Healthcare Reform

Question 1

History of health care reform in the US

Answer 1

• 1912 - Teddy Roosevelt and his Progressive party endorse social insurance as part of their platform, including health insurance.
• 1915 - American Association for Labor Legislation (AALL) proposes compulsory health insurance - not enacted and dropped as U.S. enters into World War I. Initially supported by AMA, but later opposed.

Question 2

the Baylor plan

Answer 2

• 1929 - Baylor Hospital introduces pre-paid hospital insurance plan for school teachers - the first prepaid hospital insurance plan in the United States and predecessor of Blue Cross.

Question 3

social security and FDR

Answer 3

• 1935 - Social Security Act passed; includes grants for Maternal and Child Health.
• 1943 - War Labor Board rules wage freeze does not apply to fringe benefits, including health insurance benefits.
• 1944 - FDR proposes ‘economic bill of rights’ including the right to adequate medical care

Question 4

Truman and the National health program

Answer 4

• 1947 - Truman, calls for a National Health Program,
• 1948 - Truman’s election in appeared to be a mandate for national health insurance, but the opposition, using fear of socialism, coupled with the power of southern Democrats who believed a federal role in health care might require desegregation, effectively blocked all proposals
• 1948 - AMA launched a national campaign against national health insurance proposals, repeatedly opposes national health coverage proposals over next decades.

Question 5

medicare and medicaid

Answer 5

• 1965 - Medicare and Medicaid programs are signed into law.
• 1972 - President Nixon proposed Comprehensive Health Insurance Plan.

Question 6

Hawaii’s state health insurance

Answer 6

• 1974 - Hawaii Prepaid Health Care Act passes requiring employers to cover any employee working more than 20 hours/week, later expanded to State Health Insurance Program
• States independently embark on programs to cover their residents

Question 7

Clinton - universal coverage

Answer 7

• 1993 - Clinton proposes “managed competition” approach, that included universal coverage, employer and individual mandates, competition between insurers, with government regulation to control costs.
• Opposition from the Health Insurance Association of America and the National Federation of Independent Businesses, effectively blocked it.
• Much done by Hilary, comprehensive approach – met with strong industry opposition,

Question 8

Massachusetts Health Connector

Answer 8

• 2006 - Massachusetts passes and implements legislation to provide health care coverage to nearly all state residents.
  
  • Requires residents to obtain health insurance coverage
  • Shared responsibility among individuals, employers, and the government in financing the expanded coverage.
  • Within two years of implementation the state’s uninsured rate is cut in half.
• Individual private mandate - The law mandated that nearly every resident of Massachusetts obtain a minimum level of insurance coverage, provided free health care insurance for residents earning less than 150% of the federal poverty level (FPL) and mandated employers with more than 10 “full-time” employees to provide healthcare insurance. The law was amended significantly in 2008 and twice in 2010 to make it consistent with the ACA.
• Major revisions related to health care industry price controls were passed in August 2012, and the employer mandate was repealed in 2013 in favor of the federal mandate (even though enforcement of the federal mandate was delayed until January 2015).
• Among its many effects, the law established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Massachusetts Health Connector. The Connector acts as an insurance broker to offer free, highly subsidized and full-price private insurance plans to residents, including through its web site. As such it is one of the models of the Affordable Care Act’s exchanges.
• The 2006 Massachusetts law successfully covered approximately two-thirds of the state’s then-uninsured residents, half via federal-government-paid-for Medicaid expansion (administered by MassHealth) and half via the Connector’s free and subsidized network-tiered health care insurance for those not eligible for expanded Medicaid. Relatively few Massachusetts residents used the Connector to buy full-priced insurance.

Question 9

health san francisco

Answer 9

• 2006 - City of San Francisco creates the Healthy San Francisco program, providing universal access to health services in the city for residents.
• Healthy San Francisco is a program designed to make health care services available and affordable to uninsured San Francisco residents. It is operated by the San Francisco Department of Public Health (DPH).
• The 2016 national election has not changed the Department of Public Health’s commitment to provide quality health care.
• The Healthy San Francisco program will continue to operate for those San Francisco residents age 18 or older with income up to 500% of the federal poverty level who are uninsured and ineligible for Medi-Cal or Medicare.
• San Francisco promotes inclusiveness, diversity, and respect in all of our public services and programs. We will continue to provide health care to all San Franciscans in need, regardless of immigration or insurance status.
  
  • living on a combined family income at or below 400% of the Federal Poverty Level.
  • A San Francisco resident who can provide proof of San Francisco residency*;
  • Uninsured for at least 90 days**;
  • Not eligible for public insurance programs such as Medi-Cal, Medicare, or financial assistance to purchase insurance through Covered California;
  • Age 18 or over
• may join Healthy San Francisco regardless of immigration status, employment status or pre-existing medical conditions.
• Quarterly Participant Fees (Paid Four Times a Year per Individual) Amount per Income Range:$0 $60 $150 $300 (based on April 2014 FPL, subject to change)
• *FPL is the Federal Poverty Level
• Healthy San Francisco is available to all San Francisco residents regardless of immigration status, employment status, or pre-existing medical conditions; people who make up to $54K a year can join.
• Some Healthy San Francisco Participants pay a fee for their health coverage. The Healthy San Francisco Participant Fee is based on a “sliding scale.” This means that the program will cost Participants more or less depending on their income. Simply put: Participants who earn less will pay less; Participants who earn more will pay more. Use the chart below to estimate, based on your family income, whether you may be required to pay a Participant Fee. The exact cost for you will be determined by a Certified Application Assistor at the time your application is completed.

