Health Reform Update

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Health Reform Update

• September 24, 2009
• www.unitedhealthgroup.com/reform
• Simon Stevens
• Chair, UnitedHealth Center for Health Reform
• Executive Vice President, UnitedHealth Group

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Todays Agenda

• 1. Wheres the legislative process got to, and
  whats next
• 2. The main policy proposals
• How they are inter-related
• Points of agreement, points of controversy
• Senate Finance Committee this week
• 3. Employer implications
• 4. Questions

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Legislative Actions To Date
U.S. Senate
U.S. House of Representatives

• Health Committee
• Passed Bill, Vote 13-10, July 15
• Finance Committee
• Chairmans Mark issued Sept 16 Now in Committee

• Education Labor Committee
• Passed Bill, Vote 26-22 (All Rs 3Ds), July 17
• Ways Means Committee
• Passed bill, Vote 23-18 (All Rs 3Ds), July 17
• Energy Commerce Committee
• Passed bill, Vote 31-28 (All Rs 5Ds), July 31

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Anticipated Legislative Actions This Fall
U.S. Senate
U.S. House of Reps

• Finance Committee
• Pass Finance Committee Bill
• Post-Committee Action
• Merge HELP and Finance Bills
• Consideration by Full Senate
• October 15 Reconciliation Trigger?

• Post-Committee Action
• Merge 3 Committee Bills
• Consideration by Full House

• Senate-House Conference
• Signed Into Law by the President?

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Todays Agenda

• 1. Wheres the legislative process got to, and
  whats next
• 2. The main policy proposals
• How they are inter-related
• Points of agreement, points of controversy
• Senate Finance Committee this week
• 3. Employer implications
• 4. Questions

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The interconnectedness of health (insurance)
reform
Insurance market reforms eg guaranteed issue
no pre-ex conditions adjusted community rating
PayFors to fund the subsidies savings / cost
containment new revenues / taxes
Reform that works
which requires
which requires
Targeted public funding for lower income
consumers Medicaid expansions to 100-150 of
FPL? new subsidies to 300-400
FPL ?
An effective personal responsibility coverage
requirement (individ mandate) provided
meaningful coverage is available and affordable
which requires
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Do the proposed health reforms tackle with the
cost and affordability problem?
We do not see the sort
of fundamental changes
that would be necessary to reduce the
trajectory of federal health spending by a
significant amount
CBO Director Elmendorf Testifying
to the Senate Budget Committee, July
16th 2009
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Selected key reform debates

• Broader agreement
• Individual mandate?
• New insurance rules for individual and small
  group market standardized benefits designs, end
  to pre-ex conditions exclusions, rescissions,
  move to guaranteed issues and adjusted community
  rating etc
• Medicaid expansion
• Targeted public subsidies to increase
  affordability of care
• Insurance exchanges through which individuals and
  small businesses buy coverage and subsidies are
  administered
• Other items

• Substantial disagreement
• Government insurance plan, co-ops
• Scale of public subsidies overall price tag
• Pay Fors
• Income tax increases
• Excise taxes, including on cadillac health
  plans
• Medicare Advantage cuts
• Others
• Employer mandate, ERISA, employer risk pools
• State role, incl share of new Medicaid costs
• Social issues
• Other items

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Senate Finance Committee Initial Chairmans
Mark includes

• Initial Chairmans Mark spends 774 billion net
  over 10 years, mostly to expand coverage.
• CBO has not published updated scores
  incorporating this weeks changes.
• 287bn (approx one-third) of the new spending
  goes to expanding Medicaid to 133 FPL beginning
  2014 and CHIP to 250 FPL.
• Approx. one-half of the new spending goes to
  government subsidies for the purchase of coverage
  through the newly federally-regulated individual
  and small group market, serviced by new insurance
  exchanges.
• Most individuals would be required to have health
  insurance (but with substantial exemptions).
• Employers would not be required to offer health
  insurance. Small businesses would receive tax
  credits. Large employers who do not offer
  affordable coverage would be fined if their
  low-income employees received non-Medicaid public
  subsidies for coverage bought in an insurance
  exchange.
• 6 billion of taxpayer funding to launch new
  government-sponsored health insurance coops

