Page. The Obama Administration and Health Care. Warm-up questions. Question for audience: What s the problem?

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1 The Obama Administration and Health Care Bernard Lo, M.D. April 4, Warm-up questions Like quiz shows? 2 Question for audience: What s the problem? 1. Insurance coverage, access 2. Cost of care 3. Health outcomes 3

2 45.7 million uninsured Full-time workers 66% Part-time workers 14% No workers 19% 4 Case y.o. uninsured Vaginal bleeding, mole R knee. Hgb 4. Endometrial CA, melanoma Transfer to public hospital for surgery Images, slides hard to transfer No primary MD to coordinate 5 Average Annual Premiums for Single and Family Coverage, $2,196 $5,791 Single Coverage 2000 $2,471* $6,438* Family Coverage 2001 $2,689* $7,061* 2002 $3,083* $8,003* 2003 $3,383* $9,068* 2004 $3,695* $9,950* 2005 $4,024* $10,880* 2006 $4,242* $11,480* 2007 $4,479* $12,106* 2008 $4,704* $12,680* 2009 $4,824 $13,375* $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits,

3 Exhibit 1. National Health Expenditures per Capita, Average spending on health per capita ($US PPP) United States Canada France Germany Netherlands United Kingdom THE COMMO WEALTH FU D Data: OECD Health Data 2009 (June 2009). U.S. dilemma Poor access to health insurance and health care High costs -- spend more than other countries Poor outcomes 9

4 What s in the law? Tax on indoor tanning salons? Tax on cosmetic surgery? Exclude unprocessed fuels from cellulose biofuel credit? 11 Increase access to insurance Cover pre-existing conditions Subsidized high-risk pool Cannot exclude in children Cannot exclude in adults (2014) 12

5 Increase access to insurance Changes in underwriting Children covered by parents until 26 No lifetime caps on coverage Cannot cancel insurance after illness 13 Increase access to insurance Expand Medicaid eligibility and minimum benefits package (2014) Some federal assistance to states Unintended adverse effects? Cuts to other state programs Increase state taxes Cut Medicaid benefits 14 What s in the law? Public insurance option 15

6 Increase access to insurance American Health Benefit Exchanges Individuals without Medicare or Medicaid Small Business Health Options Program Exchanges Start in Health insurance exchange Improve market for insurance Increase size of pool, spread risk Different tiers of coverage Standardize information 17

7 Question for audience A family of 4 earns $30,000. What is fair health insurance premium for them to pay? 1.$15,000 2.$5,000 3.$1,000 4.$ Financial assistance for low-income enrollees in Exchanges Premium $1092 for this family Government pays $13, Increase access to insurance Underwriting in Exchanges (2014) Guarantee issue and renewal Vary premium only by age, area, tobacco use and limit variation 21

8 Increase access to insurance Require individuals to have insurance Or pay tax penalty = greater of $2085 or 2.5% of income Otherwise incentives not to enroll until sick 22 Increase access to insurance Penalties for employers who do not offer health insurance (play or pay) $2000-$3000 per employee who receives premium tax credit 23 Increase access to MDs Medicaid reimbursement to MDs increased to Medicare rates Medicare bonus 10% for MDs in underserved areas (2011-5) Increase payments to primary care services (2013-4) 24

9 Increased coverage in insurance Close donut hole in Medicare drug benefits No coverage from $2,700-$6,154 Mental health parity (2014) End gender discrimination (2014) 25 Increased coverage in insurance No cost-sharing for proven preventive services Medicare (2011) Incentives to states for Medicaid (2011) New plans (2014) 26 What s in the law? Abstinence-only sex education Home visits by nurses to teenage moms 27

10 How to cut costs? Change reimbursement levels Change delivery of services 30

11 Cut costs: reduce reimbursement levels Reduce Medicare FFS payments Past cuts not implemented Reduce Medicare Advantage payments (2011) Reduce disproportionate share payments (2014) 31 Cut costs: reduce reimbursement levels Independent Payment Advisory Board for Medicare, Medicaid (2014) If Medicare per capita spending exceeds target, recommend spending reductions Recommendations enacted unless Congress passes plan with comparable reductions Appointed by President 32 What is bending the curve? 33

