Susan Dentzer

1
Moving Forward on Health Reform

• Susan Dentzer
• Editor-in-Chief

2
How Health Care Reform Must Bend The Cost Curve

• David M. Cutler
• Harvard University

3
The Drivers of Productive Industries
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Forecast of Cost Savings
Total savings 9.0 trillion
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What It Will Take

• Administrative Implementation
• Shorten demonstration time
• Openness to new approaches
• Provider response
• Changing existing operations
• New organizational forms

8
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

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It Was Ugly Before Reform
Federal Revenues and Noninterest Spending, by
Category
Congressional Budget Offices Alternative Fiscal
Scenario
Percentage () of Gross Domestic Product (GDP)
Source Congressional Budget Office. The
long-term budget outlook. Washington (DC) CBO
2009 Jun.
10
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
Net Deficit Effecta 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.
11
Substantial Deficits More Likely

A Lot
Scenario Analysis Summary H.R. 4872,
Reconciliation Act of 2010
Billions

Alternative Scenarios 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-19
Official CBO Score 6 1 -14 -50 -48 -15 7 6 -3 -13 -124
Unachievable Savings 0 1 5 10 20 26 32 42 52 65 254
Unscored Budget Effect 8 15 17 18 18 20 23 26 29 35 275
Uncollectable Revenue 0 -1 -2 -5 1 6 14 18 22 27 78
Premiums Reserved 0 0 5 9 10 11 11 9 8 7 70
Net Deficit Effecta 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
Subsidies (3.4 CAGR) 244 252 261 270 279 288 298 308 319 330 2850
Cost Savings (10 CAGR) -10 -11 -13 -14 -15 -17 -19 -20 -22 -25 -167
Tax Revenues (2.51 CAGR)c -110 -113 -115 -118 -121 -124 -128 -131 -134 -137 -1232
Net Deficit Effecte 124 128 133 137 142 147 152 157 162 168 1451

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.
12
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

13

• Bruce H. Hamory
• Executive Vice President, Chief Medical Officer
  Emeritus
• Geisinger Health System

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Delivery System Reform and Bending the Cost
Curve Rich Umbdenstock American Hospital
Association
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A Framework for Health Reform
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• 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

• 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

• Pilot programs on payment bundling
• Accountable Care Organizations
• Center for Medicare and Medicaid
  Innovation (CMI)
• Independent Payment Advisory Board (IPAB)
• Administrative Simplification

• Comparative effectiveness
• Hospital Value-Based Purchasing (VBP)
• Enhanced public reporting
• Numerous provisions to reduce health
  disparities
• National quality center

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Assisting with Health Reform
National Framework for System Reform
Key Health Reform Quality Issues
Education, Tools, Leadership Development and
National Projects to Support Implementation
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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

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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)

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The New Health Reform Law and Private Insurance

• Scott Keefer
• Americas Health Insurance Plans

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Laying the Foundation
Building Up to Successful Implementation
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2010 Market Reforms and Impact
Impact on Costs and Premiums Provider Capacity?
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Reforms Reflection through 2015
Changes in Coverage and Cost Impact?
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Broader Reforms and Key Challenges
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Sustainability Driving Value in Delivery
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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
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• Jon Kingsdale
• Executive Director
• Commonwealth Health Insurance Connector Authority

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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

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Examples of Federalism in PPACA

• Grants to states for Ombudsmen
• Reporting and regulation of MLRs
• Setting up an exchange, with federal start-up
  funds, and flexibility in key areas
• high-risk Pools
• Annual review of premium increases
• State insurance departments and regulation of
  immediate and 2014 reforms

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Successful Implementation
Self-Interest
Authority
Capacity
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Major Challenges

• Coordinating Medicaid and Exchange subsidy
  eligibility in the dynamic real world
• Politics of non-cooperation

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Playing for Time The Federal high-risk Program

• Deborah Chollet
• Mathematica Policy Research

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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

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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

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State high-risk pools

• High premiums
• Rarely, enrollment limits
• High cost sharing
• Annual/lifetime benefit limits
• Waiting periods for coverage of preexisting
  conditions

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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

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Ready, Set, Plan, Implement Executing the
Expansion of Medicaid

• Leighton Ku
• George Washington University

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Medicaid Eligibility in a Typical State Now and
2014
Now 2014
Parents 64 of poverty (14,000 family of 4) 138 of poverty (30,000 family of 4)
Adults without Children Not Eligible 138 of poverty (15,000 for one person)
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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

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Big Challenges Ahead

• Will the health care system be ready?
• How much will this cost?
• Will the states be ready?

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States Opposing Health Reform Have More to Gain
of Medicaid-Eligible Adults Uninsured
Source Authors 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.
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New Roles For States In Health Reform
Implementation

• Alan Weil
• National Academy for State Health Policy
• Raymond Scheppach
• National Governors Association

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The State To-Do List

• Medicaid Eligibility Expansion
• Commercial Health Insurance Regulation
• Insurance Exchanges
• Many Other Provisions

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What States Need

• Knowledge
• Executive-Branch Leadership
• Strategic Plan
• Operational Plan
• Needs Assessment
• Short-Term Plan

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Conditions For Success

• Federal Cooperation
• Stakeholder Engagement
• State-to-State Learning
• Vision, Leadership, Commitment and Willingness to
  Take Risks

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Health Reforms Late-Term Delivery Struggling
with Political Birth Defects

• Thomas P. Miller
• American Enterprise Institute

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Political Strategies
Budget Extenders
Beat the Clock
Smoke Screens
All or Nothing
Health Reform Stooges
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Rough Road Ahead?
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• Raymond C. Scheppach
• Executive Director
• National Governors Association

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• Thank you!
• www.HealthAffairs.org