Health Reform in Florida

Making the Investments Work: Implementing Health Reform in Florida

Leda M. Perez, Vice President of Health Initiatives, Collins Center

Jack Meyer, Principal, Health Management Associates

Sharon Silow-Carroll, Principal, Health Management Associates

February 17, 2011

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Welcome and introduction

The Collins Center for Public Policy finds smart solutions to important issues facing the people of Florida and the nation. We are independent, non-partisan, non-profit and passionately committed to lasting results.

Health Management Associates is a consulting firm specializing in the fields of health system restructuring, health care program development, health economics and finance, program evaluation, and data analysis, with a special concentration on addressing the needs of the medically indigent and underserved people and assessing the new health reform legislation.

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Commissioning the study

Foundation to Promote an Open Society (in partnership with the Open Society Institute) funds Collins Center in December 2009

- Collins establishes the Florida Stimulus Program, creating an online community-Reports on American Reinvestment and Recovery Act (ARRA) spending in Florida

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Authors Jack Meyer and Sharon Silow-Carroll

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Goals of the report

Present the key features of national health reform in objective, clear terms

Determine the potential benefits to Florida

Explain the main challenges involved in implementing the law

Provide recommendations to address these challenges and maximize the benefits

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Should Florida maintain the status quo?

Florida has over 4 million uninsured, and this number has been steadily rising

The state unemployment rate is well above the national average

Employers, particularly small firms, are under great pressure, and many may drop coverage

Florida Medicaid has very low eligibility standards, so decline in employer coverage means more uninsured

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Should Florida maintain the status quo?

Going without insurance has direct costs (e.g. uncompensated care, cost-shift to

privately insured) and indirect costs (e.g. work and school absenteeism, lower productivity, premature deaths); indirect costs valued at approx. $8-17billion/year

Key components of health reform

Medicaid Expansion

Health Insurance Exchanges

Insurance Market Reforms

Requirements on individuals and employers

Financing measures

Grant opportunities

Medicaid expansion

• Florida would add about 1.0 to 1.4 million enrollees to Medicaid by 2019

— about 0.7 to 1.1 million of these would be newly insured

• The additional cost to the state is about $1.2-$2.5 billion over the period of 2014-2019 (over $66.3 billion baseline)

• But the state would draw in $20-24 billion, or at least $10 from federal government for each dollar it spends

• For the newly eligible people, Florida would get $25 in federal funds for each state dollar

• Source: John Holahan and Irene Headen. Urban Institute. May 2010.

Medicaid expansion

Hospitals should realize at least $1 billion in savings from reduced uncompensated care; physicians/other providers will also benefit from less “free care”

Indirect savings will emerge from fewer absences from school and jobs, greater productivity, fewer premature deaths, and better health

Even if half of indirect costs are realized, the sum of direct and indirect savings to the private and public sectors will more than offset these new state costs

Outreach and enrollment

Florida should use 21st Century enrollment techniques that use data matching from other programs/sources outside health care to determine likely eligibility

Florida should expand use of community health workers to connect eligible people to programs and help them navigate the health system

Benefits to Florida

Improve access to prevention/primary care

Reduce avoidable ER visits, hospital admissions

Improve health outcomes, productivity

Save on total costs per person

Reduce uncompensated care burden

Reduce cost-shift to private payers

Challenges in Medicaid Expansion

Assuring an adequate health care work force

- This will require raising, not lowering payments for doctors, nurses, and other professionals

Preparing to serve a population with complex medical needs

- High incidence of chronic illness among poor and near-poor newly eligible adults

Finding the funds for the state’s contribution amidst competing needs and capturing some of the savings

Health Insurance Exchange

Exchange is insurance ‘marketplace’ for individuals and small businesses to compare and purchase health plans, receive subsidies

Can offer single point of entry to determine eligibility for enrollment and subsidies in Exchange, Medicaid, and CHIP

FL can create its own Exchange(s) rather than let federal government step in and do it

