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HealthCare Reform One Year Later: An update on where we are today and where we may be going

HealthCare Reform One Year Later: An update on where we are today and where we may be going. Marty Hauser, President. Healthcare Reform Impact. Healthcare Reform Will Be the Biggest Change To the U.S. Healthcare System Since Medicare Was Established in 1965. 2.

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HealthCare Reform One Year Later: An update on where we are today and where we may be going

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  1. HealthCare Reform One Year Later: An update on where we are today and where we may be going Marty Hauser, President

  2. Healthcare Reform Impact Healthcare Reform Will Be the Biggest Change To the U.S. Healthcare System Since Medicare Was Established in 1965 2

  3. “For too long healthcare in the United States has been fragmented – failing to meet patients’ basic needs, and leaving both patients and providers frustrated.” Donald Berwick 3

  4. “Triple Aim” Population Health Experience of Care Better Health Better Care Per Capita Cost Lower Cost 4 Source: Donald Berwick

  5. Imperative for Change 5

  6. National Health Expenditures as a Percentage of GDP 6 Source: Health Affairs

  7. How Much Healthcare Spending Is Too Much? Share of Income Spent (%) 7 Source: Fogel September 2008; National Bureau of Economic Research Working Paper 14361

  8. Seniors 3.6 Million Boomers Age-in to Medicare Every Year Starting in 2011 Millions Projected US Population 65+ 2010: 1 in 8 2030: 1 in 4 4 million seniors over 85 will grow to 9 million by 2030 8 Source: U.S. Administration on Aging

  9. Growth in Medicaid Long-Term Care Expenditures, 1990-2006 In Billions: Tripled in 15 Years 41% 37% 32% 30% 59% 63% 20% Home & Community-Based 68% 70% 13% 80% Institutional Care 87% 9 Source: Kaiser Commission on Medicaid and the Uninsured and Urban Institute analysis of HCFA/CMS-64 data

  10. A Few Cost the Most National Sample of 21 Million Insured Americans, 2003-2007 Mean Annual Cost per Person % of Population % of Total Healthcare Expense 29% 1% $101,000 39% 9% $15,000 21% 20% $3,700 11% 70% $580 10 Source: Thomson Reuters Marketscan Database

  11. Where are we now? 11

  12. Change will occur over three distinct phases… 12 Source: McKinsey & Company

  13. Insurance Uncertainties • Coverage Mandates • Elimination of Underwriting • Exchanges / Co-ops • Risk Pools • States Limiting Premium Rate Increases 13

  14. Provider Uncertainties • Medicare Funding • Medicaid Funding • Payer Response based on Medical Loss Ratio (MLR) Requirements • Transparency / Consumer Role • New Payment Models 14

  15. Healthcare Reform Certainties • Transparency of Data • Improved Quality, Cost and Value • Efficiencies • Electronic Medical Records • Accountable Care Organizations (ACOs) 15

  16. Definition of Accountable Care 16

  17. Accountable Care Organization (ACO) • A model for delivering services which offers doctors and hospitals financial incentives to provide good, quality care to patients while keeping down costs. • Includes medical home • Medicare demonstration projects scheduled to launch in January 2012 • Could save Medicare up to $960 million in the first three years 17

  18. Examples of Current Healthcare Reform Impact on Insurance Companies 18

  19. Early Phases – 2010 / 2011 Provisions • Coverage of Children with Pre-Existing Conditions • Coverage of Dependents up to Age 26 (Federal) / 28 (Ohio) • Elimination of Lifetime Limits of Coverage • Regulation of Annual Limits of Coverage • Prohibited Rescinding of Coverage • Certain Preventive Services Covered at 100% • Mandated Preventative Services for Women 19

  20. Implementation of MLR (Medical Loss Ratio) • Health plans are required to report the amount of premium dollars spent on medical care relative to total premiums collected • Healthcare Reform Requirement for MLR: • 85% for large group insured and Medicare Advantage products • 80% for individual and small group insured products • Implications • More difficult for plans to make profit margins • Greater pressure to reduce costs 20

  21. Greater Transparency CMS Star Ratings • Plans are rated on Medication Safety, Patient Satisfaction, Preventive Care Measures and Chronic Care Management • Potential Financial Impact / Transparency • Medicare plans will be paid more or less based on star rating • Today only three health plans are rated “5-star” and 74 health plans are rated “4-star” 21

  22. Exchanges (Effective Jan. 1, 2014) • A state-based insurance marketplace • Standard benefit tiers: Platinum, Gold, Silver, Bronze and Catastrophic • Decision on State vs. Federal Model • Federal grant of $1 million awarded to Ohio in September 2010 • Milliman Contract • KPMG Contract 22

  23. Exchanges Continued (Effective Jan. 1, 2014) • States have broad latitude in design of new health insurance exchange for 2014 • Guaranteed issue, no medical underwriting • Exchange to serve individuals and small groups • Sliding scale subsidies based on income • 16 million people expected to buy coverage • Uncertainty about employers continuing coverage • Think “Expedia.com” 23

  24. Additional Information: www.summacare.com/healthcarereform 44

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