Health Care Reform In Michigan: Did the Supreme Court Change the Game? Peter D. Jacobson, JD, MPH Professor of Health Law and Policy University of Michigan School of Public Health Presented to Michigan Purchasers Health Alliance 27 September 2012

Overview Summary of the Affordable Care Act (ACA) Summary of the Supreme Court decision Health reform in Michigan in the aftermath of the Supreme Court’s ruling What if…Romney? Obama?

ACA: Key Concepts Designed to expand access to health care Greater federal involvement/role Focus on prevention/wellness Focus on building the evidence base Limited funding for infrastructure, but considerable workforce provisions

Summary of ACA Content Access for uninsured populations –Major expansion of Medicaid –Significant investment in Community Health Centers Health insurance exchanges Accountable Care Organizations (ACOs) Ends pre-existing condition limitations Limited cost controls –IPAB

Summary of ACA Content First dollar coverage for clinical preventive services National Prevention Strategy CMS Innovation Center Community prevention o PH workforce o PH and prevention research o Core PH functions and infrastructure–not explicit o Trust Fund

Specific Provisions of Interest to Purchasers Establishes health insurance exchanges –Minimum essential benefits –Different from HIPCs of the 1990s? Medical loss ratio changes Reductions in Medicare reimbursement rates Permits multiple benefit tiers Expands comparative effectiveness research (with limitations)

Specific Provisions of Interest to Purchasers Medical liability demonstration projects Increases reimbursement for primary care providers Increases GME training positions Increases scholarships/loans for workforce development

Prevention/Wellness Employee wellness (grants to employers) Prevention and Public Health Fund - $15b over 10 years (not earmarked for LHDs) National Preventive Health Promotion and Public Health Council (national strategy) Education/outreach (CDC media campaigns) Healthy aging

Clinical Preventive Services Coverage mandated, no cost share Medicare coverage (i.e., annual wellness visit, no cost share) Evidence based Tobacco cessation Incentive grants to states (i.e., chronic disease prevention)

Community Transformation Grants Competitive CDC grants (state, local, tribal, community-based organizations) Evidence based o Reduce chronic disease o Address disparities, strengthen evidence base o School environments o Physical/infrastructure (active living, access to safe, nutritious food) o Evaluations

Community Health Assessments Nonprofit hospitals must conduct at least once every three years Develop and implement plan to meet identified needs –Evaluate and explain why needs not being met Integration of population health and medical care

Public Health Systems Workforce recruitment/retention programs –Loan repayment –Mid-career retraining Strengthening PH Surveillance Systems (CDC) –Capacity grant program –Epi, lab, reporting Health disparities data collection

ACA Achievements Access to health insurance Innovations—demonstration projects –Bundled payments –Accountable Care Organizations Prevention/wellness Community transformation grants Health insurance exchanges Value-based insurance design

ACA Deficiencies Lack of public health infrastructure funding Inadequate cost controls (i.e., comparative effectiveness research) No regulatory system reforms Limited delivery system changes Funding not secure Quality improvements uncertain

Incremental Changes May lead to transformational change Complexity of health reform –No quick fixes –Too many interest groups –Difficult to explain to public

Incremental Changes Secular trends will drive change even if ACA repealed –Consolidation –Fragmentation –Segmentation Change will be faster if ACA implemented

Incremental Changes Integration of population health into medical care –The future of health care delivery –Represents more effective allocation of resources –Failure to integrate raises cost of disease burden Difficult to address chronic disease burden (i.e., obesity) Prevention plus cure

NFIB v. Sibelius Key issues –Jurisdiction to hear/decide the case –Individual mandate Commerce clause Necessary and proper clause Taxing authority –Medicaid expansion Coercion –Severability

NFIB v. Sebelius The decision— entire Act upheld by 5-4 –Individual mandate upheld (5-4 based on taxing authority) –By 5-4, mandate exceeded congressional commerce clause authority –By 7-2, Medicaid expansion was coercive –No severability, but by 5-4 allowed rest of Act to stand

NFIB v. Sebelius The aftermath –Shifts burden to states –Round 1 to Obama (enactment) –Round 2 to opponents (TKO on controlling narrative) –Round 3 to Obama (5-4) –Round 4—winner take all—on 6 November

Health Reform in Michigan: Governmental Actions Health insurance exchanges –No action Governor for; legislature opposed Largely policy, rather than fiscal, dispute –State won’t be ready for 2014 start date –Likely to be an informal federal/state partnership –Uncertain structure pending federal regulations –Office of Financial and Insurance Regulation will probably oversee product selection/rates

Health Reform in Michigan: Governmental Actions Medicaid expansion –Senate Fiscal Agency Memo (28 June 2012) Unlikely to lead to general fund costs Average savings of at least $200m Decision on Medicaid expansion “will be more of a policy issue than a fiscal issue. The fiscal impact would not be an impediment to compliance.” Allows expansion of mental health benefits—revenue neutral because of federal match

Health Reform in Michigan: Insurance Experiments Medicaid expansion –Essential health benefits –OFIR benefits benchmark plan (5 September 2012) Recommends selection of Priority Health HMO plan as benchmark over BCBSM Community Blue PPO because lowest cost option Recommends selection of FEDVIP pediatric vision plan Recommends selection of MIChild dental plan Federal guidance still needed on cost-sharing, geographic rating areas, age adjustors

Health Reform in Michigan: The Election What if Obama wins –ACA implementation proceeds –Federal subsidies available –Negotiations with congressional Republicans regarding modifications If Republicans control the Senate and House, allocations may be halted If Democrats retain control of Senate, some modifications possible

Health Reform in Michigan: The Election What if Romney wins –ACA implementation halted –Negotiations with congressional Republicans regarding repeal If Republicans control the Senate and House, repeal likely If Democrats retain control of Senate, no formal repeal, but no implementation/regulation

Health Reform in Michigan: The Election Ongoing issues in Michigan –Legislation permitting BCBSM transition to nonprofit mutual insurance company –Constitutional to impose 2/3 supermajority vote for taxes

Conclusion ACA likely to be implemented if Obama wins, but with continuing struggle ACA likely to be ignored if Romney wins, even if Democrats retain control of Senate Underlying secular trends will continue no matter who wins Michigan will face difficult decisions either way