Health Care Reform: We’re Still Waiting for It Walter Tsou, MD, MPH PNHP California Los Angeles, CA July 17, 2010

Outline of Talk  A Brief Health Policy 101  Health Care Reform  Lessons for America

“Iron Triangle of Health Policy” Access to Care Cost ContainmentQuality of Care

Looking at Costs

Health Care Costs at $2.6 Tr in 2010 and almost doubles in 9 years. Total for Decade? $34 Trillion!! Source: Projected from Health Spending Projections, Health Affairs, March

US spends far more than other countries on health care per capita OECD, Health Expenditures per capita, 1998

Looking at Quality

2009 National Healthcare Quality Report  “We find that health care quality in America is suboptimal” Agency for Healthcare Quality and Research, March 2010

Looking at Access

46.3 Million Uninsured Source: US Census, 2009

Rex Morgan, MD on Personal Bankruptcy

45,000 Adult Deaths Annually Due to Lack of health insurance NY Times, Sept. 18, 2009

Health Care Reform: Which Direction?

No domestic issue is more divided than health care

Major Stakes for Both Parties  Democrats –Signature Issue for Obama  Republicans –Plan is too big –Government takeover –It will influence the midterm election and maybe the presidency

Government or the “free market”?  Government is the answer  Private insurance cannot be trusted  Government is the problem  Private insurance “works” for 160 million Americans

Choosing a pathway for reform?  Government –Expand Medicare for everyone  Private –Require everyone to buy private insurance –Insurers must be regulated

The greatest lobbying effort in history June 29, 2009

$1.2 Billion Spent on Health Care Lobbying! Center for Public Integrity, March 26, 2010

Health Care Reform: Which Direction?

What are the key elements of reform?  You will keep your insurance, whether you like it or not  You will be required to have private health insurance or pay a fine  There will be subsidies for the poor.  There will be a state insurance exchange which will be open to small businesses, self employed, and those not offered employer sponsored insurance starting in 2014  Changes to Medicare  CLASS act - voluntary purchase long term care insurance?  New regulations on insurers  Immigrants are restricted or banned

You will be required to buy private health insurance or pay a fine  Bronze (60% of the cost of care)  Silver (70% of the cost of care)  Gold (80% of the cost of care)  Platinum (90% of the cost of care)  The better the plan, the more it costs  We don’t know the price (several thousand)

How much is the fine?  The greater of: – $95 or 1% of income – $350 or 2% of income – $650 or 2.5% of income ($2,085 max)

“I am poor, how can I afford this?”  Medicaid up to 133% of poverty paid by the federal govt up to 2017  Sliding scale cost sharing of % from 133% - 400% of poverty  $5 billion put in state run high risk pools for those with preexisting conditions

This is too confusing, who can help me?  Pick employer plan for those employed  Self employed, small businesses, uninsured can go to a state insurance exchange beginning in 2014  Very poor get on Medicaid

Mass Connector, family of three, cheapest plan

Marketwatch, Feb 19, 2010 Enormous Price Increases

LA Times, April 13, 2010

New insurance regulations  No exclusions for preexisting conditions  No medical underwriting  No recissions  No lifetime caps on claims  Children can stay on plan until age 26  Must pay 80% of income toward claims if small plan, 85% if large plan  Insurers disclose payment policies, ratings

Some Republican ideas  Purchase of private insurance  Health Savings Accounts sold in exchanges  State demonstrations on malpractice reform  Restrictions on abortion

How to pay for it?  Employer sponsored insurance  Tax “Cadillac” insurance plans after 2018?  Medicare income tax increased to 2.35% –> $200K have to pay on investment income also (3.8%)  Employers > 50 workers fined if workers get insurance through the insurance exchange  Fees on drug and insurance industry  Cuts to Medicare and Medicare Advantage  Independent Payment Advisory Board

