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Trends in Health Care 2007: Challenges and Implications Course #201398

Trends in Health Care 2007: Challenges and Implications Course #201398. Santa Barbara Association of Health Underwriters Pismo Beach – February 23, 2007. Alan Katz, RHU CAHU Vice President, Public Affairs. Health Care Legislation 2007. Health Care Reform Everything Else

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Trends in Health Care 2007: Challenges and Implications Course #201398

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  1. Trends in Health Care 2007:Challenges and ImplicationsCourse #201398 Santa Barbara Association of Health UnderwritersPismo Beach –February 23, 2007 Alan Katz, RHU CAHU Vice President, Public Affairs

  2. Health Care Legislation 2007 • Health Care Reform • Everything Else • Today we’ll focus on health care reform Trends in Health Care 2007

  3. What We’re Up To Today • Why Health Care Reform Now • How We Got to Where We Are Now • Agents Focus • CAHU’s Healthy Solution • Taking Action • Conclusion / Q&A Trends in Health Care 2007

  4. Why Health Care Reform Now • The Health Care Reform Drumbeat • Governor Schwarzenegger • Democratic Leadership • Presidential Candidates • Single Payer Coalition • Sicko • Why Now? Trends in Health Care 2007

  5. A Broken Health Care System • 6.5 million uninsured • Stressed emergency rooms • “The hidden tax” • Rising health care costs • Chronic illness; poor health choices • Medical errors • Financial strain, bankruptcy From a presentation by Governor’s staff Trends in Health Care 2007

  6. Legislative Leadership 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 Trends in Health Care 2007

  7. 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 Trends in Health Care 2007

  8. 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 Trends in Health Care 2007

  9. 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 Trends in Health Care 2007

  10. Polls Reflect the Drumbeat “Topped only by immigration (18%), health care (14%) is now second on Californians’ list of most important issues facing the state. In fact, 69 percent of residents and 72 percent of likely voters think California’s health care system is in need of major change.”– Public Policy Institute of California (September 20, 2007) “The findings show that a growing majority of voters (69%) express dissatisfaction with the way the health care system is working.” • Support for making reforms within the current system fell from 52% to 33%. • Support for replacing the current system with a state government-run system rose from 24% to 36%. – The Field Poll (August 22, 2007) Trends in Health Care 2007

  11. How We Got to Where We Are Now 2006: Governor Schwarzenegger makes health care reform a high priority in campaign January 2007: Democratic leaders introduce health care reform bills (SB 48 and AB 8). Governor introduces his proposal. Republicans introduce their proposal. June 2007: Democratic leaders combine bill into AB 8. Summer 2007: The Great Budget Debacle September 2007: Legislature passes AB 8. Governor promises veto and calls special sessions on water and health care reform. Trends in Health Care 2007

  12. Assembly Bill 8: Key Provisions • Pay-or-Play:Required all employers to spend 7.5% of payroll on health benefits or pay 7.5% fee • Employees of “fee firms” required to enroll in state purchasing pool • MRMIB could increase percentage by any amount once per year • Admin Cap:Required health plans to spend 85% of premium on health services Trends in Health Care 2007

  13. Assembly Bill 8: Key Provisions • AB 1672 Expansion: Increased size of “small group and eliminated Risk Adjustment Factors • Guarantee Issue:Required guarantee issue in individual market • No requirement individuals must buy coverage • Plan Definitions:Required carriers to offer MediCare and Healthy Families look-alikes. Created category of Individual plans. Trends in Health Care 2007

  14. Key Differences with Governor Individual versus Employer Centric Broad Financing versus Employer Financing 4% Employer Fee versus 7.5 Percent Fee Trends in Health Care 2007

  15. Current Situation Staffs of Governor and Legislative Leaders are negotiating legislative language Document is circulating for comment from interested parties • A “starting point” not a compromise • Substantial placeholders Governor is lining up support for his planCarriers, hospitals, CMA, Chambers of Commerce, SEIU, etc. Trends in Health Care 2007

  16. Goal of Special Session Achieve a compromise concurrently with resolution of water-focused special session (mid-October) Enact legislation creating a framework of reform (majority vote required) Qualify an initiative with financial elements for the November 2008 ballot (part or all of framework contingent on passage) Trends in Health Care 2007

  17. 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 ……. Trends in Health Care 2007

  18. 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 • Draft language provides some “space” 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 Trends in Health Care 2007

  19. Agents Focus: Issue #2 • Purchasing Pool • May require employees of fee-based companies to enroll • May require subsidized individuals to enroll Concern: • Could “crowd-out” individual market • Discriminates against those receiving subsidies • Imposes tax on employees of fee-based companies to extent better value available outside of pool Trends in Health Care 2007

  20. Agents Focus: Issue #3 • Mandate to Issue: • Guarantee Issue in the individual market without a strong, enforceable mandate to buy • 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 Trends in Health Care 2007

  21. CAHU’s Healthy Solutions 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 new businesses and strengthens existing enterprises • is realistic about what one state can do Trends in Health Care 2007

  22. 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. Trends in Health Care 2007

  23. CAHU’s Healthy Solutions Enroll the one million Californians eligible for state programs who fail to enroll • At least 15% of the uninsured • Achieve 85% enrollment then expand eligibility gradually to 300% of Federal Poverty Level Expand subsidies gradually to Californians earning up to 400% of FPL • Expand subsidies to those earning up to 400% as state finances permit • Allow those receiving premium subsidies to use them in the open market – no segregation into state-run risk pools • Allow assignment to employers to encourage companies to buy coverage Trends in Health Care 2007

  24. CAHU’s Healthy Solutions Require carriers to guarantee issue individual coverage once 90% of Californians are enrolled • 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 Finance reform through measures which include: • Broad tax (e.g., sale tax) • Targeted taxes (e.g., tobacco, fast food, handguns) • Tax on carriers (including raising revenue from self-insured through indirect means) Trends in Health Care 2007

  25. CAHU Healthy Solutions Reduce the underlying cost of health care • Pay for performance • Electronic Health Records • Electronic Rx • Evidence based medicine • Hospital error reduction programs Trends in Health Care 2007

  26. Dealing with Reality • There’s tremendous momentum for health care reform • The drive comes from all sides and both parties • Stakes are high: The results can make the system better or far worse Trends in Health Care 2007

  27. 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 • Meet with legislators in their districts • Promote CAHU’s Healthy Solutions plan Trends in Health Care 2007

  28. What’s Required: Stay Informed • Helpful publications: • Health Underwriter newsletters and magazines • California Broker • Helpful web sites: • Health Underwriters: • www.CAHUHealthySolutions.org • California HealthCare Foundation Site: • www.CalHealthReform.org • My Blog (a shameless plug): • www.AlanKatz.WordPress.com Trends in Health Care 2007

  29. Keep Things in Perspective We’ve faced challenges like this before: • 1990-1993: AB 1672 • 1993-1994: ClintonCare • 1996: Single Payor Initiative Lawmakers are listening Trends in Health Care 2007

  30. Helping to Get it Right • 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 Trends in Health Care 2007

  31. Trends in Health Care 2007:Challenges and Implications Alan Katz, RHU CAHU Vice President, Public Affairs

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