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The Affordable Care Act: Opportunities for Care and for Single Payer

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  1. The Affordable Care Act:Opportunities for Care and for Single Payer Ellen R. Shaffer PhD MPH EQUAL Health Network www.equalhealth.info 415-922-6204 ershaffer@gmail.com February 7, 2010

  2. The Affordable Care Act • The Affordable Care Act is a major victory • Single payer would go farther • Both are under attack • Reproductive Rights is an Older Women’s issue EQUAL

  3. Crisis: Access, Cost, Quality • 50 million uninsured • Deaths • Bankruptcy – even with insurance • $2.5 Trillion a year = $8,000/person • Most expensive in the world • 37th in outcomes • Shortage of primary care • Fragmented EQUAL

  4. Health Reform: A Start • ACA delivered what Obama campaign promised • Significant though limited reforms • Takes important steps to expand coverage and improve quality, and begins to control costs • Claim the victory of half a loaf and use policy space to proceed deliberately to win the rest. • Will Administration advance, retreat, hold the line? EQUAL

  5. Patient Protection and Affordable Care Act (ACA): The Gains • Expanded Coverage and Access • Improving Quality • Consumer Protections ALL = Lower Costs • How Will We Benefit? 5 EQUAL

  6. ACA Benefits Phased In 2010-2020 Public health grant programs 2010-2013 Consumer protections Affordability and quality improvements 2014: Major coverage expansions Health Insurance Exchanges For individuals, small business employees Individual Mandate, Employer contributions Medicaid Expanded Everyone up to 133% of poverty level 2020: Medicare drug price “doughnut hole” gon 6 EQUAL

  7. 2014: Major coverage expansions Medicaid Expanded Everyone up to 133% of poverty level $14,404 for individuals $29,326 for a family of four Health Insurance Exchanges For individuals, small business employees Individual Mandate, Employer contributions Premium subsidies up to 400% of poverty level ($88,000 for 4) Limits ib premiums, out of pocket spending Undocumented immigrants generally not covered 7 EQUAL

  8. Estimated Health Insurance Coverage in 2019 Figure 6 Total Nonelderly Population = 282 Million EQUAL SOURCE: Congressional Budget Office, March 20, 2010 Return to KaiserEDU Tutorials

  9. Coverage: Now New High Risk Pool: Pre-Existing Condition Insurance Plans (for uninsured with pre-existing conditions) Covers Young Adults through Age 26 on parents’ coverage 9 EQUAL

  10. ACA Benefits Phased In 2010-2020 2010-2013 Consumer protections Affordability and quality improvements 2014: Major coverage expansions Health Insurance Exchanges For individuals, small business employees Individual Mandate, Employer contributions Medicaid Expanded Everyone up to 133% of poverty level 2020: Medicare drug price “doughnut hole” gone 10 EQUAL

  11. Immediate Improvementsin 2010 Coverage: New High Risk Pool (for uninsured with pre-existing conditions) Covers Young Adults through Age 26 on parents’ coverage Quality Increased funding for Community Clinics 11 EQUAL

  12. Immediate Improvements2010 Stops Insurance Abuses: Discrimination against children with pre-existing conditions prohibited Rescissions Illegal (withdrawal of care) Bans lifetime limits on coverage Affordability: Small business tax credits of up to 35% Rebates begin to close the Medicare Part D Doughnut Hole Reduces cost of early retiree coverage 12 EQUAL

  13. Insurance Exchanges: Who State-based Exchanges begin in 2014 Uninsured individuals, self-employed and small businesses can buy standardized, affordable coverage Safety net for insured who lose a job Est. 2.4 million eligible in CA NOT MOST UNION MEMBERS. NOT FOR MEDICARE!! Applies to Members of Congress 13 EQUAL

  14. Family of Four Joe pays max. premium of: Joe’s family income: • Eligible for MediCal • $302/month; $3,624/yr* • $663/month; $7,956/yr* • $25,000/yr • $50,000/yr • $80,000/yr * Actual cost may be less depending on age of the worker EQUAL

  15. Insurance Reform: Limits on Insurance Premiums • Cannot charge more if: • You are sick • You are female (Gender-rating) • Age-rating limited, 3:1 • No more annual or lifetime limits • Administrative costs limited • No underwriting • Easier to compare plans , 15 EQUAL EQUAL Health Network

  16. Other Key Features • Investments in public health • Quality Improvements • Free preventive care • More $ to primary care docs & nurses • Consumer Protections • Medicare • Trust Fund Preserved to 2029 • Prescription Drug “Donut Hole” closed - 2020 EQUAL

