Health Care

1
Health Care Insurance Legislation 2007

• Ventura County Association of Health Underwriters
• February 23, 2007

Alan Katz, RHU CAHU Vice President, Public
Affairs
2
Health Care Legislation 2007

• Health Care Reform
• Everything Else
• Today well focus on health care reform

3
What Were Up To Today

1. Why Health Care Reform
2. The Reform Proposals
3. Agents Focus
4. CAHUs Healthy Solution (Draft)
5. Taking Action
6. Conclusion / QA

4
Why Now.

• Reason is found in the key messages proclaimed by
  the four leading advocates of reform
• Governor Arnold Schwarzenegger
• Senate Republicans
• Senate President Pro Tempore Don Perata
• Assembly Speaker Fabian Nunez

5
Governors Key Messages

• Current System is Broken
• Been a problem for a long time
• Sacramento hasnt addressed it
• The Hidden Tax of the Uninsured
• Need to eliminate the tax if were gong to keep
  the states economy strong
• Everyone is responsible for the solution and
  everyone has something to gain
• The gain outweighs the pain for everyone

6
Senate Republicans Key Messages

• Current System Needs Strengthening
• Provide Californians with Access and Choice
• Make the Health Care System More Reliable
• Introduce No New Taxes
• Or fees or whatever you want to call them

7
Senator Peratas Key Messages

• Current System is Broken
• Share Responsibility No More Free Riders
• Focus is on 4.2 million uninsured in working
  families
• Employers and employees share cost
• Focus Competition on Price and Quality Not
  Underwriting
• Through current plans or MRMIB-run Connector
• Connector is optional for businesses and
  individuals

8
Speaker Nunezs Key Messages

• Current System is Broken
• Build on Existing Employer-based System
• Single Payer not politically practical
• The Insurance Marketplace Needs Reforming
• Insist on Affordability for Working Families
• Through public and private programs

9
Why This Matters Three Political Laws

• The Law of Political RealityPolitical Reality
  trumps Real Reality for all parties at all times
• The Law of Political ActivityPoliticians are
  paid to address perceptions and thats what they
  do
• The Law of Political ReportingThe media is paid
  to report on what politicians do and thats what
  they do

10
The Three Laws and the Uninsured

• Media Reports an Increase in Uninsured
• Politicians Repeat the Story Deploring the
  Increase in the Number of Uninsured
• Media Reports the Politicians Repeating the Media
  Story and Deploring the Increase in the Number of
  Uninsured

11
Comparison of Proposals

• Individuals Covered
• Governor Schwarzenegger All Californians
• Senate GOP Improves access
• Senator Perata Working families and all children
• Speaker Nunez Working Californians and all
  children. Unemployed adults by 2012
• Individual Mandate
• Governor Schwarzenegger Yes
• Senate GOP No
• Senator Perata Only for working families
• Speaker Nunez None

12
Comparison of Proposals

• Employer Mandate
• Governor Schwarzenegger Pay or Play (4)
• Senate GOP None
• Senator Perata Pay or Play (sliding percentage
  of payroll)
• Speaker Nunez Pay or Play
• Purchasing Pool
• Governor Schwarzenegger Yes
• Senate GOP No
• Senator Perata Yes
• Speaker Nunez Yes

13
Comparison of Proposals

• Guarantee Issue
• Governor Schwarzenegger Yes
• Senate GOP No
• Senator Perata Yes and community rating
• Speaker Nunez Prohibits exclusions for
  pre-existing conditions
• Cap on Administrative Costs
• Governor Schwarzenegger Yes
• Senate GOP No
• Senator Perata No
• Speaker Nunez No

14
Comparison of Proposals

• Other Insurance Market Reforms
• Governor Schwarzenegger Rates based on age and
  geographic area in individual market
• Senate GOP Conformity with Federal HSAs, permit
  limited benefit plans, permit greater flexibility
  for coverage rates in Small Group Market to
  reflect lifestyle behavior
• Senator Perata Community rating
• Speaker Nunez Requires uniform benefit designs
  inside and outside of purchasing pool

15
Comparison of Proposals

• Improve Access to Medical Services
• Governor Schwarzenegger Removes barriers to
  expansion of lower cost health models (retail
  based medical clinics)
• Senate GOP Allows hospitals to refer uninsured
  to clinics encourage RN-run clinics financial
  encouragement of clinics
• Senator Perata None
• Speaker Nunez None

16
Comparison of Proposals

• Cost Containment
• Governor Schwarzenegger Regulatory reform, pilot
  to combine workers comp with traditioal coverage,
  reward healthy behavior, data reporting, etc.
• Senate GOP Expansion of clinics, pricing
  transparency, etc
• Senator Perata Purchasing pool, evidenced-based
  practices
• Speaker Nunez Disease management, technology,
  simplify benefit designs, promote healthy
  lifestyles, etc.

17
Comparison of Proposals

• Financing
• Governor Schwarzenegger Federal Government (5.5
  billion), reallocates current state spending,
  employer contributions, employee contributions,
  fees on hospitals and phusician contributions
• Senate GOP Federal Government (2.2 billion),
  Smoking fees to fund MRMIP, reallocates current
  state spending
• Senator Perata Federal Government
  (Medicaid/Healthy Families)
• Speaker Nunez Federal Government
  (Medicaid/Health Families)

18
Agents A Need for Focus

• Lots of Hot Button issues
• Lots of interest groups focused on each element
  of the plan
• For Agents, two key questions
• If the provision becomes law will it harm our
  profession or our clients?
• Is changing the provision an absolute necessity
  for other stakeholders?
• Applying this means agents should focus on .

