Is the American

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• Is the American
• Health Care System
• Too Sick to Save?
• NAHUs Healthy Access PlanOur Vision for
  Affordable and Responsible Health Reform
• National Association of Health Underwriters
• 2000 N. 14th Street, Suite 450
• Arlington, VA 22201
• [phone]
• [phone] FAX
• www.nahu.org

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U.S. Medical Costs Are Rising Drastically
What solutions address this cost increase?
Medical Inflation Rose 112.5

• General Inflation
• Rose 28.8

Kaiser Family Foundation, Health Care Costs A
Primer, August 2007 OECD Stats, 2007
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Medical Costs Are Rising Drastically

• How can we constrain medical costs?
• How will we get access for all?
• How about financing access?

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Constraining Medical Costs
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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
1/3 Taxes
Administration 14
Claims Cost 86
Centers for Medicare Medicaid Services, 2004
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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
Administration 14
Other Claims Cost 70.9
Behavior 15
Aon Consulting, Research Brief The Impact of
Consumer-Directed Health Plans with Integrated
Health Improvement Services on Health Care
Consumers, October 2006
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Constraining Medical Costs
Determinants of Health Status
Access to Care 10
Genetics 20
Lifestyle Choices 50
Environment 20

• Mercer Management Journal 18, The Case for
  Consumerism in Health Care

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Constraining Medical Costs
Behavior Lifestyle The Cost of Smoking
75 B. Direct Medical Costs
92 B. Lost Productivity
88.8 B. Product Taxes Revenue

• Centers For Disease Control Prevention, Tobacco
  Use Fact Sheet (July 2007)

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Constraining Medical Costs
Behavior Lifestyle Weight Gain 86-06
No Country Can Fund All the Consequences Hyperten
sion Type 2 Diabetes Osteoarthritis Stroke
Coronary Heart Gallbladder Sleep
Apnea Respiratory Issues Some Cancers
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Obesity Trends Among U.S. Adults (BMIgt30)
No Data lt10 1014
1519 2024 2529
30

• Centers for Disease Control Prevention, 2006
  Behavioral Risk Factors Surveillance System

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Constraining Medical Costs
Behavior and Lifestyle Solutions

• Incorporate wellness and disease-management into
  all government employee programs
• Federal employees
• State employees
• Medicaid
• Medicare
• SCHIP
• Veteran Health System
• Encourage employer wellness programs
• Legal protection
• Tax incentives
• Premium incentives

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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
Administration 14
Other Claims Cost 67.6
Behavior 15
Inefficiencies 3.3
National Institute of Medicine, Report on Medical
Errors, November 1999
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Constraining Medical Costs
System Inefficiencies Solutions

• Improve system inefficiencies in doctor and
  medical facilities
• Pay for performance
• Best practice guidelines
• Evidence-based medicine
• Federal standards for interoperable electronic
  medical records
• Unify the system
• Reduce errors
• Improve patient satisfaction of the entire system

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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
Administration 14
Other Claims Cost 62.6
Behavior 15
Inefficiencies 3.3
Malpractice 5
Towers Perrin, U.S. Tort Costs 2005 Update,
March 2006 PricewaterhouseCoopers, The Factors
Fueling Rising Healthcare Costs 2006, February
2006
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Constraining Medical Costs
Medical Malpractice Solutions

• Malpractice reform limits
• Limit non-economic damages
• Increase effectiveness of disciplining
  incompetent doctors

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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
Administration 14
Other Claims Cost 45.1
Behavior 15
Inefficiencies 3.3
Government Cost Shift 9.5
Malpractice 5
Uninsured Cost Shift 8

• Margaretann Cross, Confronting the
• Medicare Cost Shift, Managed Care, Dec. 2006
• 2003 Health Affairs, Kaiser Commission Report on
  Medicaid the Uninsured

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Constraining Medical Costs
Government Cost-Shifting to Hospitals
Average 33 Less
Managed Care Magazine, December 2006 Confronting
The Medicare Cost Shift
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Constraining Medical Costs
Government Cost-Shifting to Hospitals
Breakeven
Premera Blue Cross, May 2006 Payment Level
Comparison Between Public Programs and Commercial
Health Plans for Washington State Hospitals and
Physicians
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Constraining Medical Costs
Who Is Supporting the Health Care System?
5,477 Per Person
12,913 Per Person
1,739 Per Person
2006 Chapterhouse, LLC Census Bureau, Current
Population Survey, CMS, Kaiser Family
Foundation, EBRI, U.S. GAO, CBO
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Constraining Medical Costs
Cost-Shifting Solutions

• Require Medicare, Medicaid SCHIP to reimburse
  doctors and hospitals at same level as the
  Federal Employees Health Benefit Plan.
• Provide incentives for states to streamline the
  application process for government programs.

