Moving Forward
on Health Reform
Susan Dentzer
Editor-in-Chief
How Health Care Reform
Must Bend The Cost Curve
David M. Cutler
Harvard University
The Drivers of Productive Industries
IT and its use
[ARRA, 2009]
Appropriate
Information
Compensation
Arrangements
Empowered
Employees/
Consumers
Move from
pay-for-volume
to pay-for-value
[PPACA, 2010]
Engaging employees
and consumers in
continuous quality
improvement
Healthy
person
Continued
health
Chronic
illness
Bundled payment
Primary care
physicians
Successful
management
Acute
episode
Post-acute
care
Hospitals
Post-acute
providers
Specialist
physicians
Primary care
physicians
Pharmacy
Specialist
physicians
Labs
Pharmacy
Specialist
physicians
Pharmacy
Labs
Labs
Healthy
person
Continued
health
Chronic
illness
Performancebased payment
Primary care
physicians
Successful
management
Acute
episode
Post-acute
care
Specialist
physicians
Hospitals
Post-acute
providers
Specialist
physicians
Primary care
physicians
Pharmacy
Specialist
physicians
Labs
Pharmacy
Pharmacy
Labs
Labs
Forecast of Cost Savings
Total savings = $9.0 trillion
What It Will Take
• Administrative Implementation
– Shorten demonstration time
– Openness to new approaches
• Provider response
– Changing existing operations
– New organizational forms
Health Reform And Federal
Budget Deficits: Likely to
Broaden The Gap, Not Reduce It
Michael Ramlet
Analyst, The Advisory Board Company
Douglas Holtz-Eakin
President, American Action Forum
It Was Ugly Before Reform
Federal Revenues and Noninterest Spending, by Category
Percentage (%) of Gross Domestic Product (GDP)
Congressional Budget Office’s Alternative Fiscal Scenario
Source: Congressional Budget Office. The long-term
budget outlook. Washington (DC): CBO; 2009 Jun.
Modest Deficit Reduction Projected
^
Really
Congressional Budget Office (CBO) Score – H.R. 4872, Reconciliation Act of 2010
$ Billions
CBO Projections
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-2019
Total Subsidies
4
11
13
9
70 125 181 204 219 236
1072
Total Cost Savings
2
-2
-11 -18 -43
-51 -59 -75 -91 -109
-455
Total Tax Revenues
0
-8
-15 -43 -77 -90 -114 -123 -131 -141
-739
a
Net Deficit Effect
6
1 -14 -50 -48 -15
7
6
-3 -13
-124
CBO Extrapolationsb
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2020-2029
Subsidies (3.4% CAGR) 244 252 261 270 279 288 298 308 319 330
2850
Cost Savings (10.0% CAGR) -120 -132 -145 -160 -176 -193 -212 -234 -257 -283
-1911
Tax Revenues (2.51% CAGR)c -145 -148 -152 -156 -160 -164 -168 -172 -176 -181
-1620
Net Deficit Effecta -20 -28 -36 -46 -56 -68 -82 -97 -114 -134
-681
Notes: Components may not sum to totals because of rounding.
aPositive numbers indicate increases in the deficit, and negative numbers indicate reductions in the deficit.
bExtrapolations for 2020-2029 calculated using CBO estimated compounded annual growth rates (CAGR).
cThe CBO pegs tax revenues to the rate of general inflation. U.S. Breakeven 20-Year Inflation rate between
normal bonds and inflationary bonds was 2.51 percent (accessed via Bloomberg, 9 April 2010).
Source: Congressional Budget Office.
The long-term budget outlook.
Washington (DC): CBO; 2009 Jun.
Substantial Deficits More Likely
^
A Lot
Scenario Analysis Summary – H.R. 4872, Reconciliation Act of 2010
$ Billions
Alternative Scenarios
Official CBO Score
Unachievable Savings
Unscored Budget Effect
Uncollectable Revenue
Premiums Reserved
Net Deficit Effecta
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-19
6
1 -14 -50 -48 -15
7
6
-3 -13
-124
0
1
5
10
20
26
32
42
52
65
254
8
15
17
18
18
20
23
26
29
35
275
0
-1
-2
-5
1
6
14
18
22
27
78
0
0
5
9
10
11
11
9
8
7
70
14
16
12 -20
-1
47
89 101 108 119
554
Extrapolated Scenariosb 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2020-29
244 252 261 270 279 288 298 308 319 330
2850
Subsidies (3.4% CAGR)
-10
-11
-13
-14
-15
-17
-19 -20 -22 -25
-167
Cost Savings (10% CAGR)
c
-110 -113 -115 -118 -121 -124 -128 -131 -134 -137
-1232
Tax Revenues (2.51% CAGR)
124 128 133 137 142 147 152 157 162 168
1451
Net Deficit Effecte
Notes: Components may not sum to totals because of rounding.
aPositive numbers indicate increases in the deficit, and negative numbers indicate reductions in the deficit.
bExtrapolations for 2020-2029 calculated using CBO estimated compounded annual growth rates (CAGR).
cThe CBO pegs tax revenues to the rate of general inflation. U.S. Breakeven 20-Year Inflation rate between
normal bonds and inflationary bonds was 2.51 percent (accessed via Bloomberg, 9 April 2010).