19
Agents Focus Issue 1

• Carrier Administrative Expense Cap
• Governor would require carriers to spend 85 of
  premium dollars on medical claims
• Result Little or no funds left for distribution
• Concern
• Limits funds available for distribution
• Likely to deter new entrants into the market
• Doesnt guarantee lower costs, just eliminates
  agents and reduces customer service levels

20
Agents Focus Issue 2

• Purchasing Pool
• Availability varies by proposal, but all require
  some insureds to purchase through a state pool
• Concern
• Un-level playing field
• Even when not required for all (Governor) the
  anti-crowd out provisions are weak

21
Agents Focus Issue 3

• Mandate to Issue
• Guarantee Issue in the individual market
• Consumers can buy coverage at any time time
• Assumption Enforcement will work
• Concern
• Failure to enforce mandate to purchase will
  result in dramatic premium increases and
  commission reductions or eliminations
• Current requirement for auto insurance is only
  75 effective

22
Whats Required Get Involved

• Join Health Underwriters Today!
• Contribute to CAHU PAC Today!
• Be a communicator
• Inform clients of whats at stake
• Respond to articles in your local paper
• Volunteer to speak in your community
• Attend town hall meetings
• Get involved in local campaigns
• Meet with legislators in their districts

23
CAHUs Healthy Solutions

• Will serve several purposes
• Moves us from opposing everything to supporting
  something
• Creates a context in which our key issues can be
  addressed
• The Cap
• The Pool
• The Mandate
• Provides a yardstick against which all proposals
  can be measured
• Still being finalized. Discussing a Draft.

24
CAHUs Key Messages

• All Californians deserve a health care system
  which
• delivers both world class care and financial
  security
• is accessible, affordable and fair
• boosts the states economy, attracts news
  businesses and strengthens existing enterprises
• is realistic about what one state can do

25
Requirements of Reform

• CAHU believes a Healthy Solution is one which
• neither bankrupts families nor busts the states
  budget.
• assures all Californians have at least basic
  health care coverage.
• provides the states diverse population with
  diverse choices.
• promotes ongoing and long-term innovation and
  experimentation to enable the states health care
  system to adapt over time to evolving needs.
• assures consumers access to meaningful
  information and expert advice and counseling.

26
The Yardstick

• Affordability
• Can the state afford the plan?
• Can the states citizens afford the plan?
• Universal Participation
• Does it assure every Californian has basic health
  care coverage?
• Cost Containment
• Does it constrain rapidly rising medical costs?

27
The Yardstick

• Consumer Choice
• Does it empower Californians to find and choose
  the health care coverage which best fits their
  unique needs?
• Evolving Needs
• Does it enable health care coverage to evolve
  with changes to the states population, their
  needs and expectations?

28
Key Provisions Access for All

• Low Income Expanded state programs and subsidies
• At launch help lowest income levels and expand
  only as state budget can support
• Encourage personal responsibility by assuring all
  households above 100 of FPL pay a portion of the
  premium
• Subsidies are targeted to average cost of basic
  coverage and are to be used in the traditional
  marketplace no purchasing pool

29
Key Provisions Access for All

• Above 400 of FPL Mandate to Buy.
• All Californians not eligible for state sponsored
  programs must purchase basic coverage
• Two versions Catastrophic and Core
• Enforcement through tax code, drivers license and
  other state-controlled privileges, and reduced
  benefits for those who delay

30
Key Provisions Access for All

• Carrier Mandate to Sell
• Once 90 of Californians are covered, carriers
  will be required to sell on a guarantee issue
  basis
• Until 90 coverage is achieved, expand MRMIP to
  be a true insurer of last resort
• Even under guarantee issue, pre-existing
  condition exclusions and rate-ups may be applied
• Length of exclusion and rate-up tied to duration
  previously uninsured

31
Key Provisions Financing

• Individuals above 100 of FPL contribute to cost,
  even in government programs
• a new health plan fee based on a carriers
  overall market share in the state
• Increase on health related sin taxes
• Tobacco
• Alcohol beverages
• Guns and Ammunition
• a new tax on hospital operating revenues and
  physician gross revenues or some other mechanism
  for capturing support from self-insured plans

32
Key Provisions Constraining Costs

• Pay for performance
• Electronic Health Records
• Electronic Rx
• Evidence based medicine
• Hospital error reduction programs

33
CAHU Healthy Solutions A Reminder

• The package frees CAHU to focus on whats
  important
• Caps
• Pools
• Mandates

34
Dealing with Reality

• Theres tremendous momentum for health care
  reform
• The drive comes from all sides and both parties
• Something is likely to happen
• 2007 Education Phase
• 2008 Action Phase

35
Ingredients for Negative Change

• Political Perception of a Need for Change
• An Overwhelming Desire to Be Perceived as Doing
  Something
• Disaster

36
Ingredients for Positive Change

• Political Perception of a Need for Change
• A Market in Need of Agents
• Opportunity

37
Keeping Things in Perspective

• Weve faced challenges like this before
• 1990-1993 AB 1672
• 1993-1994 ClintonCare
• 1996 Single Payor Initiative
• We have time to marshal our resources
• Debate is underway, but still in the education
  phase
• The battle phase is months away
• We can catch up and quickly

38
Whats Required Stay Informed

• Helpful publications
• Health Underwriter newsletters and magazines
• California Broker
• Helpful web sites
• Health Underwriters
• www.CAHU.org
• The Governors Site
• www.StayHealthyCalifornia.com
• My Blog (a shameless plug)
• www.AlanKatz.WordPress.com

39
Health Care Reform An Opportunity

• Agents have tremendous power
• Subject matter expertise
• Clients that are constituents
• Presence in every community
• If we work together
• If we stay focused
• We can make health care reforma change for the
  better for our clients and our profession

40
Health Care Insurance Legislation 2007

• Alan Katz, RHU