Our Broken
Health Care
System
National Health Policy
Conference
February 12, 2007
Washington, D.C.
Kim Belshe
6.5 Million Uninsured
20% of Population
Source: California Health Interview Survey, 2005
Emergency Departments Closing
400
380
The Hidden
Tax
10% of premium
Cost to
Insured
Actual Cost of Medical Care
360
Uninsured
340
10% of premium
320
1990
1994
1998
2002
2006
Source: New America Foundation
Source: Office of Statewide Health Planning and Development
The Hidden
Tax
17% of premium
Cost to
Insured
Hidden Tax
Actual Cost of Medical Care
Individuals: $455
Uninsured
17% of premium
Families: $1,186
MediMedi-Cal
Underfunding
Source: Administration Analysis of “Cost Shift Hydraulic,” Dobson
Source: New America Foundation
1
Drivers of Cost: Chronic Diseases
$153
$151
BILLION
Cancer & Diabetes
BILLION
Smoking & Physical
Inactivity
Source: Centers for Disease Control and Prevention, 2003, U.S. Data
Drivers of Cost:
Medical Errors
23,000 Deaths
Cost: >$4 Billion
Source: CA Department of Health Services
Fixing Our Broken System
Governor’s Health Care Initiative
¾Reduce the hidden tax;
Prevention / Wellness
Shared Responsibility
/ Coverage for All
Affordability
lower costs
¾Coverage for all; support
better care
¾Healthy California
Governor’s Health Care Initiative
Prevention / Wellness
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
2
Shared Benefit
Governor’s Health Care Initiative
Prevention / Wellness
Shared Responsibility
/ Coverage for All
INDIVIDUALS
Access to
affordable coverage
Healthier CA
Shared Benefit
Shared Benefit
GOVERNMENT
GOVERNMENT
Healthy, productive & economically
competitive state
Healthy, productive & economically
competitive state
DOCTORS &
HOSPITALS
INDIVIDUALS
INDIVIDUALS
Access to
affordable coverage
Healthier CA
Access to
affordable coverage
Healthier CA
Shared Benefit
Shared Benefit
Expanded insured
pop
Fair compensation
GOVERNMENT
GOVERNMENT
Healthy, productive & economically
competitive state
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
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
3
Fixing the
Broken
System
Payment Sources
Commercial payer overpayment
Creating an efficient,
competitive market dynamic
MediMedi-Cal/Uninsured Underpayment
Shared Responsibility
Fixing the Broken System
GOVERNMENT
Obtain Health
Coverage
¾ Must secure health coverage for
themselves and their children
¾ Assume greater personal
responsibility for health and
wellness
¾ Contribute to paying for their
coverage HEALTH PLANS
Shared Responsibility
Fixing the Broken System
GOVERNMENT
INDIVIDUALS
GOVERNMENT
EMPLOYERS
Obtain health
coverage
¾ Expand SCHIP/Medi
SCHIP/Medi--Cal for all children in families
earning under $60K
¾ Subsidies to families between $20K$20K-$50K provided
through new purchasing pool
¾ County responsible for access for undocumented
¾ Expand MediMedi-Cal to adults in poverty
¾ $4 billion increase in MediMedi-Cal reimbursement rates
DOCTORS & HOSPITALS
Promote a functional health care system
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
INDIVIDUALS
DOCTORS & HOSPITALS
INDIVIDUALS
EMPLOYERS
INDIVIDUALS
HEALTH PLANS
4
Shared Responsibility
Redistribution to Providers
GOVERNMENT
Promote functional market
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
INDIVIDUALS
Obtain health
coverage
New Funds to Providers
DOCTORS &
HOSPITALS
Provide affordable,
quality care
Share cost savings
$10 - $15 Billion
$3.5 Billion
Coverage Dividend from Providers
Fixing the Broken System
Shared Responsibility
GOVERNMENT
GOVERNMENT
¾ 2% fee on physician revenues –
4% on hospital revenues
¾ Participation in patient safety
initiatives
Promote functional market
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
INDIVIDUALS
EMPLOYERS
DOCTORS & HOSPITALS
¾ At least 85% of hospital payments
spent on patient care
INDIVIDUALS
Obtain health
coverage
DOCTORS &
HOSPITALS
Provide affordable,
quality care
Share cost savings
HEALTH PLANS
Guarantee access to affordable coverage
HEALTH PLANS
Fixing the Broken System
Shared Responsibility
GOVERNMENT
GOVERNMENT
HEALTH PLANS
EMPLOYERS
¾ Only base rates on age and geographic area in
the individual market
¾ 85% of premiums dedicated to patient care
¾ Offer “Healthy Actions” rewards and
incentives within benefit packages
INDIVIDUALS
DOCTORS & HOSPITALS
¾ Guarantee coverage
Promote functional health care market
Provide access to affordable coverage
Fairly compensate Medi-Cal providers
EMPLOYERS
Support
employee
access to
affordable
coverage
INDIVIDUALS
Obtain health
coverage
DOCTORS &
HOSPITALS
Provide affordable,
quality care
Share cost savings
HEALTH PLANS
Guarantee access to affordable coverage
Pass along savings
5
Fixing the Broken System
Governor’s Health Care Initiative
GOVERNMENT
¾ Offer federal Section125 plans to allow
employees to make pre-tax contributions to
coverage
¾ Contribute to the cost of coverage – nonoffering employers with 10 or more
employees will contribute 4% of payroll
DOCTORS & HOSPITALS
INDIVIDUALS
EMPLOYERS
Prevention / Wellness
Shared Responsibility
/ Coverage for All
Affordability
HEALTH PLANS
Affordability: Short Term
Affordability: Long-Term
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 MediMedi-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
FISCAL IMPACT
Prevention
$300
Tax Incentive
$900
Counties
$2,000
Subsidized Coverage
$2,270
Medi-Cal/HFP
Coverage
$2,638
Medi-Cal Rate Increase
$4,039
Federal Funding: $5.47 Billion
$12 Billion
Other - $203
Employer in lieu
$1,000
County and Other
Redirect $2,000
Physician/Hospitals
Recapture
$3,472
Federal Funds
$5,474
Cost
Funding
$1.77 billion: Redirection of current federal funds
used for programs for the uninsured
$3.7 billion: New federal funds
¾ $3.45 billion: guaranteed under current federal
statute (match for MediMedi-Cal reimbursement,
Healthy Families parental match)
¾$250 million: Discretionary funds via 1115 waiver
in millions
6
Federal Role
Medicaid funding – Rates; Parental
Fixing Our Broken System:
Shared Responsibility
expansion
¾Reduce the hidden tax;
Section 1115 waiver
Deficit Reduction Act flexibility
ValueValue-driven health care
Tax advantages – HSAs,
HSAs, Section 125 plan
lower costs
¾Coverage for all; support
better care
¾Healthy California
7