Health System Reform

1. Health System Reform Work In Progress October 24, 2007-

2. The Reform Agenda • Encourage personal responsibility in both the financing and management of heath care. • Make health insurance more affordable and accessible to all Utahns. • Support a free and transparent market place. • Endorse wellness and prevention programs • Improve health system outcomes • Promote measures to increase the portability of health insurance.

3. The Reform Agenda • Make it easier for the small business owner to provide the means for employees to obtain health insurance. • Increase the use of pre tax dollars in the purchase of health insurance. • Enhance choice and suitability of plan design to meet individual needs. • Encourage the use and availability of electronic medical records.

4. Three Choices • “We have three choices: We can do nothing and wait for the federal government-run system to be imposed on us. We can nibble at the edges and wait for a federal government-run system to be imposed on us, or we can do something bold and fix the system by taking Utah’s health care future into our own hands.” Bruce Reese, President and CEOBonneville International CorporationCo-chair, Health Care Working Group, United Way Financial Stability Council

5. Current Situation • In Utah, 306,000 people are uninsured • This represents 12% of the population • Health care costs are rising • Since 2000, health insurance premiums have doubled • In 2006, costs increased twice the rate of earnings, and more than double the rate of inflation • More businesses and individuals are at risk • The share of business that offer health benefits has dropped from 70% to 60% since 2000 • People fear that losing a job may mean losing health insurance

6. Premium Costs are Increasing *Premiums for 1997-1999 are imputed Source: Kaiser Family Foundation

7. Payment Shares Have Changed Source: Centers for Medicare & Medicaid Services, National Health Expenditure Accounts

8. The Consumer’s Role • More informed financial choices: • Selection of health-related financial products (such as Health Savings Accounts) • Better manage their health from wellness to acute conditions to chronic care • Tailor insurance to meet unique needs • Obtain and interpret available information to derive greater value from their health system

9. IBM Report on Consumers • “In this emerging environment, consumers will quickly become more motivated to make better health and wealth decisions… Health plans that recognize the “retailization” of healthcare and then successfully transform to provide new delivery models and services will prosper, while those that fail to do so will face rapid marginalization…

10. IBM Report on Consumers • “Health plan differentiation will be driven increasingly by the design attributes of product and services and equally important factors beyond cost… • “This will require health insurers to change their leadership, culture, competencies, business models, organizational structures, sourcing strategies, processes and information technology to meet the changing market and consumer preferences.”

11. Consumers, Incentives, and Value • Shift from employer-based to either government-based or individually purchased coverage • Consumers will bear increasing responsibilty and accountability • Emphasis will shift to prevention, chronic care management, and better coordination • Plan and providers must align incentives to change consumer behaviors, anticipate needs, and provide high value care

12. Health System Reform

13. Health Insurance Exchange • A set of insurance market reforms that: • Facilitate the purchase of portable insurance by individuals and families using pre-tax dollars • Expand consumer choices • Provide transparency for consumer decision-making • Effectively and fairly spread risk • Encourage competition and efficiency based on value • Facilitate combining premium payments from multiple sources • These reforms would help move from defined health benefit to a defined contribution

14. Health Insurance Exchange Chart Employers and Individuals • Sole Proprietors • Small Businesses • Non-working Individuals • Non-offered Individuals • Exchange • Pre-tax dollars • Risk pooling • Modified community rating • Broad selection • Portability • Subsidy Insurers

15. Benefits to Employees • Employees select any plan in the marketplace • They have access to information and cost comparisons • Premiums can be paid with pre-tax dollars by anyone with a paycheck • Coverage is portable and flexible

16. Benefits to Employers • Simplifies administration • No need to research & negotiate • Don’t have to choose one plan for everyone • Contribution amounts are voluntary • Contributions from multiple employers can be pooled

17. Advantages of the Exchange • Affordability (Tax Savings) • Combining Resources • Simplified Process • Private Sector Solution • Real Choice • Portability and Flexibility • Shift to Defined Contribution • Reaches Non-Traditional Workers

18. A Federalist Approach to Health System Reform • If we do nothing as a state, the federal government will “fix” it for us. This is a worst case scenario. • A “one size fits all” national healthcare system doesn’t incorporate unique state differences • Utah must be able to craft reforms that match our unique needs • States are laboratories of innovation • “[A] single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments…” (Supreme Court Justice Louis Brandeis)

19. Why Now? • This problem will not go away, in fact, it’s getting worse every day. • We are best positioned to make meaningful changes now which will help the state for generations. • No one can do this alone – everyone must work together to address this problem.