Question 11

healthy san francisco co-pay

Answer 11

• In addition to the Participant Fee, some program Participants may pay a Point of Service Fee to their clinic at the time services are received. For example, an additional fee will be paid each time a Participant visits a physician, emergency room, or picks up a prescription. The amount of the Point of Service Fee depends on the Medical Home and household income of the program Participant. If a Participant’s income is below a certain amount, that Participant will not pay a Point of Service Fee for most services.

Question 12

health san francisco point of service fees at medical homes

Answer 12

• Point of Service fees at Medical Homes associated with the SF Community Clinic Consortium (SFCCC), Kaiser Permanente, Sister Mary Phillippa Health Center and CCHCA – Chinese Hospital vary by clinic. Please contact the Medical Homes directly for a schedule of Point of Service fees.

Question 13

patient protection and affordable care act

Answer 13

• March 21, 2010
• The House of Representatives passes the Senate bill,
• the Patient Protection and Affordable Care Act
• (voting 219-212) and sends it to the President for signature.
• The purpose of the law was to increase access to affordable health insurance.
• …expanded eligibility to free health insurance for low-income individuals (Medicaid) and created a marketplace for individuals to purchase health insurance.
• In California, this free public health insurance program is called Medi-Cal and the health insurance marketplace is called Covered California.
• • The most significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965.
• Under the act, hospitals and primary physicians would transform their practices financially, technologically and clinically to drive better health outcomes, lower costs and improve their methods of distribution and accessibility.
• • The ACA was enacted to increase the quality and affordability of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of healthcare for individuals and the government.
• introduced mechanisms like mandates, subsidies, and insurance exchanges
• required insurance companies to cover all applicants within new minimum standards and offer the same rates regardless of pre-existing conditions or sex.
• On June 28, 2012, the United States Supreme Court upheld the constitutionality of the ACA’s individual mandate as an exercise of Congress’s taxing power in the case National Federation of Independent Business v. Sebelius.
• However, the Court held that states cannot be forced to participate in the ACA’s Medicaid expansion under penalty of losing their current Medicaid funding. Since the ruling, the law and its implementation have continued to face challenges in Congress and federal courts, and from some state governments, conservative advocacy groups, labor unions, and small business organizations.
• On June 25, 2015, in the case King v. Burwell, the Supreme Court affirmed that the law’s federal subsidies to help individuals pay for health insurance are available in all states, not just in those which have set up state exchanges.
• Modest drop in uninsured rates:
• In March 2015, the Centers for Disease Control and Prevention reported that the average number of uninsured during the period from January to September 2014 was 11.4 million fewer than the average in 2010.[10] In April 2015, Gallup reported that the percentage of adults who were uninsured dropped from 18% in the third quarter of 2013 to 11.4% in the second quarter of 2015.[11]

Question 14

PPACA/ACA/”obamacare”

Answer 14

• Required that all individuals have health insurance.
• The poorest covered under a Medicaid expansion (< 138% FPL)
• Federal subsidies for low and middle incomes people who do not have access to affordable coverage through their jobs, through “American Health Benefit Exchanges.”
• Employers are not mandated to provide health benefits, however large businesses whose employees receive insurance subsidies will pay penalties. Small businesses will be able to access more plans through a separate Exchange.
• Health plans will not be allowed to deny coverage to people for any reason, including their health status, nor can they charge more because of a person’s health or gender.
• Young adults will now have the option of being covered under their parents’ plan up to age 26.
• Etc…
• The Patient Protection and Affordable Care Act consists of a combination of measures to control healthcare costs, and an expansion of coverage through public and private insurance: broader Medicaid eligibility and Medicare coverage, and subsidized, regulated private insurance.
• An individual mandate coupled with subsidies for private insurance as a means for universal healthcare was considered the best way to win the support of the Senate because it had been included in prior bipartisan reform proposals. The concept goes back to at least 1989, when the conservative Heritage Foundation proposed an individual mandate as an alternative to single-payer health care.[57] It was championed for a time by conservative economists and Republican senators as a market-based approach to healthcare reform on the basis of individual responsibility and avoidance of free rider problems. Specifically, because the 1986 Emergency Medical Treatment and Active Labor Act (EMTALA) requires any hospital participating in Medicare (which nearly all do) to provide emergency care to anyone who needs it, the government often indirectly bore the cost of those without the ability to pay.[58][59][60]
• Guaranteed issue prohibits insurers from denying coverage to individuals due to pre-existing conditions, and a partial community rating requires insurers to offer the same premium price to all applicants of the same age and geographical location without regard to gender or most pre-existing conditions (excluding tobacco use).[17][18][19]
• Minimum standards for health insurance policies are established.[20][21][22][23][24]
• An individual mandate[25][26] requires all individuals not covered by an employer sponsored health plan, Medicaid, Medicare or other public insurance programs (such as Tricare) to secure an approved private-insurance policy or pay a penalty, unless the applicable individual has a financial hardship or is a member of a recognized religious sect exempted by the Internal Revenue Service.[27] The law includes subsidies to help people with low incomes comply with the mandate.[28]
• Health insurance exchanges operate as a new avenue by which individuals and small businesses in every state can compare policies and buy insurance (with a government subsidy if eligible).[29] In the first year of operation, open enrollment on the exchanges ran from October 1, 2013 to March 31, 2014. The original purchase deadline date to be covered for January 1, 2014 was December 15, 2013, but the deadline was pushed back, first to December 23, 2013 and later to December 24, 2013.[30][31][32][33] For plans starting in 2016, the proposed enrollment period is November 1, 2015 – January 31, 2016.[34]
• Low-income individuals and families whose incomes are between 100% and 400% of the federal poverty level will receive federal subsidies on a sliding scale if they purchase insurance via an exchange.[35] Section 1401(36B) of PPACA explains that each subsidy will be provided as an advanceable, refundable tax credit[36] and gives a formula for its calculation.[37] The formula was changed in the amendments (HR 4872) passed March 23, 2010, in section 1001.[38] In 2015, the subsidy would apply for incomes up to $46,680 for an individual or $95,400 for a family of four; consumers can choose to receive their tax credits in advance, and the exchange will send the money directly to the insurer every month.[39] Small businesses will be eligible for subsidies.[40]
• Medicaid eligibility expanded to include individuals and families with incomes up to 133% of the federal poverty level, including adults without disabilities and without dependent children.[49] The law also provides for a 5% “income disregard”, making the effective income eligibility limit for Medicaid 138% of the poverty level.[50] Furthermore, the State Children’s Health Insurance Program (CHIP) enrollment process is simplified.[49] However, in National Federation of Independent Business v. Sebelius, the Supreme Court ruled that states may opt out of the Medicaid expansion, and several have done so.
• Reforms to the Medicare payment system are meant to promote greater efficiency in the healthcare delivery system by restructuring Medicare reimbursements from fee-for-service to bundled payments.[51][52] Under the new payment system, a single payment is paid to a hospital and a physician group for a defined episode of care (such as a hip replacement) rather than individual payments to individual service providers. In addition, the Medicare Part D coverage gap (commonly called the “donut hole”) will shrink incrementally, closing completely by January 1, 2020.[53]
• Businesses which employ 50 or more people but do not offer health insurance to their full-time employees will pay a tax penalty if the government has subsidized a full-time employee’s healthcare through tax deductions or other means. This is commonly known as the employer mandate.[54][55] In July 2013, the Internal Revenue Service delayed enforcement of this provision for one year.

