Federal Health Care Reform 2009Federal Health Care Reform 2009

Fort Hays State UniversityHealth Care: Get in the Game

Affordable Quality Health Care for All

An Independent Licensee of the Blue Cross and Blue Shield Association.

Sunee N. MickleDirector, Government RelationsNovember 3, 2009

Corporate OverviewCorporate Overview

Our Mission

To be the best at providing health insurance in Kansas

Blue Cross and Blue Shield of KansasBlue Cross and Blue Shield of Kansas

Corporate InformationCorporate Information

Locally Owned and Operated

Based in Topeka with offices in Dodge City, Garden City, Hays, Hutchinson, Independence, Lawrence, Manhattan, Salina, Pittsburg, and Wichita

1,466 employees in total

Service 103 of Kansas' 105 counties 891,105 members Provider network includes 98% of medical doctors and acute care hospitals

Corporate InformationCorporate Information

Mutual Insurance Company Owned by our policyholders; Not publicly traded

An independent licensee of the Blue Cross and Blue Shield Association (1 of 39 different Blue Plans)

Governed by a 16 member board of directors

15 are non-employees

They represent individual and group policy

A few are policyholders who are also health care providers

Corporate InformationCorporate Information

In 2008, Blue Cross and Blue Shield of

Kansas: Processed 20,208,900 claims

Paid over $1.8 billion in claims

Paid more than $23 million in taxes

Administrative costs are approx. 8 cents/dollar

92 cents of every premium dollar is used to pay members' claims

Federal Health Care Federal Health Care ReformReform

What's Happening Now?What's Happening Now?

• Five different health care reform proposals have passed in different congressional committees

– Senate Finance Committee

• America's Health Future Act of 2009 (S.1796)

– Senate HELP Committee

• Affordable Health Choices Act (S.1679)

– House Tri-Committee

• America's Affordable Health Choices Act of 2009 (H.B.3962)

Source: The Washington Post - October 9, 2009

• Support sustainable insurance reforms

– GI, no health status/gender rating, coupled with a strong individual mandate and subsidies

• Support state insurance marts (SIMs) rather than a national insurance exchange

• Promote health care reform without the creation of a government-run plan

BCBSA Health Care Reform PrioritiesBCBSA Health Care Reform Priorities

Concerns with Current ProposalsConcerns with Current Proposals

• Creation of a government-run insurance plan

• Weak individual mandate

• Move to a 2:1 age rating vs. 5:1 age rating

• New insurer taxes

• Lack of malpractice reform

• Failure to implement system-wide cost containment

Source: Oliver Wyman, Insurance Reforms Must Include a Strong Individual Mandate and Other Key Provisions to Ensure Affordability, October 14, 2009

Impact of the Uninsured on the Impact of the Uninsured on the Individual MarketIndividual Market

Oliver Wyman, Source: Oliver Wyman, Insurance Reforms Must Include a Strong Individual Mandate and Other Key Provisions to Ensure Affordability, October 14, 2009

Age RatingAge Rating

• “5 to 1” age bands are critical – It ensures that young, healthy individuals purchase coverage

• Young and healthy individuals provide cross-subsides that keep premiums affordable for everyone

Premiums w/ 5:1 Age Adjustment

Premiums w/2:1 Age Adjustment

% Premium

Increase

20 year old $100 $200 100%

60 year old $500 $300 -20%

INDIVIDUAL FAMILY

Current Average Premium $2,972 $6,392

Proposed Reforms:

1. Weak Personal Responsibility Mandate $1,328 $2,815

2. Required minimum benefit levels $266 $563

3. New insurance taxes $122 $488

Total Added Costs $ 1,715 $3,866

Premium Under Reform $ 4,370 $9,497

Impact of Federal Insurance Reforms Impact of Federal Insurance Reforms

Individuals Purchasing New CoverageAverage Impact for Kansas — Year 5 of Reform

Estimates Exclude Adjustments for Inflation

Source of current average premium data: AHIP Individual Market Survey 2006-2007 for individuals and families adjusted to 2008-2009.These estimates are based on assumptions made across Cluster 4 states, which include: Alabama, Alaska, Arkansas, California, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Mississippi, Missouri, Montana, Nebraska, North Carolina, Ohio, Oklahoma, Tennessee, Texas, South Carolina, Wisconsin, Wyoming (Source: Oliver Wyman, Insurance Reforms Must Include a Strong Individual Mandate and Other Key Provisions to Ensure Affordability, 2009)

Impact of 40% Insurer FeeImpact of 40% Insurer Fee

Source: PricewaterhouseCoopers, Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage, October 2009.

51 51 51 51 52 53 53 54

5045

2824 24 24 24 25

16 17161717

50

28

23

0

20

40

60

80

2012 2013 2014 2015 2016 2017 2018 2019

Current law SFC as Amended House Proposal

Trend in the Number of Uninsured, 2012–2020Trend in the Number of Uninsured, 2012–2020Under Current Law and Senate Finance and Under Current Law and Senate Finance and House Tri-Committee ProposalsHouse Tri-Committee Proposals

Millions

Note: The uninsured includes unauthorized immigrants. With unauthorized immigrants excluded from the calculation, nearly 94% and 97% of legal nonelderly residents are projected to have insurance under the Senate Finance and House proposal, respectively.Data: Estimates by The Congressional Budget Office.

Federal Proposals’ Impact on Federal Proposals’ Impact on Insurance Coverage and Costs in 2019Insurance Coverage and Costs in 2019

Source: The Congressional Budget Office Preliminary Analysis of Specifications for the Senate Finance Chairman's Mark of the America's Healthy Future Act, October 7, 2009, http://www.cbo.gov/doc.cfm?index=10642. The Congressional Budget Office Analysis of HR 3200, The Affordable Health Choices Act, July 17, 2009, http://www.cbo.gov/ftpdocs/104xx/doc10464/hr3200.pdf

Senate Finance Committee Modified

Chairman’s Mark

House of RepresentativesTri-Committee

Formerly uninsured now covered, 2019 29 million 35 million

Additionally covered by Medicaid/CHIP, 2019 11 million 9 million

Covered in exchange, 2019 25 million 30 million

Net cost of coverage expansion, 2010-2019 $719 billion $1,042 trillion

Net impact on federal deficit, 2010-2019 -$81 billion $239 billion

Questions & AnswersQuestions & Answers