health reform: what it means. what's next?

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Health Reform:What it means. What’s next?

Grace-Marie TurnerMay 24, 2012MedStar Montgomery Medical Center

Americans’ views of Supreme Court decision

• 25% think the law should be upheld in full

• 38% would like the entire law thrown out

• 29% would like the court to strike down the individual mandate

• 39% support health care overhaul in general

Source: Washington Post-ABC News Poll, April 8, 2012, http://www.washingtonpost.com/wp-srv/politics/polls/postabcpoll_04082012.html.

“The mandate was a mistake”

“Democrats managed to get themselves the worst possible result: a law that enflames the opposition on the basis of overreaching federal power but may not work in practice because there is no real power behind it.

Whether or not the Court strikes it down, the individual mandate has been one of the most serious political and policy mistakes of recent decades.”

Source: Princeton Professor (and ObamaCare advisor) Paul Starr, “The Health Care Mandate Really Was a Mistake,” January 2, 2012, The New Republic, http://www.tnr.com/article/politics/99072/the-health-care-mandate-really-was-mistake.

Overwhelming majorities say ObamaCare will Increase: taxes,

the federal deficit, premiums, andhealth care costs, and willdecrease quality of carewww.galen.org

Source: AM&A, Resurgent Republic 1st Anniversary Survey of Likely Voters, April 25-27, 2010

Taxes

Federal Deficit

Health Care Costs

Insurance Premiums

Health Care Quality

Do you think the health care reform plan that Congress passed recently will increase,

decrease, or have no effect on each of the following:

Americans satisfied with own care

• 82% ― Their health care is good to excellent

• 45% ― U.S. has world’s best health system

• 51% ― Major problems, needs major changes

• 18% ― System in crisis, needs major overhaul

Robert J. Blendon, Sc.D., Drew E. Altman, Ph.D., John M. Benson, M.A., Mollyann Brodie, Ph.D., Tami Buhr, A.M., Claudia Deane, M.A., and Sasha Buscho, B.A., "Voters and Health Reform in the 2008 Presidential Election," The New England Journal of Medicine, November 6, 2008, at http://content.nejm.org/cgi/content/full/359/19/2050.

Americans agreed on goals for health reform…

• The U.S. needs health reform to:– make coverage more affordable– assure quality, and– expand access to insurance

• Most people rate their own coverage as good or excellent

• They want stability. Change is for others.

www.galen.org

Early provisions of the new health law

• “Free” preventive care

• Allowing “children” up to age 26 on parent’s policies

• No annual or lifetime limits on coverage

• Pools for pre-existing condition policies

• $250 for seniors with high drug costs

• Insurance regulations and mandates

www.galen.org

What it really does

• Significant new federal control over health insurance and medical practice

• At least 159 new programs and agencies

• Mandates on citizens, employers, & states

• $552 billion in new taxes and penalties

• $575 billion from Medicare

www.galen.org

The new health overhaul law

A vast expansion of subsidized insurance

• “32 million” more to get health coverage– 16 (or 25?) million through Medicaid

– 16 (35+?) million through federally subsidized private insurance exchanges

• 87 million on Medicaid this decade

• 23 million remain uninsured

www.galen.org

The health law’s main features

• Expands coverage to 30 million uninsured

• A new system of Exchanges created to deliver subsidies

• States required to expand Medicaid

• Citizens required to purchase approved health insurance

• Most employers required to offer coverage

• Significant new federal regulation of the health sector (with 159 new regulatory agencies and programs)

• Medicare changes

Financed by

• $575 billion in payment reductions to Medicare

• $550 billion new taxes and penalties

www.galen.org

New taxes and fees in the health law

Studies show law fails to meet goals

• Health costs and health spending increase

• One-third of businesses may drop insurance

• Young people worried about high cost of policies

• Doctors concerned about Medicaid expansion and fraying the safety net

• Seniors are concerned about access to care through Medicare and Medicare Advantage

• Up to 25 million will remain uninsuredwww.galen.org

Independent StudiesObama administration actuary Rick Foster:

• $120 billion in fines for companies and individuals

• Government spending will increase by $311 billion

• Many on Medicare will have trouble getting care

CBO:

The law will raise some family premiums by $2,100 in 2016 above what they would have been without the reform law

Richard S. Foster, Chief Actuary, “Estimated Financial Effects of the Patient Protection and Affordable Care Act, as Amended,” U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Office of the Actuary, April 22, 2010, www.cms.gov/ActuarialStudies/Downloads/PPACA_2010-04-22.pdf. Congressional Budget Office and the Joint Committee on Taxation, “An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act,” November 30, 2009, www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf.