Question 15

Why reform? US vs other OECD countries

Answer 15

• Spending per capita ~50% higher
• Generally fewer doctor visits and hospital days
• Difference in spending due to:
  
  • administrative costs
  • price (costs of doctor, procedure, drugs)
  • use of high technology
  • Health care outcomes same or worse
• three reasons why the U.S. health care system costs more than other systems throughout the world:
  
  • 1. we spend two to three times as much on administration.
  • 2. we have more excess capacity of expensive technology (more CT scanners, MRI scanners, and surgery suites).
  • 3. we pay higher prices for services than they do.

Question 16

Why does the US health system cost so much?

Answer 16

• •Administration accounts for the largest per patient difference between cost in US and Canada - 39%
• •Payments to MDs and hospitals account for 31%
• •More intensive provision of medical services account for 14% of the difference

Question 17

Why reform?

Answer 17

• 51 million uninsured individuals.
• Over the prior 10 years, insurance premiums had risen 131%.
• Average annual premiums for family health benefits were $15,000 in 2011, up 9 percent, substantially more than the growth in worker’s wages
• Huge number lacked coverage
• Skyrocketing costs of coverage (bankruptcies)
• 2018:
  
  • annual premiums for employer-sponsored family health coverage reached $19,616, up 5% from last year,
  • workers on average pay $5,547 toward the cost of their coverage,
  • average deductible among covered workers in a plan with a general annual deductible is $1,573 for single coverage.

Question 18

Health care costs as a major cause of financial instability

Answer 18

• “…biggest cause of U.S. bankruptcies…”
• 26 percent of Americans age 18-64 struggle to pay medical bills
• the average 65-year-old couple faces $275,000 in medical bills during retirement
• Challenging to determine how much influence medical costs contribute to bankruptcy – people don’t report cause, have multiple financial catastrophes, etc.
• Medical bills were the biggest cause of U.S. bankruptcies, according to a CNBC report. It estimated that 2 million people were adversely affected. A popular Facebook meme said the 643,000 Americans go bankrupt each year due to medical costs. President Obama, in his 2009 State of the Union address, said that a medical bankruptcy occurred every 30 seconds. That’s 1 million bankruptcies in a year.
• Rising health care costs make these statistics seem credible. But why are they so different? And what is the actual impact of medical bankruptcies on the economy? Most importantly, what’s the best way for you to avoid becoming one of those statistics?
• Medical Bankruptcy Facts
  
  • One reason why the estimates are so different is that they were done in different years. Those years were following the Great Recession. As a result, bankruptcy rates of all kinds skyrocketed. Consumer bankruptcies rose from 822,590 in 2007 to 1.5 million in 2010. Since then, they’ve fallen to 770,846 in 2016.
• That’s one reason why President Obama’s estimate is so high. In 2009, there were 1.4 million bankruptcies. Obama based his calculation on a 2009 Harvard study coauthored by his Assistant, Elizabeth Warren. It said 62.1 percent of all bankruptcies were because of medical bills. The researchers interviewed those who filed for bankruptcy between January and April 2007. It defined medical causes as those to include those mortgaged a home to pay medical bills. It also included those who had medical bills greater than $1,000 or lost at least two weeks of work due to illness.
• Several scientists criticized the researchers for being too broad in including those last two reasons. Even so, Obama’s calculations were a little high. Multiply 1.4 million bankruptcies by the Harvard study’s 62.1 percent, and you get 877,372 bankruptcies created by medical bills.
• In 2011, researchers Tal Gross and Matthew Notowidigbo found that out-of-pocket medical costs caused 26 percent of bankruptcies. Their study only looked at low-income debtors.
• In 2013, two studies were done that created wildly different conclusions. The most widely-reported was done by Nerdwallet Health. The researchers based their estimates on the 2009 Harvard study. They excluded the bankruptcies due to job losses from medical problems. The researchers declared that 57.1 percent was more accurate.
• Later that year, CNBC reported that Nerdwallet found that medical bills caused 646,812 Americans to declare bankruptcy. CNBC extrapolated that to everyone in their household. The average household has three people, which translates to 2 million people affected.
• The Facebook meme summarized the same article to arrive at its estimate of 643,000 medical bankruptcies. The myth-buster Snopes used the study to disprove the Facebook meme that said 643,000 Americans go bankrupt each year due to medical bills.
• Also in 2013, bankruptcy attorney Daniel Austin found that up to 26 percent of bankruptcies were primarily due to medical costs. He only counted large medical costs as a major of cause bankruptcy. These large costs were more than 50 percent of the respondent’s total debt or more than 50 percent of his/her income. Total personal bankruptcies in 2013 were 1,038,720. Multiply 26 percent by total bankruptcies, and you get 270,067 bankruptcies.
• In 2015, the Kaiser Family Foundation found that medical bills made 1 million adults declare bankruptcy. Its survey found that 26 percent of Americans age 18-64 struggled to pay medical bills. According to the U.S. Census, that’s 52 million adults. The survey found that 2 percent, or 1 million, said they declared bankruptcy that year.
• In 2017, Debt.org found that people aged 55 and older account for 20 percent of total filings. That number has doubled since 1994. Even with assistance from Medicare, the average 65-year-old couple faces $275,000 in medical bills during retirement.
• Who to Believe
  
