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Health Care Reform?P-PACA
vsSingle Payer
Oliver Fein, M.D.Professor of Clinical Medicine and Public Health
Associate DeanOffice of Affiliations
Office of Global Health Education
Weill Cornell Medical College
Internal Medicine Residency ProgramColumbia University Medical Center
NewYork-Presbyterian HospitalFebruary 3, 2012
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PRESENTATION OUTLINE
1. History of recent U.S. Health Reform
2. Challenges facing U.S. Health CareSystem
3. Comparison of Single Payer and2010 Health Reform (P-PACA)
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DISCLOSURES
Dr. Oliver Fein has no relevant financialrelationships with commercial interests
Dr. Oliver Fein is immediate past President ofPhysicians for a National Health Program
(PNHP), a non-profit educational and advocacyorganization. He receives no financialcompensation from PNHP.
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Disclosure Information
A) Relationship with companies who manufacture products used in the treatmentof the subjects under discussionYes____ No __X__ If "Yes," list company(ies) with the relationship(s) below.
Relationship Manufacturer(s)
Research Support ________________________________Speaker's Bureau ________________________________Consultant ________________________________Share Holder ________________________________Other Financial Support ________________________________Large Gift(s) ________________________________
B) Relationships with any of the commercial supporters of this CME activity:
C) Discussion of unlabeled uses: Yes _____ No___X__
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HEALTH REFORM:OBAMAS FATEFUL CHOICE
He did not want to start from scratch
He had two fundamental choices:
1) to build on the public sector (Medicare)
or
2) to build on the private sector
Which did he choose?
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Progress(?) of US Health Reform
Employer mandate
Public option**
Individual mandate*
* each eligible individual must
enroll in an applicable health plan
for the individual and must pay any
premium required with respect to
such enrollment. (S.1775)
** you can choose to enroll
in the new public plan
Medicare
??
http://images.google.com/imgres?imgurl=http://www.visitingdc.com/images/richard-nixon-picture.jpg&imgrefurl=http://www.visitingdc.com/president/richard-nixon-picture.htm&h=336&w=325&sz=23&hl=en&start=1&tbnid=rcrt6fmabc7XdM:&tbnh=119&tbnw=115&prev=/images%3Fq%3Dnixon%26gbv%3D2%26ndsp%3D20%26svnum%3D10%26hl%3Den%26sa%3DNhttp://www.enigmaticparadox.com/images/ObamaFingerDec6.jpg7/28/2019 Fein Columbia P PACA
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WHAT HAPPENED TO THEPUBLIC OPTION?
The original robust Plan March 2009
Open enrollment: Medicare foreveryone who wants it
Medicare rates, backed by the
government 119 million members (Lewin)
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The greatest lobbying effort inhistory
June 29, 2009
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$1.2 Billion Spent on Health CareLobbying!
Center for Public Integrity, March 26, 2010
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WHAT HAPPENED TO THEPUBLIC OPTION?
The House Plan November 2009
Restricted enrollment (only the uninsured)
6 million members (
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THE PATIENT PROTECTIONAND
AFFORDABLE CARE ACT(P-PACA)
March 23, 2010
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P-PACA(a MANDATE MODEL)
Everyone is required to have healthinsurance or pay a penalty.
1. Individual mandate: penalty =$695 for
singles; $2,085 for families
2. Employer mandate (50 or moreemployees): penalty =$2,000/employee
3. Necessary for the survival of private HI.Private HI lost 3.2% (6.3 million) enrolleesin 2009 and more than 15 million in the
last decade.
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ImprovedMEDICARE FOR ALL(a Single Payer Model)
Build on the original Medicare
1. Improve Coverage: preventive services,oral surgery, long term care
2. Reduce or eliminate deductibles and co-
payments3. Expand drug coverage: eliminate the
donut hole
4. Re-design physician reimbursement
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CHALLENGES FACING
HEALTH CARE REFORM
1. Declining access
2. Escalating costs
3. Lack of comprehensive benefits
4. Restricted choice
5. Uneven Quality
6. Insufficient primary care
7. How to pay for reform
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CHALLENGE #1
DECLINING ACCESS
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The Epidemic of Underinsurance
0
10
20
30
40
50
60
70
2000 2007
Insured Uninsured
Source:Too Great a Burden, Families USA, December 2007
Number of people spending more than 10% of income on health care (Millions)
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RISE IN PERSONALBANKRUPTCIES
62% of personal bankruptcies are dueto medical expensesand over 75% hadhealth insurance at the outset of their
bankrupting illness.*
* Himmelstein, et.al. Am J Med, August, 2009
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ImprovedMEDICARE FOR ALL
Automatic enrollment
Federal guarantee
All residents of the United States
Everybody in, nobody out
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HEALTH INSURANCE REFORM(P-PACA)
Mandates purchase of private HI (2014)
Expands Medicaid eligibility to 133% FPL
(2014) - single $14,403; family $19,378
Subsidizes premiums up to 400% FPL
(2014) - single $43,320; family $88,200
Insurance market reforms: Coverage upto age 26; no pre-existing condition
exclusions; no annual/lifetime limits
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Millions Will Remain Uninsured (andMillions More Poorly Insured)
Millions
Note: The uninsured include about 5 million undocumented immigrants.
