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Health Care & Insurance Legislation: 2007. Ventura County Association of Health Underwriters February 23, 2007. Alan Katz, RHU CAHU Vice President, Public Affairs. Health Care Legislation 2007. Health Care Reform Everything Else Today we’ll focus on health care reform.

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health care insurance legislation 2007

Health Care & Insurance Legislation: 2007

Ventura County Association of Health Underwriters

February 23, 2007

Alan Katz, RHU

CAHU

Vice President, Public Affairs

health care legislation 2007
Health Care Legislation 2007
  • Health Care Reform
  • Everything Else
  • Today we’ll focus on health care reform

Health Care & Insurance Legislation: 2007

what we re up to today
What We’re Up To Today
  • Why Health Care Reform
  • The Reform Proposals
  • Agents Focus
  • CAHU’s Healthy Solution (Draft)
  • Taking Action
  • Conclusion / Q&A

Health Care & Insurance Legislation: 2007

why now
Why Now.
  • Reason is found in the key messages proclaimed by the four leading advocates of reform:
  • Governor Arnold Schwarzenegger
  • Senate Republicans
  • Senate President Pro Tempore Don Perata
  • Assembly Speaker Fabian Nunez

Health Care & Insurance Legislation: 2007

slide5

Governor’s Key Messages

  • Current System is Broken
    • Been a problem for a long time
    • Sacramento hasn’t addressed it
  • The “Hidden Tax” of the Uninsured
    • Need to eliminate the tax if we’re gong to keep the state’s economy strong
  • Everyone is responsible for the solution and everyone has something to gain
    • The gain outweighs the pain for everyone

Health Care & Insurance Legislation: 2007

slide6

Senate Republican’s Key Messages

  • Current System Needs Strengthening
  • Provide Californians with Access and Choice
  • Make the Health Care System More Reliable
  • Introduce No New Taxes
    • Or fees or whatever you want to call them

Health Care & Insurance Legislation: 2007

slide7

Senator Perata’s Key Messages

  • Current System is Broken
  • Share Responsibility: No More “Free Riders”
    • Focus is on 4.2 million uninsured in “working families”
    • Employers and employees share cost
  • Focus Competition on Price and Quality … … Not Underwriting
    • Through current plans or MRMIB-run “Connector”
    • Connector is optional for businesses and individuals

Health Care & Insurance Legislation: 2007

slide8

Speaker Nunez’s Key Messages

  • Current System is Broken
  • Build on Existing Employer-based System
    • Single Payer not politically practical
  • The Insurance Marketplace Needs Reforming
  • Insist on Affordability for Working Families
    • Through public and private programs

Health Care & Insurance Legislation: 2007

slide9

Why This Matters: Three Political Laws

  • The Law of Political Reality:Political Reality trumps Real Reality for all parties at all times
  • The Law of Political Activity:Politicians are paid to address perceptions and that’s what they do
  • The Law of Political Reporting:The media is paid to report on what politicians do and that’s what they do

Health Care & Insurance Legislation: 2007

slide10

The Three Laws and the Uninsured

  • Media Reports an Increase in Uninsured
  • Politicians Repeat the Story Deploring the Increase in the Number of Uninsured
  • Media Reports the Politicians Repeating the Media Story and Deploring the Increase in the Number of Uninsured

Health Care & Insurance Legislation: 2007

slide11

Comparison of Proposals

Individuals Covered:

Governor Schwarzenegger: All Californians

Senate GOP: Improves access

Senator Perata: Working families and all children

Speaker Nunez: Working Californians and all children. Unemployed adults by 2012

Individual Mandate:

Governor Schwarzenegger: Yes

Senate GOP: No

Senator Perata: Only for working families

Speaker Nunez: None

Health Care & Insurance Legislation: 2007

slide12

Comparison of Proposals

Employer Mandate:

Governor Schwarzenegger: Pay or Play (4%)

Senate GOP: None

Senator Perata: Pay or Play (sliding percentage of payroll)

Speaker Nunez: Pay or Play

Purchasing Pool:

Governor Schwarzenegger: Yes

Senate GOP: No

Senator Perata: Yes

Speaker Nunez: Yes

Health Care & Insurance Legislation: 2007

slide13

Comparison of Proposals

Guarantee Issue:

Governor Schwarzenegger: Yes

Senate GOP: No

Senator Perata: Yes and community rating

Speaker Nunez: Prohibits exclusions for pre-existing conditions

Cap on Administrative Costs:

Governor Schwarzenegger: Yes

Senate GOP: No

Senator Perata: No

Speaker Nunez: No

Health Care & Insurance Legislation: 2007

slide14

Comparison of Proposals

Other Insurance Market Reforms:

