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National Health Care Reform: Issues and Outlook. Worldwide Employee Benefits Network Cleveland, OH. April 16, 2009. James C. Capretta Fellow, Ethics and Public Policy Center email: [email protected] Content. Issues driving reform agenda Outline of the emerging Congressional plan

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National health care reform issues and outlook

National Health Care Reform:Issues and Outlook

Worldwide Employee Benefits Network

Cleveland, OH

April 16, 2009

James C. CaprettaFellow, Ethics and Public Policy Center email: [email protected]


Content
Content

  • Issues driving reform agenda

  • Outline of the emerging Congressional plan

  • Issues for job-based coverage:

    • Potential “pay or play” dynamic

    • Minimum benefit structure

    • Potential changes in the federal tax preference

  • Issues to watch:

    • Paygo: support for offsets?

    • “Budget reconciliation”?

    • Sufficient cost-side agenda?


The census data
The Census Data

Uninsured

45 million

Military

11 million

4%

15%

Employer-Sponsored

177 million

Medicaid

40 million

13%

59%

14%

Medicare

41 million

9%

Other Private

27 million

Source: Income, Poverty, and Health Insurance Coverage in the United States: 2007, Census Bureau, Table C-1.

3


Additional data sources
Additional Data Sources

Source: “A Primer on the CPS Estimate of America’s Uninsured,” National Institute for Health Care Management, August 2006.

4


Cost pressure
Cost Pressure

Sources: Income, Poverty, and Health Insurance Coverage in the United States: 2006, Census Bureau, Table A-1, and CMS National Health Expenditure Data (www.cms.gov).

5


Firm size public insurance and the uninsured
Firm Size, Public Insurance, and the Uninsured

Source: Notes, Employee Benefit Research Institute, Vol. 26, No. 10, October 2005, Figure 3.

6



The massachusetts connector
The Massachusetts Connector

Some Key Features

  • Merges individual and small group markets.

  • Takes premiums and pays insurers on behalf of eligible enrollees.

  • Full federal tax preference retained for workers in small businesses.

  • Annual open enrollment.

  • Will receive premium subsidies from state for 100%-300% of poverty enrollees.

  • Young enrollee products.

Eligible Enrollees

Insurers

Non-Working Individuals

BC/BS

Harvard Pilgrim

Sole Proprietors

The Connector

Small Business Employees (under 50)

Tufts

Fallon

Non-Offered Individuals

New Entrants, Others

8


Federal tax preference for job based plans
Federal Tax Preference for Job-Based Plans

2007 Total = $246.1 (billions)

Federal Payroll Taxes

Federal Income Taxes

Source: “Tax Expenditures for Health Care,” Joint Committee on Taxation, JCX-66-08, July 30, 2008.

9


The income distribution of the tax preference
The Income Distribution of the Tax Preference

Source: Tax Expenditures for Health Care, Joint Committee on Taxation, JCX-66-08, July 30 2008, p. 5.

10


Potential pay or play dynamic
Potential “Pay or Play” Dynamic

“Pay or Play” Employer Tax

$ Spent on Health Coverage

Per Worker

Employer-Sponsored Insurance (ESI) Premium Per Worker

Pay or Play Tax >

ESI Cost

Pay or Play Tax <

ESI Cost

Average Wage Per Employee


Budget reconciliation
Budget Reconciliation

  • Process for “reconciling” program spending within a Committee’s jurisdiction with the spending allocation assumed in the budget resolution.

  • Typically, committees are given to a date certain to report legislation meeting their target

  • The “Byrd Rule” allows removal of “extraneous” provisions from a “reconciliation” measure. Can a coherent health-care reform bill work with the Byrd Rule in effect?

Laws Enacted Via Reconciliation

  • 1981 spending reduction plan (Reagan).

  • 1993 tax and budget plan (Clinton)

  • 1997 Balanced Budget Act (Clinton-Gingrich)

  • 2001 tax cut (Bush)

The bottom line: budget reconciliation process allows bills to pass in the U.S. Senate with 51, instead of 60, votes.


Pay as you go
Pay-As-You-Go

Entitlement Cuts + Tax Increases = >

Entitlement Increases + Tax Cuts

(Ten-Year Test)


Longer range federal cost projections
Longer Range Federal Cost Projections

Medicaid

Medicare

Source: The Long-Term Budget Outlook, CBO, December 2007 (extended baseline scenario).


The cost side agenda
The Cost-Side Agenda

The Issue

The Remedies

“Engineering” a More Cost-Effective Delivery System:

  • Health Information Technology

  • Comparative Effectiveness Research

  • Reimbursement Reform (Pay for Performance, Value- Based Purchasing)

Sufficient?

*Excess Cost Growth is per capita spending growth rate in excess of per capita GDP growth.

*Source: The Long-Term Outlook for Health Spending, CBO, November 2007.

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