Source: Congressional Budget Office.
51 51 51 52 53 5354
51
2323232328
35
50 50
0
20
40
60
80
2012 2013 2014 2015 2016 2017 2018 2019
Current law
PPACA
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CHALLENGE #2
ESCALATING COSTS
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Insurance Premiums Workers Earnings Inflation
1999-2008
Kaiser/HRET Survey of Employer-Sponsored Health
Benefits, 2000-2008. Bureau of Labor Statistics,
Consumer Price Index
119%
34%
29%
0%
20%
40%
60%
80%
100%
120%
140%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Health Insurance PremiumsWorkers' Earnings
Overall Inflation
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High Cost of Health InsurancePremiums: Its Even Too Expensive for
the Middle Class Today
National Average for Employer-provided Insurance
Single Coverage $ 5,503 per yearFamily Coverage $15,073 per year
Note: 31% high-deductible ($1,000-2,000) policies
Source: Kaiser Family Foundation/HRET Survey of Employee Benefits, 9/27/2011
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ImprovedMEDICARE FOR ALL
Low Administrative Costs = Single Payer
Administrative cost and profit
- Medicare: 2-3 %
- Private insurance: 16-30%
$400 billion* redirected to cover the uninsured
and to expand coverage for the underinsured
* NEJM 2003:349;768-775 updated to 2010
C i E d S i M
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Covering Everyone and Saving Moneythrough Medicare for All
Additional costsCovering the uninsured and poorly-insured +6.4%
Elimination of cost-sharing and co-pays +5.1%
Savings
Reduced insurance administrative costs -5.3%
Reduced hospital administrative costs -1.9%
Reduced physician office costs -3.6%
Bulk purchasing of drugs & equipment -2.8%Primary care emphasis & reduce fraud -2.2%
Source: Health Care for All Californians Plan, Lewin Group, January 2005
134
107
241
-111
-21
-76
-59
-46
-313
$ B
Total Costs +11.5%
Total Savings -15.8%
Net Savings - 4.3% - 72
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Private insurers High Overhead
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SINGLE PAYER OFFERS TOOLSTO BEND THE COST-CURVE
Global budgeting of hospitals
Capital investment planning
Emphasis on primary care; coordination of
care; alternative ways of paying for care
Bulk purchasing of pharmaceuticals
HEALTH INSURANCE REFORM
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HEALTH INSURANCE REFORM(P-PACA)
Market Theory:
Mandate the young, healthy uninsured
buy private health insurance(they usually dont get sick and dont get
health insurance = low risks)
Then, the premiums for everyone will
go down.
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WILL MARKET THEORY WORK?
Premiums*
Single Coverage $5,503 per year
Family Coverage $15,073 per year
*national average for employer-provided insurance
Penalties under P-PACA
Individuals $695 per yearFamilies $2,085 per year
Employers $2,000 per employee
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HEALTH INSURANCE REFORM(P-PACA)
Offers unproven tools to contain costs
Health Information Technology (HIT)
Chronic Disease Management
Payment reforms (e.g., ACOs, bundledpayments, value-based purchasing)
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and Costs Will Keep On Rising
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
PPACA (CMS Actuary)
Current projection
PPACA (Commonwealth Fund)
National Health Expenditures (trillions)
Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization ofservices by previously uninsured.Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center forAmerican Progress and The Commonwealth Fund, December 2009. Estimated Financial Effects of PPACA asAmended, Richard Foster, CMS Actuary, April 2010
$4.67$4.5
6.4% annualgrowth
6.6% annual
growth
6.0% annualgrowth
$4.7
National Health Expenditures as Percent of GDP17.8 17.9 18.0 18.2 18.8 19.3 19.8 20.2 20.5 21.0
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CHALLENGE #3THE DEFINITION OF ESSENTIAL
HEALTH BENEFITS
Service Coverage: Doctors, NPs,
Hospitals, Drugs; Dental, MentalHealth, Home care/nursing home
Financial Coverage: Copays anddeductibles
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ImprovedMEDICARE FOR ALL
Comprehensive coverage
- Preventive services
- Hospital care
- Physician services- Nurse practitioner services
- Dental services
- Mental health services
- Medication expenses- Reproductive health services
-Home Care/nursing home care
All medically necessary services
Any exclusions? How decided?
