Understanding Health Reform. Health Care Foundation of Greater Kansas City History of HCF Our Mission Target Population Area Served

Understanding Health Reform

Health Care Foundationof Greater Kansas City

• History of HCF• Our Mission• Target Population• Area Served

HCF’s Grantmaking

• $18 million in 2011• Funding Areas

• Safety Net Healthcare• Healthy Lifestyles• Mental Health

• Applicant Defined Grants• Initiatives

What is health insurance?

Before Insurance

• Medical care was purchased on an as-needed basis

• Fees were based on services provided

Started as a Way to Protect Workers

• A firm arose in 1850 to offer accident protection to workers in particularly dangerous professions

Evolution of a health system

“Accident” insurance for those in dangerous professions

Workers Began Organizing Themselves• In 1887, African-American

workers at a coal plant in Iowa create a mutual protection society

• $.50 per month for an individual or $1.00 per family



Mutual Protection Societies

Companies Begin Offering Insurance to Employees

• 1911: first employer-sponsored policy• Group disability policy




Companies provide

insurance

A Marketplace is Born!

• In the late 1800s, commercial insurance companies are born




Companies provide

insurance

Open marketplace

Everyone Wants In

• Hospitals and physicians groups begin offering prepaid care plans in the early 1900s

• Local hospitals (Blue Cross) and local physician groups (Blue Shield) offered services, rather than reimbursements




Companies provide

insurance

Open marketplace

Pre-paid plans

HMOs

• Henry Kaiser ran a shipyard in California• He arranged a deal with local hospitals and

clinics to provide care at reduced rates in exchange for being the sole source of care




Companies provide

insurance

Open marketplace

Pre-paid plans

HMOs

World War II

• Strict wage and price controls• Employer-sponsored insurance expanded

dramatically• Benefits were taxable until 1954




Companies provide

insurance

Open marketplace

Pre-paid plans

HMOs




Companies provide insurance

Open marketplace

Pre-paid plans

HMOs





Open marketplace

Pre-paid plans

HMOs

Uninsured

What do we think of this “system”?




Open marketplace

Pre-paid plans

HMOs

Uninsured

What is a “system”?• Interstate highway system

• Named after Dwight D. Eisenhower

• Largest public works program in history

• Idea came from German autobahn

What is a “system”?• Standards

• Speed limits• Horizontal, vertical,

and tunnel clearance• Bridge strength

• Kansas was the first state to get started

We don’t have a health system

• No logical connection between components• No central manager, but also no true

marketplace• No one is making sure we get our money’s

worth• People aren’t getting the right care at the right

time at the right place

We need to turn this…




Open marketplace

Pre-paid plans

HMOs

Uninsured

Into this

Employer-sponsored insurance

Well-regulated, affordable individual market

Medicaid and Medicare for those who need it

Uninsured

We spend a lot of money.Average spending on health

per capita ($US PPP)

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1980 1984 1988 1992 1996 2000 2004

United StatesGermanyCanadaNetherlands

New ZealandAustraliaUnited Kingdom

Total expenditures on healthas percent of GDP

Health Care Expenditure per Capita by Source of Funding, 2007

Adjusted for Differences in Cost of Living

3,3074,005

2,618 2,726 2,844 2,7582,124

2,4462,056

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571

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2,716

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US NOR SWITZ CAN FR GER SWE AUS* UK ITA

Out-of-pocket spending

Private spending

Public spending

We spend a lot of money.

We spend a lot of money.

And we don’t get enough in return.

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1997–98 2002–03

Mortality Amenable to Health Care

Deaths per 100,000 population*

Mortality Amendable to Health Care, by StateMortality Amenable to Health Care

Deaths per 100,000 population*

Life Expectancy at Birth, 2007

81.1 80.782.282.382.382.482.983.083.083.784.084.284.4

78.2 77.1 75.477.278.077.278.278.978.479.078.479.277.5

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FR SWITZ* ITA* AUS CAN* SWE NOR* GER* NETH OECDMedian

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Female Male

It’s Time to Deal with This ChallengeTotal Spending for Health Care, as a % of GDP

We Need a Bargain Shopper

• Without someone wrapping their arms around this “system,” we don’t get what we pay for.

• Nothing is free

U.S. Health System

High Performance Health System

Community Survey on Health Reform

• Phone Survey• 403 registered voters in the Kansas City

metropolitan area• Fielded in July 2010

The Status Quo is Not Acceptable

• Only 7% saw no need for change in the health care system.

