The Battle Over Health Care: Did Health Care Reform Diagnose the Right Problem?

1. The Battle Over Health Care:Did Health Care Reform Diagnose the Right Problem? NJ Academy of Family Physicians June 21, 2013 Rosemary Gibson, M.Sc. Section Editor, Less is More JAMA Internal Medicine Author, The Battle Over Health Care, The Treatment Trap, Wall of Silence

2. Why Health Care Reform? A Reminder…

7. Is Health Care Reform Built to Last? • The presentation is a non-partisan look at the law and what it means • The focus is on coverage and cost, not the entire law • If you want to build a house, you want to ensure it is on a firm foundation • Is health care reform built to last?

8. Overview of Presentation • Did health care reform diagnose the right problem? • Who will be covered and how much will the mandate cost? • What does reform mean for you as physicians? • What steps can you take to ensure everyone has access to good care?

9. Source: Congressional Budget Office, Long-Term Budget Outlook, 2007, Appendix D

10. Part I: Did Health Care Reform Diagnose the Right Problem? • The health care reform law diagnosed the problem as lack of insurance • The main solutions are the individual mandate and Medicaid expansion

11. Health care reform will enable insurance coverage for up to 32 million people • Soaring cost is a major reason that people are uninsured • Let’s look at the cost of health care: prices and volume

12. Price • The median cost of a hospital bill to treat uncomplicated appendicitis in California was $33,611. • This amount is 75 percent of the annual per capita income in CA of $44,481 in 2011. • The range in cost varied among hospitals from $1,529 to $182,955 Source: Renee Y. Hsia et al, “Health Care as a “Market Good”? Appendicitis as a Case Study, Archives of Internal Medicine, May 28, 2012. http://archinte.jamanetwork.com/article.aspx?articleid=1151669

13. Price • A 65-year old man from rural Kentucky received a bill for 1 night in a hospital for a procedure and it cost $244,041 • A Maryland man received a hospital bill for $104,000 for treatment of two kidney stones

14. Price • In 2011 a drug company gained exclusive rights to produce a progesterone shot used to prevent premature births in high-risk mothers • It increased the price 150 times higher than the cost of the non-branded version used for years • It had been available from specialty compounding pharmacies for $10 an injection. Price was raised to $1,500 or $30,000 per pregnancy

15. Price • American College of Obstetrics and Gynecology: • “The US health care system simply cannot be expected to absorb the cost of Makena™ at its current prohibitive price without significant negative repercussions.”* • Under pressure the company reduced the price http://www.acog.org/About_ACOG/News_Room/News_Releases/2011/Makena_Price_Reduction_Is_Inadequate, April 1, 2011

16. Volume • 42% of U.S. primary-care doctors believe patients they see receive too much care • More than 25% believe they themselves provide too much care to some patients • About 75% of those surveyed said they're interested in learning how their practice compares to other doctors’ practices Source: B. Sirovich, “Too Little, Too Much? Primary Care Physicians Views on US Health Care, “Arch Internal Medicine, September 26, 2011 Source: B. Sirovich, Archives of Internal Medicine

17. Choosing Wisely • The American Board of Internal Medicine Foundation launched Choosing Wisely • Campaign to encourage doctors to provide the care that patients need not the care they don’t • Choosing Wisely is about good care, not cost *Source: http://archinte.ama- assn.org/cgi/content/short/archinternmed.2011.231

19. The median family income in the U.S. in 2011 was $50,429 Source: US Census Bureau

20. In 2010 Secretary of HHS Kathleen Sebelius was asked on ABC News what people should do about enormous premium increases • “They should contact the governor of their state and state legislature demanding that those laws be changed.” • The laws referred to are those governing health insurance rate review

21. Nothing in the health care reform law stops the increase in cost of private health insurance

22. Did Health Care Reform Diagnose the Right Problem? • Health care reform defined the problem as lack of insurance • Is that the real problem? • Or is the real problem affordability? • Are the subsidies simply a band-aid on exploding costs?

24. A Word About Medicare • The health care reform law has a few provisions governing Medicare • New preventive benefits, annual wellness check up, donut hole for prescription drugs is closed

26. Independent Payment Advisory Board • In the health reform law, an Independent Payment Advisory Board would be set up with fifteen members appointed by the president and confirmed by the Senate • Members would recommend ways that Medicare can keep spending in check • President Obama and Rush Limbaugh agree that Medicare is not sustainable

27. President Obama and Rush Limbaugh Agree on This • President Obama: "The U.S. government is not going to be able to afford Medicare… on its current trajectory. ... The notion that somehow we can just keep on doing what we're doing and that's OK, that's just not true.’ • Rush Limbaugh: “I don't like the idea of letting Medicare collapse. There won’t be any Medicare if we don’t’ fix it. It is not sustainable.”