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Higher Costs

• Insurance rising 9% to $15,000/yr. in 2011

• Foster: “False more so than true” that law will lower costs for taxpayers

• Latest CBO cost estimate: $1.76 trillion/10 yrs.

• Gruber: Premiums up to 30% higher than without the law

Congressional Budget Office and the Joint Committee on Taxation, “An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act,” November 30, 2009, www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf. Chief Medicare Actuary on President's health care claims: "I would say false, more so than true,“ House Budget Committee, January 26, 2011, http://www.youtube.com/watch?v=XC9rhGWJA2w. “2011 Employer Health Benefits Survey,” Kaiser Family Foundation/Health Research & Educational Trust, September 27, 2011, http://www.kff.org/insurance/092311nr.cfm.

More could drop coverage

As many as 30 – 40 million Americans are likely to drop coverage and pay the fine instead

23 million still will be uninsured under ObamaCare’s best estimates

Amita Parashar, "Checking In With Dr. Robert Kocher On Who Might Stay Uninsured In Spite of the Individual Mandate," Kaiser Health News, December 20, 2010, http://www.kaiserhealthnews.org/Checking-In-With/kocher.aspx. Richard S. Foster, Chief Actuary, “Estimated Financial Effects of the Patient Protection and Affordable Care Act, as Amended,” U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, Office of the Actuary, April 22, 2010, www.cms.gov/ActuarialStudies/Downloads/PPACA_2010-04-22.pdf.

www.galen.org

“If you like your health insurance…”

• 51 to 80% of Americans will lose current coverage, according to Obama admin. estimates

• CBO: Up to 20 million could lose job-based plans

• McKinsey: Up to 80 million will be forced to change policies

• Child-only policies will vanish in 17 states

• 35 million more will move from job-based insurance to taxpayer-subsidized exchanges

www.galen.org

“Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and ‘Grandfathered’ Health Plans,” U.S. Department of Health and Human Services, HealthReform.gov, http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html. "CBO and JCT's Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance," Congressional Budget Office, March 2012, http://www.cbo.gov/publication/43082.Shubham Singhal, Jeris Stueland, and Drew Ungerman, “How US health care reform will affect employee benefits,” McKinsey Quarterly, June 2011, www.mckinseyquarterly.com/Health_Care/Strategy_Analysis/How_US_health_care_reform_will_affect_employee_benefits_2813.“Health Care Reform Law’s Impact on Child-Only Health Insurance Policies,” Senate Committee on Health, Education, Labor and Pensions, August 2, 2011, http://www.help.senate.gov/imo/media/doc/Child-Only%20Health%20Insurance%20Report%20Aug%202,%202011.pdf.Douglas Holtz-Eakin and Cameron Smith "Labor Markets and Health Care Reform: New Results," American Action Forum, May 27, 2010, http://americanactionforum.org/sites/default/files/OHC_LabMktsHCR.pdf.

The AMA and practicing physicians

• The SGR Medicare payment fix was its key bargaining chip

• The chance for a permanent fix is missed; the president got the AMA endorsement for an empty promise

• Budget concerns in the Congress mean

short-term fixes are likely to continue

www.galen.org

Physician concerns

• Questions about Accountable Care Organizations

• Authority of HHS Secretary to set new rules for quality of care

• Regulatory requirements that make private practice much more difficult

• More burdensome record-keeping

www.galen.org

Anna Wilde Mathews, “When the Doctor Has a Boss,”, The Wall Street Journal Nov. 8, 2010, http://online.wsj.com/article/SB10001424052748703856504575600412716683130.html.

CRS previews impact of health law on physicians

Patricia A. Davis, Jim Hahn, Paulette C. Morgan, Julie Stone, and Sibyl Tilson, “Medicare Provisions in the Patient Protection and Affordable Care Act, (PPACA): Summary and Timeline,” November 3, 2010, http://www.politico.com/static/PPM191_timeline.html.

PPACA has the potential to change fundamental aspects of how physicians organize, practice, and deliver care in the future.

• Some of these provisions create new structures and entities, like the CMS Center for Medicare and Medicaid Innovation and the Patient-Centered Outcomes Research Institute

• Others seek to develop alternatives to traditional fee-for-service payment, such as the National Pilot Program on Payment Bundling, the shared savings program (including the accountable care organization, or ACO, model), or the value-based payment modifier under the physician fee schedule

In the long run, these provisions combined have the potential to be the most substantial of the PPACA and the Reconciliation Act modifications affecting physicians and related providers.

