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Healthcare in the Obama Era Presented by Pat Bourne Agenda Status of healthcare reform and timing for action BCBSA strategy Obama “Leading the Charge” Set principles Proposed $634 B “reserve fund” House Three committees working with Leadership to draft bill Political Update

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healthcare in the obama era

Healthcare in the Obama Era

Presented by

Pat Bourne

agenda
Agenda
  • Status of healthcare reform and timing for action
  • BCBSA strategy
political update
Obama

“Leading the Charge”

Set principles

Proposed $634 B “reserve fund”

House

Three committees working with Leadership to draft bill

Political Update

Gearing up for targeted Spring/Summer Committee mark-ups

  • Senate
  • Kennedy/Baucus stakeholder meetings
  • Separate bills likely
  • Married before floor

Goal: Enact Health Care Reform This Year

congress readying bills now
Congress Readying Bills Now

Finance Committee bipartisan process

Mark-up: Week of June 11

  • HELP Committee: Legislative proposal expected 5/22
    • Bipartisan stakeholder meetings continuing
  • Expect to “marry” bills before Floor Action
congress readying bills now cont d
Congress Readying Bills Now (cont’d)

House/Senate Committee markups: June/July

Floor: Action in both chambers before August recess

Conference:Planned for September

Goal: Enactment this year

possible senate scenarios
Possible Senate Scenarios

70+ Votes

Regular Order

  • Fully bipartisan
  • Government plan option unlikely
  • No full regulatory connector
  • Overall less government intrusion
  • 51 Votes
  • Reconciliation
  • Highly partisan
  • Byrd rule may prevent extraneous matter
  • Comprehensive bill difficult
  • Likely threats:
    • Medicare buy-in
    • Government plan
    • Possible insurance reforms attached to subsidy
    • Entitlement expansion
  • 60 Votes
  • Regular Order
  • Little bipartisan support
  • Moderate Ds/Rs are key
  • Likely compromise on government plan
  • State connector possible
major proposals
Major Proposals

Priorities: Government Plan, Exchange, Insurance Reforms

bcbsa strategy
BCBSA Strategy
  • Continue to build on Pathway
  • Implement comprehensive strategy on:
    • Government plan
    • Exchange
    • Insurance reforms

Major focus

pathway to covering america
Pathway to Covering America

Encourage Research on What Works

Change Incentives to Promote Better Care

Empower Consumers and Providers

Promote Health and Wellness

Foster Public-Private Coverage Solutions

2009 bcbsa strategy
2009 BCBSA Strategy
  • Continue to build on Pathway
  • Implement comprehensive strategy on:
    • Government plan
    • Exchange
    • Insurance reforms

Major focus

government plan
Government Plan

Proponents urging:

  • Medicare-like program for everyone as option
  • Medicare buy-in for 55-64

Why?

  • Reduce provider costs through “bargaining power” of government plan
  • Increase competition/lower administrative costs
  • Some want “single payer”
government plan the vision
Government Plan: The Vision

Employers and individuals sign-up with exchange and individuals select plan from among government approved options

EMPLOYER

INDIVIDUAL

IND

IND

IND

IND

EE

EE

EE

EE

EE

EE

Exchange

BCBS United Aetna Kaiser CIGNA Public Plan

Government Plan

Government Subsidies

government plan bcbsa position
Government Plan: BCBSA Position
  • Support reform meeting President’s objectives
  • Government-run plan is unnecessary/will be devastating
    • Most will lose current employer coverage
      • 118 million shift to government plan overnight (Lewin)
    • Providers will be underpaid, creating major access issues: long waits, fewer providers, rationing
    • Needed delivery system reforms will be undermined
      • Private sector free to innovate with excellent results
      • Government stifled by political pressures
    • Government will use built-in advantages and lead to single payer
momentum strong for government plan
Momentum Strong for Government Plan

House: Expect Medicare-like plan

  • Leadership/Committee chairs support

Senate: Strong push to include in bills

  • Finance Committee: Looking for “compromise”
    • Government must negotiate, can’t use Medicare rates
    • Only triggered if certain conditions met
  • HELP Committee likely to include
  • 16 Ds signed “Government Program Essential” letter
slide15

Momentum Strong for Government Plan (cont.)

  • Proponents continue aggressive campaign
    • Howard Dean/Moveon.org continue outreach
  • Many reluctant to oppose
    • Widespread fear of angering President/Ds
    • Want to wait for actual details
  • But…
    • Nelson vocally opposed, poised to lead
    • Rs and conservatives rallying in opposition
      • Letter from high profile conservatives; Gingrich/others speaking out
    • WSJ editorial very strong; Washington Post questions need
    • Employers opposing15
couldn t the government plan negotiate rates
Couldn’t the Government Plan Negotiate Rates?

Medicare experience: Administered pricing quickly followed enactment

1965

1980s-2003

1972

1981

1984

Today

  • Deficit reduction bills limit increases in provider rates
  • Medicare enacted
  • Fees based on private sector usual and customary charges
  • Administered pricing
  • MEI limits provider updates
  • Sec. 223 limits cap Hospital rates at 112%
  • Hospital cap reduced to 108%
  • Balance billing limitations enacted
  • Hospital cost-based reimbursements phase-out
  • Physician rates: 80% of commercial
  • Hospital rates: 70% of commercial
exchange
Exchange

Proponents urging: National/regional insurance exchange to:

  • Simplify purchasing
  • Enhance competition
  • Increase choice
  • Viewed as key regulatory enabler of health care reform and gateway to government plan
exchange bcbsa position
Exchange: BCBSA Position

Offer alternative: State Insurance Marts

  • Federal exchange would:
    • Increase cost by:
      • Duplicating administrative functions and,
      • Turning group market into individual market
    • Likely to become “Super Regulator”
    • Invite federal regulation
  • BCBSA alternative – SIMs, would:
    • Provide a less costly, less complex, more transparent and faster alternative to a new federal bureaucracy
state insurance marts sims
State Insurance Marts (SIMs)

Reaction to date: Highly positive response

insurance reforms
Insurance Reforms

Proponents urging:

  • “Guarantee issue” in individual market
  • Community rating (no health status adjustments) in individual/small group markets
  • Other (e.g., minimum loss ratios)

Why?

  • Guarantee access
  • Assure “fair” rating
insurance reforms23
Insurance Reforms

Proponents urging:

  • “Guarantee issue” in individual market
  • Community rating (no health status adjustments) in individual/small group markets
  • Other (e.g., minimum loss ratios)

Why?

  • Guarantee access
  • Assure “fair” rating
prognosis what s likely
Prognosis: What’s Likely?

Major push for comprehensive reform this year

  • Substantial desire for reform, more organized than during Clinton
  • Kennedy “legacy” should not be underestimated
  • BUT, health care reform is complicated and expensive

If consensus/$$ not possible, smaller bill(s) very likely

  • Insurance reforms (GI/CR)
  • Exchange in small group market
  • Medicare buy-in 55 to 64
  • Comparative effectiveness institute
  • Pay for performance
  • Other health plan mandates