28. Independent Payment Advisory Board • It cannot change Medicare eligibility, ration care, raise premiums, or cut benefits. • If Congress doesn’t like the recommendations, it doesn’t have to implement them • But Congress needs to find equivalent savings and pare back Medicare spending by an alternative means that it chooses. • IPAB is targeted for repeal

29. "When the music stops…things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing." Charles Prince Chairman, Citigroup, 2007

30. Is health care reform built to last?

31. Part II: Cost and CoverageUnder Health Care Reform • Who will be covered under the Patient Protection and Affordable Care Act and what will it cost?

32. How Many Uninsured Will Be Covered? • Up 16 million low-income people may be covered under Medicaid, the joint federal-state program • Some governors have said they will not expand Medicaid • In New Jersey an estimated 450,000 additional people will be eligible for Medicaid

33. What is the Individual Mandate? • Requires almost everyone under age 65 to have insurance from their employer, Medicaid or private insurance • Individual mandate applies to those without employer coverage or Medicaid and will affect up to 16 million people; begins January 2014

34. What is the Estimated Cost of the Mandate to Buy Private Insurance? • A 45-year old head of household in a family of 4 will pay $2,672 a year for insurance in 2014 • In addition, maximum out-of-pocket costs are $4,172 Source: Kaiser Family Foundation, Congressional Budget Office, http://healthreform.kff.org/SubsidyCalculator.aspx

35. What is the Estimated Cost of the Mandate to Buy Insurance • A 60-year old person earning $48,000 a year will pay $10,100 a year for insurance in 2014 • In addition, maximum out-of-pocket costs are $6,100 Source: Kaiser Family Foundation, Congressional Budget Office, http://healthreform.kff.org/SubsidyCalculator.aspx

36. What is an Exchange and How Will It Work? • The exchange will be accessible online and by telephone • It will provide information to help consumers shop for state-approved health insurance plans and apply for subsidies and tax credits.

37. How Much is the Penalty for Not Having Insurance • In 2016 the penalty will be $695 a year or 2.5 percent of income, whichever is greater. • Exemptions will be given for financial hardship, religious objections, American Indians, undocumented immigrants, and where the lowest cost plan costs more than 8%of income Source: Kaiser Family Foundation, Congressinal Budget Office, http://healthreform.kff.org/SubsidyCalculator.aspx

38. The Court of Public Opinion • Will people buy insurance? • Will they be able to afford it? • Are the penalties strong enough to encourage people to buy insurance? Source: Kaiser Family Foundation, Congressinal Budget Office, http://healthreform.kff.org/SubsidyCalculator.aspx

39. Will People Abide by the Mandate and Buy Insurance? • People with a serious illness and who cannot find/afford insurance now and who can afford it may be eager to buy it. Others may not. • If only the sick enroll, the premiums and subsidies will cost more • There is no enforcement of the penalty: no property liens or wage garnishment Source: Kaiser Family Foundation, Congressional Budget Office, http://healthreform.kff.org/SubsidyCalculator.aspx

40. What About Employer-Provided insurance • What will it cost? • What benefits will it offer? • Will employers continue to provide insurance?

41. Today’s Health Insurance is Not Your Parents’ Health Insurance • You are paying more of your income for health insurance • Getting fewer benefits • Paying higher deductibles • = Swiss cheese health insurance

42. Employer-Provided Insurance • W

44. Penalty for Employers if They Don’t Provide Insurance • Will employers continue to provide coverage? • Employers with >50 employees that don’t provide insurance and have at least 1 full-time employee who receives subsidized insurance from the exchange will pay a penalty: $2,000/ full-time employee, excluding the first 30 employees. • Penalty is less costly than insurance

46. Will States Be Able to Afford Medicaid Expansion? • The federal government will pay 100% of the cost of Medicaid expansion from 2014 to 2019 • Beginning in 2020 states will pay 10 percent of the cost and the federal government will pay 90 percent

47. State Medicaid Director in California under Governor Schwarzenegger: • “Medicaid provides care that is invaluable but it is reeling under its own weight. States are now being asked to implement the largest social program since Medicare and Medicaid began. Medicaid is falling apart as states cut benefits as enrollment increased because of the recession.”

48. Part III • What does health care reform mean for you as physicians?

49. More of Your Patients Will Have Health Insurance • More of your patients will have health insurance • But as health care costs continue to increase, they will have gaps in coverage = the Swiss cheese effect

50. Access to Primary Care Will Be Challenging • Health reform is like a new house without a first floor • The reform law encourages more primary careand medical homes but the steps are modest • Lack of access to primary care will be an ongoing challenge especially for seniors: = less preventive care and more episodic, costly interventions