Specific changes to watch

• IPAB — the Independent Payment Advisory Board

• Patient-Centered Outcomes Research Institute

• Physician Quality Reporting Initiative

www.galen.org

Action items

• Government requirements for use of EMR

• Comparative effectiveness “guidelines”

• Payment policies that penalize those with the top 10% of charges

www.galen.org

Predictions of the Medicare actuary

“House Budget Committee Hearing Highlights,” House Budget Committee, July 13, 2011, http://paulryan.house.gov/News/DocumentSingle.aspx?DocumentID=251972. “Statement of Actuarial Opinion,” 2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medicare Insurance Trust Funds, May 13, 2011, https://www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf.

Under current law, CMS actuary Richard Foster says Medicare is on track to pay physicians less than Medicaid does, and this would lead to “severe problems with beneficiary access to care.”

He predicts many Medicare providers will go bankrupt if policies are unchanged. More than 40% eventually would end up “shifting to negative profit margins” and will either go out of business or stop seeing Medicare patients altogether.

“I paid for my Medicare!”

Consider this…

A couple retiring today with both spouses earning an average wage throughout their careers would have paid $109,000 in total Medicare payroll taxes during their lifetimes.

Yet the expected spending by Medicare on the couple will be $343,000.

C. Eugene Steuerle and Stephanie Rennane, "Social Security and Medicare Taxes and Benefits Over a Lifetime," Urban Institute, June 2011, http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf.

Medicare’s Cash Shortfall

• In 2011, Medicare spent $549.1 billion on medical services for America’s seniors but only collected $260.8 billion in payroll taxes and monthly premiums

Medicare deficit in 2011:

$288.3 billion

Medicare is becoming a black hole, and we must start now to fight its gravitational pull

Push-back coming from

• Doctors and patients

Losing control over medical decisions

• Small businesses and big employers

New taxes, penalties, and mandates

• States

Higher costs for Medicaid

• Consumers

Higher costs for insurance and fewer choices

• Seniors

Cuts to Medicare

www.galen.org

www.galen.org

Some realities

The health law is not settled policy

• 55% want the health overhaul law repealed

• 51% say it will reduce the quality of care

• 56% object to cuts to Medicare

• Two-thirds say it will increase the national debt

• Just 12% think the bill should go into effect in its current form

• 60% believe it will increase health costs

• 71% say it will increase taxes“55% Favor Repeal of Health Care Law,” Rasmussen Reports, December 12, 2011, http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/december_2011/55_favor_repeal_of_health_care_law. “56% Oppose Medicare Cuts in Health Care Proposal,” Rasmussen Reports, March 19, 2010, http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/march_2010/56_oppose_medicare_cuts_in_health_care_proposal.

Source: Grace-Marie Turner, “Obama's Strategy of Silence,” The American Spectator, September 2011, http://spectator.org/archives/2011/09/12/obamas-strategy-of-silence.

"The economy, as important as it was, was

not the decisive factor this election. Health

care was…The American people found this

a crime against democracy…they want it

repealed, and this issue is gonna go on and

on."

― Democratic pollster Pat Caddell

Health care in 2012

• LegislationChallenges to the law: 1099, CLASS and IPAB

• Regulation12,000+ pages so far

• LegalU.S. Supreme Court decision in late June

• Political2012 campaigns and elections

www.galen.org

Europeans going the other way

• Consumerism

• Value of private enterprise and competition

• Doctor-patient relationship

• Decentralized decision-making

• NHS reforms

www.galen.org

Caution ahead

• Political criticism, resistance, no matter what the Court decides

• Physicians and hospitals will remain the central players and your participation in health reform will be vital to successful reform.

Source: http://www.towersperrin.com/tp/jsp/masterbrand_webcache_html.jsp?webc=HR_Services/United_States/Press_Releases/2007/20070522/2007_05_22.htm&selected=press

The future?

• The global move toward consumerism is real, driven by greater patient demand for more control over decisions.

• Health overhaul is law and will fundamentally change the U.S. health sector. But I believe it will be amended significantly before 2014.

www.galen.org

What we know for sure

Choice

Americans value innovation, diversity, and choice to accommodate different needs of 300 million people

Focus on the patient

They want doctors and patients, not government, to make health care decisions

Value in health spending

To realize the promise of personalized medicine and achieve overall cost saving, we must allow more choice and competition

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A not-for-profit health and tax policy research organization

/GalenInstitutewww.galen.org

Grace-Marie Turner

Galen Institute

703-299-8900

gracemarie@galen.org

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