Health Care Legislation and Regulation

1. Health Care Legislation and Regulation Unit 3 Town Hall Seminar

2. White House Announces Another $250 Million, This Time for Public Health Infrastructure and Prevention Efforts • Just a few days after announcing it will fund $250 million to bolster the nation's workforce of primary care providers, the Obama administration on Friday announced another $250 million will augment efforts to expand prevention and public health infrastructure. • "With these investments, we are tackling the underlying causes of chronic diseases as well as strengthening our ability to meet the public health challenges of the 21st century," said U.S. Surgeon General Regina M. Benjamin. "This moves America in the direction of becoming a fit and healthy nation." • Said Secretary of Health and Human Services Kathleen Sebelius: "Investing in prevention and public health builds the foundation for improving the health and well-being of Americans, and for lowering costs in the healthcare system. Investing in proven preventive services will help patients get the care they need, avoiding costly and unnecessary care later. This prevention-focused approach is better for doctors, patients, and our national balance sheet."

3. White House Announces Another $250 Million, This Time for Public Health Infrastructure and Prevention Efforts Allocations of the $250 million will be as follows: • Community and Clinical Prevention—$126 million, with federal, state, and community initiatives that will integrate primary care services with behavioral health settings, obesity prevention, and fitness and tobacco cessation. • Public Health Infrastructure—$70 million to build support for state, local, and tribal public health efforts and to prevent, detect, and respond to infectious disease outbreaks at a local level. • Research and Tracking—$31 million for data collection and analysis, which includes strengthening the Centers for Disease Control and Prevention's Community Guide and the Task Force on Community Preventive Services, and improving transparency and public involvement in the Clinical Preventive Services Task Force. • Public Health Training—$23 million to expand the CDC's public health workforce programs and public health training centers. • Both of the $250 million allocations were specified in the Patient Protection and Affordable Care Act.

5. Chapter Overview • How economists make decisions • Supply • Demand • Markets

6. Economic Decision-making • Economists believe that people are rational actors who will never purposely choose to make themselves worse off • People seek to maximize utility • Given the scarcity of resources, decisions need to be made about the production, distribution, and consumption of health care resources • Consider individual preference and efficiency

7. Demand • Demand: the quantity of goods and services that a consumer is willing and able to purchase over a specified time

8. Health Insurance and Demand • Health insurance acts as a buffer between the consumer and cost of health care goods and services • Goods and services cost the consumer less than the charged price because of the presence of health insurance • Moral Hazard • Because a consumer does not pay the full cost of a good, the consumer may purchase more than goods than he would otherwise purchase without insurance

9. Supply • Supply: the amount of goods and services that producers are able and willing to sell at a given price over a given period of time

10. Health Insurance and Supply • The presence of health insurance may impact a provider’s willingness to supply goods and services • Competing concerns • Providers act as patient’s agent and act in patient’s best interest • Providers may have a financial incentive to act or refrain from acting in a certain way due to insurance arrangements or the lack of insurance • Supplier-induced demand is the provider version of moral hazard • Providers create a demand beyond the amount the well-informed consumer would have chosen • It is debated whether supplier-induced demand actually occurs

11. Health insurance exchange • A health insurance exchange is an organized marketplace for the purchase of health insurance set up as a governmental or quasi-governmental entity to help insurers comply with consumer protections, compete in cost-efficient ways, and to facilitate the expansion of insurance coverage to more people. Exchanges do not bear risk themselves – they are not insurers. Rather, they would contract with private insurers and possibly offer a public plan option to cover specified populations (such as those obtaining coverage through small employers and those without employer coverage).

12. Health insurance exchange • The basic idea of a health insurance exchange is similar to the concept of a stock exchange or farmers market • an exchange serves as a market clearinghouse, but not as a regulator or purchaser. It functions as a single placewhere people can go to find out about their health insurance options, and improves market competition among health plans by providing more complete and understandable access to information about the products and pricing available in the market.

13. Health insurance exchange • Ideally, an exchange would promote insurance transparency and accountability, facilitate enrollment and the delivery of subsidies, while also playing roles in spreading risk (i.e., ensuring that the costs associated with those with high medical need are shared broadly) and containing costs. However, with too restricted eligibility and a market share too small, it could raise premiums, encourage "cherry-picking" of customers, and force a clearance of the exchange. This is what happened in Texas and California in their failed exchanges.

14. Health insurance exchange • Some experts believe that insurance exchanges can make markets more efficient, providing oversight and structure, because current health insurance markets are not well organized and have to deal with wide variations in coverages and requirements among different companies, employers, and policies. • On the date of enactment of the Patient Protection and Affordable Care Act of 2010, only a few health insurance exchanges across the country were up and running. Among them were the Massachusetts Connector, the Utah Health Exchange, and HealthPass, a New York-based, non-profit exchange.