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ImprovedMEDICARE FOR ALL
Eliminates Co-Pays or Deductibles
Reduce use of needed and unneeded
services equally
Result in under use of primary care services
Not as effective in reducing over use oftechnology intensive services, as
- Eliminating self-referral to MD owned facilities
- Reducing defensive medicine
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HEALTH INSURANCE REFORM(P-PACA)
No Standard Benefit Package mandated
Eliminates co-pays and deductibles, but only on
preventive services
No regulation of the magnitude of premiums,deductibles and co-pays just the stipulationthat benefits have an actuarial value of 60% or
higher
Stipulation that health insurers have medical lostratios (MLR) of 80-85%
HHS DEFINES
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HHS DEFINESESSENTIAL HEALTH BENEFITS
(January 2012)
States choose a benchmark plan that reflects the scope of services
offered by a typical employer plan
Four benchmark options:One of the three largest small group plans in the state by
enrollment;One of the three largest state employee health plans by
enrollment;One of the three largest federal employee health plan options by
enrollment;The largest HMO plan offered in the states commercial market by
enrollment.If states choose not to select a benchmark, HHS intends to propose
that the default benchmark will be the small group plan with the
largest enrollment in the state.
Consequence: 50 Different Benefit Packages
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CHALLENGE #4RESTRICTED CHOICE
42% of employees have no choice
Private health insurance limits choice to
the network of doctors and hospitals with
whom they have negotiated contracts
You pay more to go out of network
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ImprovedMEDICARE FOR ALL
Expands Choice for Everyone
No limit to a network of providers
Free choice of doctor and hospital
Delinks health insurance fromemployment
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HEALTH INSURANCE REFORM(P-PACA)
Creation of HI Exchanges Expands Choicefor Some
Limited to the individual and small group market
Market-place of private HI plans
No public option
State-based with federal backup
No state single payer until 2017
VERMONTS PATHWAY TO
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VERMONTS PATHWAY TO
SINGLE PAYER
Elected Peter Shumlin governor: 11/6/2010
William Hsiao, Ph.D., Harvard economist,reports 3 options: 2/2011
- Option 3: Public-private hybrid single payer Standard benefit package Uniform prices Administered by a public benefitcorporation
Pathway legislation passed: 5/25/11
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HEALTH INSURANCE REFORM(P-PACA)
Restricts Choice: The case of abortion
Allows states to prohibit abortion coverage
in state-run exchanges
If states allow abortion coverage, requires
enrollees or employers to send two checks
Insurers must keep abortion coverage money
separate from federal subsidies
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CHALLENGE #5:UNEVEN QUALITY
In 2008, U.S. was last among 19industrialized nations in
mortality amenable to healthcare.
In 2006, we were 15th.
* Commonwealth Fund (2011)
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ImprovedMEDICARE FOR ALL
National data on health care quality vs.
proprietary data held by private HI
National standards and public reporting
HIT for the nation with patient protections
every patient their own medical record on acredit card
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HEALTH INSURANCE REFORM(P-PACA)
Comparative Effectiveness Research
Innovation Center in CMS to test new paymentand service delivery models PCMH + ACOs
(2011)
Value based purchasing hospital paymentsbased on quality reporting measures (2013)
Readmission penalties (2013)
Reduce hospital payments for hospital-acquiredconditions (2015)
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CHALLENGE #6:LACK OF PRIMARY CARE
Average medical school debt =$160,000
Primary care is under-reimbursed
Medical school graduates goinginto specialties
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ImprovedMEDICARE FOR ALL
Debt forgiveness for primary care
Malpractice payment for primary careproviders (MDs, NPs and PAs)
Patient-Centered Medical Homes (team
based care, open access, coordination ofcare; phone/internet medicine)
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HEALTH INSURANCE REFORM(P-PACA)
10% Primary Care Bonus Payments (2011-2017) estimate = $4,000/provider/year
Increase Medicaid payment to Medicarerates for primary care (2013)
Independent Payment Advisory Board
I-PAB (2014)
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CHALLENGE #7
HOW TO PAY FOR REFORM
I d
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ImprovedMEDICARE FOR ALL
Public funding
- Payroll tax
- Corporate taxes
- Income taxes- Tax on unearned income (stocks, bonds, etc.)