- Choices re: governance, number of exchanges, funding

Potential for Exchanges to be active purchasers driving savings and quality gains

Benefits of Exchanges

Broad choice of private insurance for people who have had no choice or very limited choice

Small firms get affordable choices

Subsidies scaled to income will help moderate and middle-income people afford coverage

Exchanges could improve quality and lower costs through smart purchasing

Exchange Challenges

Build an electronic-based system of determining eligibility for multiple programs

Create secure data sharing with federal agencies

Match federal tax credits with household contribution and get total to health plans

Develop capacity to assess health plans on rates, quality of care, provider networks, medical loss ratio

Insurance Market Reforms

2010: already in force

No lifetime caps, restricted annual caps, limits on rescinding

Children may stay on parents’ plans until age 26

No pre-existing condition exclusions for kids

2011

Plans must report how premiums are spent

Process for state review of premium increases

Insurance Market Reforms

2012

Rebates to consumers if Medical Loss Ratio<80% (individual and small group plans) or 85% (large group plans)

2014

Guaranteed issue and renewability (no one denied)

Rates may not vary with health status, limited variation on age

No annual limits on value of coverage

Benefits of Insurance Market Reforms

Child (and later, anyone) with disability or prior illness will not be denied coverage or face exorbitant rates

Young adult without job-based insurance can remain on parent’s plan until age 26

Person requiring expensive treatments would not see coverage terminated after reaching health plan cap

Older adults not yet eligible for Medicare would see more affordable insurance rates

Insurance Market Reform Challenges

Premiums for younger workers likely to rise; some may decline coverage and pay the modest penalty

State must develop and implement new regulations and procedures to review insurers’ premiums and how they are used

State must determine whether rate increases are “reasonable” to keep premiums affordable, without leading to many insurers leaving the state

Federal Funding Opportunities

Community Health Centers

Expand capacity, test wellness plans

Medicaid

“Health homes” for chronically ill patients

Quality measurement program

Global & Bundled payment demos

Pediatric Accountable Care Organization demo

Employers

Workplace wellness programs

Other: med malpractice demo, diabetes prevention…

Employer & Individual Obligations

Employers

Small businesses not required to provide insurance; but if they do, eligible for up to 30% tax credit

Businesses with more than 50 workers must offer coverage or pay a fee

Businesses with up to 100 workers may buy through Exchange; larger firms may do so in 2017

Firms with more than 200 employees must automatically enroll workers unless employee opts out

Individuals

2014: US citizens & legal residents must obtain coverage or pay penalty (exemptions for hardship cases)

Financing

Smaller increases in Medicare payments to providers

Lower payments to Medicare Advantage plans

Board recommends cost-containment strategies if Medicare grows too fast

0.9% payroll tax increase for couples $250k+ and individuals $200k+, and 3.8% tax on unearned income for high-income taxpayers (affecting about 2% households)

Excise tax on insurers selling “Cadillac” policies

$2,500 limit on FSA medical contributions

Fees on pharmaceutical and medical device manufacturers, health insurers, and tanning salons

Action Steps

Prepare Medicaid

•Conduct innovative outreach and enrollment of those newly eligible for Medicaid

– Community Health Workers, auto-enrollment, etc.

•Develop statewide plan for Medicaid managed care– with quality and access protections

•Assess and address higher-risk and chronic care needs of newly eligible

– E.g. care management, self-management education, transitional care

•Apply for federal grants (planning, demos, etc.)

Action Steps

Design Insurance Exchange

Consumer-friendly web portal for screening, eligibility determination, links to appropriate programs & subsidies

Insurance risk-adjustment mechanism

Health plan accountability for cost and quality- E.g. develop & collect quality measures for diabetes. asthma

Enact Necessary Legislation

Authority to Insurance department and AHCA to implement reforms

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Thank you.

Do You Have Any Questions?

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Thank you.To download the report visit:http://www.collinscenter.org

Contact information:Leda Perez: [email protected]

Jack Meyer: [email protected]