15. Markets • Market structures • Perfectly competitive market • efficiently allocate resources • Monopolies • Single seller controls market • Oligopolies • Few dominant firms, substantial barriers to entry • Monopsonies • Few consumers who control price paid to sellers • Health care is a monopolistically competitive market • Few dominant firms with significant market power and many smaller firms without market power

16. Health Insurance and Markets • A typical market transaction involves two parties • Consumer and supplier • Health care transaction with an insured patient involves three parties • Consumer (patient) • Supplier (provider) • Insurers • Presence of third party (insurers) changes consumer and supplier analysis of costs and benefits of each transaction

17. Market Failure • Ways to address market failure • Do nothing • Gov’t finances or directly provides public goods • Gov’t increases taxes, tax deductions, subsidies • Gov’t issues regulatory mandates • Gov’t prohibitions • Redistribution of income

18. Massachusetts Connector In 2006, Massachusetts policymakers enacted a far-reaching health reform plan, creating what is known as the Massachusetts health insurance "connector," along with other reforms. Now many policymakers, both in Congress and in other states, are exploring whether the connector concept is an effective means of reducing the number of uninsured Americans.

19. Massachusetts Connector • The Massachusetts health care reform law, enacted in 2006, mandates that nearly every resident of Massachusetts obtain a state-government-regulated minimum level of healthcare insurance coverage and provides free health care insurance for residents earning less than 150% of the federal poverty level federal poverty level (FPL) who are not eligible for Mass Health. The law also partially-subsidizes health care insurance for those earning up to 300% of the FPL.

20. Massachusetts Connector • The law established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Health Connector. Among other roles, the Connector acts as an insurance broker to offer private insurance plans to residents. • The reform legislation also included tax penalties for failing to obtain an insurance plan. Massachusetts tax filers who failed to enroll in a health insurance plan which was deemed affordable for them lost the $219 personal exemption on their income tax. Beginning in 2008, penalties increased by monthly increments.

21. HealthPass • HealthPass is an affordable way for New York City, Long Island, Westchester, Rockland, Orange, Dutchess and Putnam county small businesses to offer a variety of health benefit options to their employees at no extra cost to the employer. When a small business offers HealthPass, each employee gets to choose between twenty five plus health benefit options from six leading health carriers - Group Health, Inc. (GHI), HIP Heath Plans of New York, Horizon Healthcare Insurance Company of New York, HealthNet Health Plans, PerfectHealth, and Guardian. HealthPass provides employers and employees CHOICE, like a fortune 500 company. Rates vary based on the plan design and coverage level chosen and range from under $200 - $1500.

22. HealthPass • HealthPass helps ease the uncertainty of rising healthcare costs by allowing you to base your contribution on a specific plan. Each employee can still pick whichever plan best fits his/her individual needs. If there's a difference between the employer contribution and the cost of coverage the employee selected, it's paid through payroll deduction. The result is, you set a fixed benefit budget while employees have the flexibility to individually select the benefit options and provider network they want.

23. Will Small Businesses Stop Offering Health Insurance? • The Affordable Health Choices Act contains what has come to be known as the employer mandate. This provision requires larger small businesses to either offer their employees health insurance or pay a penalty, an 8 percent payroll tax. A number of small businesses are opting to pay the 8 percent payroll tax in lieu of providing employee health insurance because, for the average business, paying the payroll tax would be cheaper.

24. Market Failure • A market failure means that resources are not produced or allocated efficiently • Traditionally, inequitable distribution of resources does not equal a market failure • Common reasons for market failures • Imperfect information • Concentration of market power • Consumption of public goods • Presence of externalities

25. White House Poised to Release Health Law Details MOST INSURANCE PLANS WILL SOON BE PROHIBITED FROM REJECTING COVERAGE OF CHILDREN BECAUSE OF PRE-EXISTING MEDICAL PROBLEMS, UNDER RULES GOVERNING ENFORCEMENT OF THE 'PATIENTS BILL OF RIGHTS' IN THE NEW HEALTH CARE LAW • THE WHITE HOUSE LATER TUESDAY WILL RELEASE DETAILS OF HOW THE PATIENTS' PROVISION WILL BE IMPLEMENTED. • THE LANGUAGE INVOLVING COVERAGE OF CHILDREN WITH PRE-EXISTING CONDITIONS WILL BE ENFORCED FOR MOST INSURANCE PLANS RENEWING ON OR AFTER SEPT. 23. • UNDER THE NEW FEDERAL RULES, PATIENTS ALSO CAN STILL PICK THEIR PRIMARY DOCTORS OR PEDIATRICIANS, AND PRIOR APPROVAL REQUIREMENTS FOR EMERGENCY CARE WILL BE PROHIBITED. • THE RULES APPLY TO MOST HEALTH PLANS, EXCEPT IN CASES WHERE THEY ARE "GRANDFATHERED" UNDER THE LAW.

26. Questions

27. Sources • http://www.nahu.org/legislative/connector/index.cfm