A Blue Cross and Blue Shield Association Presentation

Transcription

1 A Blue Cross and Blue Shield Association Presentation Issues in Healthcare Reform CSG Spring Conference Health Policy Task Force Joan Gardner Executive Director, State Services May 17, 2009

2 Healthcare Reform: What s Likely in ? 2010? Major push for comprehensive reform this year Substantial desire for reform Effort more organized than past attempts, stakeholder input However, comprehensive healthcare reform is complicated and expensive State policymakers are key stakeholders can play major role Important to weigh-in in with concerns New federal funds can be best leveraged for state innovations in public-private private programs and new marketing initiatives 2

3 Pathway to Covering America Encourage Research on What Works Change Incentives to Promote Better Care Empower Consumers and Providers Promote Health and Wellness Foster Public-Private Coverage Solutions 3

4 Exchanges: What Are They? Employers enroll in exchange and individual employees select plan from among government-approved options EMPLOYER INDIVIDUAL EE EE EE EE EE EE IND IND IND IND Exchange BCBS United Aetna Government-Run Kaiser CIGNA Public Plan Plan Government Subsidies 4

5 Some Policymakers Believe a National Exchange is Necessary to Accomplish Reform Goals Reduce Costs Goals BCBSA Response Exchanges will increase costs by turning the group market into an individual market and duplicating administrative functions. Pool Small Groups/Individuals Increase Choice Simplify Shopping/Competitive Pricing Facilitate Subsidies Exchanges do not pool risk pooling occurs at the health plan level Past experience demonstrates that exchanges limit plan choice to HMOs BCBSA proposes a State Insurance Mart as a competitive alternative SIMs can help enrollment in subsidies. Alternatives for direct payment of subsidies exist (e.g., Insure Oklahoma). 5

6 Exchanges Actually Duplicate Administrative Functions Function Current Responsibilities State Insurers Brokers Exchange Approval of Benefits X X Approval of Premiums X X Advertising/Sales X X X Enrollment X X X Education X X X X Billing X X X Claims Processing Complaints/Appeals X X X X X 6

7 Exchanges Could Reduce Choice, Protections Factors likely to limit plan choice within a national or regional exchange: A federal government agency rather than the market will specify the products and health plans offered Health plans will not offer as many choices when individuals can select plans annually based on their perceived health status Adverse selection issues Two sets of rules federal and state could mean regulatory, consumer confusion Loss of effective market oversight Threat to consumer protections 7

8 Medicare Data Demonstrates that National, Regional Risk Pooling Would Lead to Major Cross-subsidies Among States WA +12% ME +17% OR +14% NV -9% CA -6% ID +15% UT +9% AZ +2% MT +18% WY 0% CO +2% NM +22% ND +18% SD +19% NE +8% KS +4% OK -5% MN +2% IA +19% MO +7% AR +8% WI +14% IL -5% IN +7% MI -2% TN +4% KY +5% OH +4% WV +9% VA +15% SC +6% PA +2% NC +8% VT +15% NY -8% NJ -9% DE +2% DC -9% MD -11% PR +111% NH +8% CT -6% MA -6% RI +7% NM +30% MS -4% AL +2% GA +6% TX -9% AK -4% LA -12% FL -11% While some cross-subsidies subsidies may be a good deal for a high-cost state, low-cost states would pay higher health insurance premiums 8

9 BCBSA Alternative: State Insurance Marts (SIMs) State Insurance Mart: Key Functions State Internet Portal Standard Benefit Comparisons Standard Application Lists all individual/small group insurers Each state to develop consensus templates Each state to develop consensus individual/ small group application Tax/Subsidy Calculator Help for estimating available subsidies Links Links to broker listings, public programs, and enrollment for small employer tax credit 9 9

10 Structure of Government-Run Plan Most proposals describe new plan as Medicare-like Baucus proposal: Exchange would include a new government plan option, similar to Medicare Same rules as private insurance plans participating in the Exchange (e.g., same levels of benefits and set the premiums the same way) Rates paid to health care providers would be determined by balancing the goals of increasing competition and ensuring access for patients A number of options could be considered to determine who runs the plan, who is eligible for it, and how to ensure that the public-private insurance competition lowers costs and improves quality Source: Baucus Call to Action: Health Reform

11 Policy Arguments For Government-Run Plan Proponents say a new government-run run plan is needed to: Increase competition and counter health plan consolidation; Reduce provider costs through bargaining power of government plan; Lower administrative costs: 2% in Medicare vs. 30%+ for individual and small employer coverage ; and Place downward pressure on insurance company profits, corporate excess 11

12 Policy Arguments Against Government-Run Plan Opponents say government plan would: Result in unfair competition because government would use price-setting to pay inadequate rates to providers; Increase premiums by exacerbating cost-shift shift to private sector, leading to loss of employer coverage; Unnecessary under comprehensive healthcare reform where everyone can obtain private coverage; Stepping stone to single-payer, one-size size-fits-all healthcare, not more choice; and Government cannot afford new entitlement programs: adverse selection issues, Medicare already on brink of insolvency. 12

13 Government-Run Plan: Choice? 77% of insured individuals would have government-run healthcare under Commonwealth Fund plan* Current Law Commonwealth Proposal Private Plans: Non-Government 76 million Private Plans: Non-Government 172 million Crowd Out: 2/3 private enrollees estimated to switch to new public plan New Public Plan million 77% of Insured Uninsured 49 million Uninsured (6 million) Public: Medicare, Medicaid, Military 95 million Public: Medicare, Medicaid, Military 95 million Total = 316 million Total = 316 million 13

14 Government-Run Plan: Necessary? Can implement comprehensive healthcare reform through existing state structures Leverage state expertise, flexibility and innovation in new programs Maintain consumer protections, provide sound financial oversight Government-run run plan cannot innovate like modern health plans Can t pick winners and losers, such as excluding poor quality providers Private sector leads on quality, product design, adopting new cost-control control strategies, wellness and prevention strategies Unlevel playing field Government would likely subsidize the program Medicare not adequately funded while insurers have to maintain reserves/surplus The government will never negotiate rates with providers Government plan cannot pay providers more for beneficiaries < 65 years than programs for the poor, aged, blind, and disabled 14

15 BCBSA: Pathway to Covering America Objective: Demonstrate leadership on reining in costs, improving quality, and extending coverage to all Americans Pathway Initiatives: 1) Encourage research on what works 2) Change incentives to promote better care 3) Empower consumers and providers 4) Promote health and wellness 5) Foster public-private private coverage solutions 15