Health Reform 2.0 PNHP meeting May 22, 2010

Impact of Health Reform on: The Uninsured # of uninsured reduced from 46 million today to ~23 million in Safety net hospital funding through Medicare cut by $36 billion through Community health centers receive extra $1 billion annually

Impact of Health Reform on: The Underinsured If you like your current coverage you can keep it. If you don’t like your current job-based coverage, you HAVE to keep it. Policies required to cover at least 60% of expected health costs – e.g. $2,000 deductible + 20% co-insurance for next $15,000 of care.

$5000 annually in premiums $2000 deductible 20% coinsurance for next $15,000 Massachusetts Policies Available through the exchange to a 56 yo with income > $32,000

Crimes and Punishments in Massachusetts #The CrimeThe Fine 1 Violation of Child Labor Laws $50 2 Employers Failing to Partially Subsidize a Poor Health Plan for Workers $295 3 Illegal Sale of Firearms, First Offense $500 max. 4 Driving Under the Influence, First Offense $500 min. 5 Domestic Assault $1000 max. 6 Cruelty to or Malicious Killing of Animals $1000 max. 7 Communication of a Terrorist Threat $1000 min. 8 Being Uninsured In Massachusetts ~ $1000

Impact of Health Reform on: Medical Bankruptcy No change for 75% of medically bankruptcy filers who have insurance. Up to 50% reduction among the 25% of the medically bankruptcy who were uninsured in 2007 but will gain coverage under reform. Maximum expected reduction in medical bankruptcies = 12.5%.

Despite high overhead HMOs prosper by cherry-picking Especially in Medicare, where cherry-picking is already illegal

Impact of Health Reform on: Administrative Costs IRS cost to enforce mandate - $5-10 bil Running insurance exchanges - ~4% of premiums (based on Massachusetts) Insurance overhead - ~13% of new premium revenues = $42 bil Cap on insurance overhead - ???? Standardized claim forms - ????

Role Played by Health Industry in Health Reform Insurance donations to Dems & Repubs + ads in favoring AND opposing Pharma - >$100 million on ads supporting reform Senate framework written by Liz Fowler, former VP of Public Policy for Wellpoint/Anthem

Impact of Health Reform on: Health Care Costs - 1 Expanded Medicaid - $434 bil. Subsidies for private coverage - $358 bil. Small employer tax credits - $37 bil. Temporary high risk pools, subsidy for retirees <65, etc – ~$10 bil. All figures reflect spending through 2019

Impact of Health Reform on: Health Care Costs – 2 (savings) Decreased Medicare Advantage/HMO overpayment - $136 bil. Decreased Medicare (DSH) payment to safety net hospitals - $36 bil. Decreased Medicare fee-for-service payments to doctors/hospitals - $196 bil. Other Medicare/Medicaid cuts - $87 bil. All figures reflect spending through 2019

Impact of Health Reform on: Cost Control Provisions Insurance exchanges Health information technology Comparative effectiveness research Fraud and abuse prosecution/recovery Alternatives to F-F-S (experiments) Coverage of preventive services Tax on “Cadillac” coverage Malpractice reform (experiments) Medicare advisory board

Health Reform Bill: Proven Cost Control Provisions

Hospital Computing and the Cost and Quality of Care Data sources: –Computerization – HIMSS surveys –Quality – Medicare/Dartmouth Atlas –Costs – Medicare cost reports Data available for ~4,000 U.S. hospitals

Conclusions Computerization NOT associated with lower costs of care. Computerization NOT associated with lower administrative costs. Computerization associated with slightly better quality scores - ? Real improvement vs. more documentation.