the health care landscape before and after the aca
DESCRIPTION
The Health Care Landscape Before and After the ACA. Bill Evans University of Notre Dame. Two Goals. What are the issues that any health reform proposal must address? How did the ACA deal with these issues? . What must health care reform address?. Access - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/1.jpg)
The Health Care Landscape Beforeand After the ACA
Bill EvansUniversity of Notre Dame
1
![Page 2: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/2.jpg)
Two Goals
• What are the issues that any health reform proposal must address?
• How did the ACA deal with these issues?
2
![Page 3: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/3.jpg)
What must health care reform address?
• Access
• Cost (both the level and rate of change)
• Medicare
• Tax equity
3
![Page 4: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/4.jpg)
4
![Page 5: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/5.jpg)
5
Percent of Firms Offering Health Insurance
46%
72%
87%95% 98%
0%
20%
40%
60%
80%
100%
3-9 10-24 25-49 50-199 200+
% O
fferin
g In
sura
nce
Firm Size
Percent of Firms Offering Health Insurance
![Page 6: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/6.jpg)
Uninsured Non-Elderly by Work Status of Family Head, 2007
6
Full-year,full-time worker,
66.7%
Full-year,part-
time worker, 6.6%
Part-year, full-time worker, 11.5%
Part-year, part-time
worker, 4.1%
Non-worker, 11.0%
![Page 7: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/7.jpg)
Problems for small firms
• Large firms typically self insure – act as their own insurance company
• Small firms must purchase insurance in the market
• Much higher cost– Do not benefit from large insurance pools– Higher administrative costs– Pay profits– Adverse selection
7
![Page 8: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/8.jpg)
What must health care reform address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
8
![Page 9: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/9.jpg)
Expenditures on Health Care
• Actual, 2010
• $2.6 trillion on HC
• $8,402 per capita
• 17.9% of GDP
• Projected, 2021
• $4.7 trillion
• $14,102 per capita
• 29.6% of GDP
9
![Page 10: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/10.jpg)
$7,290
$4,763$4,417
$3,895$3,424
$2,992$2,581 $2,581
$0
$2,000
$4,000
$6,000
$8,000
US NOR SWZ CAN IRE UK SPN JPNCountry
Per Capita $ on Health Care, 2007
10
87% more than Canada
143% more than UK
![Page 11: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/11.jpg)
Average Annual Premiums Covered Workers, 2011
• Individual plan–$5,429 total
• Family plan–$15,073
11
![Page 12: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/12.jpg)
12
31% 26%
138%
0%
40%
80%
120%
160%
Overall inflation Mean familyincome
Health insurancepremiums
Pric
e C
hang
esPrice Changes, 1999 to 2010
![Page 13: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/13.jpg)
Bang per buck??
• US ranks 25 of 29 countries in life expectancy– 4.3 years shorter than Japan (highest)– 2.4 years shorter than Canada
• 24th worst of 28 countries in infant mortality– More than twice the rate of Japan (lowest)– About 30% higher than both Canada and UK
13
![Page 14: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/14.jpg)
Are high expenditures a bad thing??
• A key driver of health care costs is technology• New technologies are effective but expensive• Many technologies NOT available 30 years ago are
commonplace today– MRIs/CT scans, angioplasty, anti-psychotropic drugs,
hip/knee replacements, neo-natal intensive care, treatments for AIDS, statin drugs
• Health care is the ONLY industry where a growing fraction of GDP is considered BAD
14
![Page 15: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/15.jpg)
Medical Successes
• ARVs reduced AIDS mortality by 70%
• NICU’s reduce neonatal mortality among very low birth weights infants by 42%
• Lipitor reduces LDL by 39-60%, reduces all cause mortality by 12%
• 30-day survival rates for heart attack patients admitted to the hospital fell 17% 1995-2006
15
![Page 16: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/16.jpg)
Where would you rather be treated for a disease: US or elsewhere?
16
![Page 17: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/17.jpg)
5-year Cancer Survival Rates Country Breast
(Female)Cervical
(Female)Colon
(Male)Lung
(Male)Prostate
(Male)Thyroid
(Female)
US 82.8 69.0 61.7 12.0 81.2 95.9UK 66.7 62.6 51.0 7.0 44.3 74.4Dnmk. 70.6 64.2 39.2 5.6 41.0 71.7France 80.3 64.1 49.6 8.7 67.6 77.0Swed. 80.6 68.0 51.8 8.8 64.7 83.7Switz. 79.6 67.2 52.3 10.3 71.4 78.0
17
![Page 18: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/18.jpg)
18
4.3%
3.3%
5.4% 5.2%
0%
1%
2%
3%
4%
5%
6%
AMI Ischemic stroke
30-Day In Hospital Mortality Rate for Acute Conditions
U.S. OECD
![Page 19: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/19.jpg)
If you want to cut costs, where?
