National Health Policy
Conference
February 12, 2007
Washington, D.C.
Kim Belshe

Source: California Health Interview Survey, 2005

Emergency Departments Closing
400
380
360
340
320
1990 1994 1998
Source: Office of Statewide Health Planning and Development
2002 2006

10% of premium
Actual Cost of Medical Care
Cost to
Insured
Uninsured
10% of premium
Source: New America Foundation

17% of premium
Actual Cost of Medical Care
Cost to
Insured
Uninsured
17% of premium
Medi-Cal
Underfunding
Source: Administration Analysis of “Cost Shift Hydraulic,” Dobson

Source: New America Foundation

Drivers of Cost: Chronic Diseases
$153
BILLION
$151
BILLION
Cancer & Diabetes Smoking & Physical
Inactivity
Source: Centers for Disease Control and Prevention, 2003, U.S. Data

Source: CA Department of Health Services

 Reduce the hidden tax; lower costs
 Coverage for all; support better care
 Healthy California

Governor’s Health Care Initiative
Prevention / Wellness
Shared Responsibility
/ Coverage for All
Affordability

Governor’s Health Care Initiative
Prevention / Wellness

Healthier State – Long Term Affordability
Offer consumers incentives and rewards
Promote diabetes prevention and treatment
Reduce medical errors
Reverse obesity trends
Support tobacco cessation

Governor’s Health Care Initiative
Prevention / Wellness
Shared Responsibility
/ Coverage for All

Shared Benefit
INDIVIDUALS
Access to affordable coverage
Healthier CA

Shared Benefit
GOVERNMENT
Healthy, productive & economically competitive state
INDIVIDUALS
Access to affordable coverage
Healthier CA

Shared Benefit
GOVERNMENT
Healthy, productive & economically competitive state
INDIVIDUALS
Access to affordable coverage
Healthier CA
DOCTORS &
HOSPITALS
Expanded insured pop
Fair compensation

Shared Benefit
GOVERNMENT
Healthy, productive & economically competitive state
INDIVIDUALS
Access to affordable coverage
Healthier CA
HEALTH PLANS
Expanded market
Fair compensation
DOCTORS &
HOSPITALS
Expanded insured pop
Fair compensation

Shared Benefit
GOVERNMENT
Healthy, productive & economically competitive state
EMPLOYERS
Affordable coverage
Healthy, productive workforce
INDIVIDUALS
Access to affordable coverage
Healthier CA
HEALTH PLANS
DOCTORS &
HOSPITALS
Expanded insured pop
Fair compensation
Expanded market
Fair compensation

Creating an efficient, competitive market dynamic

Commercial payer overpayment
Medi-Cal/Uninsured Underpayment

Shared Responsibility
INDIVIDUALS
Obtain Health
Coverage

Fixing the Broken System
GOVERNMENT
INDIVIDUALS
 Must secure health coverage for themselves and their children
 Assume greater personal responsibility for health and wellness
 Contribute to paying for their coverage
HEALTH PLANS

Shared Responsibility
GOVERNMENT
Promote a functional health care system
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
INDIVIDUALS
Obtain health coverage

Fixing the Broken System
INDIVIDUALS
GOVERNMENT
 Expand SCHIP/Medi-Cal for all children in families earning under $60K
 Subsidies to families between $20K-$50K provided through new purchasing pool
 County responsible for access for undocumented
 Expand Medi-Cal to adults in poverty
 $4 billion increase in Medi-Cal reimbursement rates
HEALTH PLANS

Shared Responsibility
GOVERNMENT
Promote functional market
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
INDIVIDUALS
Obtain health coverage
DOCTORS &
HOSPITALS
Provide affordable, quality care
Share cost savings

New Funds to Providers
$10 - $15 Billion
$3.5 Billion
Coverage Dividend from Providers

Fixing the Broken System
GOVERNMENT
DOCTORS & HOSPITALS
 2% fee on physician revenues –
4% on hospital revenues
 Participation in patient safety initiatives
 At least 85% of hospital payments spent on patient care
HEALTH PLANS

Shared Responsibility
GOVERNMENT
Promote functional market
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
INDIVIDUALS
Obtain health coverage
DOCTORS &
HOSPITALS
Provide affordable, quality care
Share cost savings
HEALTH PLANS
Guarantee access to affordable coverage

Fixing the Broken System
GOVERNMENT
HEALTH PLANS
 Guarantee coverage
 Only base rates on age and geographic area in the individual market
 85% of premiums dedicated to patient care
 Offer “Healthy Actions” rewards and incentives within benefit packages
INDIVIDUALS

Shared Responsibility
GOVERNMENT
Promote functional health care market
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
EMPLOYERS
Support INDIVIDUALS
DOCTORS &
HOSPITALS employee access to affordable
Obtain health coverage
Provide affordable, quality care
Share cost savings coverage
HEALTH PLANS
Guarantee access to affordable coverage
Pass along savings

Fixing the Broken System
GOVERNMENT
EMPLOYERS
 Offer federal Section125 plans to allow employees to make pre-tax contributions to coverage
 Contribute to the cost of coverage – nonoffering employers with 10 or more employees will contribute 4% of payroll
HEALTH PLANS

Governor’s Health Care Initiative
Prevention / Wellness
Shared Responsibility
/ Coverage for All
Affordability

Reduce hidden tax
Tax breaks for individuals & businesses tied to purchase of health insurance
Enhance insurer & hospital efficiency by requiring 85% of premiums & hospital dollars on patient care
Remove regulatory barriers
Reduce regulatory red tape

Promote prevention & wellness
Accelerate adoption of health information technology
Tie Medi-Cal rate increases to performance measures
Enhance health care quality & efficiency through transparency and performance measures
Monitor & evaluate market function & costs and revise as necessary

Prevention
$300
Tax Incentive
$900
Counties
$2,000
Subsidized Coverage
$12 Billion
$2,270
Other - $203
Employer in lieu
$1,000
County and Other
Redirect $2,000
Physician/Hospitals
Medi-Cal/HFP
Coverage
$2,638
Recapture
$3,472
Federal Funds
$5,474
Medi-Cal Rate Increase
$4,039
Cost Funding in millions

Federal Funding: $5.47 Billion
$1.77 billion: Redirection of current federal funds used for programs for the uninsured
$3.7 billion: New federal funds
 $3.45 billion: guaranteed under current federal statute (match for Medi-Cal reimbursement,
Healthy Families parental match)
 $250 million: Discretionary funds via 1115 waiver

Federal Role
Medicaid funding –
Rates; Parental expansion
Section 1115 waiver
Deficit Reduction Act flexibility
Value-driven health care
Tax advantages –
HSAs, Section 125 plan

 Reduce the hidden tax; lower costs
 Coverage for all; support better care
 Healthy California