Source: Congressional Budget Office.
The long-term budget outlook.
Washington (DC): CBO; 2009 Jun.
Hello Greece?
•
In light of the fiscal threat from growing spending, the budgetary impacts
of the Patient Protection and Affordable Care Act are central to any
discussion of its merits
•
Even with the budgetary gimmicks, if everything goes well there is only a
modest projected decline in the deficit of $124 billion in the first 10 years
and $681 billion in the second 10 years
•
If one accounts for the dubious budgetary provisions related to
unachievable cost savings, unscored budget effects, uncollectible
revenue, and already reserved premiums, the act would raise, not lower,
federal deficits by $554 billion in the first ten years and $1.4 trillion over
the succeeding 10 years
Bruce H. Hamory
Executive Vice President, Chief Medical
Officer Emeritus
Geisinger Health System
Delivery System Reform and
Bending the Cost Curve
Rich Umbdenstock
American Hospital Association
A Framework for Health Reform
• 32
million more people
with health coverage
• Shared responsibility
• Insurance reforms
• Medicaid expansions
• Tax credits
HIT Medicare/ Medicaid Incentive
programs
• Expansion of broadband
technology
• Funding for HIT infrastructure
•
•
•
•
•
Comparative effectiveness
Hospital Value-Based Purchasing (VBP)
Enhanced public reporting
Numerous provisions to reduce health
disparities
• National quality center
• $12.9 billion
prevention fund
• Increases coverage
of preventive
services
• No cost sharing for
recommended
preventive
services
• Annual Medicare
wellness visits
• Grants for workplace
wellness programs
• Creates a national
public health
council
with advisory
groups
• Pilot programs on payment bundling
• Accountable Care Organizations
• Center for Medicare and Medicaid
Innovation (CMI)
• Independent Payment Advisory Board
(IPAB)
• Administrative Simplification
Assisting with Health Reform
National Framework
for System Reform
Key Health Reform Quality
Issues
Education, Tools, Leadership Development and National Projects to
Support Implementation
National Projects
Comprehensive Unit-based Patient
Safety Program (CUSP) to reduce
Central Line Associated Blood Stream
Infections (CLABSI) and Catheter
Associated Urinary Tract Infections
(CAUTI)
CLABSI: 28 states, over 600 hospitals
and growing
Work To Be Done
• Policy Adjustments
– Readmissions
– Hospital acquired conditions
– DSH
Additional Issues
• Campaigns
– GME slots
– 340B expansions
– Medicaid hospital payments
– Liability reform
– Coverage (undocumented immigrants)
The New Health Reform Law
and Private Insurance
Scott Keefer
America’s Health Insurance Plans
Laying the Foundation
Building Up to
Successful
Implementation
Incentives for
Coverage/Insurance Market
Reforms
Addition of New Purchasing
Mechanisms and Benefit
Design Requirements
Delivery System
Changes/Payment Reform
2010 Market Reforms and Impact
Market
Reform
Access
Benefits
•
•
•
•
•
Minimum Loss Ratio
Premium Rate Review
Rescission
Internal and External Review
Children with Preexisting conditions
•
•
•
•
High Risk Pool
Dependent Coverage
Small Business Tax Credits
Internet Portal
• First Dollar Preventive Coverage
• Annual Limits (“Restricted”)
• Prohibition on Lifetime Limits
Impact on
Costs and
Premiums;
Provider
Capacity?
Reforms & Reflection through 2015
2011-2012
Federalism
2013-2014
Exchanges
2015
Stability?
• States Ramp Up
• Initial Delivery Changes
• Legislative Corrections?
• Funding (SGR/FMAP and HRP $)
• Enrollment: Lessons Learned?
• Delivery: The Role of Congress
• Benefit Balance & Grandfathering
• Measuring Access & Delivery
• Delivery: The Next Phase (e.g.,
readmissions, bundling, VBP)
• 2017 – Exchanges & Large Group
Changes in
Coverage
and Cost
Impact?
Broader Reforms and Key Challenges
Exchanges:
Flexibility and
Variation;
Impact on ESI?
