Healthcare Presentation

Health Care Reform: Opportunities and Challenges

in Virginia

April 16, 2010

Aspirations for the Session

✤ Provide a foundation upon which to consider the implications of health care reform legislation

✤ Explore the Patient Protection and Affordable Care Act (ACA)

✤ Discuss the upcoming opportunities and challenges for health care reform in Virginia

2

Agenda

3

Overview of Session and Basic Health Care Information

Jane N. Kusiak, Executive Director, Council on Virginia’s Future

Patient Protection and Affordable Care Act: What’s in the Bill?

John McInerney, Policy Director, The Commonwealth Institute for Fiscal Analysis

The Politics of Health Care Reform Michael Cassidy, Executive Director, The Commonwealth Institute for Fiscal Analysis

The Economics of Health Care Reform

Dr. Louis Rossiter, Research Professor, The Thomas Jefferson Program in Public Policy, College of William & Mary

Opportunities for Health Care Leadership in Virginia

Jane N. Kusiak

Summary and Discussion Jane N. Kusiak and Panel

Health Status In Virginia

4

Jane N. Kusiak,Executive Director

Health Status in Virginia

Health & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyState RankingState RankingState RankingState RankingState Ranking

Indicator Progress Trend 1-10 11-20 21-30 31-40 41-50

Cancer Deaths ]

Cardiovascular Disease ]

Health Insurance a

Immunization ]

Infant Mortality ]

Obesity a

Smoking ]

Suicide a

Teen Pregnancy ]

5

Source: Virginia Performs (VaPerforms.virginia.gov)

Regional Health Trends

Health & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & FamilyHealth & Family

Indicator Central Eastern Hampton Roads Northern Southside Southwest Valley West

Central

Cancer ] ] ] ] ] [ [ ]

Cardiovascular Disease ] ] ] ] ] ] ] ]

Infant Mortality ] a ] a [ [ [ a

Obesity a a [ a a a a a

Suicide [ ] [ ] [ [ a [

Teen Pregnancy ] ] ] ] ] [ ] ]

6

Source: Virginia Performs (VaPerforms.virginia.gov); Estimates of current performance trends provided by the Weldon Cooper Center at U.Va.

Infant Mortality by Race/Ethnicity and Level of Education, 2005-2007

Non-Hispanic Non-Hispanic

Source: Virginia Department of Health, Office of the Commissioner

7

0

5

10

15

20

White Black Hispanic Other/NR

Less than 12 years12 yearsGreater than 12 years

Infa

nt D

eath

s p

er 1

,000

Liv

e B

irth

s

Virginia Smoking Rate by Income Level

Source: Virginia Performs (VaPerforms.virginia.gov); based on data from the Centers for Disease Control and Prevention (CDC), Behavioral Risk Factor Surveillance System

8

10%

16%

22%

28%

34%

40%

2003 2004 2005 2006 2007 2008

Less than $15,000$15,000 – $24,999$25,000 – $34,999$35,000 – $49,999$50,000+

Cardiovascular Death Rates

Source: Virginia Performs (VaPerforms.virginia.gov); based on Virginia Center for Health Statistics; City County Profiles (www.vdh.state.va.us/healthstats/stats.asp)

9

10

Health Insurance

Non-Elderly Uninsured by State

11

0%

5%

10%

15%

20%

25%

30%M

assa

chus

etts

Haw

aii

Min

neso

taW

isco

nsin

Iow

aC

onne

ctic

utP

enns

ylva

nia

Mai

neN

ew H

amp

shire

Verm

ont

Nor

th D

akot

aD

elaw

are

Rho

de

Isla

ndM

ichi

gan

Ohi

oW

ashi

ngto

nS

outh

Dak

ota

Ind

iana

Ala

bam

aU

tah

Kan

sas

Neb

rask

aM

isso

uri

Mar

ylan

dIll

inoi

sV

irgin

iaN

ew Y

ork

Wyo

min

gId

aho

Ken

tuck

yN

ew J

erse

yTe

nnes

see

Wes

t V

irgin

iaU

nite

d S

tate

sC

olor

ado

Nor

th C

arol

ina

Okl

ahom

aM

onta

naS

outh

Car

olin

aO

rego

nA

rkan

sas

Geo

rgia

Nev

ada

Cal

iforn

iaM

issi

ssip

pi

Ala

ska

Ariz

ona

Loui

sian

aFl

orid

aN

ew M

exic

oTe

xas

VirginiaUnited States

Source: The Henry J. Kaiser Family Foundation; stathealthfacts.org; http://www.statehealthfacts.org/comparetable.jsp?ind=139&cat=3

