Reform Efforts to Increase Access to Health Insurance

1
Reform Efforts to Increase Access to Health
Insurance Presentation to the Blue Ribbon Task
Force on Adult Health Care Coverage
Expansion San Mateo, California September 28,
2006 Enrique Martinez-Vidal Deputy
Director RWJFs State Coverage Initiatives
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State Coverage Initiatives (SCI )

• An Initiative of the Robert Wood Johnson
  Foundation
• Direct technical assistance to states
• State specific help, research on state policy
  makers questions
• Convening state officials
• Web site http//statecoverage.net
• Publications
• Grant funding

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Overview

• Current Health Care System
• Cost Drivers and Cost Containment
• State Reforms
• Concluding Thoughts

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Population Under Age 65 Without Health Insurance
Source National Scorecard, Commonwealth Fund
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Percent of Adults Ages 1864 Uninsured by State
Source National Scorecard, Commonwealth Fund
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Adults Ages 19-64 Who Were Uninsured and
Underinsured, By Poverty Status, 2003
Underinsured defined as insured all year, but
experienced one of the following medical
expenses equaled 10 or more of income medical
expenses equaled 5 or more of incomes if
low-income or deductibles equaled 5 or more of
income. SOURCE 2003 Commonwealth Fund Biennial
Health Insurance Survey
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International Comparison of Spending on Health,
19802004
Average spending on health per capita (US PPP)
Total expenditures on health as GDP
Source OECD Health Data 2005 and 2006
8
Problems Reported in the Past Year Because of
Cost Percent of adults ages 1964
Source The Commonwealth Fund Biennial Health
Insurance Survey (2005).
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Adults Without Insurance Are Less Likely to Be
Able to Manage Chronic ConditionsPercent of
adults ages 1964 with at least one chronic
condition
Hypertension, high blood pressure, or stroke
heart attack or heart disease diabetes asthma,
emphysema, or lung disease. Source
Commonwealth Fund Biennial Health Insurance
Survey (2005).
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Cost Drivers Cost Containment
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Cost Drivers and Cost Containment Why Do We
Care? Premiums Rise Three Times Faster than
Inflation and Wages in 2005
Estimate is statistically different from the
previous year shown at pstatistically different from the previous year
shown at preflect the cost of health insurance premiums for
a family of four. Historical estimates of
workers earnings have been updated to reflect
new industry classifications (NAICS). Data
KFF/HRET Survey of Employer-Sponsored Health
Benefits 2005.
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Percent of Median Family Income Required to Buy
Family Health Insurance
Source Calculations by Len Nichols, using KFF
and AHRQ premium data, CPS income data.
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Labor Market Realities
Occupation Family premium/Median wage Physician
7.3 History professor 15.8 Secretary
29.1 Carpenter 24.2 Cook 49.8S Source KFF
premium and BLS wage data.
14
Distribution of Health SpendingAdults Ages
18-64, 2001
Source Employee Benefit Research Institute
estimates from the 2001 Medical Expenditure Panel
Survey.
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More than 80 of Health Care Spending on Behalf
of People with Chronic Conditions
Thorpe, Kenneth E, PhD. What Accounts for the
High and Rising Costs of Health Care? Slides
presented at the State Coverage Initiatives
National Meeting, Washington, DC, February 23-24,
2006
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Long-term Drivers (1)

• Transition to Looser Managed Care
• Provider Consolidation and Pushback
• Financing System
• Third-party payers with no predetermined/defined
  limits
• Relatively low patient out-of-pocket costs
• Payment system pays more to providers to deliver
  more services
• Limited information about the effectiveness of
  tests/procedures/drugs/etc.

