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]