States, 2007-2008; United States, 2008

Health Insurance Status of Non-Elderly Virginians, 2008

Source: Profile of Virginia’s Uninsured and Trends in Health Insurance Coverage, 2000-2008, The Urban Institute, January 2010

12

67.7% 4.8%

4.8%

7.3%

1.6%13.8%UninsuredMedicareMedicaid and CHIPTRICAREPrivate NongroupEmployer

Uninsured Virginians by Age Cohort

13

Share of Total Non-Elderly Uninsured by Age Group, 2007-2008

Rate of Uninsured in Each Age Group, 2007-2008

9.2%

31.1%

25.7%

16.2%

17.8%

Under 19 19-2425-34 35-5455-64

0%

6%

12%

18%

24%

30%

Under 19 19-24 25-34 35-54 55-64

10.6%

13.9%

25.3%27.5%

9.3%


Non-Elderly Uninsured Virginians by Race / Ethnicity

14

(Non-Hispanic)

8.9%

19.7%

21.3%

50.1%

White (Non-Hispanic)Black (Non-Hispanic)HispanicOther

Share of Total Non-Elderly Uninsured by Race/Ethnicity, 2007-2008

0%

10%

20%

30%

40%

50%

17.8%

41.7%

16.2%11.5%

White Black Hispanic Other(Non-Hispanic)

Rate of Uninsured by Race/Ethnicity, 2007-2008


15

Non-Elderly Uninsured Virginians by Employment Status / Firm Size

6.2%

10.4%

16.2%

19.3%

27.7%

20.2%

Non-working 500+10-99 Less than 10Self-employed 100-499

Share of Total Non-Elderly Uninsured by Employment Status/Firm Size, 2007-2008

0%

10%

20%

30%

40%

Non-working

Self-employed

Less than 1010-99

100-499500+

7.6%9.7%

21.5%

34.3%35.3%

30.9%

Percent Uninsured by Employment Status/Firm Size, 2007-2008


16

Non-Elderly Uninsured Virginians by Family Poverty Level

22.4%

15.6%

26.8%

35.2%

At or Below Poverty Level101-200% FPL201%-300% FPLAbove 300% FPL

Share of Total Non-Elderly Uninsured by Family Poverty Level (FPL), 2007-2008

0%

10%

20%

30%

40%

6.2%

15.0%

26.3%

38.0%

At or BelowPoverty 301%+101-200%

of FPL201-300%

of FPL

Percent Uninsured by Family Poverty Level, 2007-2008


The Patient Protection and Affordable Care Act (ACA):

What’s in the Bill?

17

John McInerney,Policy Director

Health Reform in Brief (VERY BRIEF)

✤ Covers 32 million additional Americans by 2019

✤ Expands Medicaid and creates new health insurance marketplace for those without insurance through their jobs

✤ Authorizes cost control measures to slow growth of health care spending

18

What to Expect from ACA in 2010

✤ Young adults will be able to stay on parents’ plan until 26

✤ No pre-existing condition exclusions for children’s health insurance

✤ Drug costs for seniors will decrease through rebates and other measures

✤ Provides small business tax credits

19

What to Expect from ACA in 2010

✤ Removing lifetime caps

✤ Ending of “rescissions”

✤ Providing access to high-risk pool coverage for adults with pre-existing conditions

✤ Small business reinsurance program for those insuring 55-64 year olds

20

Other Insurance Market Reforms

Then What? ...Reforms in 2014

✤ Creation of Health Insurance Exchange marketplace

✤ Individual mandate; subsidies to help middle and lower income Americans afford insurance

✤ New tax credits for small businesses

21

✤ Expansion of Medicaid program

✤ An end to pre-existing condition discrimination

Cost-Control and the ACA

“...Pretty much every proposed (cost containment) innovation found in the health policy literature these days is encapsulated in these measures.”