• Administrative/overhead– 3% in Canada (single payer)– 1.5% in Medicare– 8-30% in US system overall
• Chronic conditions– Spending is heavily concentrated in a small % of
population
19
![Page 20: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/20.jpg)
20
Percent of Total Health Care Expenses by Different Percentiles of Population, 2002
22%
49%
64%
80%
97%
0%
20%
40%
60%
80%
100%
1% 5% 10% 20% 50%Percentiles of population
% o
f tot
al e
xpen
ditu
res
![Page 21: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/21.jpg)
If you want to cut costs, where?
• Administrative/overhead– 3% in Canada (single payer)– 1.5% in Medicare– 8-30% in US system overall
• Chronic conditions– Spending is heavily concentrated in a small % of
population• Unnecessary/end of life care– ¼ of Medicare $ are in last year of life
21
![Page 22: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/22.jpg)
22
Per Capita Medicare Spending by Hospital Referral Region, 2006
$9,000 to 16,352 (57)8,000 to < 9,000 (79)
7,500 to < 8,000 (53)7,000 to < 7,500 (42)
5,310 to < 7,000 (75)Not Populated
![Page 23: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/23.jpg)
What must health care reform address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
23
![Page 24: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/24.jpg)
Medicare
• 2010
• 47 million recipients
• $524 bill. exp.
• 3.2% of GDP
• 16% of fed. budget
• 2040
• 87 million recipients
• 6% of GDP
24
![Page 25: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/25.jpg)
Medicare Sources as % of GDP
25
Unfunded portionOf Medicare Will equal 2% ofGDP
![Page 26: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/26.jpg)
Future problems
• Rising costs
• Rising number eligibles
• People are living longer– Older people spend a lot more on health care
• Falling fraction of people to tax
26
![Page 27: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/27.jpg)
27
20.428.4
34.339.7
46.8
62.3
79.287.0
0
20
40
60
80
100
1970 1980 1990 2000 2010 2020 2030 2040
Mill
ions
of P
eopl
e
Year
Medicare Enrollment
![Page 28: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/28.jpg)
28
13.9 14.315.2
16.417.2
18.018.7
10.4 10.9 11.0 11.2 11.3 11.412.0
6
8
10
12
14
16
18
20
1950 1960 1970 1980 1990 2000 2005
Rem
aini
ng Y
ears
Year
Remaining Life Years at Ages 65 and 75
At age 65
At age 75
![Page 29: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/29.jpg)
29
$2,650 $3,370 $5,210
$7,887
$10,778
$16,389
$25,691
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
0-18 19-44 45-54 55-65 64-75 75-84 85+Age group
Per Person Health Care Spending, 2004
![Page 30: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/30.jpg)
30
5.5
4.7 4.5 4.3 4.0
3.22.6 2.5
0
1
2
3
4
5
6
1970 1980 1990 2000 2010 2020 2030 2040
Ratio
Year
Ratio: 20-64 Population/Medicare
![Page 31: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/31.jpg)
What must health care reform address?
• Access
• Cost (both the level and rate of inflation)
• Medicare
• Tax equity
31
![Page 32: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/32.jpg)
Tax Preferred Status of Health Care
• EPHI a tax-free fringe benefit• WW II era program• Greatly reduces costs of HI to consumers– But encourages more generous coverage
• Has encouraged the growth of EPHI– Few had insurance before the benefit– Now 170 million have EPHI
• Helps solve the problem of adverse selection
32
![Page 33: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/33.jpg)
Tax Benefit of EPHI
• A family w/ $70,000 in income• 37% marginal tax rate– 25% federal– 4% state– ~8% Social Security and Medicare
• Want to purchase $12,000 policy in AFTER TAX DOLLARS
33
![Page 34: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/34.jpg)
Without tax advantage:
• Receive $19,047 in income
• Pay 37% or $7,047 in taxes
• $12,000 left over for health insurance
• Net benefit of tax deduction is $7,047
34
![Page 35: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/35.jpg)
Inequalities
• Costs Fed. Govt. $250 billion/year
• Tax break only available to those w/ ins. – More likely high wage workers
• Tax benefit greatest for high income as well– Paying higher marginal rates
• Regressive tax– Benefits are much higher in upper income groups
35
![Page 36: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/36.jpg)
Patient Protection and Affordable Care Act
An outline and some likely outcomes
36
![Page 37: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/37.jpg)
Overview
• Mainly a coverage bill
• Builds out from existing system– Tries to fill in the gaps in coverage
• Large scale insurance industry reform– Community rating– Eliminate pre-existing conditions
37
![Page 38: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/38.jpg)
Coverage expansions achieved through
• Individual mandate (tax of 2.5% of AGI)
• Pay or play -- employer mandates
• Expand Medicaid to include higher income groups
38
![Page 39: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/39.jpg)
Coverage expansion (continued)
• Provide tax credits for the low income in individual market
• Tax credits for small firms to provide insurance
• Establish health insurance exchange where people can purchase group insurance
39
![Page 40: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/40.jpg)
Why is coverage mandatory?