33 10 M (4%) Nongroup Source of Insurance Coverage Pre-Reform and Under Affordable Care Act, 2019 * Employees whose employers provide coverage through the exchange are shown as covered by their employers (5 million), thus about 29 million people would be enrolled through plans in the exchange. Note: ESI is Employer-Sponsored Insurance. Source: S. R. Collins, K. Davis, J. L. Nicholson, S. D. Rustgi, and R. Nuzum, The Health Insurance Provisions of the Affordable Care Act: Implications for Coverage, Affordability, and Costs, The Commonwealth Fund, (forthcoming). Among 282 million people under age 65 Pre-Reform 162 M (57%) ESI 35 M (12%) Medicaid 54 M (19%) Uninsured 16 M (6%) Other 15 M (5%) Nongroup 159 M (56%) ESI 51 M (18%) Medicaid 24 M (9%) Exchanges (Private Plans) 16 M (6%) Other 23 M (8%) Uninsured Affordable Care Act

Health Care Will Become Even More Expensive NY Times, April 23, 2010

CBO estimate of Affordable Care Act of 2010 Total Net Impact on Federal Deficit, 2010–2019 –$143 Gross Cost of Coverage Provisions $938 Offsetting Revenues from Individual Mandate, Employers, and Wage Effects –$117 Savings from Payment and System Reforms –$511 Productivity updates/provider payment changes–160 Medicare Advantage reform–204 Other improvements and savings–147 Education System Savings–$19 Total Revenues–$432 Major Sources of Cost, Savings and Revenues Compared with Projected Spending, Net Cumulative Effect on Federal Deficit, 2010–2019 Dollars in billions Note: Totals do not reflect net impact on deficit due to rounding. Source: Congressional Budget Office, Letter to the Honorable Nancy Pelosi, Mar. 20, 2010.

We have the Most Expensive Health Care System in the World By far... Yet we have lower life expectancy than half of the world National Geographic, OECD Health Data 2009

Jobless Recovery in a Global Economy?  Why would we hire Americans when we have the most expensive health care per capita in the world?  Other countries that provide universal health care have either single payer or the insurers act as a single payer  A country that does not produce things will soon be a second class country

What Does It Mean When a Nation Stops Making Things Here?

Jobs, jobs, jobs... Health care are linked  Employer sponsored insurance is a cost for every employer  In a global economy, jobs follow manufacturing

Dramatic Loss of Jobs That May Never Return US Bureau of Labor Statistics

2010 US Debt - $13.2 Trillion! 91% of GDP Gross Debt Debt as % GDP

Canada is First of G-7 Countries to Recover from Recession Bloomberg News, July 9, 2010

Why US Manufacturers Move Overseas?  United States –$7,300 per capita on health care in 2007 –Administrative overhead 31% * –Per capita income $46,000  Taiwan –$800 per capita on health care in 2007 –Administrative overhead 1.6% * –Per capita income $30,100 * Sources: NEJM, August 21, 2003, Bureau of NHI, Taiwan

Information technology  Congress has $19 Billion in the economic stimulus bill  Can we do health IT with such a dysfunctional fragmented system?

Health IT works when the health system works (Taiwan) Frontline, April 2008

NY Times, Feb 26, 2010

How Tough Are Our Choices?  Bankrupt Private Health Insurers?  Bankrupt America? 

David Walker, former US Comptroller General 60 Minutes, March 4, 2007

Making a decision on a tough choice  Well, if you put it that way.... The choice is clear  We must control health care costs... –For the sake of American jobs –For the sake of our national deficit –For our kids future

C-SPAN, June 10, 2010

Overall Impressions  Incredibly complex  Many good, bad, and ugly stuff  Embraces the principle of insurance reform  A strong prevention and public health agenda  Many will have difficulty affording this  My prediction: It will achieve mediocre, expensive health care for some people, but may prevent illness in others  For those who want quality, affordable health care for all, “No rest for the weary”

Questions?