Legislative Update

1
Legislative Update

• National Labor Office
• Labor Healthcare Forum
• July 25, 2007

2
Agenda

• Political Environment
• 2007 Legislative/Regulatory Agenda

3
Political Environment

• New Democratic Congress driving agenda
• While Iraq is overarching, healthcare high on
  agenda
• Uninsured
• SCHIP
• Medicare Advantage
• Oversight hearings ongoing
• Important tool for legislation and positioning
  for 08
• Pay as you go rules are major constraint/threat
• MA targeted as pay for

4
Political Environment

• Bipartisan support still critical
• 51 49 Senate means nothing gets done without
  bipartisan agreement
• Focus for most issues is the Senate
• Democrats shifting strategy to broaden the
  front in confronting Bush (terrorism, civil
  liberties)
• Risks and rewards
• As election gets closer less likely any
  legislation passes

5
Political Environment
Ds took control of Congress after 2006 elections
110th Congress
109th Congress
6
Political Environment

• Ds well positioned to hold Senate in 2008
• 33 Senate seats up 21 R vs. 12 D
• 6 Ds running in red states
• 4 Rs running in blue states
• Can Ds hold House in 2008?
• All 435 seats up for reelection
• 64 Rs won with 55 or less
• 52 Ds won with 55 or less

7
Agenda

• Political Environment
• 2007 Legislative/Regulatory Agenda

8
2007 Legislative/Regulatory Agenda

• Priority Issues
• Uninsured
• Market Reform
• SCHIP
• Medicare
• Health Information Technology (HIT)

• Other Issues
• Mental Health Parity
• Genetics
• Drugs
• Medicaid
• Blue Healthcare Bank
• Medicare Contractors
• Federal Charter
• HSAs
• Antitrust
• Medigap

9
Uninsured

• Uninsured returns to federal/state forefront
• Priority of new Democratic Congress
• Major 08 Presidential campaign issue
• States pursuing aggressive solutions

10
Uninsured Overview
The uninsured is rising . . .
. . . . key segments include
of total uninsured

• High income 20
• Unenrolled public 25
• program eligibles
• Those with difficulty 56
• affording coverage

Source Health Affairs
Source EBRI CPS data
11
Uninsured Other Key Segments

• Key Reasons
• No longer covered by parents policy, but not yet
  working may not value
• Small firms less likely to offer low wage cant
  afford
• Represent 86 of growth in the uninsured
  (1998-2003)
• More likely to lack access to ER coverage
  language/ cultural issues

of Uninsured
Young Adults (18-30) 34
Workers in Small 27 Firms (lt25)
Immigrants 26
Hispanics 30
12
Uninsured Key Elements of Major Proposals
13
Uninsured What Path to Reform?

• Three paths under discussion

• Government
• Expansion
• Proposal includes
• Kids coverage expansion
• Medicare buy-in for early retirees
• FEHBP buy-in
• Medicaid expansion for all low income

Individual Choice Most purchase coverage in
non-group market Employer tax advantage phased
out/individuals receive tax advantage Subsidies
for lower income
Employer Based System Most obtain coverage thru
employer Employer tax. advantage
continues Subsidies for lower income/small
employer
14
Uninsured BCBSA Favor Employer-Based System

• Employer-based system assures

Employers are drivers and incubators Have
incentives to keep workers healthy
Employers assure broad participation and cross
subsidization
Pooling
All workers receive subsidies government likely
to focus on low income/would never provide same
level
Employers are de facto regulators
Reasonable Regulation
15
Uninsured BCBSA Proposal
Individuals/Families Eligible for public programs
under current rules
Individuals/Families With incomes of
50,000/year or more
Individuals/Families Incomes under 50,000/year
Tax credits for small firms with low wage
workers Tax credits for individuals/families
whose premiums exceed 5 of income Tax credits
for the unemployed Expand SCHIP (with 100
federal funding) to cover all individuals below
poverty Federal grants to states for innovative
programs and high risk pools
Increase federal funding for state outreach Use
Medicaid/SCHIP funds to enroll individuals in
employer coverage (100 federal funding)
Conduct national education initiative on the
importance of being insured Other options would
also benefit these families, such as tax credits
for families with high premiums relative to
income and for the unemployed
Must also address affordability
16
Uninsured Likely 2007 Action

