Federal Health Reform: What Does It Mean for You, Your Family & California?

1. January 2010 Federal Health Reform:What Does It Meanfor You, Your Family & California? www.health-access.org www.facebook.com/healthaccess www.twitter.com/healthaccess www.healthcareforamericanow.org

2. Understanding Health Reform • The Problem: Why do we need health reform in California? • The Process: How does federal health reform happen? • The Policy: How will federal health reform impact the health coverage of California families? • The Pressure Points: What are the major issues in health reform? What do we need to fight for? How can Californians make their voice heard?

3. HEALTH REFORM:An Urgent Need in California

4. Why Health Reform? • Californians are concerned that their health coverage will not be there when they need it. • Californians are more likely to be uninsured than most Americans – over 7 million Californians are uninsured this year. • Californians are less likely to get coverage from an employer, and such coverage is eroding. • Californians have a lack of affordable coverage options, and some can not get coverage at any price. • Californians rely on public health insurance programs and the health care safety net, but budget cuts are taking their toll. • Californians need protection from inadequate coverage and discriminatory practices by insurers and employers. • The status quo is not an option—it’s not just unaffordable, but unsustainable.

5. What Can We Win? President Obama’s goals for health reform: • Reduce long-term growth of health care costs for businesses and government • Protect families from bankruptcy or debt because of health care costs • Guarantee choice of doctors and health plans • Invest in prevention and wellness • Improve patient safety and quality of care • Assure affordable, quality health coverage for all Americans • Maintain coverage when you change or lose your job • End barriers to coverage for people with pre-existing medical conditions

6. HEALTH REFORM:The Political Process

7. How A Health Reform Bill Becomes A Law • HOUSE OF REPRESENTATIVES► Committee on Ways and Means • ► Committee on Energy and Commerce • ► Committee on Education and Labor • SENATE • ► Committee on Finance • ► Committee on Health, • Education, Labor, and • Pensions (HELP) Senate Floor House Floor Negotiations House & Senate Floor Votes WHITE HOUSE President Obama

8. Why California’s Voice Matters • Over 12% of US population and almost 15% of uninsured population • Largest Congressional delegation (55), with 14 members on key health committees and 3 Chairs (Waxman, Stark, and Miller) • Strong House Leadership (Pelosi, Becerra, & Waters plus Chairs of Black Caucus, Asian Caucus, Progressive Caucus, New Democrats) • Many key “swing votes” (Most # of Blue Dogs) • Senators Boxer & Feinstein

9. Current Status in Congress HOUSE OF REPRESENTATIVES On November 7, 2009, the House passed H.R. 3962, Affordable Health Care for America Act H.R. 3962 passed by a final vote of 220-215 House Speaker Nancy Pelosi is negotiating with the Senate and the White House on a final bill SENATE On December 24, 2009, the Senate passed H.R. 3590, Patient Protection and Affordable Care Act H.R. 3590 passed by a final vote of 60-39 Senate Leader Reid is negotiating with the House and the White House on a final bill Health reform is farther along in the Congressional process than anytime since the passage of Medicare over 40 years ago.

10. “The current system wastes too much, leaves too many Americans uncovered and allows insurance companies to make unjust decisions, such as refusing to cover people with pre-existing conditions. Failure on the reform effort is not an option because the status quo is unsustainable.“ –President Obama White House Commitment

11. HEALTH REFORM:The Policy Proposal

12. Consumer Protections in Health Reform (July 29, 2009) No Discrimination for Pre-Existing Conditions No Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays (yearly caps on for out-of-pocket costs) No Cost-Sharing for Preventive Care No Dropping of Coverage for Seriously Ill No Gender Discrimination No Annual or Lifetime Caps on Coverage Extended Coverage for Young Adults (family coverage thru 26) Guaranteed Insurance Renewal President Obama’s Health Reform Principles

13. Goal: Affordable Coverage, Essential Benefits In each of the ways people gets coverage today (through an employer, a public program, or buying it as an individual), coverage should include: • Affordability • Premiums not to exceed above a percentage of income—sliding scale up to ~12 percent of income. • Cap on out-of-pocket costs (co-pays, deductibles) of $5,000 for an individual and $10,000 for a family. • No co-pays for preventive services like mammograms and prostate cancer screening. • Basic Benefits • Covers doctors, hospitals, prescription drugs, mental health parity. • Comparable to most large employers now. • Consumer Protections • Purchasing Power of Group Coverage

