Health Reform Issues and Overview

1. June 24, 2009 February 11, 2009 Health Reform Issues and Overview • Webinar One • Hosted By Jud Sommer • Senior Vice President, Government Affairs

2. Overview • Why reform? • What reform will look like? • Next steps -- United for Health Reform

3. Why Reform?

4. Uninsured • The Congressional Budget Office (CBO) estimates that 45 million nonelderly people will be uninsured at a given point in 2009 • Approximately 17% of the total nonelderly U.S. population • 28.1% of 18 – 24 year olds were uninsured in 2007, the highest of any age bracket ¹ • Almost 96 percent of firms with 50 or more employees offer health insurance as compared with 43 percent of firms that have fewer than 50 workers. ² • In 2008, total government spending to reimburse uncompensated care costs incurred by medical providers was approximately $42.9 billion.³ It is estimated that under funding of public programs shifts $88 billion in health care cost to the private sector each year.4 • U.S. Census Bureau, Health Insurance Coverage 2007 • U.S. Department of Health and Human Services, Medical Expenditure Panel Survey-Insurance Component (2006) • Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (2008); Hadley et al. (2008) • Milliman, Hospitals & Physicians Cost Shift, December 2008; figures reflect 2006 and 2007 data.

5. Costs • The gross domestic product (GDP), a basic measure of an economy's economic performance, is the market value of all final goods and services made within the borders of a nation in a year. 1 • National Health Expenditure is estimated at nearly 18% of GDP¹ • Health care spending is 4.3 times the amount spent on national defense • Medicare represents a $36 trillion entitlement obligation of the U.S. government. The Medicare hospital trust fund is expected to become insolvent by 2017.² 1 • Centers for Medicare and Medicaid Services, “National Health Expenditures Projections: 2008 – 2018.” • The Henry J. Kaiser Family Foundation

6. Cost: Medicare & Medicaid Note: Pre-Stimulus / Pre-TARP

7. Cost: Premiums vs. Earnings & Inflation Healthcare cost increases

8. Understanding Costs Supply Demand Administration and net cost of private insurance HospitalCare Physicians & Clinical Drugs Dental Home Health/ Nursing Home Etc. 300M people across America $2.371T 93% $2.555T 100% $0.184T 7% $800B $533B $264B $177B $210B Source: CBO, December 2008, based on CMS estimates

9. Quality & Efficiency Opportunity Half of health care cost growth is potentially controllable, linked to excess services and higher prices Supply-Sensitive Care: Days in the Hospital forPatients During the Last Six Months of Life Among Academic Medical Centers Source: The Lewin Group analysis of data from the Centers for Medicare and Medicaid Services, Office of the Actuary. Estimated split by excess medical inflation and utilization/ intensity is based upon data published by OACT of CMS. Source: John Wennberg, Dartmouth Medical School.

10. What will Reform Look Like?

11. Two Key Policy Domains Expanding Coverage Paying For It • Eligibility for and structure for new funding • Public Programs • Existing • New • Subsidies • Individual insurance market reforms • Spillover to small group (rating rules, etc.) • Exchange / Connector design • Enforceable individual mandate • Standard benefits designs • Administrative costs / distribution regulations • Federal / state interplay • Employer ‘pay or play’ • ERISA • Government health plan, with variants • Etc. • Federal Savings • MA Rate cuts – set by government or by bidding • Other Medicare savings • Unit price cuts via a government plan • Other cost containment proposals • New Federal Revenues • Limiting the tax exclusion for employer-sponsored health coverage • “Sin” taxes • Other sources • Savings in non-federal national health expenditures • Administrative simplification • Slow national trend by 1.5% over 10 years • Etc. ~120-150 billion / year? ~$1-1.5 trillion over 10 years?

12. Initial Step – The ‘Stimulus’ Bill • $25B new COBRA subsidies • $87B new Medicaid resources • $19B for Health IT • $1.1B for Comparative Effectiveness Research • $2B in Federally Qualified Community Health Centers • $500M for Health Professions Workforce and National Health Service Corps • $1B for Prevention and Wellness

13. Timeline- What has happened thus far February May March April June Administration 8th – White House Stakeholder Meeting on Health Reform 11th – President’s meeting with stakeholders on cost containment 11th – President’s proposal for additional $313 billion to fund reform 5th – White House Forum on Health Reform 26th – President’s budget proposal for $635 billion health reform reserve fund Senate HELP Committee 24th – Hearing on underinsurance 26th – Hearing on integrated care 13th – Meeting with stakeholders on health reform 28th – Hearing on state experiences with health reform 29th – Hearing on primary health care access reform 14th – Hearing on delivery system reform 15th – Meeting with stakeholders on health reform 9th – “Affordable Health Choices Act” introduced 16th – CBO $1 trillion cost estimate for reform bill released Senate Finance Committee 22nd – Roundtable discussion 1 on delivery system reform 5th – Roundtable discussion 2 on expanding coverage 12th – Roundtable discussion 3 on financing of reform 17th – Introduction of reform bill delayed to get CBO cost estimate (bill still being negotiated) House Tri-Committees 10th to 27th – Energy & Commerce reform hearings 1 through 4 10th – Education & Labor hearing on strengthening employer coverage 11th – Ways & Means reform hearing 1 2nd – Energy & Commerce health reform hearing 5 23rd – Education & Labor hearing on cost of employer coverage 1st to 29th – Ways & Means reforms hearings 2 through 4 10th – Education & Labor hearing on single payer option 19th – Tri-Committee releases draft health reform bill

14. Timing – From Three Plans to One New York Times – June 18, 2009

15. Next Steps

16. United for Health Reform • Webinars • Webinar 2 – UnitedHealth Group’s Positions and Views  June 30th • Webinar 3 – Advocacy  July 2nd • Letter writing • Town Hall meetings • Questions? • Email – hcreform@uhc.com • Additional info • ACT - United for Health Reform • www.UnitedforHealthReform.com • LEARN - Get the Facts on Health Reform • www.HealthReformFacts.com

17. Q & A Please email questions to:hcreform@uhc.comAnswers will be posted at:HealthReformFacts.com