12 HE in trillions $6 $5 $4 $3 $2 $2.5 Exhibit 14. Total National Health Expenditures (NHE) : Current Projection and Alternative Scenarios Current projection Option 1: Medicare Reforms Only Option 2: Intermediate Public Plan Option 3: Robust Public Plan 5.8% annual growth 5.6% annual growth 6.5% annual growth 5.2% annual growth $5.0 $4.7 $4.6 $4.4 $1 $ Source: C. Schoen, K. Davis, S. Guterman, and K. Stremikis, Fork In the Road: Alternative Paths to a High Performance U.S. Health System, ( ew York: The Commonwealth Fund, June 2009). THE COMMO WEALTH FU D Cut costs: change delivery of services 1. Patient-centered medical homes to provide primary care MD team with nurse, pharmacist, dietician Pay MD for coordination, for performance measures (2011 in Medicare) Increase primary care payments (2013-4) 35 Cut costs: change delivery of services 1. Medical home challenges Small groups cannot afford ancillary staff How provide incentives to lower ED and hospital use? 36

13 Cut costs: change delivery of services 2. Accountable care organizations Manage continuum of care Accountable for costs and quality for population Share in costs savings relative to riskadjusted target (2011 Medicare) 37 Cut costs: change delivery of services 2. Accountable care organizations Bonus for keeping costs below target No penalties bonus only Also quality targets Challenges Require 50 MDs/5000 patients Fee-for-service incentives in private insurance 38 What s in the law? Allow employers to offer rewards for participating in wellness program and meeting health-related standards 39

14 Questions for audience: How to reduce costs? Bundle payments 1.Favor 2.Oppose 3.What?? 4.Not sure 40 Cut costs: change delivery of services 3. Bundled payments: rationale 20% Medicare patients discharged from hospital readmitted within 30d without an outpatient visit Nurse discharge interview to educate patient, schedule appointment, reconcile meds reduces ED visits and readmissions 42

15 Cut costs: change delivery of services 3. Bundled payments Combine hospitalization payments to MD and hospital for CHF, COPD Pilot projects in Medicaid 2012, Medicare 2013 Providers share savings 43 Cut costs: change delivery of services 3. Bundled payments Unintended adverse consequences Avoid high-risk, complex patients Increase admissions for borderline indications Need quality of care incentives 44 Cut costs: change delivery of services 3. Incentives for patient safety Reduce Medicare payments for High readmissions (2013) Hospital infections and errors (2014) 1% reduction in Medicare $ if in top 25% Extend to Medicaid Publish rates by hospital 45

16 Why is it so difficult? Different priorities Vision for government Restrict freedom vs. instrument for public good Private sector vs. market failure Size and budget of federal government Ineffective bureaucracy 46 Minority leader McConnell Most people aren't interested in celebrating a bill that makes their lives more complicated, takes more out of their paychecks and puts decisions they're used to making themselves into the hands of federal bureaucrats 48

17 President Obama Congress declared that America's workers and America's families and America's small businesses deserve the security of knowing that neither illness nor accident should endanger the dreams they've worked a lifetime to achieve 50 Vice-President Biden This is a big f***ing deal 51

18 53 How to pay for increased access? Play or pay (employer mandate) Employers must provide insurance or pay tax if > 50 employees 54

19 How to pay for increased access? Increase Medicare A taxes (2013) From 1.45% to 2.35% for wages >$200K 3.8% tax on investment income 55 How to pay for increased access? Excise tax on employer-sponsored high-cost plans (2018) 40% tax on premium above $10,200 individual or $27,500 for family 56 How to pay for increased access? 3.8% tax on investment income (2013) 57

20 What s in the law? Post nutritional values in chain restaurants and vending machines 58 What s in the law? Increase Medicare-funded graduate medical training positions 59 Other provisions Flexible spending accounts not cover OTC drugs 60

21 Impact of uninsurance Fewer preventive services Delay or forego MD visits Later stage cancer Poorer health outcomes Premature death 61 Impact of uninsurance Cost of uncompensated care $86 billion Government subsidize $56 billion Burdens on safety-net hospitals 62 Case 2. 84y.o. with dementia, feeding tube Recurrent aspiration Convert to jejunostomy Questions about penalties? Unavoidable re-admissions Quality of care in nursing home Disincentive to care for such patients 63

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