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CBOs assessment of changes to coverage from
Senate Finance Committee Initial Chairmans Mark

• Medicaid / CHIP -4m 10m
• Employer 7m 0m
• Non group / other -2m -4m
• Exchanges 8m 23m
• Net change 9m 29m

2016
2013
Change over 2010, compared to current law
NB these estimates do not take account of the
weakening of the individual mandate and other
changes in Tuesdays revised Chairmans Mark
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Senate Finance Committee Initial Chairmans
Mark Where the money is coming from
(of the 774bn net)
Plus further risk of 250bn cost shift to
employers premiums and costs from Medicare
provider reimbursement cuts, and new taxes on
medical devices and pharma.
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Todays Agenda

• 1. Wheres the legislative process got to, and
  whats next
• 2. The main policy proposals
• How they are inter-related
• Points of agreement, points of controversy
• Senate Finance Committee this week
• 3. Employer implications
• 4. Questions

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Some possible implications for employers

• Taxes on health benefits and indirect provider
  cost shifts impact on trend and health benefit
  cost inflation
• Employer mandate pay or play and free rider
  penalties
• House employers with payrolls over 400-750k
  must pay for at least 72.5 of single premium
  65 of family premium for federally-mandated
  essential benefits package, or pay 8 payroll
  tax.
• Senate HELP employers of gt25 workers must pay at
  least 60 of premium cost or pay 750 for each
  uninsured full time employee and 375 for each
  uninsured part time employee
• Senate Finance proposal employers of gt50
  workers that dont offer coverage and whose
  employees receive tax credits to buy insurance
  individually are fined a per person fee
  multiplied by their entire number of employees
• Federally-mandated health benefits designs, for
  individual and small group market but with some
  initial impacts on all employers and could
  extended further
• eg House allows further COBRA extensions
• eg House prohibits employers from reducing
  benefits for retirees unless same changes made to
  active employee coverage
• eg House has ERISA preemption wavers
• eg House pre-ex exclusion prohibition
• eg Senate HELP increases the HIPAA limit on
  financial incentives for wellness program
  participation from 20 to 30 of plan cost
• eg SFC allows more flexibility for Value Based
  Insurance Designs (eg UnitedHealthcare Diabetes
  Health Plans)

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Some possible implications for employers (cont/

• Tax changes for employers / employer-sponsored
  health benefits, eg
• repeal business deduction for employer 28 Part D
  drug subsidy payment
• credits for small employers sliding scale to lt25
  employees and av wages lt40k-80k
• various FSA, HSA and other changes
• cadillac tax on high value health plans
• tax-free employer provided health coverage for
  certain dependents
• Risk dynamics if individual employees opt out of
  employer pools
• Sen Wydens suggested amendments
• SFC proposal that individuals can opt out if
  employers coverage is not deemed affordable
  employees able to receive subsidies if employer
  coverage costs them more than 12 of adjusted
  income
• 2013-2015 risk adjustment between some employers
  premiums
• Mandated changes to health benefits
  administration, eg
• most employers who offer health benefits required
  to auto-enroll employees who dont actively
  choose
• employer W2 reporting of value of health benefits
• various new data and transaction standards across
  the health sector administrative
  simplification
• Temporary reinsurance programs 55-64 proposals
  vary between House and Senate.

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Todays Agenda

• 1. Wheres the legislative process got to, and
  whats next
• 2. The main policy proposals
• How they are inter-related
• Points of agreement, points of controversy
• Senate Finance Committee this week
• 3. Employer implications
• 4. Questions

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www.unitedhealthgroup.com/reform