Obama Administration Outline/Proposal

Broad Outline Only• Would retain employer based health insurance system• Includes a “play or pay” model• Creates a public/private plan mix – Insurance Exchange• Expands Medicaid to make more lower income people

eligible• No individual mandate for coverage (families would be

required to have children enrolled in a plan)• Attempts to increase access to lower cost generic drugs• Increases access to medications from other countries

where deemed safe by FDA

Healthy Americans Act(Sen. Wyden (D-OR) & Sen. Bennett (R-UT))

• First introduced in Jan. ’07• Shifts away from employer based model to one in which individuals

purchase insurance from private insurers• No public plan• Mandates individual coverage• Eliminates employer federal tax deduction for health insurance to

employees– Instead employers would increase wages because no longer

paying insurance benefits– Employees get deduction for premiums on individual taxes– Features income based premium subsidies

• Folds Medicaid and SCHIP into state based private insurance pools– Idea is that would result in more uniform quality of care and

access to care if all folded into similar private insurance products.

Senate Finance Committee Policy Options

• Chairman Sen. Max Baucus (D-MT)• Series of policy options the committee will consider in crafting its proposal

rather than formal proposal• Mandates individual coverage• May or may not include employer “play or pay” (option A & option B)• Like Obama proposal calls for creation of a Health Insurance Exchange –

public plan– “marketplace for insurance options including some public and some

private options”– Exchange would perform regulatory function as well and would prohibit

member plans from exclusions of coverage based on pre-existing conditions

– Sen. Baucus has indicated that his public plan will “look and feel” more like a private plan – adhere to open market principles

• Sen. Baucus has recently indicated that his committee’s proposal is unlikely to achieve universal coverage and will likely specifically exclude undocumented workers

HELP Committee Proposal(Sen. Kennedy D-MA)

• Features government created public plan• Mandates individual coverage• Includes a “play or pay” provision for employers• Sliding scale of subsidized premiums – some

subsidies up to 500% of FPL ($110,000 for family of four)

• Proposes to reimburse physicians and hospitals at Medicare rates plus 10%

• Creates new insurance program to provide home and community based care for 10 million people with severe disabilities

Massachusetts Reform Program • In 2006 passed plan for “universal” healthcare insurance coverage. Estimated over

440,000 additional covered. Uninsured rate fell from estimated 10% to estimated 3%• Program mandates individual coverage • Creates public/private insurance exchange• Estimated that around half of newly covered individuals are paying something

towards premiums, rest are 100% subsidized• Underestimated number of uninsured poor prior to enactment of program

– In the first year 176,000 – 40,000 more than predicted- enrolled in subsidized program, Commonwealth Care

• Remains a significant segment of uninsured – individuals with income too high to qualify for subsidy but too low too afford private insurance options

– For these individuals penalty for not obtaining insurance often less than cost of the private insurance option

• New program has done little to assist with cost containment– In first two years forced twice to supplement program totaling extra $250 Million– Budget request for program increased $400 Million from 2008 to 2009 ($869

Million) and it is still believed the funding level will fall short– State Senate President Therese Murray quoted in 10/08 as believing that

program costs can not be sustained at current rates• Has created an access to care problem

– Shortage of primary care physicians– Wait to see a primary care physician has gone up significantly – some wait times

of more than two months reported

Paying For Healthcare Reform • Cost estimates of various reform packages are in the neighborhood of $1

Trillion for the first 10 years• President Obama has committed to the reform package being “deficit

neutral”• Achieved through combination of cost cutting, modernization and tax

increases on Americans earning more than $250,000 per year• President recently proposed budget contains $635 billion “down payment”

on healthcare reform• President has recently proposed an additional $313 Billion in cuts to

Medicare & Medicaid – Incorporate productivity adjustments into Medicare payment updates– Reduce subsidies to hospitals for treating the uninsured

• In FY 2013 payments begin to decrease. By FY 2019 funding would be at 25% of DSH funding in 2013.

– Reduce Medicare payments for Advance Medical Imaging• Increase the equipment utilization factor from current 50% to 95% as per MedPAC

“recommendation”– Reduce payments to SNFs, inpatient rehab facilities and LTC hospitals

• As per MedPAC 2010 payment recommendations

– Cut “waste, fraud & abuse”• “increased scrutiny” of physicians in high-risk areas or those that order a high volume

of high-risk services (home health, DME, home infusion therapy)