  • Researchers disagree on how much medical bills cause bankruptcies. The biggest problem in answering the question is that those filing for bankruptcy aren’t required to state the reason. As a result, estimates are based on surveys. The methodology differs from study to study. It depends on how the researchers and the survey respondents define medical debt.
  • Second, a variety of factors cause bankruptcies. Most people with medical debt have other debt. They may also have low income, little savings, and job losses. That makes it difficult to determine whether the bankruptcy was because of medical debt alone. For example, the Kaiser Family Foundation study found that only 3 percent said their bankruptcy was because of medical debt. But another 8 percent said it was because of a combination of medical and other debt.
• It also found that the insured were a bit more likely to declare bankruptcy (3 percent) than the uninsured (1 percent). That could be because they thought they were protected from medical bills. Many were not prepared for unexpected deductible and coinsurance costs. Almost a third weren’t aware that a particular hospital or service wasn’t part of their plan. One-in-four found that the insurance denied their claims.
• How did those with insurance wind up with so many bills? After high deductibles, co-insurance payments, and annual/lifetime limits, the insurance ran out. Other companies denied claims or just canceled the insurance.
• How to Avoid Medical Bankruptcy
  
  • It’s not a good idea to file for bankruptcy to discharge medical bills. For one thing, a bankruptcy stays on your record for 10 years. You may not be able to rent an apartment, get an auto loan, or buy a home. Some employers would reject your job application for that reason.
• In some states, you may lose your home. For example, Nebraska only protects$12,500 in home equity from seizure. In total, you could lose $100,968 in assets. The biggest loss is in Delaware, where you could lose $125,745 on average.
• Also, bankruptcy is expensive. Average costs are from $1,500 to $3,000 for a Chapter 7 filing with a lawyer. Chapter 13 average costs are from $3,000 to $4,000 with an attorney. Those are national average costs. The costs could be much higher in many eastern states.
• The best way to avoid medical bankruptcy is to prevent medical bills. To do that, you must prevent or manage chronic diseases. The most expensive are diabetes, at $26,971 per family, and neurological disorders like multiple sclerosis, which cost $34,167 on average. The biggest expense is hospitalization, which caused half of the bankruptcies.
• High medical bills from accidents can’t be avoided. For those situations, a financial cushion is a must. Sock away three to six months of expenses in a savings or money market account. Only a third of Americans have more than $1,000 in savings.
• As the research shows, health insurance won’t completely protect you. Many people were bankrupted by high deductibles and other out-of-pocket expenses. You should have at least the amount of your deductible in savings

Question 19

multi-payer health care financing

Answer 19

• To try to figure out root causes of higher costs we have to look at our systems of financing health care.
• Money, or funds, generally come from one or more of 4 sources… through private and/or public (gov’t) payers, to private and/or public providers.

Question 20

Billing and INsurance Related Administrative Cost Related to Multi-Payer system

Answer 20

• $471 billion annually (2012) in billing and insurance-related administration ($1500 per person)
  
  • $70 billion in physician offices
  • $74 billion in hospitals
  • $94 billion in settings providing other health services and supplies
• 80% due to added costs of multi-payer system (15% of health care spending)
• Administrative costs are the largest source of higher costs in the US, and Billing and Insurance Related Administrative Costs are responsible for much of this.
• Billing and Insurance Related costs in the U.S. health care system totaled approximately $471 ($330 – $597) billion in 2012. This includes
  
  • $70 ($54 – $76) billion in physician practices,
  • $74 ($58 – $94) billion in hospitals,
  • $94 ($47 – $141) billion in settings providing other health services and supplies,
  • $198 ($154 – $233) billion in private insurers, and
  • $35 ($17 – $52) billion in public insurers.
• Compared to simplified financing, $375 ($254 – $507) billion, or 80%, represents the added BIR costs of the current multi-payer system.
• A simplified financing system in the U.S. could result in cost savings exceeding $350 billion annually, nearly 15% of health care spending.
• (Jiwani et al. BMC Health Services Research (2014) 14:556)

Question 21

Why are billing and insurance related Administrative costs so high?