• Insurance industry reform– Community rating– eliminate pre-existing condition clauses
• If adopted under current system– Costs for low risk would rise – they would exit
• Mandatory coverage forces low cost users into the system, helps subsidize high cost users
40
![Page 41: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/41.jpg)
Impact on Uninsured
• Reduce uninsured by 32 mil. in 2019 (60%↓)
• Leaves another 23 mil. uninsured
• Hispanics will be over-represented in the uninsured
41
![Page 42: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/42.jpg)
Balance Sheet – CBO 2010-2019
• What the program buys
• Expand private$ 464
• Expand public $ 434
• Small firm credit $ 37
• Total$ 935
• How it is paid for
• ↑ taxes $ 454• ↓Mcare/caid $
368• Other $ 255• Total $1077
• $142 billion ↓ deficit
42In Billions of $
![Page 43: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/43.jpg)
Does it reduce the deficit?
• $40 billion in savings was due to CLASS act– Long term care programs– Takes in revenues for 6 years before any benefits paid out– Financially not viable and has since been dropped
• Rosie scenario about future Medicare cuts– 27% fee cut set to go into effect in Jan of 2013– Automatic reductions in fees if growth is too high
43
![Page 44: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/44.jpg)
44
Medicare Board of Trustees
“It is important to note that the actual future costs of Medicare are likely to exceed those shown by the current law projections…We recommend that the projections be interpreted as an illustration of the very favorable financial outcomes that would be experienced if the productivity adjustments can be sustained in the long run.”
![Page 45: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/45.jpg)
45
More general point
• It was necessary to do something about the future costs of Medicare
• ACA did attack these costs – but – the savings were then paid out in benefits
• If the concern is the overall fiscal health – we have not improved
![Page 46: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/46.jpg)
What is missing?
Cost controls
46
![Page 47: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/47.jpg)
• Add 32 million people to the market with excellent insurance coverage
• Modest attempt at cost controls– Accountable Care Organizations
• No effort to change supply – Should increase price– Could be a lot worse
• With Medicare/Caid cuts, may discourage some providers from participating in program
47
![Page 48: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/48.jpg)
Winners
• Uninsured– affordable high-quality insurance now available
• Workers at small companies– Now have access to group market– Heavy subsidies for low income
48
![Page 49: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/49.jpg)
• Hospitals/Rx/Medical Technology– Insure 32 million more people– Sicker than average group (holding age constant)– With insurance, they will start to use services– Evidence:
• Stock prices of these firms increased every time bill moved closer to passage
• Market is evaluating the bill as helping suppliers
49
![Page 50: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/50.jpg)
Losers
• Medicare advantage – Frozen reimbursements levels
• Small group market – this portion of market will not exist in a few years
• Workers with high cost plans• Tanning salons• Generic drug manufacturers• State budgets in some states
50
![Page 51: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/51.jpg)
Where is the uncertainty?
• How will Medicare cuts impact providers?• Can ACO’s reduce growth of costs?• What is a qualified plan?• Can exchanges constrain costs?• How many people will get subsidized coverage?– Will not necessarily change who has coverage – but will
change who pays for it
51
![Page 52: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/52.jpg)
52
The end
![Page 53: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/53.jpg)
Pay or play
• Firms w/ >50 employees must offer qualified health insurance or pay $2000 tax/employee
• Tax incentives/credits for small firms to provide insurance
• Language is that firms must pay “fair share”• Economists believe workers pay for insurance in the
form of lower wages• Will firms pay or play?
53
![Page 54: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/54.jpg)
Small Firms
• Small firms not subject to pay/play mandate• Face extremely high cost of providing HI• Workers face much lower wages if they receive HI
from firm• Gov’t now provides high subsidy rate for low-income
uninsured• As a result….
54
![Page 55: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/55.jpg)
• May make sense for small firms with low wage workers to – drop coverage– have workers pick up subsidized insurance via exchange
• Workers would get– Wage hile– Reduced health insurance costs
• Increase federal costs of program
55
![Page 56: The Health Care Landscape Before and After the ACA](https://reader036.vdocument.in/reader036/viewer/2022062323/568164d5550346895dd70f04/html5/thumbnails/56.jpg)
56
Age
$
Not Obese
Obese
A
BC
Age1 Age2