James G. Hodge, Jr., JD, LLM

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Assessing National Health Care Reform
Perspectives on Individual Communal Health

• James G. Hodge, Jr., JD, LLM
• Lincoln Professor of Health Law and Ethics
• Sandra Day OConnor College of Law, ASU

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Acknowledgments

• Special thanks to Ron Ordell, JD, Jalayne Arias,
  JD and others at ASUs Public Health Law and
  Policy Program, as well as Beth DeFelice, JD at
  the Ross-Blakley Library for their outstanding
  research and assistance with this presentation
• Additional thanks to Rebecca Krieger and
  colleagues at the Health Law Society for their
  help organizing this session

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Principle Objectives

• The Need for Reform
• Pillars of Health Care Reform
• Implementation Timeline
• Winners Losers
• Communal Benefits

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National Health Care Reform

• Extensive Debates Among Key Players

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Whats Right About our Health Care System
Presently?

• Over 85 of Americans are Insured
• Millions More Americans Can Get Insurance
• Insured Enjoy Ready Access and Choices of Health
  Care Providers
• Others Have Options for Care Through Existing
  Federal, State, Tribal, and Local Programs

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Whats Right About our Health Care System
Presently?

• Quality of Health Care Services for Many Insured
  is Highest Among all Industrialized Countries
• State-of-the-Art Technology and Pharmaceutical
  Drugs Are Available
• Health Care Services are not Controlled or
  Rationed Directly via Government

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Whats Wrong With Our Health Care System
Presently?

• National Costs are Increasing Exponentially
  (17.6 GDP 2009)
• 46-50 Million Americans Currently Lack Insurance
  Coverage
• Millions More Are Underinsured and At Risk
• Lack of Access Raises Costs for All
• Government/Employers Cannot Adequately Control
  Costs

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Whats Wrong With Our Health Care System
Presently?

• Quality of Care for Uninsured/Underinsured is
  Abysmal
• Billions Wasted Each Year
• Incentives for HCWs to Perform Unnecessary
  Services
• Uninsured Wait Too Long to Seek Services
• U.S. Health Outcomes Rank Below 36 Other Nations
  (WHO 2000)
• Many Americans Forced to Choose Other Essentials
  of Life Over Health

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Whats Wrong With Our Health Care System
Presently?

• No one in Congress or any government would
  intentionally design a health care system that
  performs this poorly for so few at such high
  costs. Professor Theda Scopcol, Harvard
  University, Shoen Lecture, ASU Sandra Day College
  of Law, January 2010

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Vestiges of Health Care Reforms

• 1900s State Medical Licensing
• 1910s State-based Insurance Regulation
• 1930s Tied to Hospital Organization
• 1965 Introduction of Medicare/Medicaid to Fill
  Gaps
• 1974 Use of Federal Incentives through ERISA to
  Encourage Employer-based Coverage
• 1980s Support for Managed Care to Curb Costs
• 1986 EMTALA to prevent patient
  dumping
• 1997 SCHIPS to cover more children
• 2003 Medicare Part D to cover
  seniors RX

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Pillars of Health Care Reform
Costs
Access
Quality
Coverage
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Pillars of Health Care Reform
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Health Care Flowchart
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Congressional Proposals
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Congressional Proposals
Pillar House Tri-committee Senate Fin. Committee Senate HELP Committee
Access Ins. Exchange Public Option gt Medicaid E/er coverage Ins. Exchange gt Medicaid gt Medicare E/er coverage Ins. Exchange Indiv. subsidies gt Medicaid E/er coverage
Coverage Require indiv coverage 2.5 Fine AGI Hardship excep Require indiv to have basic coverage Penalties ? Require indiv coverage 750 tax penalty Various excepts
Quality Min. services No pre-existing conditions 4 levels of cov. No pre-existing conditions Essential services No pre-existing conditions
Costs 1.5 Trillion over 10 years 1 Trillion over 20 years 615 Billion over 10 years
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National Health Care Reform Legislation

• The Patient Protection and Affordable Care Act,
  HR 3590
• Passed by House on March 21, 2010
• Signed by President Obama on March 23, 2010
• The Health Care and Education Affordability
  Reconciliation Act of 2010, HR 4872
• Passed by House on March 21, and the Senate on
  March 25, 2010
• Signed by President Obama on March 30, 2010

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National Health Care Reform Legislation

• Thursday, April 1, 2010 - President Barack Obama
  
• This legislation . . . represents enormous
  progress. It enshrines the principle that every
  American should have the security of decent care
  and that nobody should go bankrupt because
  they've got a kid who's sick with a preexisting
  condition.
• Portland, Maine

