Health Care Reform?

P-PACA vs Single Payer

Oliver Fein, M.D.
Professor of Clinical Medicine and Public Health Associate Dean
Office of Affiliations Office of Global Health Education

Weill Cornell Medical College

Internal Medicine Residency Program Columbia University Medical Center NewYork-Presbyterian Hospital February 3, 2012

PRESENTATION OUTLINE
1. History of recent U.S. Health Reform 2. Challenges facing U.S. Health Care System 3. Comparison of Single Payer and 2010 Health Reform (P-PACA)

DISCLOSURES
Dr. Oliver Fein has no relevant financial relationships with commercial interests Dr. Oliver Fein is immediate past President of Physicians for a National Health Program (PNHP), a non-profit educational and advocacy organization. He receives no financial compensation from PNHP.

Disclosure Information
A) Relationship with companies who manufacture products used in the treatment of the subjects under discussion Yes____ No __X__ If "Yes," list company(ies) with the relationship(s) below. Relationship Research Support Speaker's Bureau Consultant Share Holder Other Financial Support Large Gift(s) Manufacturer(s) ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________

B) Relationships with any of the commercial supporters of this CME activity:

C) Discussion of unlabeled uses: Yes _____ No___X__

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?

Progress(?) of US Health Reform

Employer mandate Medicare ??
* 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)

Individual mandate*

Public option**
** you can choose to enroll in the new public plan

WHAT HAPPENED TO THE PUBLIC OPTION?

The original robust Plan March 2009 Open enrollment: Medicare for everyone who wants it Medicare rates, backed by the government 119 million members (Lewin)

The greatest lobbying effort in history

June 29, 2009

$1.2 Billion Spent on Health Care Lobbying!

Center for Public Integrity, March 26, 2010

WHAT HAPPENED TO THE PUBLIC OPTION?

The House Plan November 2009
Restricted enrollment (only the uninsured) 6 million members (<2% of the population) Negotiated rates, self sustaining

The Senate Plan December 2009

No public option

THE PATIENT PROTECTION AND AFFORDABLE CARE ACT (P-PACA)

March 23, 2010

P-PACA (a MANDATE MODEL)

Everyone is required to have health insurance or pay a penalty. 1. Individual mandate: penalty =$695 for singles; $2,085 for families 2. Employer mandate (50 or more employees): penalty =$2,000/employee

3. Necessary for the survival of private HI. Private HI lost 3.2% (6.3 million) enrollees in 2009 and more than 15 million in the last decade.

Improved MEDICARE 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 copayments 3. Expand drug coverage: eliminate the donut hole 4. Re-design physician reimbursement

CHALLENGES FACING HEALTH CARE REFORM

1. 2. 3. 4. 5. 6. 7. Declining access Escalating costs Lack of comprehensive benefits Restricted choice Uneven Quality Insufficient primary care How to pay for reform

CHALLENGE #1

DECLINING ACCESS

The Epidemic of Underinsurance

70 60 50 40 30 20 10 0 2000 2007

Number of people spending more than 10% of income on health care (Millions)

Insured

Uninsured

Source: Too Great a Burden, Families USA, December 2007

RISE IN PERSONAL BANKRUPTCIES

62% of personal bankruptcies are due to medical expenses and over 75% had health insurance at the outset of their bankrupting illness.*
* Himmelstein, et.al. Am J Med, August, 2009

Improved MEDICARE FOR ALL

Automatic enrollment
Federal guarantee All residents of the United States

Everybody in, nobody out

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 up to age 26; no pre-existing condition exclusions; no annual/lifetime limits

Millions Will Remain Uninsured (and Millions More Poorly Insured)

Millions
80 Current law PPACA 60 51 50 40 51 50 35 28 23 20 23 23 23 51 51 52 53 53 54

0 2012 2013 2014 2015 2016 2017 2018 2019

Note: The uninsured include about 5 million undocumented immigrants. Source: Congressional Budget Office.

CHALLENGE #2

ESCALATING COSTS

Insurance Premiums Workers Earnings Inflation 1999-2008

140% Health Insurance Premiums 120% 100% 80% 60% 40% 20% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 34% 29% Workers' Earnings Overall Inflation 119%

Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2008. Bureau of Labor Statistics, Consumer Price Index

High Cost of Health Insurance Premiums: Its Even Too Expensive for the Middle Class Today
National Average for Employer-provided Insurance

Single Coverage Family Coverage

$ 5,503 per year $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

Improved MEDICARE 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

Covering Everyone and Saving Money through Medicare for All

Additional costs Covering the uninsured and poorly-insured Elimination of cost-sharing and co-pays +6.4% +5.1%

Total Costs
Savings Reduced insurance administrative costs Reduced hospital administrative costs Reduced physician office costs Bulk purchasing of drugs & equipment Primary care emphasis & reduce fraud

$B 134 107 +11.5% 241

-111

-21 -76 -59 -46 Total Savings -15.8% -313 Net Savings - 4.3% - 72

-5.3% -1.9% -3.6% -2.8% -2.2%

Source: Health Care for All Californians Plan, Lewin Group, January 2005

Private insurers High Overhead

SINGLE PAYER OFFERS TOOLS TO 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 (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.