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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
Administration 14
Other Claims Cost 45.1
Behavior 15
Inefficiencies 3.3
Government Cost-Shift 9.5
Malpractice 5
Uninsured Cost-Shift 8
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Constraining Medical Costs
Decreasing Utilization Solutions

• Expand consumerism
• Health Savings Accounts (HSAs)
• Health Reimbursement Arrangements (HRAs)
• Flexible Savings Accounts (FSAs)
• Increase health care cost transparency

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Constraining Medical Costs
How Much Can Private Insurance Costs Be Affected?
Administration 14
Other Claims Cost 45.1
Behavior 15
Inefficiencies 3.3
Government Cost Shift 9.5
Malpractice 5
Uninsured Cost Shift 8
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Access for All
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Access For All
Most Uninsured Not A Crisis
46 Million Considered Uninsured
Eligible for Government Program (but not signed
up)

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80
50,000 Annual Income

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Temporarily Uninsured
14


Long-Term Uninsured
20

• February 2005 Blue Cross Blue Shield Association
  analysis of Census Bureaus Income, Poverty and
  Insurance Coverage report

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Access For All
Most States Have Guaranteed Access to Individual
Coverage
Other
Guaranteed-Issue Market
Insurer of Last Resort
High-Risk Pool
No Mechanism
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Access for All
Recommendations for Guaranteed Access to Health
Insurance in Every State

• In a number of states there are individuals with
  serious medical conditions and no access to
  employer-sponsored health insurance they cannot
  buy health insurance at any price. Most states
  (but not all) have at least one guaranteed
  option, with the most common being a high-risk
  health insurance pool. The federal government
  should require that all states have at least one
  private guaranteed purchasing option for all
  individual health insurance market consumers.
• The federal government should provide seed grants
  to states creating high-risk pools and states
  that provide risk-pool premium subsidies to
  low-income citizens and older beneficiaries to
  help ensure continued coverage for early
  retirees.

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Important to Understand Claims Utilization
Access for All
Total Claims Incurred
Insured Population
Under the plans currently being offered by most
employers, the majority of employees are not
filing claims or using their benefits. However,
we are paying premiums as if they do.
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Access for All
Reinsurance

• Making it easier and more affordable for carriers
  to reinsure expenses related to extraordinary
  claims could prove to be an effective way of
  lowering premiums.
• In considering reinsurance as part of an overall
  reform package, Congress should conduct a study
  to thoroughly analyze the efficacy of reinsurance
  programs.

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Access for All
Smart State Reforms Make a Difference
Varying regulatory climates can have a profound
impact on insurance affordability. Consider the
differences in individual rates for two
30-year-old males living in a Philadelphia suburb
located across the bridge from each other in
different states.
September 2007 Lowest and Highest Rates for PPO
Indemnity Plans 1000 Deductible 80/20
Coinsurance In Neighboring Philadelphia Suburbs
NJ
PA
599 - 6,009 Haddonfield, NJ 08033
70 - 260 Wayne, PA 19087
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Access for All
Affordable Access Grants to States

• In some states, over-regulation of the health
  insurance market has decreased competition and
  increased premium costs.
• NAHU believes states should be encouraged to
  create regulatory climates that ensure the
  availability of many affordable coverage options,
  as well as offer premium subsidies to targeted
  populations.
• The federal government should make block grants
  available to states to encourage and reward state
  health insurance innovations that utilize the
  strengths of the existing private health
  insurance marketplace like
• Broadly funded high-risk pools
• Allowing for the assessment of insurable risk in
  the individual and small-group health insurance
  markets
• Statewide medical liability reforms
• Limits on state mandated benefit requirements
• Low-income subsidies and tax incentives for the
  purchase of private coverage
• Premium assistance in Medicaid and SCHIP

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Access for All
Tax Equity

• The vast majority of privately insured Americans
  are happy with their employer-sponsored coverage.
  The preservation of the federal employer tax
  deduction and employee exclusion is critical.
• But the employer-sponsored health insurance
  system does not work for everyone.
• We should provide the same tax deductions to
  individuals and the self-employed that
  corporations have for providing health insurance
  coverage for their employees.
• Remove the 7.5 of adjusted gross limit of
  medical expenses on tax filers itemized
  deduction Schedule A form
• Allow the deduction of individual insurance
  premiums as a medical expense
• Equalize the self-employed health insurance
  deduction to the level corporations deduct
• Clarify federal requirements regarding individual
  policies sold on a list-bill basis regarding the
  establishment of Section 125 plans, HIPAA group
  insurance protections, and the applicability of
  state-based individual health insurance laws and
  regulations.

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Access For All
Public/Private Producer Community Education
Partnership

• All health insurance consumers, both private and
  public, should have access to quality information
  and assistance regarding their health care
  coverage.
• NAHU will assume responsibility for training
  insurance agents in all coverage options, both
  public and private, through the creation of a
  designation programthe Certified Health Care
  Access Advisor.

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Financing Access
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Financing Access

• Raise public funds to prevent cost-shifting to
  private sector.
• Raise them from activities that drive up health
  costs
• Cigarettes and tobacco products
• Alcohol
• Unhealthy food
• Handguns and ammunition

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Solutions Exist to Fix Health Care

• Work to constrain medical costs
• Continue increasing access to coverage
• Decide how access will be financed

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NAHU

• Our Current Health Care System
• Is Not Dead.
• Healthy Access Can Fix It!