- John Iglehart, founding editor of Health Affairs

22

Specific Cost-Containment Strategies

✤ Collecting excise tax on high-cost health plans

✤ Demonstration programs to remove waste, improve quality and efficiency

✤ Measures to improve coordination and delivery of care

23

Implementation is Next

✤ Passage of national health care reform was difficult and unprecedented...

✤ Putting reforms in place will require more heavy lifting

24

The Politics of Health Care Reform

25

Michael Cassidy,Executive Director

Health Care Reform: A Circular Problem?

26

!"#$%&$'&()"$

)()"#*&+#$

!"#$#%"&%#'(#)*)+#%,)-,%

!'$%#.+/*)/-%"/%.0"1)*+0#%

!2/3$%*"%+/"'-,%

42)#+%0+1+/'+#%

5'6,%

7628+%(269%.0"-02:%

7'(#)*)+#%)/2*+;'2$+%

</*)1)*'28%:2/*2$+%

=1+0>("*>%)#/3$%6"1+0+*%?""0%/++*%#'(#)*)+#%%

How Was the Cycle Broken?

✤ Muted opposition

✤ Support from the health care industry

✤ Grassroots emerge

27

“There Has to Be a Better Way”

In 1994, Harry and Louise were very concerned about the Clinton health reform plan.

28

...15 Years Later

✤ By 2009, Harry and Louise (Association of Health Insurance Plans) became supporters of early versions of health reform!

✤ They didn’t like the final version, but no new ads were made.

29

Strange Bedfellows

✤ In 2009, these groups came together to propose cost-cutting strategies for health reform.

✤ AMA, PhRMA, AHA, and SEIU endorsed the final health reform legislation.

30

Grassroots Organizations

✤ In 1993-94, the grassroots were no match for industry and provider groups

✤ By 2009, activists were ready to support and push for health care reform...

31

Powerful Advocates for Reform

32

Groups May Now Look Out for Their Own Interests

33

34

The Economics of Reform

Dr. Louis Rossiter, Research Professor,

The Thomas Jefferson Program in Public Policy,

College of William & Mary

President Obama

“... in the end, coverage without cost containment will shift our burdens, not relieve them. So we will take steps to remove the waste and inefficiency from the system so we can bring down costs and improve the quality of our care while we are at it.”

35

✤ 32 million of the 46.3 million uninsured Americans

✤ The nation, because the number with insurance increases from 255 million to 287 million

✤ States with above average uninsured

36

Economically - Who’s Helped, Who’s Hurt?

✤ Medicare beneficiaries (who have opted out of traditional Medicare) in Medicare Advantage private plans

✤ Taxpayers with income over $250,000 (couple) and $200,000 (individual)

✤ Providers currently receiving subsidies for serving the uninsured could see patients go elsewhere

✤ Families and individuals with high-premium health plans subject to the new excise tax

✤ States who will have to fund a portion of expanded Medicaid and CHIP after four years

Helped Hurt

Impact of Reform on Spending?

MORE

37

Biggest Economic Changes Will Be for the Young Immortals

38

No Health Insurance Is Highest Among

Young Immortals 2005

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

18-24 25-34 35-44 45-54 55-64

Age in Years

Pe

rce

nt

The Cost Shifting for Hospitals and Physicians Will All But Disappear

39

21.5%

7.4% 7.5%

2.8%

15.1%

10.0%

31.6%

14.0%

16.5%

2.8%

12.9%

5.9%

21.2%

30.7%

0%

10%

20%

30%

40%1998 2008

Hospital Care

Physician/ Clinical

Services

Prescription Drugs

Nursing Home Care

Home Health Care

Other Personal

Health Care

Other Health Spending

Notes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.

Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2008; file nhe2008.zip).

These Old Medicaid Categories Will Be Replaced By 133% of Federal Poverty Line

40

200%185%

41%

0%

68%74%

Children Pregnant

Women

Elderly and

Individuals

with

Disabilities

Working

Parents

Non-

Working

Parents

Childless

Adults

Note: Medicaid income eligibility for most elderly and individuals with disabilities is based on the income threshold of Supplemental Security Income (SSI).

SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for KCMU, 2009.