Take Up and Getting
Everyone In:
Premium Credits and
Medicaid Expansion
Market Reforms &
Coverage
Requirement
Linkage:
The All Important
1st year
Delivery and System
Reforms:
Key Goals:
A Balanced
Pool and
Sustainability
The Will to Change,
Multi-Stake Holder
Support ,and Capacity
Sustainability: Driving Value in Delivery
Sustainability Requires
a Commitment Equal to
Access Improvements
(learning the lessons of
Massachusetts)
Key Improvements:
Transparency, A Strong
Multi-Stakeholder
Approach & SystemWide Focus
PPACA’s Cost
Containment: End Point
or a Foundation to
Build Upon?
Ensuring
Affordability
and Stability
=
Sustainability
Over Long
Run
Implementing Insurance Market
Reforms Under the Federal
Health Reform Law
Len M. Nichols, Ph.D.
Director, Center For Health Policy Research and Ethics
College of Health And Human Services
George Mason University
Jon Kingsdale
Executive Director
Commonwealth Health Insurance
Connector Authority
PPACA is NOT a Federal Takeover
• Takeover not 2000 pages, rather, 2
lines
• Federalism:
– Federal Goals – State Implementation
• McCarran-Ferguson
• HIPAA
• Patient Protection and Affordable Care Act
Examples of Federalism in PPACA
• Grants to states for Ombudsmen
• Reporting and regulation of MLRs
• Setting up an exchange, with federal startup funds, and flexibility in key areas
• high-risk Pools
• Annual review of premium increases
• State insurance departments and
regulation of immediate and 2014
reforms
Successful Implementation
Self-Interest
Capacity
Authority
Major Challenges
• Coordinating Medicaid and
Exchange subsidy eligibility in the
dynamic real world
• Politics of non-cooperation
Playing for Time: The Federal
high-risk Program
Deborah Chollet
Mathematica Policy Research
Why focus on high-risk individuals?
• Unlike groups, individuals who apply
for coverage now can be:
– Denied coverage
– Offered coverage that excludes care
broadly related to their condition
– Charged a much higher premium
• Even minor conditions can trigger
denial, exclusions, or a “rate up”
Where do high-risk individuals
find coverage now?
• In 35 states, a state high-risk pool
funded by premiums, assessments on
insurers, state funds
• In 5 states, the insurance market
• An insurer of last resort
• No option if not transferring from
group coverage
State high-risk pools
•
•
•
•
•
High premiums
Rarely, enrollment limits
High cost sharing
Annual/lifetime benefit limits
Waiting periods for coverage of
preexisting conditions
The Federal High-Risk Program
• Temporary, pending 2014 market
reforms
• Premiums equal to market rates
• No waiting periods, lower cost sharing
• Eligible if
– Qualifying condition, denied coverage
or offered exclusion or higher premium
– Uninsured 6 months or more
Ready, Set, Plan, Implement:
Executing the Expansion of
Medicaid
Leighton Ku
George Washington University
Medicaid Eligibility in a Typical
State: Now and 2014
Parents
Adults
without
Children
Now
2014
64% of
poverty
138% of
poverty
($14,000
family of 4)
($30,000
family of 4)
Not
Eligible
138% of
poverty
($15,000 for
one person)
Countdown for Key Changes
Now
• States must retain Medicaid & CHIP eligibility
(limited exceptions)
• States may begin expansions for adults early
Soon
• CMS & states begin planning & systems
development
Jan. 2014
• Expand eligibility for non-elderly adults
• Narrower benefit packages for newly covered
• Coordinated applications for Medicaid, CHIP &
health insurance exchanges
Big Challenges Ahead
• Will the health care system be
ready?
• How much will this cost?
• Will the states be ready?
States Opposing Health Reform
Have More to Gain
% of Medicaid-Eligible Adults Uninsured
39%
26%
Opposing States
Other States
Source: Author’s analysis of March 2009 Current Population Survey data
Notes: Opposing states include Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan,
Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Virginia and
Washington state. Estimates are for people 19 to 64 with income below 138 percent of poverty, adjusted for immigrant status.
New Roles For States In
Health Reform
Implementation
Alan Weil
National Academy for State Health Policy
Raymond Scheppach
National Governors Association
The State To-Do List
• Medicaid Eligibility Expansion
• Commercial Health Insurance
Regulation
• Insurance Exchanges
• Many Other Provisions
What States Need
•
•
•
•
•
•
Knowledge
Executive-Branch Leadership
Strategic Plan
Operational Plan
Needs Assessment
Short-Term Plan
Conditions For Success
•
•
•
•
Federal Cooperation
Stakeholder Engagement
State-to-State Learning
Vision, Leadership, Commitment
and Willingness to Take Risks
Health Reform’s Late-Term
Delivery: Struggling with
Political Birth Defects
Thomas P. Miller
American Enterprise Institute
Political Strategies
Budget Extenders
Smoke Screens
All or Nothing
Beat the
Clock
Health Reform
Stooges
Rough Road Ahead?
Raymond C. Scheppach
Executive Director
National Governors Association
Thank you!
www.HealthAffairs.org