Initial Impressions of “Health Reform”

But…• Many respondents were supportive of specific

elementsComponent of Health Care Law Total Approve

1) Tax credits for small businesses 78%

2) Denying coverage due to history 67%

3) Financial help for low & moderate income families 67%

4) Keeping children up to age 26 on family health plan 64%

5) Prohibit lifetime limits 57%

6) Expand Medicaid to low income and uninsured adults, regardless of children

59%

7) All employers, except small businesses with 50 employees or less, can be fined

45%

8) Limits future increases in Medicare Payments to health care providers

38%

9) Requires all Americans to have health insurance, or else pay a fine

33%

Change in Opinions After Brief Education

• After being exposed to these elements of health reforms, respondents were again asked their opinion

• Beginning of survey: 34% favorable• End of survey: 45% favorable• This is a 32% increase

Patient Protection and Affordable Care Act

• A platform for change• Seeks to move us toward a system• We can pay less and get more

Current Source of Coverage, U.S.

Uninsured(17%)

Medicaid(16%)

Individual(5%)

Medicare(12%)

Employer Sponsored Insurance (49%)


• Small business tax credits

• Early retiree insurance• Wellness program

grants• Employer mandate

(exempts business < 50)


Individual(5%)

Uninsured(17%)

Medicaid(16%)

Medicare(12%)


Individual(5%)


• Review of Health Plan Premium Increases

• Dependent Coverage to Age 26• No Recissions

• Coverage of Preventive Benefits• Minimum Medical Loss Ratio for Insurers


Medicare(12%)

Uninsured(17%)

Medicaid(16%)

Individual(5%)


Medicare(12%)

• Changes in Provider Rates• Medicare Beneficiary Drug Rebate• Payments for Primary Care• Prevention Benefits• Medicare Advantage Payment Changes• Bonuses to High-Performing Medicare Advantage Plans• Value-Based Purchasing• Reduced Payments for Hospital Readmissions

Medicare(12%)

• CLASS Act• Creates a national, voluntary program for buying

community living assistance services and supports• Voluntary payroll deductions• Five-year vesting period• Provides cash benefits of at least $50 per day to

purchase non-medical services and supports• Goal is to support “aging in place”


Medicaid(16%)

Medicare(12%)

Uninsured(17%)

Individual(5%)


Medicaid(16%)

• Expands Medicaid to 133% FPL• Childless Adults• Enhanced federal match• Federal government will pay 96% of this cost

• Reduces Medicaid payments for hospital-acquired infections

Medicaid(16%)

Total Spending from 2014 to 2019

Medicaid(16%)

Total Spending from 2014 to 2019

Medicaid(16%)

Medicaid(16%)


Uninsured(17%)

Medicaid(16%)

Medicare(12%)Individual

(5%)


Uninsured(17%)

•Creates a Temporary High Risk Pool

System Wide Provisions

Uninsured(17%)

Medicaid(16%)

Medicare(12%)Individual

(5%)


Guaranteed Issue

• Requires insurers to offer coverage to anyone, even if they have pre-existing conditions

• Allows price-setting based on age, geographic area, family composition, and tobacco use

• Not gender• Being a woman is not a pre-existing condition

• Imagine guaranteed issue without a mandate

Guaranteed Issue

Need an Individual Mandate

• Guaranteed issue and the individual mandate go hand in hand.

Health Insurance Exchanges

• Creates state or regional exchanges• Individuals and Small Businesses (<100)• Large employers beginning in 2017• Creates four benefit plans, plus a catastrophic

plan• Clearinghouse for information

Health Insurance Exchanges

• Idea is to automatically calculate• Employer contribution• Government subsidy• Your premium

• Exchange will enroll you

What the Exchange Could Look Like

Premium Subsidies to Individuals• Accessible through the health insurance

exchangeTax Credits: Maximum Percent of Income Paid for Premiums

Income for a Family of FourPercent Paid for Premiums

FPL Range From: To:

Up to 133% FPL $0 $29,327 2% of income

133-150% of FPL $29,327 $33,075 3-4% of income

150-200% of FPL $33,075 $44,100 4-6.3% of income

200-250% of FPL $44,100 $55,125 6.3-8.05% of income

250-300% of FPL $55,125 $66,150 8.05-9.5% of income

300-400% of FPL $66,150 $88,200 9.5% of income

Paying for Health Reform

• Tax on indoor tanning• Tax on high cost insurance• Increase in Medicare payroll taxes• Changes in Medicare payments• Employer Mandate• Fees on Insurers, Pharma, and Medical Device

Makers

This is Incremental

ACA will be Revisited

• Social Security’s many large holes filled over 40 years

• Medicare is revised nearly every year• Enactment closes one chapter and opens a new

one

HCF’s Response to Health Reform

• In August 2010, launched ReformReality.org• Educate the KC public about reform• Specific components of the bill• Why reform is necessary• 5,000 visitors to date

Jessica [email protected]

mailto:[email protected]

Documents

Understanding Health Reform. Health Care Foundation of Greater Kansas City History of HCF Our Mission Target Population Area Served