Answer 21

• Complex process, with multiple steps, often detailed & demanding, including:
  
  • Contracting, maintaining benefits database, patient insurance determination, collection of copayments, formulary and prior authorization procedures, procedure coding, submitting claims, receiving payments, paying subcontracted providers, appealing denials and underpayments, negotiating end-of-year resolution of unsettled claims, and collecting from patients, …

Question 22

provider billing and insurance related administrative costs

Answer 22

• Some steps seem almost designed to slow and complicate the process (definitely have that effect), e.g., prior authorization, high rates of denials / errors / underpayment.
• While there is a relatively modest number of payers, providers have to track plan-specific benefits and pay rules for dozens to hundreds of plans, including negotiated variants, that change frequently…

Question 23

Four basic modes of health care financing

Answer 23

• Out-of-pocket payment
• Individual private insurance
• Employment based private insurance
• Government financing
• So – if we are considering finding a way to make health care accessible to all people, we have to consider how the services are paid for…
• OOP does not work well…
• National health insurance -> replace OOP with individual and/or employment based private, and government coverage.

Question 24

Major types of health reform

Answer 24

• Free market – let individuals buy health insurance / care, subsidize the poor. Often called “consumer driven” but with issues of moral hazard.
• Improved mixed system – regulate private insurance, expand public insurance (PPACA). “Managed competition”
• Single payer / universal – use a public fund to pay for private and public providers, everyone covered with good benefit package. Common in OECD countries.
• Several directions that health care reform can take – with these major types of systems.
• The first – “Free Market” – is subject to challenges of moral hazard… the additional health care that is purchased when persons become insured. Under conventional theory, health economists regard these additional health care purchases as inefficient because they represent care that is worth less to consumers than it costs to produce.
• Patients who have low-deductible, low co-payment insurance will demand any and all pharmaceuticals and other treatments that promise any benefit at all, net of the risks and side effects of the treatment, without regard to cost. This is a standard “moral hazard” problem.
• With ACA and insurance, patients will find that their policies exclude fewer categories of treatment. These reforms are net improvements, but they will exacerbate the moral hazard problem that plagues our health-care system and drives up costs.
• Need some process to be able to tell if health benefits of more expensive tx, compared to existing treatments, justify adding cost to the system. In the US, given the way the health insurance system is structured, we are not able to tell.
• Government provision of information to facilitate a private market for a (currently non-existent) product that I call “relative value health insurance.”

Question 25

how do we evaluate different proposals? Criteria to judge reform proposals:

Answer 25

• universal coverage
• continuous coverage
• affordable coverage for individuals and families
• affordable and sustainable health insurance strategy for society
• Enhancement of health and well-being by promoting access to high-quality care that is:
  
  • effective,
  • efficient,
  • safe,
  • timely,
  • patient-centered,
  • equitable.
• The IOM Report - 2004
• Institute of Medicine Report on the consequences of uninsurance; the reports present substantial and compelling evidence on the harmful effects of being uninsured.
  
  • Health care coverage should be universal.
  • Health care coverage should be continuous.
  • Health care coverage should be affordable to individuals and families.
  • The health insurance strategy should be affordable and sustainable for society.
  • Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered, and equitable.

Question 26

single payer health care financing

Answer 26

• One option is a system in which all payment is made from one source – the government. Results in much lower admin costs – as dealing with a greatly simplified less fragmented system for billing and payments.
• Canada – monopsony (only one buyer – govt (mainly provincial govts, with some funding from federal govt) interfaces with many would-be sellers of a particular product)
• Nurses are one of the big groups pushing the single payer system

Question 27

administrative savings from single payer - principles

Answer 27

• •Universal coverage: no eligibility determination, marketing, underwriting.
• •Single avenue for payment: standard benefit package & reimbursement rates; single billing process - transparent, simple, few errors; single fiscal agent per office.
• •Single clinical practice rules: formularies, referrals, guidelines.
• •Not-for-profit: public or private
• One of the main benefits of single payer – lower admin costs
• According to PNHP…Over 31% of every health care dollar goes to paperwork, overhead, CEO salaries, profits, etc.
• Because the U.S. does not have a unified system that serves everyone, and instead has thousands of different insurance plans, each with its own marketing, paperwork, enrollment, premiums, and rules and regulations, our insurance system is both extremely complex and fragmented.
• The Medicare program operates with just 3% overhead, compared to 15% to 25% overhead at a typical HMO. Provincial single-payer plans in Canada have an overhead of about 1%.
• Insurance companies would go away!
• Right now, different insurers require different things. They may say azithromycin prescription for PNA is bad practice and will ding the provider.

Question 28

taiwan transformation to single payer

Answer 28

• •Started National Health Insurance (NHI) - 1995
• •NHI covers >98% of population,
• •small co-pays.
• •cost = 3.4% of GDP,
• •satisfaction = 77.5%,
• •admin cost =1.49%,
• •equitable financial burden
• •deaths from “amenable causes” fell faster with NHI, 5.83% per year 1996 – 1999.
• Deaths from amenable causes = deaths that are preventable

Question 29

the past few decades of private health insurance

Answer 29

• Looking at hx of reimbursement and payment processes in the US….

Question 30

health coverage through the ACA

Answer 30

Question 31

patient protection and affordable care act (PPACA) - key provisions:

Answer 31

• Private insurance regulation - fairer, plainer
• Insurance exchanges - individuals / small business
• Public expansion for poor (Medicaid, CHIP)
• Medicare - close gaps, control costs
• Individual mandate
• Subsidies for poor / near-poor to purchase insurance
• Payment reforms and quality initiatives

Question 32

other ACA key elements

Answer 32

• In addition to:
  
  • Expanding coverage
  • Reforming the delivery system
  • Financing reform
  • Protecting Medicare & Medicaid payments
• Also:
  
  • Building the workforce
  • Wellness and prevention
  • Quality and safety
  • Regulatory oversight & program integrity

Question 33

what is the ACA

Answer 33

• 974 pages
• 480 major changes

Question 34

Gap in coverage for states that did not expand Medicaid

Answer 34

• Unintended consequence of states choosing to not expand Medicaid coverage (to 138%, that would have been 100% funded by federal government)

