The Path to Universal Coverage: Can Health Reform Succeed? HCW Lunch & Learn May 16, 2007

1. The Path to Universal Coverage:Can Health Reform Succeed?HCW Lunch & LearnMay 16, 2007 Jonathan Oberlander Department of Social Medicine Department of Health Policy & Administration UNC-Chapel Hill

2. The Odd Couple

3. Familiar Headlines • “Number of Uninsured Escalates” • “ No Relief in Sight for Health Costs” • “Health Insurance Gap Surges as Political Issue” • “Coalition Unveils Plan to Cover the Uninsured” • “Talk of Universal Health Care Grows” • “States Take Initiative on Health Care Reform” • “Candidates Outline Ideas for Universal Health Care”

5. Cycle of U.S. Health Reform • Discover Crisis in Health System • Identify and Debate Solutions • Do Nothing or Not Much • Ignore Issue • Rediscover Crisis in Health System

6. Roadmap • Rediscovering a Crisis • Cost Control • Covering the Uninsured • The Future of Health Reform

7. Rediscovering the Crisis

8. Source: KCMU and Urban Institute

9. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits: 2005

12. The Future: Up, Up, and Away Source: Uwe Reinhardt

13. II. Cost Control

14. Private Sector Strategies to Control Costs

15. A Brief History of Private Sector Cost Control Efforts in Two Words:1990s: Managed2000s: Directed

16. Promise of HSAs/Consumer-directed health care • Control costs by reducing excess demand and unnecessary medical care (“skin in the game”) • Make people responsible for their health care behavior • Portability; move away from employer-based system

17. Problems with HSAs • Regressive tax policy • Regressive health policy • Concentration of health care costs • Supply-side backlash

18. Other Magic Bullets/Acronyms to Control Costs • Electronic Medical Records (EMR) • Pay for performance (P4P)

19. III. The Politics of Health Reform & Covering the Uninsured

20. The Health Reform Debate Vs.

21. Why is Health Reform So Hard to Pass? • Interests (NHE=SEI) • Institutions • Ideology • Indifference

22. Public Sector Strategies to Expand Coverage:The Federal Government

23. A long time ago,In a capital not so far awayThe Clinton health plan diedand took with it any political enthusiasm for comprehensive reformUS health policy thus entered the galaxy of incrementalism and inaction, where it remains todayIs there hope for reform?

24. The Trouble with Incrementlaism

25. Health Reform Solutions, 1993 • Single Payer • Employer Mandate • Individual Mandate • Expand Public Programs • Tax Credits for Private Insurance

26. Since 1994 health policy analysts have been hard at work developing new solutions to cover the uninsured. The results are in…..

27. Health Reform Solutions, 2007 • Single Payer • Employer Mandate • Individual Mandate • Expand Public Programs • Tax Credits for Private Insurance

28. Bush Health Reform Plan 2007 * New standard tax deduction for health insurance for individual and employer-based insurance: $15,000 families $7,500 individuals * Health insurance to be treated as taxable income and above those amounts will be taxed

29. Income Tax Distribution of Uninsured 5% (27% tax bracket) 1% (30%-39% tax bracket) 23% (15% tax bracket) 55% (0% tax bracket) 16% (10% tax bracket) Source: S. A. Glied and D. K. Remler, The Effect of Health Savings Accounts on Health Insurance Coverage (New York: The Commonwealth Fund, April 2005).

30. How Much Reform? • Estimated coverage impact: Bush plan would increase coverage by 2-5 million uninsured • Future of employer-based insurance • Individual/Non-group Market

31. The Politics of Changing the Tax Preference Value of tax exclusion for employer-sponsored insurance: $188 billion Estimated increase in federal revenues from Bush proposal to cap that exclusion: $333 billion, 2007-17* Members of Congress Running for Re-election in 2008: 468 Presidents Running for Re-election in 2008: Zero. *JCT estimate: Lewin estimates $153 billionrevenue loss 2009-2018.

32. Public Sector Strategies to Expand Coverage:The States

33. And when all looked lost, health policy analysts deployed a new weapon in the fight for health reformagainst the Empire of rising costs and uninsured…. A weapon so threatening even insurance companies and providers trembled with fear

34. Terminator-Care

35. States On The March • Maine • Massachusetts • Illinois • Vermont • California • Pennsylvania

36. Health Reform Agenda in North Carolina • High Risk Pool • Children’s Insurance

37. A Massachusetts Miracle? • Universal coverage (or at least more universal) • Play or Pay (not very much) • Individual Mandate • Medicaid expansion • Income-related subsidies • Purchasing Pool (“the Connector”) • Bipartisan Politics

38. California: Terminator-Care • Play or Pay (4% payroll tax for buis.>10 workers) employer mandate • Individual Mandate • Purchasing Pool • Medicaid expansion • Provider Taxes • Insurers must spend 85% of $ on patient care

39. Limits of State-led Reform • How universal is universal? • ERISA & legal challenges • Medicaid waivers • Cost control, or lack thereof • Financing and affordability

40. III. Health Reform & the 2008 Elections

41. Partisan Divide on Health Care “The time has come for universal health care in America.” --Barack Obama, January 25, 2007 “They're moving toward socialized medicine so fast, it'll make your head spin.” --Rudy Guliani, April 27, 2007

42. Health Care in the Primaries

43. 2008 Plans: John Edwards • Universal Coverage • Play or pay employer mandate • Health Markets with Medicare-like option • Individual mandate • Real financing: roll back tax cuts

44. IV. The Future of Health Reform

45. What forces will shape health reform in coming years? • 2008 elections & Iraq • Economy & Budget • Medicare • State health reforms • Middle class & Anxiously insured • Business

46. A Fairer Fight Vs.

47. A Sign of Things To Come? “Abandoning the business lobby’s traditional resistance to healthcare reform, a new coalition of 36 major companies plans to launch a political campaign today calling for medical insurance to be expanded to everyone…..” Los Angeles Times, May 7th, 2007

48. Conclusions 1. Employer-based system is fraying and perhaps approaching a crossroads: which way do we go? And do employers become the swing voters in health reform? 2. If you’re looking for signs of hope, pay attention to state efforts, SCHIP renewal, 2008 elections. 3. If you’re a pessimist, you’re in luck: things will continue to get worse, especially for low-and middle-income Americans priced out of health insurance 4. Comprehensive reform may be returning to the national political agenda; but there is no guarantee it will pass. What happens next?...

49. Famous Health Policy Analyst