Federal Poverty Line

(For a family of four is

$21,200 per year in 2008)

Medicaid Eligibility for Working Parents by Income, January 2009

41

*The Federal Poverty Line (FPL) for a family of three in 2008 is $17,600 per year. SOURCE: Kaiser Commission on Medicaid and the Uninsured, Where are States Today: Medicaid and State-

Funded Coverage Eligibility Levels for Low-Income Adults. October 2009.

AZ AR

MS

LA

WA

MN

ND

WY

ID

UT CO

OR

NV

CA

MT

IA

WI MI

NE

SD

ME

MO KS

OH IN

NY

IL

KY

TN

NC

NH

MA

VT

PA

VA

WV

CT

NJ

DE

MD

RI

HI

DC

AK

SC

NM

OK

GA

TX

IL

FL

AL

50- 99% FPL (20 states)

20-49% FPL (14 states)

> 100% FPL (17 states including DC) US Median Eligibility = 68% FPL: $11,968 per year

Medicaid Today

42

Health Insurance

Coverage

29.5 million children & 15 million adults in low-income

families; 14 million elderly and persons with disabilities

State Capacity for Health

Coverage

Federal share ranges 50% to 76%; 44% of all federal funds to states

MEDICAID

Support for Health Care

System and Safety-net

16% of national health spending; 40% of long-term care services

Assistance to

Medicare Beneficiaries

8.8 million aged and disabled — 19% of Medicare

beneficiaries

Long-Term Care

Assistance

1 million nursing home residents; 2.8 million

community-based residents

Source: Kaiser Commission on Medicaid and the Uninsured, 2009

43

OUTLAYSOUTLAYS

Health Insurance Exchanges $358Reinsurance and Risk Adjustment Payments 106Coverage Medicaid/CHIP 434Medicare Payment Cuts -455Other Changes to Direct Spending -40

REVENUESREVENUES

Small-Employer Tax Credit -$37Penalty Payments from Employers and Uninsured 65Excise Tax on High-Premium Plans 32Additional Hospital Insurance Tax 210Other Changes Revenue Provisions 149

Estimated Federal Outlays & Revenues

($billions)

In Summary: Economics of Reform

✤ Small Business Response to Incentives

✤ Hospital and Physician Response to Virtual Elimination of Uninsured

✤ Excess Demand for Primary Care Providers

✤ Affording Expansion of Medicaid

✤ Virginia’s Response in Its Own Tax Code

44

Changed

Incentives in

Insurance and Medical

Markets

Opportunities for Leadership In Virginia

45

Jane N. Kusiak

Opportunities for Leadership in Virginia

✤ High-Risk Pool in 2010

✤ Insurance Exchange State Plan Approval by January 2013 with Implementation by 2014

✤ Medicaid Expansion by 2014

‣ Outreach / Enrollment / Delivery

✤ Health Workforce Alignment

✤ Continuing Wrap-Around Support for High-Risk Populations

46

Summary and Discussion

47

Projected Health Insurance Status in Virginia

48

Source: 2008 (Now) data from Profile of Virginia’s Uninsured and Trends in Health Insurance Coverage, 2000-2008, The Urban Institute, January 2010. Non-elderly insured through Medicare not included. Estimates for 2019 are based on estimates for the nation made by the Congressional Budget Office.

Now 2019

0%

20%

40%

60%

80%

100%

Employer InsuredMedicaid/CHIPPrivate NongroupExchangeUnisured

73.6% 72.2%

14.1%5.7%7.7%5.4%4.9%

7.4% 8.9%

0!

200!

400!

600!

800!

1,000!

1,200!

49

ACA National Projections, 2010 - 2019(in Billions)

Medicaid and

CHIP Coverage:

$434

Reinsurance & Risk Adjustment:

$106

Health Insurance

Exchanges: $358

Small-Employer

Tax Credit: $37

Medicare Payment Cuts and

Other Savings:

$455

Medicare Payroll

Tax: $210

Other: $30

Voluntary Long-Term Care

Program: $70

Employer & Individual Penalty:

$65

Excise Tax on High-Cost

Plans: $32

Other: $169

Insurer / Provider Fees:

$107

Uses Sources$965 $1,108

Source: Congressional Budget Office, March 2010.

Contact Information

50

Michael Cassidy [email protected]

Jane Kusiak [email protected]

John McInerney [email protected]

Lou Rossiter [email protected]

Documents

Healthcare Presentation