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Support/Oppose Current Reform Proposals
As of right now, do you generally support or
oppose Congressional health care proposals?
Somewhat oppose
Somewhat support
Strongly support
Strongly oppose
TOTAL
Democrat
Independent
Republican
Note Depends on which proposal (vol.)
responses for total3 and Dont know/Refused
responses for total9. Not shown for party
breaks.Source Kaiser Family Foundation Health
Tracking Poll (conducted March 10-15, 2010)
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Key Issues

• Expanding Access
• Increasing Insurance Coverage
• Improving Quality
• Controlling Health Care Costs
• Communal Benefits

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How Is Access Expanded?
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Expanding Access

• Significant expansion of Medicaid population
• Creation of state-based health insurance
  exchanges
• Incentives for primary care practitioners and
  other providers to practice in underserved areas
  (including loan forgiveness measures)
• Small business tax credits to cover employees

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How Is Insurance Coverage Increased?
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Increasing Coverage

• Discrimination based on pre-existing conditions,
  health status, gender, or income is prohibited
• Lifetime or annual limits or caps on coverage
  are abolished
• Co-pays deductibles for preventive care for
  many insured are eliminated
• Children lt 27 may remain on parents insurance
• Independent appeals process for coverage denials
• Mental health parity preserved

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How Is Quality Improved?
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Improving Quality

• Doctors to collaborate provide patient-centric
  care for seniors with chronic conditions
• Medicare reimbursements no longer FFS
• Significant investments in training HCWs
• Reporting requirements for health plans
• Improve health outcomes through coordinated care
  medical home models
• Deter hospital re-admission through programs for
  hospital discharge
• Improve patient safety, reduce medical errors,
  promote health and wellness

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How Are Costs Controlled?
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Controlling Costs

• Patient-Centered Outcomes Research Institute to
  engage in comparative effectiveness research
• DHHS and States to conduct annual reviews of new
  plans seeking large premium increases
• Providers penalized for high re-admission rates
• Reduce overpayments to private Medicare plans
• Administrative simplification standardization
• Preventive care funding obesity/chronic
  diseases

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Community Benefits
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Community Health Centers

• Federally-qualified centers provide care to 20
  million presently. In 5 years, the number is
  expected to increase by 10 million
• 11 billion to be divided among new and existing
  centers over 5 years
• Federal development of new community mental
  health centers

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Calorie Labeling

• FDA required to create a national standard for
  calorie labeling in next year
• Restaurants with 20 or more locations food
  sold in vending machines are affected
• Federal regulations to supersede state and
  local laws already in place in some areas (NYC,
  Seattle, California)

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Additional Community Benefits

• The Indian Health Care Improvement Act (IHCIA
  expired in 2000) was made permanent as part of
  the health care reform legislation
• Preventive care services tied to recommendations
  of Preventive Services Task Force appointed by
  DHHS
• Stronger incentives for at-work health programs
• Home-visiting program for pregnant teenagers
  expanded (1-2 RN visits per month can reduce
  child abuse and neglect by nearly 50)
• Nursing mothers allowed job breaks as often as
  necessary in a private place which is not a
  bathroom
• Abstinence programs for adolescents?

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Implementation Timeline
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Highlights of Year 1 (2010)

• 6 months young adults can stay on their
  parents' insurance until age 27
• Insurers barred from excluding children with
  pre-existing conditions (similar rule applying to
  adults takes effect 1/1/2014)
• Insurers cannot cancel policies to avoid paying
  claims when insureds get sick (cancellation due
  to fraud acceptable)
• Lifetime limits on benefits annual limits
  prohibited
• Businesses with lt 50 employees to receive tax
  credits covering 35 of their health care
  premiums, gt 50 by 2014
• Temporary reinsurance program to help offset
  coverage costs for companies providing early
  retiree health benefits (ages 55-64)
• 10 tax imposed on amounts paid for indoor
  tanning services

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Highlights of Year 1 (2010)

• Seniors to receive a 250 rebate to help fill
  the doughnut hole in Medicare prescription drug
  coverage (between 2,700 - 6,154). Gap to be
  fully closed by 2020
• Negotiated deals with drug companies to lead to
  discounts for Medicare recipients (lowering the
  of persons in the hole)

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Highlights of Year 2 (2011)

• Medicare to provide free annual wellness visits
  and personalized prevention plans with no co-pay
• 2.3 billion annual fee imposed on drug makers
  (gt over time)
• 50 discount on brand-name drugs for Medicare
  enrollees
• Medicare payroll tax to increase from 1.45 to
  2.35 for individuals earning gt 200K and married
  filing jointly gt 250K
• Community health centers funding to increase
• States to offer home- and community-based
  services to Medicaid disabled rather than
  institutional care
• 10 Medicare bonus to doctors practicing in
  underserved areas (inner cities and rural
  communities)

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Highlights of Year 3 (2012)

