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 UnderwritersPismo Beach – February 23, 2007

Alan Katz, RHUCAHU

Vice President, Public Affairs

October 4, 2007 Trends in Health Care 2007 Slide 2

1. Health Care Reform

2. Everything Else

Today we’ll focus on health care reform

Health Care Legislation 2007


1. Why Health Care Reform Now

2. How We Got to Where We Are Now

3. Agents Focus

4. CAHU’s Healthy Solution

5. Taking Action

6. Conclusion / Q&A

What We’re Up To Today


The Health Care Reform Drumbeat

Governor Schwarzenegger

Democratic Leadership

Presidential Candidates

Single Payer Coalition

Sicko

Why Now?

Why Health Care Reform Now


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


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

Legislative Leadership 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

Senate Republican’s Key Messages


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

Why This Matters: Three Political Laws


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

The Three Laws and the Uninsured


“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)

Polls Reflect the Drumbeat


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.

How We Got to Where We Are Now


1. 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

2. Admin Cap: Required health plans to spend 85% of premium on health services

Assembly Bill 8: Key Provisions


3. AB 1672 Expansion: Increased size of “small group and eliminated Risk Adjustment Factors

4. Guarantee Issue:Required guarantee issue in individual market

No requirement individuals must buy coverage

5. Plan Definitions:Required carriers to offer MediCare and Healthy Families look-alikes. Created category of Individual plans.

Assembly Bill 8: Key Provisions


Individual versus Employer Centric

Broad Financing versus Employer Financing

4% Employer Fee versus 7.5 Percent Fee

Key Differences with Governor


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.

Current Situation


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)

Goal of Special Session


Lots of Hot Button issues

Lots of interest groups focused on each element of the plan

For Agents, two key questions:

1. If the provision becomes law will it harm our profession or our clients?

2. Is changing the provision an absolute necessity for other stakeholders?

Applying this means agents should focus on …….

Agents: A Need for Focus


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

Agents Focus: Issue #1


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



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



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

CAHU’s Healthy Solutions


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.

Requirements of Reform


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



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)



Reduce the underlying cost of health care Pay for performance Electronic Health Records Electronic Rx Evidence based medicine Hospital error reduction programs

CAHU Healthy Solutions


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

Dealing with Reality


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

What’s Required: Get Involved


Helpful publications:Health Underwriter newsletters and magazinesCalifornia 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

What’s Required: Stay Informed


We’ve faced challenges like this before: 1990-1993: AB 1672 1993-1994: ClintonCare 1996: Single Payor Initiative

Lawmakers are listening

Keep Things in Perspective


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

Helping to Get it Right

Alan Katz, RHUCAHU

Vice President, Public Affairs

Trends in Health Care 2007:Challenges and Implications

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

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