-of-pocket spending for consumers Return to KaiserEDU Tutorials

  33. Employer Requirements and Incentives Larger employers that don’t offer affordable coverage will face penalties of up to $2,000 per full-time worker per year beginning in 2014 Small employers with up to 50 employees will be exempt from penalties Tax credits available for some small businesses that offer health benefits Return to KaiserEDU Tutorials

  34. Individual Mandate • Individuals will be required to have health coverage that meets minimum standards in 2014 • Individual mandate spreads costs among whole population • Mandate enforced through the tax system • Penalty for not having insurance: greater of $695 (up to $2085 for family) or 2.5% of family income • Exemptions for certain groups and if people cannot find affordable health insurance Return to KaiserEDU Tutorials

  35. Some Uninsured Will Remain • Congressional Budget Office (CBO) estimates 23 million uninsured in 2019 • Who are they? • Immigrants who are not legal residents • Eligible for Medicaid but unenrolled • Exempt from the mandate (most because can’t find affordable coverage) • Choose to pay penalty in lieu of getting coverage • Many remaining uninsured will be low-income Return to KaiserEDU Tutorials

  36. Health Reform and Delivery System Changes • Promoting primary care and prevention • Improving provider supply • Developing new models for coordinating and delivering care • Making use of information technology • Reforming provider payments to promote quality Return to KaiserEDU Tutorials

  37. Promoting Primary and Preventive Care • Increased Medicare and Medicaid payments for primary care providers • Incentives for new doctors and other health professionals to practice primary care • No cost-sharing in Medicare and new private plans for certain preventive services and incentives for states to do same in Medicaid • Funding for population-based prevention activities Return to KaiserEDU Tutorials

  38. Containing Health Care Costs • Greater oversight of health insurance premiums and insurer practices • Increased competition and price transparency through Exchanges • Provider payment reforms in Medicare • Testing of new, more efficient delivery system models in Medicare and Medicaid Return to KaiserEDU Tutorials

  39. Financing Health Reform, 2010-2019 Federal savings New revenues Total Cost = $938 Billion Savings to Federal Deficit = $124 Billion Source: Congressional Budget Office, 2010 Return to KaiserEDU Tutorials

  40. Health Reform Implementation Timeline Return to KaiserEDU Tutorials

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