• Providers to implement uniform standards for
  electronic exchange of health information
• Contributions to flexible savings accounts
  (FSAs) limited to 2,500 per year
• Threshold for claiming itemized tax deduction
  for medical expenses rises from 7.5 of income to
  10
• Hospital insurance tax to increase 0.9 for
  individuals earning gt 200K (250K for married
  filing jointly)
• 2.3 excise tax on sale of medical devices
  begins

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Highlights of Year 4 (2013/2014)

• Insurers cannot discriminate on bases of
  pre-existing conditions for any individual or
  impose annual caps on benefit payments
• Individuals must purchase insurance (with
  various subsides provided to assist some)
• Employers (gt 50 e/ees) must provide insurance
  plans
• States health insurance exchanges to accommodate
  multiple insurers

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In 2018 - Taxing Cadillac Plans

• An excise tax will be imposed on high-cost,
  employer-provided health plans beyond 27,500 for
  family coverage and 10,200 for single coverage
• Tax will be 40 of the value of the plan above
  the threshold, indexed for inflation

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Winners Losers
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Uninsured and Underinsured

• Those who were previously denied coverage or
  could not afford insurance can get it

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Drug Companies

• Despite new federal fees, they avoided direct
  competition with the feds through
  Medicare/Medicaid and public option
• Gained millions of new customers buying more
  medications
• Biologic drug makers get 12 years patient
  exclusivity for new drugs

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Health Care Providers

• Formerly uninsured and underinsured to access
  services they could not previously afford
• Less charity or no-pay patients

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Insurance Companies

• Despite absorbing major new rules and fees for
  the provision of health insurance, they avoided
  federal public option
• Acquire millions of new customers (many of whom
  are healthy young adults)

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Losers

• Cadillac Plan Holders - plans may be phased out
• Medical Device Makers - taxes passed onto users
• Corporate Retirees - companies to cancel
  coverage
• Generic Drug Makers - must wait years to sell
  drugs
• Illegal Immigrants cannot even purchase health
  insurance through exchanges
• Wealthy significant new tax burdens

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Legislative Judicial Responses
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Legislative Response - I

• 36 States recently introduced or proposed
  legislation or State constitutional amendments to
  preempt federal mandates to purchase health
  insurance
• Virginia legislation passed to allow residents
  to opt out of federal requirement to have health
  insurance
• Utah legislation introduced and awaiting
  Governor approval to require state agencies to
  seek lawmaker approval before complying with the
  new federal health care law

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Legislative Response - II

• Louisiana legislation proposed to make it a
  misdemeanor (subject only to monetary fines) for
  a State or local official to coerce an individual
  to purchase health insurance
• Arizona Arizona Health Care Freedom Act seeks to
  amend the State constitution to prevent
  individuals or employers from being compelled to
  participate in a health care system or insurance
  plan. Voter approval needed in November, 2010

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Judicial Responses - I
14 states joined in a lawsuit filed by Florida
Attorney General Bill McCollum claiming the
Patient Protection Affordable Care Act is
unconstitutional Georgia Attorney General
Thurbert Baker is subject to impeachment for
refusing to join Arizonas legislature recently
armed Governor Jan Brewer to sue over the bill

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Judicial Responses - II
HI
WA
NH
VT
AK
MT
ME
ND
MN
OR
ID
MA
SD
WI
NY
MI
RI
WY
CT
PA
IA
NJ
NE
NV
DE
OH
IN
IL
UT
MD
CA
CO
WV
VA
DC
KS
MO
KY
NC
TN
OK
AZ
NM
AR
SC
GA
AL
MS
TX
LA
States filing suit as of 4/2/10
FL
State has filed its own suit
PR - (Puerto Rico) VI - (U.S. Virgin Islands)
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Judicial Responses - III

• Individual Mandate
• The mandate extends federal Commerce power beyond
  economic activity to economic inactivity. Never
  before has Congress used its Commerce power to
  mandate that an individual person engage in an
  economic transaction with a private company.
• Represents an unconstitutional extension of the
  power to tax.
• Tenth Amendment
• Imposes an unfunded mandate upon states
  struggling economically and illegally expands
  federal authority over states sovereign rights

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Judicial Responses - IV

• Commerce Clause
• The cumulative effect of non-participation in the
  market effects the market, allowing Congress to
  regulate
• Bill is Structured as a Tax
• Taxation is fully within Congress power as long
  as it is a genuine revenue-raising device
• State Sovereignty
• State measures attempting to nullify federal laws
  on federalism grounds unlikely

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Paying for It All

• The Act will cost around 950 billion over 10
  years but will reduce the deficit by 138 billion
  over the same time period.
• The largest deficit reduction of any bill we
  have adopted in Congress since 1993.
  Congressional Budget Office

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Paying For it All

• April 1, 2010 - President Barack Obama
• It's not going to bring down the cost of health
  care overnight. We're going to have to make some
  adjustments along the way. . . .
• Portland, Maine

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Conclusion

• Questions?
• Comments . . .
• Thoughts . . .
• Thank You!

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