  17. Benefit Small business tax credit $250 relief from donut hole Early Retiree Reinsurance Program benefits Ending lifetime coverage limits Youth up to age 26 covered Increased Coverage for: 503,000 small businesses 382,000 Medicare beneficiaries 430,000 early retirees 19 million residents 196,000 individuals Immediate Benefits for California $761 million federal dollars are available to California to provide coverage for uninsured residents with pre-existing medical conditions EQUAL

  18. Affordability: Now • Rebates begin to close the Medicare Part D Donut Hole: $250 in 2010; 50% brand name drugs 2011 • Small business tax credits of up to 35% • States and feds can reject “unreasonable” premiums • Reduces cost of early retiree coverage EQUAL

  19. Affordability:“Medical Loss Ratio” • 80-85% of premium must be spent on health care (vs. admin., profit) • Rebates • Current policy debate: “Wellness programs” run by insurance co.s = Medical care? or Marketing? EQUAL

  20. Quality: Now • Free preventive care • Decision point: Will HRSA cover contraception thru prevention? * Exception for “Grandfathered plans” • Increased funding for Community Clinics • More money for primary care and public health EQUAL

  21. Consumer Protections: Now Discrimination against children with pre-existing conditions prohibited Rescissions Illegal (withdrawal of care) Bans lifetime limits on $ amount of coverage Annual limits phased out 21 EQUAL

  22. State Insurance Exchanges, 2014: Who Uninsured individuals, self-employed and small businesses can buy coverage NOT FOR MEDICARE!! Safety net for insured who lose a job Applies to Members of Congress No Public Option 22 EQUAL

  23. Insurance Reform: Limits on Insurance Premiums • Cannot charge more if: • You are sick • You are female (Gender-rating) • Age-rating limited, 3:1 • No more annual or lifetime limits • Administrative costs limited • No underwriting • Easier to compare plans , 23 EQUAL EQUAL Health Network

  24. Costs of coverage for subsidy eligible individuals in exchange compared to existing non-group market (premium and out-of-pocket) EQUAL

  25. Financing Health Reform, 2010-2019 Figure 15 Federal savings New revenues Total Cost = $938 Billion Savings to Federal Deficit = $124 Billion EQUAL Source: Congressional Budget Office, 2010 Return to KaiserEDU Tutorials

  26. Premiums on the Exchange Premium contributions limited based on income as a percent of Federal Poverty Level (FPL): • 150% FPL ($16,245/yr): $ 68/month • 200% FPL ($21,660/yr): $113 • 250% FPL ($27,075/yr): $191 • 300% FPL ($32,490/yr): $ 257 Hardship exemption: Available if lowest cost plan exceeds 8% of an individual’s income Comparison: Single payer bills: c. 10% payroll tax EQUAL

  27. Elements of Single Payer • Single payment source: government • Vast reduction in administrative costs • Effective levers for cost control • Universal coverage • Can improve administration, information, quality of care EQUAL

  28. Universal Coverage: Undocumented Immigrants • Important human right • Preventive care improves health, reduces ER use • Undocumented in CA pay $80,000 more in fees than receive in lifetime govt. benefits EQUAL

  29. Cost Control • Budgets control costs on the supply side • Growth in health spending linked to • State GDP, population growth • Technological change • Demographics (employment, etc.) • Administration: 5% limit • Negotiate prescription drug prices • Increase primary care: No co-pays or deductibles EQUAL

  30. Delivery System • Current mix: public and private providers • Choice of primary care MD • Referral needed to specialist • Payment methods, risk adjusted: • Fee for service • Facility budget • Capitation • Financial incentives to practice in underserved areas & for primary care EQUAL

  31. Comprehensive Benefits • Medical and surgical • Mental health, substance abuse • Dental • Prescription drugs • Hospice, SNF after hospital • Health education • Translation, transportation EQUAL

  32. Accountable Governance • Elected Health Commissioner • Health Policy Board • Office of Medical Practice Standards • Office of Consumer Advocacy • Health Care Fund • Inspector General EQUAL

  33. Quality • Access to primary care • Monitor health outcomes • Program: decrease medical errors • Planning for health providers, facilities EQUAL

  34. Single Payer Bills • Congress • HR 676 Conyers • S 703 Sanders • HR 3000 B Lee • State • CA SB 810 • Vermont – Hsiao Report EQUAL

  35. How Is Single Payer Financed • HR 676 Federal bill – Rep. Conyers MI • Existing federal revenues for health care • Increase income tax on top 5% income earners • Excise tax on payroll and self-employment income (SSI) • Tax on stock and bond transactions EQUAL