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Long-term Drivers (2)

• Labor Shortages Nurses/Other Practitioners
• Advances in medical technology
• Provide better outcomes
• Same outcomes but less pain or shorter recovery
• Lower unit costs (but higher utilization)
• Increased resources in medical care
• More physician specialists
• More facilities
• Direct-to-Consumer Marketing
• Associated with Strong Sales of Key Drugs
  (Lipitor, Nexium,
• Zocor, Norvasc, Prevacid)

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Long-term Drivers (3)

• Rising Prevalence of Treated Disease
• Rising Population Factors
• Changing Treatment Thresholds
• Innovation
• Lifestyle changes
• Obesity (linked to rising rates of diabetes,
  hyperlipidemia i.e., high cholesterol,
  hypertension, heart disease)
• Oversold drivers
• Population aging (debatable)
• Professional liability/medical malpractice
• Mandated benefits

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Types of Possible Remedies (1)

• Purchasing to Improve Quality/Patient Safety
• Pay for performance
• Tiered networks
• The Leapfrog Group
• Purchasing Strategies to Reduce Costs
• Pooled purchasing, rebates, etc
• Wellness Programs
• Disease Management
• Information Technology
• Evidence-Based Medicine
• Improve Efficiency (i.e., appropriate care
  settings)

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Types of Possible Remedies (2)

• Consumer-Related Strategies
• Changes to Consumer Cost Sharing
• Consumer Education (Performance Guides, Cost
  Transparency)
• Consumer-Directed Health Care
• Supply Controls
• Ration Services, CON, professional supply,
  technology diffusion
• Price Controls
• Hospital Rate Regulation (Maryland West
  Virginia)
• Public Program Payment Formulae
  (Medicaid/Medicare)
• Use Buying Power of State (Medicaid/State
  Employees)

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State Reforms
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Drivers of State Health Reform Efforts

• Increasing uninsured
• Declines in employer sponsored insurance
• Increase in public coverage offsets what would be
  larger increase in uninsured
• Health insurance is increasingly unaffordable to
  working families
• Some states beginning to emerge from fiscal
  crisis
• Lack of national consensus

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Different Strategies to Coverage

• Comprehensive approaches
• Covering children
• Making new insurance options more affordable for
  low-income working uninsured
• Safety Net Strategies

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Comprehensive Efforts
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Massachusetts Health Care Reform

• Individual mandate for those that can afford
• Employer (10) Fair Share Assessment - 295/FTE
• Employer (10) Free Rider Surcharge
• All employers must offer Section 125 (cafeteria)
  plans
• Commonwealth Health Insurance Connector
• Market reforms merging small group market and
  individual market
• Commonwealth Care Health Insurance (begins 3/07)
• Sliding scale subsidies
• Medicaid expansion
• Health Safety Net Fund

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Massachusetts - Potential Lessons

• Different segments of the uninsured require
  different solutions
• Insurance connector
• Market Changes
• Impact of merging individual and small group
  market
• Raising age of dependents up to 25
• Employer requirements such as requirement to
  set up pre-tax plans (section 125)
• Benefit designs Affordable
• Individual mandate key interest for many
  states, but difficult for most states to address
  affordability without significant funding

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Vermont Health Care Reform

• Catamount Health new affordable comprehensive
  product for uninsured
• Sliding scale premiums up
• Funding from 365/FTE employer assessment,
  cigarette tax and individual premiums (possibly
  federal matching funds)
• Premium Assistance for uninsured have access to employer sponsored insurance
• Cost containment that focuses on chronic disease
  prevention

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Vermont Potential Lessons

• Cost containment efforts that focus on chronic
  disease prevention
• Catamount Health
• Enrollment experience
• Funding sources

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Maines Dirigo and MaineCare Eligibility

Dirigo Health Affordable Premiums for Workers in
Small Firms
Dirigo Health Reduced Employee Contributions for
Workers in Small Firms
MaineCare Expansion
MaineCare
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Maine - Potential Lessons

• Financing challenge of using savings to finance
  expansion
• Challenge of building and maintaining a consensus

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Expansions for Children
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Illinois AllKids

