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Healthcare Reform. MDI Rotary September, 2010. Agenda. The Problem Health Reform Bill Outstanding Issues / Challenges Questions. Health Reform. Overall problems – broadly recognized Highest spending per person among industrialized nations, without comparable measurable higher outcomes

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Healthcare reform

Healthcare Reform

MDI Rotary

September, 2010


Agenda
Agenda

  • The Problem

  • Health Reform Bill

  • Outstanding Issues / Challenges

  • Questions


Health reform
Health Reform

Overall problems – broadly recognized

  • Highest spending per person among industrialized nations, without comparable measurable higher outcomes

  • Unequal access creates gaps

  • High employer costs weaken America in today’s global economy

  • Americans are increasingly angry about high costs, and how they are distributed


Mckinsey international report
McKinsey International Report

Potential Savings (2003)

  • Drugs - $66 billion

  • Physician remuneration - $58 billion

  • Nursing staffing and complexity - $50 billion

  • Provider profits and taxes - $75 billion

  • Administration costs (insurance only) - $98 billion

  • “Other” - $147 billion (includes inefficient incentives)


Mckinsey international report1
McKinsey International Report

Conclusion:

“ Most components of the US healthcare system are economically distorted . . . . No single factor is either the cause or the silver bullet for reform actions.”


The overall challenges
The Overall Challenges

  • Expand Access & Coverage

  • Reduce Costs/Spending

  • Improve Quality


Expand access coverage
Expand Access & Coverage

  • Major focus of current reform

  • Restructure the insurance market

  • Expand government support for lower income individuals and families beginning in 2014

  • Mandated coverage beginning in 2014


Insurance reforms
Insurance Reforms

  • Individuals/employers have opportunity to purchase coverage through State Exchange starting in 2012

    • Require all insures to offer coverage that meets essential benefits package including preventative coverage

    • Subsidies for low-income individuals (2014) on a sliding scale up to 400% FPL

    • Limits on out of pocket expenses

    • State specific, includes national plan overseen by Federal Office of Personnel Management

  • Projected to cover 95% of legal residents


Medicaid expansions
Medicaid Expansions

  • Expand coverage to everyone at or below 133% of the Federal Poverty Level in 2014

  • Increased Federal funding

    Current Maine Medicaid

    • 100% FPL Childless Adults

    • 200% FPL Children

    • 200% FPL Parents of Children


How reform is paid for
How Reform is Paid For

  • Elimination of subsidy to insurance companies for Medicare Advantage

  • Reduced Medicare reimbursement to hospitals (CAH’s excluded)

    • Across the board cuts to payments

    • Reduced payment and penalties for complications

    • Reduce payment for readmissions


How reform is paid for1
How Reform is Paid For

  • Increased taxes

    • Medicare tax on high incomes (2013)

    • “Cadillac Plan” tax (2018)

    • Assessments on other providers/insurers

  • Closing of the “Doughnut Hole”

  • Geographic variation

    • $200 million per year lowest quartile states (2011 & 2012)

    • IOM study


Insurance reforms 2010
Insurance Reforms - 2010

  • Community rating (standard) pricing

  • Continued coverage up to age 26

  • Prohibit insurers from denying coverage for children based on pre-existing conditions

  • Ban on lifetime coverage maximums

  • Minimum medical loss ratio required


Insurance reforms ultimately
Insurance Reforms - Ultimately

  • Ban on denying coverage to adults for pre-existing conditions

  • No cost sharing – preventative services

  • Elimination of annual limits

  • Limits on FSA’s and HSA’s

  • Individual mandate to buy coverage (2014) penalties phased in

    • Individual penalty – $95 (2014) - $695 (2016)

    • Family maximum $2,085 (2016) or 2.5% household income


Employer provisions current
Employer Provisions - Current

  • Current tax credit for small business

    • Up to 50 FTE’s/avg. wages $50,000

    • Employer cont. at least 50% of cost

    • Not available to sole prop./self-emp.

  • Maximum credit 35% for 10 or fewer FTE’s and avg. wages less than $25,000

  • Credit to withheld taxes for nonprofits

  • Starting 2014 – 2 year transition 50% credit


Employer provisions future
Employer Provisions - Future

  • Current health plans grandfathered

  • Employers of 50 FTE’s or more may be required to pay an assessment for coverage

    • Full time = 30 hours per week

    • Seasonal employees with fewer than 120 days excluded

  • Assessment different if you offer insurance or not – and if employees are subsidized by the exchange


Employer provisions future1
Employer Provisions - Future

  • All employers who offer insurance to provide vouchers for employees not taking insurance

  • Employers of 200 FTE’s or more must automatically enroll employees

  • Employers must provide coverage information on W-2 forms

  • Exclusions available for hardship ?


Other provisions
Other Provisions

  • Various Quality Intiatives

  • Medicaid demonstration projects

  • Expansion of various “rural” provisions

  • Improved Medicaid reimbursement for Primary Care Physicians (2013)

  • $50 million for liability reform demonstration projects


Outstanding issues challenges
Outstanding Issues / Challenges

  • Cost drivers not directly addressed

  • Complexity of implementation

  • Physician payment “fix”

  • Adequacy of fines for not buying coverage

  • Political will to implement payment cuts and taxes


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