Question 35

Health insurance marketplaces facilitate enrollment into coverage by individuals and small employers

Answer 35

Question 36

ACA includes new rules for coverage in the non-group market

Answer 36

• Pre-ACA
  
  • •Policies are medically underwritten
  • •Many policies exclude benefits such as prescription drugs and maternity care
  • •Policies typically have high cost sharing
  • •Premiums are unsubsidized leaving them unaffordable for many
• Post-ACA
  
  • •Insurers are prohibited from discriminating based on health status
  • •Policies must cover the essential health benefits
  • •Consumer out-of-pocket spending is limited
  • •Premium and cost-sharing subsidies are available

Question 37

Plans sold through marketplaces are easier to compare

Answer 37

• Actuarial value = the percentage of total average costs for covered benefits that a plan will cover.
• For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all covered benefits. However, you could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on your actual health care needs and the terms of your insurance policy.
• … the levels of coverage in the ACA are not defined using specific deductibles, copays, and coinsurance. Rather, they are specified using the concept of an “actuarial value” (AV). For example, a plan with an actuarial value of 70% (referred to as a “silver” plan in the ACA) means that for a standard population, the plan will pay 70% of their health care expenses, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance. The higher the actuarial value, the less patient cost-sharing the plan will have on average. The percentage a plan pays for any given enrollee will generally be different from the actuarial value, depending upon the health care services used and the total cost of those services. And, the details of the patient cost-sharing will likely vary from plan to plan.

Question 38

catastrophic health insurance

Answer 38

• People under 30
• People of any age with a hardship exemption or affordability exemption (based on Marketplace or job-based insurance being unaffordable)
• Cover:
  
  • same essential health benefits as other Marketplace plans.
  • certain preventive services at no cost.
  • at least 3 primary care visits per year before you’ve met your deductible.
• 2019: Catastrophic health insurance plans have low monthly premiums and very high deductibles. They may be an affordable way to protect yourself from worst-case scenarios, like getting seriously sick or injured. But you pay most routine medical expenses yourself.
• Only the following people are eligible:
• People under 30
• People of any age with a hardship exemption or affordability exemption (based on Marketplace or job-based insurance being unaffordable)
• If you’re eligible to buy a Catastrophic plan, you’ll see them displayed when you compare plans in the Marketplace.
• How much Catastrophic plans cost
• Monthly premiums are usually low, but you can’t use a premium tax credit to reduce your cost. If you qualify for a premium tax credit based on your income, a Bronze or Silver plan is likely to be a better value. Be sure to compare.
• Deductibles — the amount you have to pay yourself for most services before the plan starts to pay anything — are very high. For 2019, the deductible for all Catastrophic plans is $7,900. After you spend that much, your insurance company pays for all covered services, with no copayment or coinsurance.
• What Catastrophic plans cover
• Catastrophic plans cover the same essential health benefits as other Marketplace plans.
• Like other plans, Catastrophic plans cover certain preventive services at no cost.
• They also cover at least 3 primary care visits per year before you’ve met your deductible.
• Catastrophic plans are a fifth type of plan, but they are only available to individuals who meet eligibility requirements. Although they have the lowest monthly cost, the benefits are primarily limited to emergency situations, and you must meet certain eligibility requirements.
• Out-of-Pocket Costs You Pay = More than 40%
• How Much the Plan Pays = Less than 60%
• To qualify for a Catastrophic plan, you must either be under the age of 30, or have a hardship exemption at any age. You may qualify for a hardship if you are experiencing:
  
  • Homelessness;
  • An eviction/foreclosure;
  • A notice of shutoff from your utility company;
  • Domestic violence or a death in the family;
  • A natural or man-made disaster.
  • Bankruptcy or substantial debt from medical expenses;
  • An increase in expenses due to caring for an ill, disabled, or aging family member;
  • Claiming a child as a tax dependent who was denied Medicaid or CHIP;
  • If you won an appeal for previously being denied a qualified health plan, but were denied eligibility at the time;
  • You lost coverage in the past, but found qualified health plans to be unaffordable;
  • Some other hardship related to obtaining health insurance.

