and After the ACA Bill Evans University of Notre Dame 1 Two Goals What are the issues that any health reform proposal must address How did the ACA deal with these issues 2 What must health care reform address ID: 674258
Download Presentation The PPT/PDF document "The Health Care Landscape Before" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
The Health Care Landscape Beforeand After the ACA
Bill EvansUniversity of Notre Dame
1Slide2
Two GoalsWhat are the issues that any health reform proposal must address?
How did the ACA deal with these issues? 2Slide3
What must health care reform address?
AccessCost (both the level and rate of change)MedicareTax equity3Slide4
4Slide5
5Slide6
Uninsured Non-Elderly by Work Status of Family Head, 2007
6Slide7
Problems for small firmsLarge firms typically self insure – act as their own insurance company
Small firms must purchase insurance in the marketMuch higher cost Do not benefit from large insurance poolsHigher administrative costsPay profitsAdverse selection
7Slide8
What must health care reform address?Access
Cost (both the level and rate of inflation)MedicareTax equity8Slide9
Expenditures on Health Care
Actual, 2010$2.6 trillion on HC$8,402 per capita17.9% of GDPProjected, 2021
$4.7 trillion
$14,102 per capita
29.6% of GDP
9Slide10
10
87% more than Canada
143% more than UKSlide11
Average Annual Premiums Covered Workers, 2011
Individual plan$5,429 totalFamily plan
$15,073
11Slide12
12Slide13
Bang per buck??US ranks 25 of 29 countries in life expectancy4.3 years shorter than Japan (highest)
2.4 years shorter than Canada 24th worst of 28 countries in infant mortalityMore than twice the rate of Japan (lowest)About 30% higher than both Canada and UK13Slide14
Are high expenditures a bad thing??A key driver of health care costs is
technologyNew technologies are effective but expensiveMany technologies NOT available 30 years ago are commonplace todayMRIs/CT scans, angioplasty, anti-psychotropic drugs, hip/knee replacements, neo-natal intensive care, treatments for AIDS, statin drugs
Health care is the ONLY industry where a growing fraction of GDP is considered BAD
14Slide15
Medical SuccessesARVs reduced AIDS mortality
by 70%NICU’s reduce neonatal mortality among very low birth weights infants by 42%Lipitor reduces LDL by 39-60%, reduces all cause mortality by 12%30-day survival rates for heart attack patients admitted to the hospital fell 17% 1995-200615Slide16
Where would you rather be treated for a disease: US or elsewhere?
16Slide17
5-year Cancer Survival Rates
CountryBreast(Female)
Cervical
(Female)
Colon
(Male)
Lung
(Male)
Prostate
(Male)
Thyroid
(Female)
US
82.8
69.0
61.7
12.0
81.2
95.9
UK
66.7
62.6
51.0
7.0
44.3
74.4
Dnmk
.
70.6
64.2
39.2
5.6
41.0
71.7
France
80.3
64.1
49.6
8.7
67.6
77.0
Swed.
80.6
68.0
51.8
8.8
64.7
83.7
Switz.
79.6
67.2
52.3
10.3
71.4
78.0
17Slide18
18Slide19
If you want to cut costs, where?
Administrative/overhead3% in Canada (single payer)1.5% in Medicare8-30% in US system overallChronic conditionsSpending is heavily concentrated in a small % of population
19Slide20
20Slide21
If you want to cut costs, where?