Governor Schwarzenegger: Rates based on age and geographic area in individual market

Senate GOP: Conformity with Federal HSAs, permit limited benefit plans, permit greater flexibility for coverage rates in Small Group Market to reflect lifestyle behavior

Senator Perata: Community rating

Speaker Nunez: Requires uniform benefit designs inside and outside of purchasing pool

Health Care & Insurance Legislation: 2007

slide15

Comparison of Proposals

Improve Access to Medical Services:

Governor Schwarzenegger: Removes barriers to expansion of lower cost health models (retail based medical clinics)

Senate GOP: Allows hospitals to refer uninsured to clinics; encourage RN-run clinics; financial encouragement of clinics

Senator Perata: None

Speaker Nunez: None

Health Care & Insurance Legislation: 2007

slide16

Comparison of Proposals

Cost Containment:

Governor Schwarzenegger: Regulatory reform, pilot to combine workers comp with traditioal coverage, reward healthy behavior, data reporting, etc.

Senate GOP: Expansion of clinics, pricing transparency, etc

Senator Perata: Purchasing pool, evidenced-based practices

Speaker Nunez: Disease management, technology, simplify benefit designs, promote healthy lifestyles, etc.

Health Care & Insurance Legislation: 2007

slide17

Comparison of Proposals

Financing:

Governor Schwarzenegger: Federal Government ($5.5 billion), reallocates current state spending, employer contributions, employee contributions, fees on hospitals and phusician contributions

Senate GOP: Federal Government ($2.2 billion), Smoking fees to fund MRMIP, reallocates current state spending

Senator Perata: Federal Government (Medicaid/Healthy Families)

Speaker Nunez: Federal Government (Medicaid/Health Families)

Health Care & Insurance Legislation: 2007

slide18

Agents: A Need for Focus

Lots of Hot Button issues

Lots of interest groups focused on each element of the plan

For Agents, two key questions:

  • If the provision becomes law will it harm our profession or our clients?
  • Is changing the provision an absolute necessity for other stakeholders?

Applying this means agents should focus on …….

Health Care & Insurance Legislation: 2007

slide19

Agents Focus: Issue #1

Carrier Administrative Expense Cap

  • Governor would require carriers to spend 85% of premium dollars on medical claims
  • Result: Little or no funds left for distribution

Concern:

  • Limits funds available for distribution
  • Likely to deter new entrants into the market
  • Doesn’t guarantee lower costs, just eliminates agents and reduces customer service levels

Health Care & Insurance Legislation: 2007

slide20

Agents Focus: Issue #2

  • Purchasing Pool
    • Availability varies by proposal, but all require some insureds to purchase through a state pool

Concern:

    • Un-level playing field
    • Even when not required for all (Governor) the “anti-crowd out” provisions are weak

Health Care & Insurance Legislation: 2007

slide21

Agents Focus: Issue #3

  • Mandate to Issue:
    • Guarantee Issue in the individual market
    • Consumers can buy coverage at any time time
    • Assumption: Enforcement will work

Concern:

    • Failure to enforce mandate to purchase will result in dramatic premium increases and commission reductions or eliminations
      • Current requirement for auto insurance is only 75% effective

Health Care & Insurance Legislation: 2007

slide22

What’s Required: Get Involved

  • Join Health Underwriters – Today!
  • Contribute to CAHU PAC – Today!
  • Be a communicator
    • Inform clients of what’s at stake
    • Respond to articles in your local paper
    • Volunteer to speak in your community
    • Attend town hall meetings
    • Get involved in local campaigns
    • Meet with legislators in their districts

Health Care & Insurance Legislation: 2007

slide23

CAHU’s Healthy Solutions

  • Will serve several purposes
    • Moves us from opposing everything to supporting something
    • Creates a context in which our key issues can be addressed
      • The Cap
      • The Pool
      • The Mandate
    • Provides a yardstick against which all proposals can be measured
  • Still being finalized. Discussing a Draft.

Health Care & Insurance Legislation: 2007

slide24

CAHU’s Key Messages

  • All Californians deserve a health care system which
    • delivers both world class care and financial security
    • is accessible, affordable and fair
    • boosts the state’s economy, attracts news businesses and strengthens existing enterprises
    • is realistic about what one state can do

Health Care & Insurance Legislation: 2007

slide25

Requirements of Reform

CAHU believes a Healthy Solution is one which:

  • neither bankrupts families nor busts the state’s budget.
  • assures all Californians have at least basic health care coverage.
  • provides the state’s diverse population with diverse choices.
  • promotes ongoing and long-term innovation and experimentation to enable the state’s health care system to adapt over time to evolving needs.
  • assures consumers access to meaningful information and expert advice and counseling.

