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Health Care Reform Today: The Federal Perspective. Jean M. Abraham, Ph.D. Division of Health Policy & Management School of Public Health University of Minnesota October 26, 2011. Motivation: Costs and Coverage. Costs Projected U.S. spending on health care in 2011 $2.7 trillion

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health care reform today the federal perspective

Health Care Reform Today: The Federal Perspective

Jean M. Abraham, Ph.D.

Division of Health Policy & Management

School of Public Health

University of Minnesota

October 26, 2011

motivation costs and coverage
Motivation: Costs and Coverage
  • Costs
    • Projected U.S. spending on health care in 2011
      • $2.7 trillion
      • $8,666 per capita
    • 17% of GDP
    • Since 2000, inflation-adjusted costs have been growing at about 5.5% per year, considerably faster than overall economic growth.
  • Coverage
    • 17.6% of < 65 population lacks health insurance
the who and the what of implementation
The Who and the What of Implementation
  • Who
    • Multiple Federal government agencies involved
      • Health and Human Services
        • CMS
          • Center for Consumer Information and Insurance Oversight (CCIIO)
            • http://cciio.cms.gov/resources/regulations/index.html
    • State governments
  • What
    • Federal agencies engaged in the administrative rule-making process
      • Generate detailed “rules” corresponding to legislative provisions
        • Proposed rules with comment periods; interim final rules; final rules
key populations and provisions
Key Populations and Provisions
  • Individuals
    • Uninsured
    • Individuals who directly purchase insurance
    • People with employer-sponsored insurance
    • Medicare beneficiaries
  • Health insurers
  • Health care providers
coverage expansion in 2014
Coverage Expansion in 2014
  • Medicaid
    • Expand eligibility to all individuals in families earning less than 133% FPL
    • Children
      • Current eligibility varies by state, ranging from 100% FPL to 300% FPL
      • 20 states directly affected
    • Adults
      • Eligibility varies by pregnancy, working parents, childless adults (not covered in 45 states)
    • CBO projected net increase of 16 million by 2019
coverage expansion in 20141
Coverage Expansion in 2014
  • Subsidized private insurance
    • Premium assistance credits
    • Individuals with family incomes of 133% FPL– 400% FPL who do not have an offer of employer-sponsored insurance
    • Subsidies based on a sliding-scale
      • 3%-9.5% of income is maximum dollar amount families would pay for coverage
    • Additional cost-sharing subsidies for very low income
    • CBO projects a net increase of 24 million in Exchanges
exchanges
Exchanges
  • Organized marketplaces for individuals and small employers to purchase insurance
  • Functions
    • Certify qualified health plans (e.g., marketing, provider choice, quality)
    • Determine open enrollment period
    • Standardize enrollment process
    • Provide individuals and employers with price and quality information on available plans in standard format
    • Create a web portal to shop
regulation of new private health plans
Regulation of ‘New’ Private Health Plans
  • No lifetime limits on benefits (2010)
  • No ‘unreasonable’ annual limits
  • Cannot rescind coverage (2010)
  • No denials of coverage for children with pre-existing conditions (2010)
  • No exclusions or delays in coverage for particular services for children with pre-existing conditions (2010)
  • Require qualified health plans to provide certain preventive services with zero cost-sharing (2010)
  • Medical loss ratio regulation (2011)
individual mandate a political hot potato
Individual Mandate: A Political “Hot Potato”
  • U.S. citizens and legal residents must have qualifying health coverage
  • Tax penalty the greater of $695 per year up to 3 times that amount for a family or 2.5% of household income
  • Phased in through 2016
  • Exemptions
    • Financial hardship waiver if lowest cost plan is more than 8% of income
    • < 3 month gaps
    • Religious objections
    • Undocumented immigrants
    • Prisoners
  • Playing out through the court system
  • Potential implications for Exchange functioning and premiums
employer based population
Employer-based population
  • Dependent coverage expansion (Plan year after 9/23/10)
    • Up to age 26
    • Included on family coverage policy
  • Flexible Spending Account changes
    • No OTC medicines without prescription (2011)
    • Limit contribution to $2500 / year (2013)
  • Small business tax credit (2010)
    • Very small (<25) , low-wage (< $50K/year average)
  • Wellness benefits
    • Small employers (2011)
  • Employer-shared responsibility requirement (2014)
medicare beneficiaries
Medicare Beneficiaries
  • Medicare Part D Prescription Drug Coverage
    • Higher income enrollees pay higher premiums
      • Aligns with current Part B policy
      • Affects about 5% of beneficiaries
    • Closing the “donut” hole
      • $2,830-$6,440 in total covered spending in 2010
      • $250 rebate in 2010 for those who hit the gap
      • 50% discount on brand-name drugs in 2011
      • Gradual reduction in gap cost-sharing until it hits 25% by 2020
  • Medicare Advantage
    • Downward adjustment in health plan payment rates from the federal government
implications for providers
Implications for Providers
  • Annual Medicare payment rate updates reduced for most providers (2010/2012)
  • Medicare & Medicaid Disproportionate Share Hospital payments decline (2014)
    • Medicaid payment rates increase in 2013/2014 to 100% Medicare levels for primary care
  • Demonstrations in Delivery and Financing Innovation (2012-)
    • Medical Homes
    • Bundled Payments
    • Accountable Care Organizations
  • Increased reporting of data for quality improvement, resource tracking, and disparities reduction (2012)
demand for medical care workforce
Demand for Medical Care & Workforce
  • Increased demand for services
    • Evidence from research (Buchmueller et al. 2005)
      • Outpatient visits
        • 1-2 additional visits per year on average
        • Bigger response for women than men
        • Bigger response of going from uninsured to Medicaid than from uninsured to private insurance
      • Inpatient utilization
        • Small but significant increase in demand of .16 to .24 days per year going from uninsured to privately insured
    • Extensive geographic variation
      • Prior number/concentration of uninsured
      • Existing provider capacity
pressure on primary care
Pressure on Primary Care
  • Research Questions
    • How much additional primary care will be demanded across states, given the coverage expansion?
    • How many more primary care providers will be needed?
  • Methods
    • Medical Expenditure Panel Survey, American Community Survey, and MGMA productivity data
  • Findings
    • 15.07-24.26 million additional visits by 2019
    • 4,307-6,940 additional primary care physicians