No premiums: regressive
No increase in overall health care spending,because of administrative savings
I d
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ImprovedMEDICARE FOR ALL
Non-profit/private delivery system underlocal control
- Doctors not salaried by government- Hospitals not owned by government
- This is not socialized medicine
A publicly funded-privately deliveredpartnership
HEALTH INSURANCE REFORM
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HEALTH INSURANCE REFORM(P-PACA)
1. Increased taxes- Excise tax on Cadillac health insurance plans (2018)- Medicare payroll tax increase from 1.45% to
2.35% if income greater than $200-250K- 3.8% tax on investment income
2. Savings from Medicare- Advantage: ($132 bill over 10 yrs)- Cut DSH payments ($36 million)- Cut Medicare payments to hospitals
($136 bill over 10 yrs)- Cut payments for home care/nursing homes ($60 bill)
3. Revenue from cracking down on fraud and abuse
HEALTH REFORM (P PACA)
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HEALTH REFORM (P-PACA)1. Expanded coverage, but not universal
2. Cost control by market means
3. No definition of benefits
4. Choice thru State-based exchanges,
but no public option
5. Limits on abortion
6. Primary care/ACO pilots
7. Funding: Excise tax on high cost (comprehensivecoverage) private HI and Medicare cutbacks
Si l P
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Single PayerMEDICARE FOR ALL
THE PHYSICIANS PROPOSAL(JAMA, August 13, 2003 p. 798-805)
1. Universal coverage/automatic enrollment
2. Low administrative costs=single payer3. Comprehensive coverage without co-pays
and deductibles4. Maximum choice of Doctor, NP, Hospital5. Improved quality through nationwide HIT6. Expanded primary care7. Publicly-funded/privately delivered
MEDICARE 2.0
Conyers HR 676
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Conyers HR 676Expanded and improved
MEDICARE-FOR-ALLSingle Payer NH Care
(55 Co-sponsors in House of Rep)
Automatic enrollment
Comprehensive benefits
Free choice of doctor and hospital
Doctors and hospitals remain independent
Financed through progressive taxes
Costs contained through capital planning, budgeting,
quality reviews, primary care emphasis
S (& )
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Sanders (& McDermott):American Health Security Act
S 915 (HR 1200)
1.Automatic enrollment
2.Comprehensive benefits3.Operated by States using Federal standards
4.Free choice of doctor and hospital
5.Doctors and hospitals remain independent6.Public agency processes and pays bills
7.Financed through payroll taxes
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April 14, 2010Overall, do you think the benefits from government
programs such as Social Security and Medicare are worth
the costs of those programs for taxpayers, or are they notworth the costs? (results in %)
Worth It Not Worth It DK/NA
National Sample 76 19 5Tea Party Sample 62 33 6
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Summary
A system based on private insurance plans-- will not lead to universal coverage
-- will not create affordable insurance
A Medicare for All System-- can lead to universal, comprehensive coveragewithout costing more
-- has the greatest potential to increase choice,improve quality and expand primary care
-- can be financed fairly
Will We Get Real Health Care Reform
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Will We Get Real Health Care ReformBefore the Premium Takes All our Income?
Source: American Family Physician, November 14, 2005
Today
CONTACTS AND REFERENCES
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CONTACTS AND REFERENCES
PNHP National: www.pnhp.org
PNHP-NY Metro: www.pnhpnymetro.org
Bodenheimer TS, Grumbach K, Understanding HealthPolicy: A Clinical Approach. McGraw-Hill, 2005
Fein O, Birn AE. (editors), Comparative Health Systems. AmJour Public Health 2003; 93: 1-176
OBrien ME, Livingston M (editors), 10 Excellent Reasonsfor National Health Care. New Press, 2008
Potter W, Deadly Spin: An Insurance Company InsiderSpeaks Out on How Corporate PR Is Killing Health Care
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