Presentation Transcript

1. Health Reform Basics
2. Outline Setting the Stage Rational for Reform Access and Reform The Economics of Exchanges/Marketplaces
3. Setting the Stage for Reform The Goals: Access Cost Value Quality Economists have assumed that you can’t improve one area without harming at least one of the others
4. Access Nonelderly American’s Source of Health Insurance Coverage, 2011
5. Cost/Quality The average value of medical advance is very high The average 45-year-old will spend $30,000 more on cardiovascular disease care than the equivalent person did in 1950 He/she will live another 3 years because of this care We have spent a lot, but have gotten a lot more Most estimates suggest that 20 to 30 percent of medical spending could be eliminated with no adverse effects on patient outcomes
6. Cost/Quality Beyond A is unambiguous waste Between C and A could be waste if benefits<costs Especially if it is somebody else’s care
7. Cost/Quality
8. Sources of Excess Cost (2009) Source: IOM, 2010
9. Reform Most of the ACA deals with the access issue and much less directly with the value equation Easier problem to tackle We don’t really understand how to create value Less resistance from interest groups That $765 billion in waste is someone’s paycheck
10. Reform
11. Access Why Are They Uninsured? Too expensive Administrative costs Irregularities in insurance markets (small families subsidize large ones) Adverse selection in individual market Implicit Insurance through uncompensated care Over-insurance
12. Reform Explanations Tax Subsidy Regulation Psychological motivation
13. Access Why Do We Care About the Uninsured? Market failure of individual market Externalities Physical Financial ~$43 Billion or 2% of HC spending Labor market inefficiencies – “job lock” Paternalism Redistribution
14. Access Two Types of Solutions Sweeping Universalism 163 million privately insured plus 46 million Medicare who are mostly happy with current state 50 million uninsured not happy Incremental Universalism Tweak the current system to accommodate the 50 million
15. 3 Issues with Incremental Universalism Pooling If pools are too small or attract high risk, insurers will be reluctant to offer coverage for fear of high cost exposure Large pools exist for Medicare/Medicaid/large employers Solving the problem of the uninsured/underinsured requires developing effective pooling mechanisms
16. 3 Issues with Incremental Universalism Affordability Insurance is expensive Average cost of employer provided family coverage in 2012 was over $15,000 per year A family of four at 200% of the poverty level earns about $47,000 per year. This is about a third of their income Even if those with low incomes had access to large pooling arrangements, they would still need subsidies.
17. 3 Issues with Incremental Universalism Mandates Full insurance requires a mandate Even large subsidies will not be sufficient Many of the currently uninsured qualify for public insures and still do not take it up Mandates provide more effective risk pooling Transfer from those who are currently healthy to those who are currently sick Without a way to compel individuals to participate the market will fail
18. Three-Legged Stool Community Rating Giving individuals with pre-existing conditions access to health care Requires the Mandate Otherwise adverse selection occurs Employer provided insurance has a hidden mandate Need a subsidy to make insurance affordable
19. Bang for the Buck Targeting The extent to which new spending is directed to those who would otherwise be uninsured As opposed to buying out the base or crowding out
20. 50 Million Tuna Swimming with 200 Million Dolphins
21. Insurance Exchanges Provides a large risk pool for the individual and small employer to participate in Apples-to-apples: should lower price of coverage Designed to create competition in insurance markets Lower barriers to entry Transparency to the consumer Can see tradeoffs in price and generosity and network size Incentives for innovations
22. Insurance Exchanges States have the ability to control the number and types of plans, set quality or price standards States can also bar the sale of insurance to individuals and small businesses outside of the exchanges – or require they also be sold in the exchanges To prevent “cherry-picking” Vermont and DC are the only states to do this so far The ACA has many “experiments” for alternative methods for paying for care and organizing providers. The exchanges will be in position to encourage or require the adoption of those innovations that work.
23. Marketplace Basics Terminology: Health Insurance Marketplace (formerly known as the Exchange) and SHOP for small employers Compare private insurance plans based on price, benefits, quality, and other features Most people will get a break on costs “No wrong door” with Medicaid and CHIP Open enrollment starts October 1 and coverage is effective beginning on January 1
24. The Enrollment Opportunity Source: Enroll America 49 Million Total Nonelderly Uninsured If All States Expand Medicaid
25. ACA Support Fitted to Your Income Family Income Family income based on 2013 federal poverty income levels for a family of four
26. ACA Coverage and Coverage Gap Family Income Family income based on 2013 federal poverty income levels for a family of four
27. Marketplace Administration Source: The Commonwealth Fund, www.commonwealthfund.org/Maps-and-Data/State-Exchange-Map.aspx State-based Partnership Federally facilitated
28. Coverage Level Options in the Marketplace Essential Health Benefits ambulatory services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management pediatric services dental and vision care % paid by enrollee % covered by plan Platinum Gold Silver Bronze Catastrophic plan for people under 30 or if no other coverage is affordable
29. How much is it? http://kff.org/interactive/subsidy-calculator/
30. It definitely wasn’t pretty!