14. Securing On-the-Job Coverage • Over half of all Californians (19 million) already have coverage through their employer, and reform will make on-the-job coverage more secure and reliable • Larger employers will either cover their workers, or contribute to their care—setting a standard much like the minimum wage does for pay. For example, in H.R. 3962: • Employers required to pay a portion (60% or more) of premiums; applies to all workers, even part-time employees • For those that don’t provide coverage, an employer assessment is scaled (0-8%) based on the size of the business, including the number of employees and payroll size • Small businesses will not only be exempt from requirement, but many will receive significant subsidies (tax credits up to 50% of premiums) to help pay for coverage

15. Improving Public Programs • Nearly a third of Californians (10 million+) get coverage thru Medicare, Medicaid, SCHIP, etc. • For seniors, Medicare will remain intact and be strengthened so it is more stable • Close “donut hole” gap in Rx drug coverage • Increase provider rates for better access • Root out waste, fraud, and abuse, especially overpayments to insurance companies. • Medicaid (Medi-Cal) will be expanded to cover all of the lowest-income families, including adults without dependent children • H.R. 3962 to expand Medicaid for all under 150% of poverty level • Reduce paperwork and eligibility barriers.

16. New, Affordable Choices • For those who still must buy coverage as individuals (2 million Californians currently),health reform will create an Health Insurance Exchange that will offer a number of affordable coverage options. • Affordability credits will be provided for coverage purchased on the Exchange for families earning up to 400% FPL ($74K for family of 3). • Unlike current individual market, no denials or different premiums for pre-existing conditions. • TheExchange will make it easier to understand and get a quality, affordable health plan, offering a range of easy-to-compare insurance products, with basic benefits. • A Public Health Insurance Option is one of many choices in the Exchange. It can provide choice, competition, and a means of controlling costs.

17. Health Insurance Exchange YOUR CHOICE The exchange is a government-regulated marketplace of insurance plans with different tiers, or levels of coverage, offered to individuals without health care or to small companies. Presumably, the presence of government-regulated exchanges will, like any functioning market, bring prices down so that personal and employer-provided insurance is both comprehensive (i.e., cannot legally skimp out on necessary care or otherwise abuse customers) and competitive (i.e., enough demand will force insurance companies to cut prices to compete). A public health insurance option could provide an affordable and safe choice.

18. Cost Containment • Prevention: Change delivery system to promote care; no cost-sharing for preventative care to encourage use; and research comparative effectiveness of treatments. • Bulk Purchasing through group coverage, as well as the public health insurance option, to bargain for better rates. • Abolishing Underwriting and its expense and incentives, getting insurers to compete on cost & quality rather than risk selection. • Information Technology to foster electronic records, reduce bureaucracy, get better data on cost & quality • Payment Reforms to reward quality & better health outcomes. • Coverage for all both directly (prevention, reduces cost-shift) reduces costs and helps provides policy tools for further efforts.

19. Financing • Health reform will cost money upfront, but should be seen as an investment to get savings in the long run. • Main cost is Medicaid expansion and affordability subsidies for low- and moderate-income families. • Congressional Budget Office estimates that proposals will cost (and raise) under $1 trillion over 10 years. CBO says it will be paid for (rather than add to deficit). • Over half of the financing is savings in existing health system. For example: reducing the overpayments to insurers in Medicare Advantage program. • Proposals include “shared responsibility” mandates, sliding-scale contributions for individuals, and employer requirement. • Additional financing for health reform ideas include: surtax on wealthy; an excise tax on high-cost insurance products; and potentially other revenue sources

20. HEALTH REFORM:What It Means for You, Your Family & California

21. H.R. 3962 and You • IF YOU ARE INSURED, nothing requires you to change it; but it will make your coverage more secure and stable: • It makes it more likely your employer continues to offer coverage, set minimum standards for such coverage. • It improves Medicare and expands Medicaid. • It fixes the “individual market” of coverage in multiple ways. • It provides the foundation to bring down the overall costs of health care

22. H.R. 3962 and You • IF YOU ARE UNINSURED, you will need to get coverage, but there will be new help and new options to ensure coverage is: • AVAILABLE: No denials or different rates for pre-existing conditions. • AFFORDABLE: Subsidies/affordability credits for low & mid income families, so we don’t have to pay more than a % of their income. • ADEQUATE: Minimum benefit standards and a cap on out-of-pocket costs, so no one goes into significant debt or bankruptcy. • ADMINISTRATIVELY SIMPLE: The Exchange provides choice and convenience, making it easy to sign up for and compare plans. • ALSO: Other efforts attempt to bring down the cost of coverage. • In the Exchange, a public health insurance option will be a new choice. • The individual mandate includes exemptions for affordability, hardship.