  36. HR 676: System Savings • Reduced paperwork • Bulk procurement of medicines • Improved access to preventive care EQUAL

  37. Vermont Proposal • Payroll tax (SSI) • Exempts workers who are paid and employers who pay wages below 180% of the FPL • exemption is phased out at 220% of FPL. • payroll contribution capped at $120,000. EQUAL

  38. Vermont • Firms employing between 1 and 10 employees will spend in total $173 million more than they would have under PPACA reforms in 2019, or $1,702 per employee. However, larger firms will experience lower spending than they would have under PPACA. • Spending for firms with between 101 and 500 employees will be $20 million less, or $332 less per household, while firms with more than 500 employees will spend $111 million less, or $1,039 less per household. • Firms who currently provide health insurance to their employees would see lower costs than they would have under PPACA reforms. In total, offering firms will spend $211 million less in 2019, or $947 per household. However, firms not currently offering insurance will pay more. Non-offering firms will see increase in costs of $285 million in 2019 under option 1a reforms, or $1,722 per employee. 97 EQUAL

  39. Vermont: Households • Total costs including contributions will be lower under option 1A by $339 million in 2019 as compared to ACA, or $1,201 per household. • Total additional benefits will also be lower. • However, the net financial benefit will be $198 million, or $704 per household. EQUAL

  40. Senate Bill 921 (Kuehl)The Health Care for All Californians Act Similar to HR 1200 (McDermott/Wellstone) Financing: State Health Fund • Earmarked state health care taxes replace insurance premiums • Combine existing federal, state, county health funds (=50% current health care payments) EQUAL

  41. ACA: Steps Towards Single Payer Expands coverage Required financing by government, individuals and employers will create incentives for greater cost controls New quality measures and delivery system reforms will guide cost control while protecting benefits 41 EQUAL

  42. Toward Single Payer • legislative commitment to universal coverage • national benefits standard • income-based definition of affordability • an employer mandate, • global budget for Medicare • the recognition that insurance must be much more strongly regulated, with new institutions for doing that EQUAL

  43. ACA • Effective 1/1/2011 to 12/31/2016, there will be a 10% bonus in Medicare payments to PCPs that have at least 60% of Medicare billing in the areas of office, nursing home and home care visits. • From 1/1/13 to 12/31/14: will raise Medicare rates for primary care physicians for evaluation and management services, and services related to immunization. • National Health Service Corps funding is planned to rise from $320M/year in 2010 to 1.15B/year in 2015. These funds are those used to help PCPs in high need areas pay back their debt. • Title VII funds to family medicine residency programs and academic departments of family medicine have also been reauthorized. • January 1, 2011, funding for community health centers will increase by $11 billion. EQUAL

  44. Why is This Controversial? • Opponents can not muster votes to repeal • But will focus on undermining it • Public divided • “Statist” government takeover • Corporate takeover • Some support, experiencing benefits • Unfinished issues continue to be controversial: • Social divisions – abortion, immigrants • Role of government – public option EQUAL

  45. SB 840 • The California Health Insurance System will be funded by a combination of monies already collected and used by government health agencies such as Medicare and Medi-Cal, and new revenues. Government monies already pay for about half of all health expenditures. The use of Medicare and Medicaid funds will require waivers negotiated with the federal government. (140240) • The specific new revenues for CUHA have not yet been included in the bill. A Premium Commission will recommend additional new revenues to pay for the remaining cost of the program. These will likely include health premiums based on a percentage of wages, paid partly by employers and partly by employees. • The Lewin Group (2004) studied a proposal for approximately 12% of wages along with some other taxes, and found it adequate EQUAL

  46. National Deficit With and Without Health Reform EQUAL

  47. Why Do We Do Worse Than Other Countries? EQUAL

  48. Election 2010 • Republican agenda: • Fight about health care as lead up to 2012 election • Focus on abortion • Moderate Democrats and Republicans: • Deficit Commission: Slash Medicare, Social Security • Free trade/expand exports • Dems beat big money in CA • VT governor stumping for single payer EQUAL

  49. Contest for the Future • Corporate domination of campaign spending was successful in many races – but not all • Analyze what’s working and do more of it • Traditional advocacy groups limited – unions, women, seniors, etc. • Take the initiative to create vehicles for advocacy EQUAL

  50. The ACA: Educate, Defend, Implement • Regulations.Gov • Comment on Medical Loss Ratio, repro rights • State activities • Implement exchanges • Incorporate larger businesses sooner • Create public insurance EQUAL