Health Care & Insurance Legislation: 2007

slide26

The Yardstick

  • Affordability
    • Can the state afford the plan?
    • Can the state’s citizens afford the plan?
  • Universal Participation
    • Does it assure every Californian has basic health care coverage?
  • Cost Containment
    • Does it constrain rapidly rising medical costs?

Health Care & Insurance Legislation: 2007

slide27

The Yardstick

  • Consumer Choice
    • Does it empower Californians to find and choose the health care coverage which best fits their unique needs?
  • Evolving Needs
    • Does it enable health care coverage to evolve with changes to the state’s population, their needs and expectations?

Health Care & Insurance Legislation: 2007

slide28

Key Provisions: Access for All

Low Income: Expanded state programs and subsidies

  • At launch help lowest income levels and expand only as state budget can support
  • Encourage personal responsibility by assuring all households above 100% of FPL pay a portion of the premium
  • Subsidies are targeted to average cost of basic coverage and are to be used in the traditional marketplace – no purchasing pool

Health Care & Insurance Legislation: 2007

slide29

Key Provisions: Access for All

Above 400% of FPL: Mandate to Buy.

  • All Californians not eligible for state sponsored programs must purchase basic coverage
    • Two versions: Catastrophic and Core
  • Enforcement through tax code, drivers license and other state-controlled privileges, and reduced benefits for those who delay

Health Care & Insurance Legislation: 2007

slide30

Key Provisions: Access for All

Carrier Mandate to Sell

  • Once 90% of Californians are covered, carriers will be required to sell on a guarantee issue basis
    • Until 90% coverage is achieved, expand MRMIP to be a true insurer of last resort
    • Even under guarantee issue, pre-existing condition exclusions and rate-ups may be applied
      • Length of exclusion and rate-up tied to duration previously uninsured

Health Care & Insurance Legislation: 2007

slide31

Key Provisions: Financing

  • Individuals above 100% of FPL contribute to cost, even in government programs
  • a new health plan fee based on a carrier’s overall market share in the state
  • Increase on health related sin taxes:
    • Tobacco
    • Alcohol beverages
    • Guns and Ammunition
  • a new tax on hospital operating revenues and physician gross revenues or some other mechanism for capturing support from self-insured plans

Health Care & Insurance Legislation: 2007

slide32

Key Provisions: Constraining Costs

  • Pay for performance
  • Electronic Health Records
  • Electronic Rx
  • Evidence based medicine
  • Hospital error reduction programs

Health Care & Insurance Legislation: 2007

slide33

CAHU Healthy Solutions: A Reminder

The package frees CAHU to focus on what’s important:

  • Caps
  • Pools
  • Mandates

Health Care & Insurance Legislation: 2007

slide34

Dealing with Reality

  • There’s tremendous momentum for health care reform
  • The drive comes from all sides and both parties
  • Something is likely to happen
    • 2007: Education Phase
    • 2008: Action Phase

Health Care & Insurance Legislation: 2007

slide35

Ingredients for Negative Change

Political Perception of a Need for Change

+

An Overwhelming Desire to Be Perceived as Doing Something

=

Disaster

Health Care & Insurance Legislation: 2007

slide36

Ingredients for Positive Change

Political Perception of a Need for Change

+

A Market in Need of Agents

=

Opportunity

Health Care & Insurance Legislation: 2007

slide37

Keeping Things in Perspective

We’ve faced challenges like this before:

  • 1990-1993: AB 1672
  • 1993-1994: ClintonCare
  • 1996: Single Payor Initiative

We have time to marshal our resources

  • Debate is underway, but still in the “education” phase
    • The “battle” phase is months away
  • We can catch up – and quickly

Health Care & Insurance Legislation: 2007

slide38

What’s Required: Stay Informed

  • Helpful publications:
  • Health Underwriter newsletters and magazines
  • California Broker
  • Helpful web sites:
  • Health Underwriters:
  • www.CAHU.org
  • The Governor’s Site:
  • www.StayHealthyCalifornia.com
  • My Blog (a shameless plug):
  • www.AlanKatz.WordPress.com

Health Care & Insurance Legislation: 2007

slide39

Health Care Reform: An Opportunity

  • Agents have tremendous power:
    • Subject matter expertise
    • Clients that are constituents
    • Presence in every community
  • If we work together …
  • … If we stay focused …
  • We can make health care reforma change for the better for our clients and our profession

Health Care & Insurance Legislation: 2007