Health Care Reform: A Summary

1. Health Care Reform: A Summary CAHU Convention October 25, 2007 Alan Katz and John Lovell

2. What We’re Up To Today • Health Care Reform: Why Now • Health Care Reform: Our Story So Far • Health Care Reform: The Governor’s Plan • Health Care Reform: Other Plans • Health Care Reform: What’s Next? • Conclusion / Q&A Health Care Reform: A Sumamry

3. Health Care Reform: A Summary • Health Care Reform: Why Now • Health Care Reform: Our Story So Far • Health Care Reform: The Governor’s Plan • Health Care Reform: Other Plans • Health Care Reform: What’s Next? • Conclusion / Q&A Health Care Reform: A Sumamry

4. A Broken Health Care System • 6.5 million uninsured • Stressed emergency rooms • “The hidden tax” • Rising health care costs • Chronic illness; poor health choices • Medical errors • Financial strain, bankruptcy From a presentation by Governor’s staff Health Care Reform: A Sumamry

5. Three Political Laws • The Law of Political Reality:Political Reality trumps Real Reality for all parties at all times • The Law of Political Activity:Politicians are paid to address perceptions and that’s what they do • The Law of Political Reporting:The media is paid to report on what politicians do and that’s what they do Health Care Reform: A Sumamry

6. The Three Laws and the Uninsured • Media Reports an Increase in Uninsured • Politicians Repeat the Story Deploring the Increase in the Number of Uninsured • Media Reports the Politicians Repeating the Media Story and Deploring the Increase in the Number of Uninsured Health Care Reform: A Sumamry

7. Polls Reflect the Drumbeat “Topped only by immigration (18%), health care (14%) is now second on Californians’ list of most important issues facing the state. In fact, 69 percent of residents and 72 percent of likely voters think California’s health care system is in need of major change.”– Public Policy Institute of California (September 20, 2007) “The findings show that a growing majority of voters (69%) express dissatisfaction with the way the health care system is working.” • Support for making reforms within the current system fell from 52% to 33%. • Support for replacing the current system with a state government-run system rose from 24% to 36%. – The Field Poll (August 22, 2007) Health Care Reform: A Sumamry

8. Health Care Reform: A Summary • Health Care Reform: Why Now • Health Care Reform: Our Story So Far • Health Care Reform: The Governor’s Plan • Health Care Reform: Other Plans • Health Care Reform: What’s Next? • Conclusion / Q&A Health Care Reform: A Sumamry

9. How We Got to Where We Are Now 2006: Governor Schwarzenegger makes health care reform a high priority in campaign January 2007: Democratic leaders introduce health care reform bills (SB 48 and AB 8). Governor introduces his proposal. Republicans introduce their proposal. June 2007: Democratic leaders combine bill into AB 8. Summer 2007: The Great Budget Debacle September 2007: Legislature passes AB 8. Governor promises veto and calls special sessions on water and health care reform. Health Care Reform: A Sumamry

10. Assembly Bill 8: Key Provisions • Pay-or-Play:Required all employers to spend 7.5% of payroll on health benefits or pay 7.5% fee • Employees of “fee firms” required to enroll in state purchasing pool • MRMIB could increase percentage by any amount once per year • Admin Cap:Required health plans to spend 85% of premium on health services Health Care Reform: A Sumamry

11. Assembly Bill 8: Key Provisions • Expanding Small Group Reforms: Increased size of “small group and eliminated Risk Adjustment Factors • Guarantee Issue:Required guarantee issue in individual market • No requirement individuals must buy coverage • Plan Definitions:Required carriers to offer MediCare and Healthy Families look-alikes. Created category of Individual plans. Health Care Reform: A Sumamry

12. Key Differences with Governor Individual versus Employer Centric Broad Financing versus Employer Financing 4% Employer Fee versus 7.5 Percent Fee Health Care Reform: A Sumamry

13. Current Situation Staffs of Governor and Legislative Leaders continue to negotiate The Governor is lining up support for his plan. Carriers, hospitals, CMA, Chambers of Commerce, SEIU, etc. have endorsed it “in principle.” Governor released a new version of his plan in early October, reflecting input from stakeholders. • His staff continues to seek input • Substantial placeholders Health Care Reform: A Sumamry

14. Key Elements of Version 2.0 Wellness and cost containment features remain Group coverage remains virtually untouched Dramatic changes to individual coverage Significant subsidies for low- and mid-income families Financing still broad – includes leasing of the State Lottery Health Care Reform: A Sumamry

15. Some Key Problems with Version 2.0 No definition of a minimum benefit package No effective enforcement of the mandate to buy individual coverage The state purchasing pool may not operate on a level playing field The Medical Loss Ratio requirement may result in higher premiums and fewer carriers Health Care Reform: A Sumamry

16. Legislative Battle Fronts Republicans:No fees or taxes Democrats:More funding from businessHigher premium subsidiesExpanded eligibility for premium subsidies Everyone:Lease the Lottery?! Health Care Reform: A Sumamry

17. Health Care Reform: What’s Next • Negotiations continue • Goal is to pass a framework of reform and to qualify a funding initiative • Single Payer advocates are preparing a ballot initiative • Others may introduce initiatives of their own • Some change is inevitable • As voters, taxpayers and concerned citizens we need to remain informed and communicate with lawmakers Health Care Reform: A Sumamry

18. Health Care Reform: A Summary • Change may be inevitable • But whether it’s change for the better or not depends on us • Together we can make sure what emerges from Sacramento benefits everyone Health Care Reform: A Sumamry

19. Health Care Reform: A Summary Questions and Answers www.CAHUHealthySolutions.org