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 year Families $2,085 per year Employers $2,000 per employee

HEALTH INSURANCE REFORM (P-PACA)

Offers unproven tools to contain costs
Health Information Technology (HIT) Chronic Disease Management

Payment reforms (e.g., ACOs, bundled payments, value-based purchasing)

and Costs Will Keep On Rising

National Health Expenditures (trillions) $5.0 PPACA (CMS Actuary) $4.5 Current projection $4.0 PPACA (Commonwealth Fund)
$3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Notes: * Modified current projection estimates national health spending when corrected to reflect underutilization of services by previously uninsured. Source: D. M. Cutler, K. Davis, and K. Stremikis, Why Health Reform Will Bend the Cost Curve, Center for American Progress and The Commonwealth Fund, December 2009. Estimated Financial Effects of PPACA as Amended, Richard Foster, CMS Actuary, April 2010

6.6% annual growth

$4.7 $4.67 $4.5

6.4% annual growth

6.0% annual growth

National Health Expenditures as Percent of GDP

17.8 17.9 18.0 18.2 18.8 19.3 19.8 20.2 20.5 21.0

CHALLENGE #3 THE DEFINITION OF ESSENTIAL HEALTH BENEFITS

Service Coverage: Doctors, NPs, Hospitals, Drugs; Dental, Mental Health, Home care/nursing home

Financial Coverage: Copays and deductibles

Improved MEDICARE 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?

Improved MEDICARE 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 of technology intensive services, as - Eliminating self-referral to MD owned facilities - Reducing defensive medicine

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 stipulation that benefits have an actuarial value of 60% or higher Stipulation that health insurers have medical lost ratios (MLR) of 80-85%

HHS DEFINES ESSENTIAL 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

CHALLENGE #4 RESTRICTED 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

Improved MEDICARE FOR ALL

Expands Choice for Everyone No limit to a network of providers Free choice of doctor and hospital Delinks health insurance from employment

HEALTH INSURANCE REFORM (P-PACA)

Creation of HI Exchanges Expands Choice for 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 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 benefit corporation

Pathway legislation passed: 5/25/11

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

CHALLENGE #5: UNEVEN QUALITY

In 2008, U.S. was last among 19 industrialized nations in mortality amenable to health care.

In 2006, we were 15th.

* Commonwealth Fund (2011)

Improved MEDICARE 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 a credit card

HEALTH INSURANCE REFORM (P-PACA)

Comparative Effectiveness Research Innovation Center in CMS to test new payment and service delivery models PCMH + ACOs (2011) Value based purchasing hospital payments based on quality reporting measures (2013)

Readmission penalties (2013)

Reduce hospital payments for hospital-acquired conditions (2015)

CHALLENGE #6: LACK OF PRIMARY CARE

Average medical school debt = $160,000 Primary care is under-reimbursed
Medical school graduates going into specialties

Improved MEDICARE FOR ALL

Debt forgiveness for primary care
Malpractice payment for primary care providers (MDs, NPs and PAs) Patient-Centered Medical Homes (team based care, open access, coordination of care; phone/internet medicine)

HEALTH INSURANCE REFORM (P-PACA)

10% Primary Care Bonus Payments (20112017) estimate = $4,000/provider/year Increase Medicaid payment to Medicare rates for primary care (2013) Independent Payment Advisory Board I-PAB (2014)

CHALLENGE #7

HOW TO PAY FOR REFORM

Improved MEDICARE 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

Improved MEDICARE FOR ALL

Non-profit/private delivery system under local control
- Doctors not salaried by government - Hospitals not owned by government - This is not socialized medicine

A publicly funded-privately delivered partnership

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 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) Revenue from cracking down on fraud and abuse

2.

3.

HEALTH REFORM (P-PACA)

1. 2. 3. 4. Expanded coverage, but not universal Cost control by market means No definition of benefits Choice thru State-based exchanges, but no public option Limits on abortion Primary care/ACO pilots

5. 6.

7.

Funding: Excise tax on high cost (comprehensive coverage) private HI and Medicare cutbacks

Single Payer MEDICARE FOR ALL

THE PHYSICIANS PROPOSAL (JAMA, August 13, 2003 p. 798-805) 1. 2. 3. 4. 5. 6. 7. Universal coverage/automatic enrollment Low administrative costs=single payer Comprehensive coverage without co-pays and deductibles Maximum choice of Doctor, NP, Hospital Improved quality through nationwide HIT Expanded primary care Publicly-funded/privately delivered

MEDICARE 2.0

Conyers HR 676 Expanded and improved MEDICARE-FOR-ALL Single 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

Sanders (& McDermott): American Health Security Act S 915 (HR 1200)
1.Automatic enrollment 2.Comprehensive benefits 3.Operated by States using Federal standards 4.Free choice of doctor and hospital 5.Doctors and hospitals remain independent 6.Public agency processes and pays bills 7.Financed through payroll taxes

April 14, 2010

Overall, 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 not worth the costs? (results in %) Worth It National Sample 76 Tea Party Sample 62 Not Worth It DK/NA 19 33

5 6

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 coverage without 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 Before the Premium Takes All our Income?

Today

Source: American Family Physician, November 14, 2005

CONTACTS AND REFERENCES

PNHP National: www.pnhp.org PNHP-NY Metro: www.pnhpnymetro.org Bodenheimer TS, Grumbach K, Understanding Health Policy: A Clinical Approach. McGraw-Hill, 2005 Fein O, Birn AE. (editors), Comparative Health Systems. Am Jour Public Health 2003; 93: 1-176

OBrien ME, Livingston M (editors), 10 Excellent Reasons for National Health Care. New Press, 2008
Potter W, Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans. Bloomsbury Press, 2010