23. H.R. 3962 and California Given the extent of our state’s health care crisis, California could especially benefit from health reform: • EXPANDED COVERAGE: California has one of the worst insurance rates in the country. H.R. 3962 would cover most (94%) Californians, reducing the uninsured in the state by over 4 million over the next decade. This would provide relief to our beleaguered health system and safety-net. • STABILIZED EMPLOYER-BASED COVERAGE: California has one of the worst rates of employers offering coverage. H.R. 3962 would provide new subsidies for small business to provide coverage, and the assessment provides a level playing field for employers who offer coverage. • SUBSIDIES FOR LOW-WAGE WORKERS: California has a disproportionately large percentage of low-income workers. H.R. 3962 would expand Medi-Cal to cover most families below 150% FPL (over 2 million Californians will be newly covered), and provide significant subsidies to families under 400% FPL.

24. H.R. 3962 and California Continued… • A BETTER WAY TO BUY COVERAGE: California’s individual insurance market is the biggest in the nation, but leaves Californians at most risk of being denied for “pre-existing conditions,” rescissions, and other insurer abuses. H.R. 3962 provides a new Health Insurance Exchange where insurers can’t rescind or deny coverage for “pre-existing conditions,” standards prevent “junk” insurance, and consumers can make “apples-to-apples” comparisons between plans, including a choice of a public health insurance option. • RECOGNITION OF OUR DIVERSE POPULATION: H.R. 3962 recognizes the need for investment in language access; workforce development; and other needs for our diverse population.

25. HEALTH REFORM:What We Need To Fight For

26. What We Can Win • Near-universal coverage for all, largely through group coverage and its purchasing power. • New consumer protections: New rules and oversight on insurers that include the abolition of underwriting and limits on age-based rates and on premiums dollars going to administration and profit. • The biggest expansion of Medicaid since its creation 40 years ago, completing a commitment for millions in and near poverty. • Sliding scale subsidies tied to income: Consumers will pay for coverage not based on how sick they are, but what they can afford. • The end of most junk insurance and bankruptcies due to medical bills, with a cap on out-of-pocket costs. • Fair share financing, including an employer assessment as important in concept as the minimum wage was for pay • Assistance for small business, and their low-wage workers to be able to afford coverage. • More sustainability and improvements for existing public programs, filling the donut hole in Medicare & simplifying Medicaid. • The tools for cost containment and quality improvement in health care generally, from prevention to IT to bulk purchasing. • Momentum to do more in the future, politically and policy-wise, in health care and beyond

27. Pressure Points in Reform Despite significant agreement and a similar framework among bills, there are crucial differences between the proposals. What do we need to fight for? • Affordability • Coverage must remain affordable for low- and middle-class families, especially to meet the mandate. • Debate about level of subsidies & quality and value of coverage for low- and moderate income families, including whether to provide subsidies to those between 300-400% of poverty level. • Financing • Affordability subsidies limited by amount of funds that can be raised, and concerns about deficit. • H.R. 3962 has a high-income surcharge; original Obama budget has a similar progressive tax modification • Senate Finance has excise tax on high-cost insurance products • Other possibilities might include soda tax; Medicare tax

28. Pressure Points in Reform • Employer Responsibility • Debate on both size and structure of assessment on employers who don’t provide health coverage to their workers. • H.R. 3962 based on 0-8% of payroll. • Senate HELP version based on $750 per worker per year • Senate Finance “free rider” version is limited, complicated, discriminatory. • The Exchange and Insurer Oversight • Is the Exchange national or state-by-state? • Does it replace, or go alongside, the individual market? • Negotiating power to bargain for better rates, better benefits? • Allow bigger businesses to buy-in? Workers without good coverage? • Rules on insurers (Medical loss ratios, age rating, etc) • Public Health Insurance Option • Included in President’s plan, House, & Senate HELP versions • Weak alternatives floated include trigger, co-ops, etc. • Senate considering national version with state “opt-out”

29. Pressure Points in Reform • Hot Button Issues • All bills explicit to not use federal funds for coverage of abortion, or coverage of undocumented immigrants—both existing law. But some versions of reform take it further: • Abortion: Stupak amendment in House version would bar abortion coverage even in private, unfunded health plans offered in the exchange. • Undocumented Immigrants: Senate version would place burdensome verification requirements in exchange to prohibit undocumented immigrants to purchase coverage even with their own money. • Many Other Issues • Many other provisions to debate: What are your issues? • Health Access & HCAN supports H.R. 3962

30. What Can You Do? • Call/write/fax/visit your member of Congressand tell them what you care about in health care reform • Be a voice in health reform: • Share your health care story, with us! • Write Letters to the Editor of your local paper • Join a campaign for health care: • Sign up at www.health-access.org for E-mail updates and California-specific alerts. • Join Health Care for America NOW! campaign at www.healthcareforamericanow.org • For fact checks, visit www.healthreform.gov