Question 39

Short-term, limited-duration insurance

Answer 39

• •Less than 12 months
• •May be renewed for up to 36 months
• •Relatively unregulated short-term health insurance
• •Limited coverage
• Short-Term, Limited-Duration Insurance
• Short-term, limited-duration insurance is a type of health insurance coverage that was primarily designed to fill gaps in coverage that may occur when an individual is transitioning from one plan or coverage to another plan or coverage, such as in between jobs. This type of coverage is exempt from the definition of individual health insurance coverage under the Patient Protection and Affordable Care Act (PPACA) and is therefore not subject to the PPACA provisions that apply to the individual market.
• Final Policies
• Today’s rule provides consumers with more affordable options for health coverage. They will now have the ability to purchase short-term, limited-duration insurance policies that:
• Are less than 12 months;
• Contain important language to help them understand the coverage they are getting; and
• May be renewed for up to 36 months.
• The True Cost of Cheap Health Insurance
• What the Trump administration’s forthcoming rule expanding access to “junk” plans will mean for consumers
• Vann R. Newkirk II Apr 25, 2018
• Any day now, the Trump administration is expected to release new regulations to make short-term health-insurance plans last a lot longer. In a fact sheet about the forthcoming changes, the administration said it wants to extend access to the plans—which now expire after three months, and offer too few services to qualify for the Affordable Care Act’s tax credits—in order to “provide additional, often much more affordable coverage options, while also ensuring consumers understand the coverage they purchase.” According to that release, the policies are beneficial for unemployed people and for those who can’t afford pricey Obamacare plans. But are they?
• As stated in the proposed rule released by the departments of Health and Human Services, Labor, and the Treasury in February, the federal government wants to reverse previous restrictions on short-term plans. In 2016, the Obama administration issued a rule limiting their maximum coverage duration to three months and effectively eliminating enrollees’ ability to automatically renew the plans at the end of their term. While the new rule’s exact language is not yet known, it will likely extend that duration to 12 months and allow for reapplication, essentially making short-term
• Coming just months after Congress repealed the individual mandate, the new rule will open up relatively unregulated short-term health insurance as an alternative to heavily regulated Obamacare plans—which until December were the only ones that qualified under the mandate. The Trump administration isn’t wrong when it states that these plans will be cheaper, too. According to the Kaiser Family Foundation, some short-term plans currently have premiums that are less than a tenth of those for the lowest cost plans on some Obamacare exchanges. While for many consumers, the ACA’s premium tax credits drastically lower the actual amount they pay in monthly premiums, there’s little doubt that short-term plans will still be less expensive overall, and that’s a big deal for the families squeezed by Obamacare premiums, which increased again this year.
• But there’s a cost to affordability, so to speak: The not-so-secret secret about short-term health-insurance plans is that they’re skimpy—and as my colleague Olga Khazan found out, often comically so:
• If I get cancer, I have to wait 30 days before my treatment is covered. I can’t get counseling, mental-health care, or treatment for substance-abuse issues, and the plan doesn’t cover prescription drugs. And you can forget about obesity treatments, LASIK, sex-change operations, childbirth or abortion, dentistry, or eyeglasses. If I get injured while participating in college sports or the rodeo, I’m on my own. As a Texan, this is worth taking into account.
• The rap on short-term plans is that they are often “junk” plans that collect premiums from people who feel they need to have insurance, but might not understand their terms. This is why the Obama administration passed the 2016 regulations in the first place, as short-term insurance purchases skyrocketed with the advent of the individual mandate. The plans’ offerings, however, aren’t really regulated by Obamacare—or by previous laws, for that matter—and can contain provisions that make little to no sense and are designed to provide minimum real benefits. For example, of the short-term plans the Kaiser Family Foundation recently studied, all covered cancer treatment, but less than 30 percent covered prescription drugs. None of them covered maternity care. In general, short-term plans can and often do deny patients for preexisting conditions.
• As Khazan and Vox’s Dylan Scott note, these plans might ostensibly be useful for some young, healthy adults: those who just want some type of coverage, don’t expect to have a major illness anytime soon, and who understand what they’re getting into—and what they’re not getting. The new rule from the Trump administration will likely stipulate that plan providers inform would-be enrollees that their policies might not meet Obamacare’s minimum requirements. The rule would essentially allow these healthy adults to take a gamble on their health care for years at a time, extending what Khazan calls “in-case-you-get-hit-by-a-bus plans” year over year.
• But the tricky thing about many short-term plans, relative to other offerings, is they may not even be that useful for young-and-invincible types. While it’s difficult to assess their average value, since they are unregulated and diverse, the cheapest short-term plans appear to do little but avert only the most extreme—and unlikely—costs.
• For example, the cheapest short-term plan offered in Phoenix on the eHealth portal—a major private, online insurance marketplace—costs $30.59 a month for a 30-year-old male nonsmoker. Under the new Trump regulations, it would amount to about $367 per year. Not bad! That’s less per year than the 30-year-old might pay per month under some Obamacare plans on the exchange.
• But he’d get what he pays for. Under that plan, he would pay $10,000 of his first $15,000 in medical expenses, after meeting his $5,000 deductible and covering 50 percent coinsurance payments (up to $5,000) after the deductible is met. Before he hits the $5,000 out-of-pocket maximum, the plan would pay $1,000 maximum per day for hospital stays, $1,000 maximum for outpatient surgery, and $500 maximum for emergency-room visits. The plan wouldn’t cover outpatient prescription drugs.
• It gets more complicated from there. Let’s say Phoenix Man has his hit-by-a-bus moment and suffers a serious, but not deadly, injury like a complex and displaced arm fracture. Assuming he doesn’t have the wherewithal or pain tolerance to take a Lyft to the hospital, and decides to take an ambulance, the ride might set him back $1,000. If this is his first health incident since enrolling in the plan, that payment would come straight from his own checkbook, because his deductible hasn’t been met. While it only allows for some very rough assumptions, health-cost calculator site Amino says Phoenix Man can expect another $5,000 in facility fees. The costs of the actual medical procedure to fix his arm would be about $4,000, of which he’d pay half, since by then his coinsurance payments would kick in. Assuming things go well and there aren’t complications, Phoenix Man would pay around $7,500 for a $10,000 treatment.
• Although this is just a guesstimate—and granted that high deductibles are common even in Obamacare plans—this scenario illustrates the gist of the value proposition of many short-term plans. Phoenix Man pays $367 a year for what is essentially a 25 percent discount on his accident. While the bang for his buck would increase if he got sick or—heaven forbid—walked in front of a bus again, unless he racked up enough bills to hit the out-of-pocket maximum, Phoenix Man would pay for half of all his subsequent medical costs for the rest of the year—except for his prescriptions, which would be full price.
• That is, of course, better than being uninsured. But given that most Americans have less than $1,000 in savings and many can’t afford sudden major bills, having a short-term plan like Phoenix Man’s might not make that much of a financial difference overall. For low-income people with little to no margins on their monthly paychecks, it might make more sense to forgo the $30 monthly payments for a bare-bones plan and float by uninsured, taking extra care at busy crosswalks.
• Just about any plan, no matter how skimpy, can protect beneficiaries from the full wrath of the maelstrom of hospital bills that often attends even minor procedures. But most short-term plans do relatively little of that protection compared to Obamacare plans. That’s why they make up such a high-profit portion of the insurance industry: They are largely designed to rake in premiums, even as they offer little in return. And even when they do pay for things, they often provide confusing or conflicting protocols for making claims. Collectively, short-term plans can leave thousands of people functionally uninsured or underinsured without addressing or lowering real systemwide costs.
• The Trump administration portrays its pending move as a common-sense reform to meet demand in a changing marketplace. That much is accurate: Price pressures and the continuing renaissance of the short-term health-insurance industry will probably make short-term plans more attractive and more common over time. But in its role in the larger picture, as an entity that since the passage of Obamacare has been tasked with balancing profit for corporations with affordability and access for consumers, the federal government is taking another step back under Trump—allowing the markets greater autonomy in deciding who gets care and who doesn’t.