Hofer, Abraham, and Moscovice, Milbank Quarterly (2011)

nursing
Nursing
  • Registered nurses are the largest occupation in the health care sector.
  • Nursing shortage (Buerhaus 2008)
    • 285,000 growing to 1 million by 2020 with demographic shifts
    • Upward wage pressure has had a slight effect, but vacancy rates are still sizable, particularly in certain areas
  • Factors
    • Shortage of nursing school faculty
    • Aging nursing supply simultaneous with increasing demand
nursing specific provisions
Nursing-specific Provisions
  • Increasing the nursingsupply
    • Grants and loan programs for nurses
      • Advanced nursing education grants
        • Removes 10% cap on doctoral education
        • Eligibility includes nurse midwives
      • Loan repayment and scholarship programs
    • Funding for National Health Service Corps
  • Schools of nursing
    • Education, practice, and retention grants
    • Comprehensive geriatric education programs
nursing specific provisions1
Nursing-specific Provisions
  • Increased resources
    • Grants for nurse-managed health clinics to provide care to underserved/vulnerable populations
    • Maternal, infant, and early childhood home visit provisions
  • Increased analysis of workforce needs
    • National healthcare workforce commission
    • State healthcare workforce development
concluding observations
Concluding Observations
  • “Coverage first, cost second” approach to reform
    • Improvement in access to coverage, but not likely to slow the growth of costs.
    • Affordability through income re-distribution, not necessarily efficiency gains in delivery and financing
    • Important infrastructure investments relating to delivery system, but likely insufficient to bend the cost curve
    • Uncertainty about financing mechanisms and long-run costs
  • Implementation and impact
    • Administrative rule-making continues
    • State governments are working hard
    • Constitutionality is yet to be determined