• Previous recent expansions
• Coverage for Children expanded from 185 to 200
  FPL
• Phased in coverage for parents from 49 to 133
  FPL (waiver allows 185)
• KidCare rebate premium assistance program
• AllKids expansion (July 2006)
• All uninsured children eligible
• 45 million estimated cost to be financed through
  savings from shift to a primary care case
  management model (PCCM)
• Other States also proposing NM, OR, WA, WI

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Make Insurance More Affordable
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Efforts to Make Insurance More Affordable

• Building purchasing power
• Limited benefits
• Consumer directed health care
• Medicaid Strategies

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Building Purchasing Power
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Employer Purchasing Alliances

• Puget Sound Health Alliance
• Minnesota Smart Buy Alliance

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Minnesota Smart Buy Alliance

• Minnesota Smart Buy Alliance State of Minnesota
  joined with private employers and labor groups
  (together buy health insurance for 70 of
  Minnesota residents) to improve quality and lower
  costs by pursuing 4 key strategies
• Reward or require "best in class" certification
  to identify health care providers achieving
  certain levels of expertise, experience,
  proficiency, and results.
• Adopt and utilize uniform measures of quality
  and results and use the results in purchasing
  care
• Empower consumers with easy access to
  information.
• Encourage efficiencies and quality improvements
  by supporting development and/or requiring
  adoption of new technologies
• Source Silow-Carroll, S and T. Alteras.
  Minnesota's Smart-Buy Alliance A Coalition of
  Public and Private Purchasers Demands
  Quality and Efficiency in Health Care. The
  Commonwealth Fund, States in Action, May 2005.

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West Virginia Small Business Plan Uses State
Purchasing Power to Lower Premium

• Initiative addresses the volume needed to get
  purchasing power for small employers
• Allows carriers to access Public Employees'
  reimbursement rates ? reduce premiums by 20-25
• Eligibility Firms w/2-50 employees
• Minimum employer contribution of 50 75 of
  eligible employees must participate

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Insure Montana Purchasing Pool and Tax Credit
Program

• Insure Montana (capped)
• For small employers (2-9 employees) not providing
  insurance
• Provides coverage through new State Health
  Insurance Purchasing Pool or another qualified
  Association Plan
• No employee earns 75K per year (owner excluded)
• Pool insurance is subsidized on a sliding scale
  basis
• Relatively high deductibles and coinsurance
• Tax credits (capped)
• For small businesses that are currently offering
  health insurance
• Program is funded by a tobacco tax.

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Purchasing Pools

• Mixed results improves plan choice in small
  firms and has increased coverage, but enrollment
  has generally been low
• Have not generated significant administrative
  savings or price discounts to date
• Adverse selection problems
• States continue to express interest in this
  option

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Arizona HealthCare GroupContracting Power

• Open to small business and sole proprietors who
  have been without health insurance for 6 months
• State subsidy ended July 2005, program now funded
  by premiums
• Managed by AHCCCS, coverage provided by private
  health plans (mostly Medicaid MCOs)
• Recent enrollment growth may provide lessons for
  other states
• Current enrollment over 20,000 up from about
  10,000 in 04 (92 enrollment groups
• Need data to understand what is driving growth
  and overall program impact

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Healthy New York lowers premiums for small
businesses and uninsured workers

• 20 of people account for 80 of health spending
• State subsidizes costs for high cost enrollees
  with the goal of lowering premiums for all
• State requires all HMOs to offer product
• Some benefits excluded (MH/SA)
• Small firms w/ low-wage workers, low income
  self-employed, uninsured workers w/o access to
  employer sponsored insurance may enroll

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Healthy New York Reinsurance Subsidy
State Reinsurance Fund 90 Carrier 10
Carrier 100
Carrier 100
0
5,000
75,000

• Estimated savings of 50 for individuals
• Over 110,000 enrolled (1/06)
• Most enrollment is non-group
• State Reinsurance Fund spent 13.3 m. in 2003,
  34.5 m. in 2004, and 38 m. in 2005

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Healthy New York - Potential Lessons