Administrative/overhead3% in Canada (single payer)1.5% in Medicare8-30% in US system overallChronic conditionsSpending is heavily concentrated in a small % of populationUnnecessary/end of life care
¼ of Medicare $ are in last year of life
21Slide22
22
Per Capita Medicare Spending by Hospital Referral Region, 2006
$9,000
to
16,352
(57)
8,000
to <
9,000
(79)
7,500
to <
8,000
(53)
7,000
to <
7,500
(42)
5,310
to <
7,000
(75)
Not PopulatedSlide23
What must health care reform address?Access
Cost (both the level and rate of inflation)MedicareTax equity23Slide24
Medicare 2010
47 million recipients$524 bill. exp.3.2% of GDP16% of fed. budget
2040
87 million recipients
6% of GDP
24Slide25
Medicare Sources as % of GDP25
Unfunded portion
Of Medicare
Will equal 2% of
GDPSlide26
Future problemsRising costs
Rising number eligiblesPeople are living longerOlder people spend a lot more on health careFalling fraction of people to tax
26Slide27
27Slide28
28Slide29
29Slide30
30Slide31
What must health care reform address?Access
Cost (both the level and rate of inflation)MedicareTax equity31Slide32
Tax Preferred Status of Health CareEPHI a tax-free fringe benefit
WW II era programGreatly reduces costs of HI to consumersBut encourages more generous coverageHas encouraged the growth of EPHIFew had insurance before the benefitNow 170 million have EPHIHelps solve the problem of adverse selection
32Slide33
Tax Benefit of EPHIA family w/ $70,000 in income37% marginal tax rate
25% federal4% state~8% Social Security and MedicareWant to purchase $12,000 policy in AFTER TAX DOLLARS33Slide34
Without tax advantage:Receive $19,047 in income
Pay 37% or $7,047 in taxes$12,000 left over for health insuranceNet benefit of tax deduction is $7,04734Slide35
InequalitiesCosts Fed. Govt. $250 billion/year
Tax break only available to those w/ ins. More likely high wage workersTax benefit greatest for high income as wellPaying higher marginal ratesRegressive taxBenefits are much higher in upper income groups
35Slide36
Patient Protection and Affordable Care ActAn outline and some likely outcomes
36Slide37
OverviewMainly a coverage billBuilds out from existing system
Tries to fill in the gaps in coverageLarge scale insurance industry reformCommunity ratingEliminate pre-existing conditions37Slide38
Coverage expansions achieved throughIndividual mandate (tax of 2.5% of AGI)Pay or play -- employer mandates
Expand Medicaid to include higher income groups38Slide39
Coverage expansion (continued)Provide tax credits for the low income in individual marketTax credits for small firms to provide insurance
Establish health insurance exchange where people can purchase group insurance39Slide40
Why is coverage mandatory?Insurance industry reformCommunity rating
eliminate pre-existing condition clausesIf adopted under current systemCosts for low risk would rise – they would exit Mandatory coverage forces low cost users into the system, helps subsidize high cost users40Slide41
Impact on UninsuredReduce uninsured by 32 mil. in 2019 (60%↓)Leaves another 23 mil. uninsured
Hispanics will be over-represented in the uninsured41Slide42
Balance Sheet – CBO 2010-2019 What the program buys
Expand private $ 464Expand public $ 434Small firm credit $ 37Total $ 935How it is paid for
↑
taxes $ 454
↓
Mcare
/
caid
$ 368
Other $ 255
Total $1077
$142 billion
↓
deficit
42
In Billions of $Slide43
Does it reduce the deficit?$40 billion in savings was due to CLASS actLong term care programs
Takes in revenues for 6 years before any benefits paid outFinancially not viable and has since been droppedRosie scenario about future Medicare cuts27% fee cut set to go into effect in Jan of 2013Automatic reductions in fees if growth is too high
43Slide44
Medicare Board of Trustees“It is important to note that the actual future costs of Medicare are likely to exceed those shown by the current law projections…We recommend that the projections be interpreted as an illustration of the very favorable financial outcomes that would be experienced if the productivity adjustments can be sustained in the long run.”
44Slide45
More general pointIt was necessary to do something about the future costs of MedicareACA did attack these costs – but – the savings were then paid out in benefits
If the concern is the overall fiscal health – we have not improved45Slide46
What is missing?Cost controls
46Slide47
Add 32 million people to the market with excellent insurance coverageModest attempt at cost controls
Accountable Care OrganizationsNo effort to change supply Should increase priceCould be a lot worseWith Medicare/Caid cuts, may discourage some providers from participating in program47Slide48
WinnersUninsuredaffordable high-quality insurance now available
Workers at small companiesNow have access to group marketHeavy subsidies for low income 48Slide49
Hospitals/Rx/Medical TechnologyInsure 32 million more peopleSicker than average group (holding age constant)
With insurance, they will start to use servicesEvidence:Stock prices of these firms increased every time bill moved closer to passageMarket is evaluating the bill as helping suppliers49Slide50
LosersMedicare advantage Frozen reimbursements levels
Small group market – this portion of market will not exist in a few yearsWorkers with high cost plansTanning salonsGeneric drug manufacturersState budgets in some states50Slide51
Where is the uncertainty?How will Medicare cuts impact providers?Can ACO’s reduce growth of costs?What is a qualified
plan?Can exchanges constrain costs?How many people will get subsidized coverage?Will not necessarily change who has coverage – but will change who pays for it51Slide52
The end
52Slide53
Pay or playFirms w/ >50 employees must offer qualified health insurance or pay $2000 tax/employeeTax incentives/credits for small firms to provide insurance
Language is that firms must pay “fair share”Economists believe workers pay for insurance in the form of lower wagesWill firms pay or play?53Slide54
Small FirmsSmall firms not subject to pay/play mandateFace extremely high cost of providing HI
Workers face much lower wages if they receive HI from firmGov’t now provides high subsidy rate for low-income uninsuredAs a result….54Slide55
May make sense for small firms with low wage workers to drop coveragehave workers pick up subsidized insurance via exchange
Workers would getWage hileReduced health insurance costsIncrease federal costs of program55Slide56
56
Age
$
Not Obese
Obese
A
B
C
Age
1
Age
2