• Enactment of targeted federal proposal possible
  in 2007
• Lots of ideas debated, but comprehensive action
  unlikely this Congress
• Bipartisan support to help small employers
• SCHIP must be reauthorized
• New pay as you go budget rules a constraint

17
State Childrens Health Insurance Program (SCHIP)

• Major D priority since SCHIP expires in 2007
• Key debate How much to spend?
• President/most Rs modest (8 B)
• Ds/some Rs expansive (50 B)
• BCBSA Strategy
• Supportive overall working through coalitions
• Shape bills to
• Prioritize enrolling already eligible kids
• Make it easier to buy into employer coverage

18
Medicare Advantage

• Primary congressional target for savings
• Ds MA overpaid, CBO estimates 55B (5-yr)
  savings
• Possible offset for SCHIP, doc fix, others
• Private FFS and special needs MA options
  particularly vulnerable

Will be at risk all year
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MA BCBSA Strategy
Research
Show value to seniors/stakeholders
Lobbying
Key bipartisan Members
National Coalition
Bipartisan influential partners
Local Stakeholders
Local coalitions/grasstops/grassroots
Media
Comprehensive strategy
20
Health IT

• Bipartisan interest in health IT
• Key BCBSA concern ICD-10 October
  2012 is soonest
• Congress working on bills
• ICD-10 not in key bills (but proponents lobbying)
• Administration readying ICD-10 proposed rule
• Possible release 2007 Final rule could take
  years
• Drivers of ICD-10
• General belief Improved quality
• Device manufacturers More codes more
• Coders Business opportunities
• Hospitals ?

21
ICD-10 is More Complex Than ICD-9
Procedure Codes
Diagnosis Codes
ICD-10
ICD-9
ICD-10
ICD-9
ICD diagnosis codes are used by inpatient and
outpatient providers for billing and
reimbursement.
ICD procedure codes are used by only inpatient
providers for billing and reimbursement.
22
Diagnosis Codes for Sports Injury Caused by
Striking Against or Being Struck
24 ICD-10 Codes
Striking against or struck accidentally in
sports without subsequent fall (E917.0) Includes
kicked or stepped on during game (football)
(rugby), struck by hit or thrown ball, struck by
hockey stick or puck
1 ICD-9 Code
W21.00 Struck by hit or thrown ball, unspecified
type W21.01 Struck by football W21.02 Struck by
soccer ball W21.03 Struck by baseball W21.04
Struck by golf ball W21.05 Struck by basketball
W21.06 Struck by volleyball W21.07 Struck by
softball W21.09 Struck by other hit or thrown
ball
W21.11 Struck by baseball bat W21.12 Struck by
tennis racquet W21.13 Struck by golf club W21.19
Struck by other bat, racquet or club W21.210
Struck by ice hockey stick W21.211 Struck by
field hockey stick W21.220 Struck by ice hockey
puck W21.221 Struck by field hockey puck
W21.31 Struck by shoe cleats Stepped on by shoe
cleats W21.32 Struck by skate blades Skated over
by skate blades W21.39 Struck by other sports
foot wear W21.4 Striking against diving board
W21.81 Striking against or struck by football
helmet W21.89 Striking against or struck by
other sports equipment W21.9 Striking against or
struck by unspecified sports equipment
23
ICD-10 BCBSA Message

• 2012 is the earliest because
• Must implement next generation of HIPAA
  transactions (5010) first
• Huge impact on providers need time to automate
  offices
• Risky for Medicare before contractor
  consolidation completed (2009)

24
ICD-10 Strategy Lead Coalition
National Coalition 46 Organizations
Physician Groups
Other Providers American Chiropractic Association
American Clinical Laboratory Association American
Physical Therapy Association
Insurers Blue Cross and Blue Shield
Association Americas Health Insurance Plans
Others HEAL Coalition (institutions certifying
coders) American Association of Community Colleges
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2007 Legislative/Regulatory Agenda

• Priority Issues
• Uninsured
• Market Reform
• SCHIP
• Medicare
• Health Information Technology (HIT)

• Other Issues
• Mental Health Parity
• Genetics
• Drugs
• Medicaid
• Blue Healthcare Bank
• Medicare Contractors
• Federal Charter
• HSAs
• Antitrust
• Medigap