• Product vs Program
• Perceived efficiency and value of program
• Getting participation requires long-term
  partnership to build trust that coverage will
  continue to be there
• Challenge mostly individuals vs. small groups
• Market oversight key feature to assure State
  Reinsurance contributions result in lower
  premiums

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Limited Benefit Products
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Value of Limited Benefit Plans is Matter of
Debate

• At least 13 states have passed limited benefit
  legislation, 2 states passed new laws in 2005
• Responds to criticism that too many mandates are
  increasing costs however, savings from
  eliminating mandated benefits not sufficient to
  increase take-up rates
• New coverage for currently uninsured or crowd-out
  those who have comprehensive health insurance?
• Opponents Illusory cost-savings - increased
  uncompensated care for providers
• Continued use of safety-net by beneficiaries
• Report by Commonwealth Fund cites increased
  health / financial risks for consumers who have
  less benefits or substantial increases in
  deductibles

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Consumer-Directed Health Care
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Consumer-Driven Health PlansA New Paradigm?

• Health care costs continue to rise
• Rate of uninsured continues to rise
• Past approaches have not worked
• Traditional health insurance (until early 80s)
• Regulated prices for government programs (until
  early 90s)
• Managed care and purchaser power (until early
  00s)
• New solution- CDHPs?
• Shift of power to cost-conscious, educated
  consumers

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Outlook for CDHP

• Research underway will provide continuing insight
• Early adopters may not be representative of
  future enrollees
• Educational tools not yet fully developed
• Potential for risk segmentation
• Impact on vulnerable populations unknown
• What about 80/20 Rule?

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Medicaid Strategies
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Medicaid Coverage for Low-income Workers

• New insurance products for small firms with
  low-wage workers
• Employers, individual and Medicaid pay premium
• New Mexico open to uninsured adults individuals may pay employer contribution
• Oklahoma covers workers and spouses work for small firms program begins with
  voucher safety-net option will be provided for
  workers with employers unwilling to participate
• Arkansas recently received waiver to offer
  limited benefit product to small firms, Medicaid
  funding will be available for low-wage workers
  (

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Potential Lessons

• Rethinking traditional Medicaid premium
  assistance model
• Rather than buying uninsured into
  employer-sponsored insurance, creating new
  products for employers to offer to low wage
  workers
• Using federal Medicaid funds to support
  non-traditional Medicaid population low wage
  workers

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Medicaids Changing Role and Impact of Deficit
Reduction Act

• Covering different population, sometimes higher
  income groups
• Increased cost-sharing
• Changing benefit designs
• Consumer responsibility
• Role in expanding coverage to uninsured

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Improving Access through the Safety Net
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Safety Net Strategies

• Interest in 3-share programs (1/3 employee 1/3
  employer 1/3 public)
• Organizing care delivered through safety net
• Wrap-around services, benefits

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Challenges of Safety Net Models

• Long-term, sustainable funding
• e.g., Three-Share Models (Muskegon, MI)
• Access vs. coverage models
• Designing a program to fill gaps in complex
  health system
• Enrollment

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Concluding Thoughts (1)

• Local stakeholders collaboration
• Agree on a plan of action
• Know local populations and issues related to them
• Ongoing relationships
• Forge public-private partnerships
• Shared employer/individual/govt responsibility
  for financing
• Collaboration among health providers to identify
  and spread best practices, improve quality and
  efficiency
• Improve patient-centered primary care
• Accelerate adoption of IT work toward patient
  access to an integrated personal health record
• Reward high quality and efficient care
• Invest in chronic care improvement, transitional
  care

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Concluding Thoughts (2)

• Progress can be made by at sub-national level
• Testing new ideas (politically and practically)
• Creating momentum for national policy solution
• Massachusetts demonstrated that compromise is
  possible
• How do we define success?
• Right size expectations for what can be achieved
  sub-nationally
• Role for ambitious goals, but also need a reality
  check
• Challenge of incremental reforms is making them
  seamless
• Adequate financing is critical