Health Reform: A California PerspectiveInsure the Uninsured Project (www.itup.org) September 3, 2009Kaiser Family FoundationWashington, DC

The Uninsured in CaliforniaSurveys

• CHIS vs. CPS▫ CHIS is a California specific survey of health insurance

and health status. According to CHIS (2007), about 5 million Californians are

uninsured at a point in time and 6.5 million over the course of the year.

▫ CPS is a national survey; a point in time response The 2008 report found nearly 6.7 million Californians are

uninsured over the course of the year. ▫ The high unemployment due to the recession has

increased this figure to over 7 million.

The Uninsured in CaliforniaPopulations

•7 million uninsured (7th highest by percentage)▫55% between 18 and 40 years old▫Young adults have highest uninsured rate at 25%▫61% have incomes under 200% FPL▫25% have incomes over 300% FPL▫85% are working or the spouses/children of workers▫15% are legal permanent residents ▫64% are US citizens

The Uninsured in CaliforniaPopulations

*Residents under 65 with no health insurance at some point in 2006 Source: P. Reese, Interactive Map: Counties with the Most Uninsured, The Sacramento Bee, Aug. 16, 2009

The Uninsured in CaliforniaVariation by County

•Regional variation in uninsured rate

•Much poorer access to care▫49% report no usual source of care, compared to 6% of privately insured and 12% of publicly insured

The Uninsured in CaliforniaVariation by Region

Private Coverage in California• 60% of Californians privately

insured• Employer coverage

▫ 70% of businesses offer coverage (63% nationally)

▫ 3-9 employees: 60% offer coverage▫ 10-50 employees: 83% offer coverage▫ 27% of lower wage firms offer

coverage▫ Rate of coverage shrunk by 4% from

2002-2008 due to high premium increases

• Individual coverage▫ 2 million buy through individual market▫ Prices rising sharply and extent of

coverage shrinking

Public Coverage in CaliforniaMedi-Cal

• Covers 6.8 million in 2009

• $40B in spending▫$2,740 per beneficiary in FY 2006 (2nd lowest in

nation)

CA recently discontinued these services to adults: dental, vision, podiatric, hearing

Public Coverage in California Healthy Families/AIM

•Covers 925,000 children▫Over 70,000 on wait list and growing, with

coverage terminations scheduled for November•$1.2B in spending• Subscribers choose among competing public

and private plans

Public Coverage in CaliforniaEligibility

Building Blocks in California Medi-Cal Managed Care Models

Medically Indigent Adults (MIAs)

•MIAs: adults not otherwise eligible for Medi-Cal▫1.5 million persons under

200% FPL▫Medi-Cal coverage

discontinued in 1982-3

•Counties are responsible for care▫$1.8B in spending

$367 per uninsured person, compared to $4,900 average employment based coverage premium

Medically Indigent Adults (MIAs)

County Models

Model Description County

ProviderOperate public hospitals and

clinics

Los Angeles, San Francisco and Santa

Clara

PayorPay private hospitals, providers, and clinics

Orange, San Diego

HybridOperate public clinics and

pay private hospitalsTulare, Sacramento,

Stanislaus

Small County

Pool resources and pay private hospitals, doctors,

and clinics

Humboldt, Imperial, Kings

California’s Flex Workforce

•Temporary, seasonal, part-time, self-employed micro-businesses and contract workers (estimated 16% of workforce)▫Child care, agriculture, real estate,

construction, service industries•High rates of uninsured

▫12% receive coverage through job•Industry wide coverage (Taft Hartley trusts, MEWAS)

▫Potential building blocks if financing for care to low wage workers can be accessed

Underwriting and Purchasing Pools

•1992 reform, small employers (2-5o employees)▫Guaranteed issue and renewal, age rating▫4 family sizes, 9 geographical areas▫HIPC/PacAdvantage – purchasing pool fell victim

to adverse selection

• Individual market ▫High rate of denials, rescissions, and other practices▫MRMIP - Bad risk pool for medically uninsurable

Enrollment frozen at less than 8,000 with over 170,000 eligible

Cost Containment and HMOs

• California: competitive model since 1982-83

• High HMO penetration (twice national average)▫ 50% of insured employees▫ 50% of Medi-Cal subscribers

• CA changed from low priced to medium priced HMO market▫ Employer premiums increased 9.2% in 2008 (4.8% nationally)

Small employer premiums increased 30% more than large employers

▫ Premiums increased 4X faster than inflation from 2002-2008

Competition resulted in lower costs in urban areas (SD, LA) but is not a viable strategy in rural and single-hospital regions

The Safety Net

The Safety NetDelivery System (2006)

•Community clinics▫Average 1 visit/uninsured

Range by county from 0.2 to 3 visits/uninsured

•Counties ▫Pay or provide: (per 1000

uninsured) 85 inpatient days 90 emergency room visits 900 outpatient visits

▫Eligibility limits for MIAs range from 63% to 500% FPL

Uncompensated Care (2006)

•Hospitals

▫$1.7B in bad debt/charity care to uninsured in 2006 (3.3% of expenses)

▫$2B in uncompensated care to Medi-Cal patients

▫Net operating losses of $2B (almost 4% of revenue) in 2006

Uncompensated Care (2006)• Clinics

▫$231M in uncompensated care to uninsured (12% of expenses) in 2006

• DSH and supplemental payments▫Public hospitals receive $1B in DSH, $578M in Safety

Net Care Pool funds▫Private hospitals receive $669M to offset

uncompensated care

Local Pilots

•10 counties using different designs targeted to most urgent local needs▫$180M in competitive

federal allocations

• Children’s Health Initiatives (CHIs) for uninsured children

Local PilotsCounty Examples

Local

Pilot

Description

Healthy

San

Francisco,

Contra

Costa

Basic

Health

Care

Deliver managed care through local health plan to uninsured using safety network of hospitals and

clinics

San Diego FOCUS, Sacramento SacAdvantage

Small employer purchasing pilots

Alameda County for ExcellenceShift emergency room users to

medical homes

San Diego Coverage InitiativeImprove care management for

chronic conditions

Ventura Access Coverage Enrollment Program,

Kern Medical Center Health Plan

Integrating community clinics with county delivery

Proposed Bi-Partisan ReformABX1 1

• Individual Mandate with hardship exclusions• Employer pay or play and required offering of

§125 plans • Financing: individuals, employers, government and providers

▫Counties and federal government to pay part of coverage match for MIAs▫Hospitals to pay part of match for rate increases and coverage expansions to the uninsured

•MRMIB (state purchasing pool) to set benefits level

•Expand Medicaid to 150% FPL, CHIP to 300% FPL

•Refundable tax credits on a sliding scale to 400% FPL through state purchasing pool (Exchange)

•Require cost/quality transparency, P4P•Managed competition•Triggered repeal of reforms if costs exceeded

revenues and the state government failed to balance the program’s deficit

Proposed Bi-Partisan ReformABX1 1

ObservationsITUP Board of Advisors

RecommendationsITUP Regional Workgroups

For resources and additional information we are available at

(310) 828-0338info@itup.org

http://www.itup.org