Question 40

Association health plans

Answer 40

• •allow small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage
• •strengthen negotiating power with providers from larger risk pools and greater economies of scale
• •can exempt people with pre-existing conditions.
• Association Health Plans work by allowing small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer.
• Association Health Plans will also be able to strengthen negotiating power with providers from larger risk pools and greater economies of scale.

Question 41

individual mandate

Answer 41

• Tax Cuts and Jobs Act of 2017:
  
  • sets the ACA’s penalties for individuals who remain uninsured to $0, beginning in 2019.
  • the number of people uninsured would be 10 percent lower in California in 2019, if a state mandate implemented
  • Health insurance premiums in the individual market would fall by an average 11.8 percent in 2019 if all states passed their own insurance mandates
• The Tax Cuts and Jobs Act of 2017 eliminated the financial penalty of the Affordable Care Act’s individual mandate.
• States could reinstate a similar penalty to encourage health insurance enrollment, ensuring broad sharing of health care costs across healthy and sick populations to stabilize the marketplaces.
• in 2019, the number of people uninsured would be 10 percent lower in California if we implemented a state mandate
• If all states were to replace the ACA’s individual mandate penalty with their own version, the number of uninsured in the U.S. would drop by 3.9 million in 2019 and 7.5 million in 2022
• Health insurance premiums in the individual market would fall by an average 11.8 percent in 2019 if all states passed their own insurance mandates

Question 42

California Challenges to Trump Administration ACA-exempt insurance options

Answer 42

• A ban on short-term insurance plans that can be extended up to 36 months and do not include essential benefits coverage such as maternity care, mental health, and prescription drugs.
• A ban on association health plans, which can exempt people with pre-existing conditions.
• The creation of a council that will conduct a feasibility study on a state public option healthcare plan.
• Prohibiting the state from applying for a waiver that would require Medicaid enrollees to show proof of employment.
• Requiring that health plans spend at least 80 percent of premium revenue on healthcare.
• California Challenges Trump Administration’s ACA-exempt Insurance Options
• Jerry Brown, governor of California, has signed a healthcare package that includes bills banning the Trump administration’s new healthcare options that don’t meet the requirements of the Affordable Care Act.
• The bills in the package include:
  
  • A ban on the Trump administration’s short-term insurance plans that can be extended up to 36 months and do not include essential benefits coverage such as maternity care, mental health, and prescription drugs.
  • A ban on association health plans, which can exempt people with pre-existing conditions.
  • The creation of a council that will conduct a feasibility study on a state public option healthcare plan.
  • Prohibiting the state from applying for a waiver that would require Medicaid enrollees to show proof of employment.
  • Requiring that health plans spend at least 80 percent of premium revenue on healthcare.

Question 43

california’s employer sponsored insurance market

Answer 43

• Compared to other states, California’s employer sponsored insurance market has a relatively low rate of covered workers choosing high-deductible policies.
• In 2017, only 13% of California’s 6.7 million workers with ESI were enrolled in an HDHP option. While the proportion has more than doubled in only four years, it still lags far behind the comparable national rate.
• Despite the higher premiums, Californians with job-based coverage are much more likely to be enrolled in health maintenance organizations (50%) or preferred provider organizations, known as PPOs (28%).

Question 44

single payer?

Answer 44

• Could California create an independent, state-run system responsible for all aspects of every resident’s health care
• Replace / cover:
  
  • Medi-Cal (Medicaid) - a third of the population
  • employer plans - 43 percent
  • Medicare
  • Individual – Market place
  • Uninsured
• Federal gov’t not going there now… so up to states…?
• California - world’s fifth-largest economy and nearly 40 million people.
• Health care is 20 percent of California’s economy
• Can we create an independent, state-run system that’s responsible for every resident’s health care and prescription drugs?
• Federal rules govern nearly all health-insurance coverage.
• Medi-Cal (Medicaid), covers about a third of the population.
• almost everyone else gets coverage through an employer, Medicare or the individual marketplace.
• To redirect Medicare funds, California would require a federal waiver
• Cost - A legislative analysis of the bill (Healthy California / SB 562), which would provide free medical care for every resident including undocumented immigrants, estimated the final tally would be about $400 billion a year — more than double the state’s budget.
• About half that sum could come from existing Medicare and Medicaid dollars, according to the analysis.
• What employees and employers currently spend would cover another $100 billion to $150 billion. But the remaining $50 billion to $100 billion would require new taxes — such as a 15 percent payroll tax on earned income.
• A separate analysis put the bill’s cost at $331 billion, accounting for savings achieved through efficiencies and preventive care, among other things. Whatever the figure, even supporters concede that it would require a higher sales tax and increased taxes on large businesses.
• Assembly Bill 2517: Sets California on a potential path toward a form of single-payer health care. Proposal also included in the state budget, with $5 million appropriated this year to provide a “road map” with benchmarks to move California toward a “unified publicly funded health care system,” according to the bill’s authors. System could be publicly funded or a hybrid to include coverage provided by and paid for by employers. Version included in state budget.