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Health Care ReformSherry Gliedsag1@columbia.eduHealth Reform was Not InevitableSome people have said that it would be a miracle if we passed health care reform. But I believe we live in a time of great change when miracles do happen. The cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year I believe that comprehensive health insurance is an idea whose time has come. I believe that some kind of program will be enacted this year.Millions do not now have protection or security against the economic effects of sickness. And the time has now arrived for action to help them attain that opportunity and to help them get that protection.

Quotations from the last four efforts to pass Universal health insurance Presidents Truman, Nixon, Clinton, and Obama.That aura of inevitability has been around a long time Time after time it has been dashedWhile in retrospect it seems foreordained, it certainly didnt look promising back in 2008.In fact, the stars seemed much more poorly aligned than back in 1993 a time when both President Bush and then candidate Clinton had quite well-developed health reform plans going into the election.2

Public Opinion1993 20% of voters ranked health care as the most important issue in the 1992 presidential election120089% indicated health care was the most important issue in the 2008 campaign

1 Kaiser Family Foundation Election Spotlight. Data collected from 1992 Presidential Election Exit Polls2 CNN Exit Polls, November 4, 2008

Despite rising costs and uninsured rolls, health care had been an important issue in the Democratic primariesBut it was not a central issue in the election campaign itself.By the time the election happened in 2008, Wall Street was imploding, the housing market was sinking, and unemployment rates were skyrocketing.31993GDP 2.9% Change from 1992Budget Deficit as % of GDP3.9% (1993)Public Debt as a percentage of GDP 66.2% (1993)Unemployment rate6.9% (1993)

2009GDP :-3.5% Change from 2008Budget Deficit as % of GDP:10.1% (2009)Public Debt as a percentage of GDP 85.2% (2009)Unemployment9.3% (2009)

Economic LandscapeBill Clinton famously struggled with balancing fiscal demands of health care against the deficit.President Obama had a much more challenging balance sheetThe economy had begun to grow again by the time Clinton took office but plummeted in 2009The budget deficit was a manageable 3.9% of GDP but the Recovery Act, passed in early 2009, drove it up to 10.1%And the weak economy and fiscal stimulus had increased an already burgeoning national debt.Where Clinton had worried about keeping the cost of health care down, it was a starting point that the ACA could not add to the deficitAnd the high unemployment rate also meant that any effort to draw substantial revenue from employment was doomed.4Political Landscape1992Clinton 370, Bush 168House: 258 (D), 176 (R)Senate: 57 (D), 43 (R)

Obama 349, McCain 173House: 256 (D), 178 (R)Senate: 55(D), 42(R), 2(I)April 27: Arlen Specter (R)(D)June 20: Al Franken (D)

2008

The political landscape was also weaker this time around at least at first.While my memory held that Obama had won the 2008 election in a landslide, the reality was less overwhelmingFewer EVFewer house democrats electedFewer Senate Dems elected one of the Is was Sanders but the other was Joe LiebermanThe SCHIP reauthorization was an almost entirely party line voteStimulus bill 2 Rs crossed Olympia Snowe and Arlen SpecterAnd then on June 20, Minnesota finally certified Al Franken as winner of the Senate race by just 312 votesThat fall, youll remember, after rancorous debate and the emergence of the Tea Party during the August recess, the Senate and the House passedBut as it turned out, there were only 213 days between June 20 and January 19

51. Reform of Insurer PracticeRate Review review of increases>10%Transparency/appealsLifetime limitsMedical Loss Ratio Annual limitsPre-existing conditionsUnderwriting and rating limitsRisk adjustment

Red has already happened 105 million Americans benefit from the lifetime limits provisions of the law The provisions in black will take effect beginning in 2014 Insurers to compete on quality and price not on selection

Fully-insured plans pursuant to a CBA are grandfathereduntil the last expiration date of a CBA related to that coverage. Multi-employer plans aregrandfathered until the last expiration date of a CBA related to that plan regardless ofemployer. Grandfathered status may be maintained upon the CBA expiration date if nochanges were made since March 23, 2010, that would have otherwise caused the plan to loseits grandfathered status.6Annual LimitsMinimum limits2010 $750,0002011 $1.25 million2012 $2 million2014 not permittedOne important component of the insurer reform was getting rid of annual limitsTerrible from an economics perspective protection against catastrophic risksAnd lower bound $750,000 not that hard to incurVery common after all, exist more or less in Medicare through inpatient days limitationConsumer advocates felt very strongly that this had to move quicklyNow lots of research had been done on health insurance in the 2000sKFF surveys, other surveysWe had focused a lot on rise in high deductible plans adequacy of protection? conservative/liberal splitWe had, however, missed another development probably because it was so undesirable that no one advocated for it7Limited Benefit PlanMcDonalds$56 per month up to $2,000 benefits/yearRuby Tuesday$18.43 per week - $1,250 outpatient; $3000 inpatientDennysNo inpatient, up to $300 doctor visitsWaivers3 million people in 1,372 mini-med plans

Very high administrative costsVirtually no risk protectionLike Christmas clubsSecretary had to develop a waiver program found that some 3 million people enrolled in theseProblem remains as 2014 approaches what will these employers do? 82. Improvements in CoveragePreventive services in MedicarePart D donut hole in MedicarePreventive services with no copayEssential Health BenefitsStandardized cost-sharingActuarial value

5.5 million seniors$90 Rising as donut hole closesUSPSTF recommended preventive services with no copayAnd beginning in 2014, health plans will generally be required to cover ten categories of benefitsSignificant expansion in mental health and substance use benefitsAs well as habilitative services, pediatric dentalTo promote consumer choice and encourage competition and innovation, the Law requires Exchanges to offer a range of plansDefined in terms of actuarial value 54 million9Preventive Services with No CopayUSPSTF A and BNovember 2009 MammographyMikulski amendment IOM CommitteeContraceptive coverage3. Expansions of CoverageYoung adultsTax credits to 400% FPLHealth Insurance Exchanges20-22 million (including much current non-group)Medicaid expansion to 133% FPL 16-17 millionRequirements to offer and obtain coverageIndividual mandateEmployer requirementsRequirement that plans cover young adult dependentsSubstantial new funding for coverage of people with incomes 133-400% of FPLNew health insurance exchangesIndividual mandate 1/3 exempt because incomes too low or undocumented or premium exceeds 8% of incomeEstimated 7% compelled to buy coverage of whom most would do so voluntarily given subsidies 3% of the under 65 are subject to mandate AND not receiving new subsidiesEmployer requirements > 50 penalties $2000 * number of FT employees less 30 if anyone takes a tax credit; non-affordable coverage (