Presentation to MSU Case Management Conference Health Care

Presentation to MSU Case Management Conference Health Care

Presentation to MSU Case Management Conference Health Care Update 2017: Lending Clarity to Chaos Steve Fitton, Principal, Health Management Associates November 1, 2017 HealthManagement.com

HMA Federal Health Reform An Attempt to Explain and Predict 1. 2. 3. 4. 5. 6.

7. A Little History Two Metrics that Really Matter ACA Status - How is it doing? Federal Reform Proposals Executive Action Regulatory Powers Health Care Trends in Coverage The Future Where are We Going? HMA

2 1. A Little History In 1900, the average American spent $5/year on health care and no one had health insurance Blue Cross was developed in the late 1920s to help make hospital costs affordable (premiums were $.50 per month) Private health coverage grew from 9% of the population in 1940 to 70% in the 60s, largely because employers offered it as a tax exempt

benefit starting in World War II Our health coverage system is one of historic accident; no one planned it HMA 3 Medicare and Medicaid Over 50 Years Old HMA

4 Not Without Controversy HMA 5 Public Financing in the US Health Care System

One of the traditional methods of imposing statism or socialism has been by way of medicine.If you don't do this, one of these days you and I are going to spend our sunset years telling our children and our children's children what it was like in America when men were free. [Medicare will usher in] federal programs that will invade every area of freedom as we have know it in this country. -From Ronald Reagans 1961 taped anti-Medicare HMA

message, Ronald Reagan Speaks Out Against 6 Medicare and Medicaid Early Year Basics Medicare Compulsory federal program for persons aged 65-and-older Medicaid Federal/State shared responsibility for certain categories of low

income individuals Medicare started more quickly than Medicaid enrolling 18.9 million persons in 1966; Medicaid had only reached 4 million in that year By 1973, Medicare had 23M enrollees and HMA 7 Medicare Enrollment 1966 2013

HMA 8 HMA 9 HMA 10

HMA 11 HMA 12 HMA 13 HMA 14 HMA 15 The Affordable Care Act

Designed to fill gaps so that nearly all Americans have health coverage Individual markets created with subsidies to help families up to 400% FPL afford coverage Medicaid expanded to 133% FPL but without categorical eligibility limitations Supreme Court rules that ACA cannot force states to expand Medicaid HMA 16

ACA Coverage Impact in Michigan Healthy Michigan fills the gap between current coverage and private health insurance coverage offered on the Exchange 400% % of federal poverty level 350% 300% 250%

200% 150% 100% 50% 0% Medicare Exchange Expansion

Current HMA 17 Medicaid and CHIP Enrollment Trend 2000 2017 Millions of U.S.

Medicaid and CHIP Beneficiaries 52 Million 80 Million 65 Million 60 Million PostACA

36 Million SOURCE: HMA, based on CMS data and HMA projections, 2017. 2017 2013 HMA 18 Medicaid: The Largest Single Health Insurer in U.S. Insurance Status of Americans in 2017

Uninsured 27 million 8% Private 26 Million 8% Medicare 58 Million

16% 80 Million Total Medicaid Employer-Sponsored 176 million 48% Source: HMA estimates 2017; CMS data, 2017. Note: Total does not add to 100% due to rounding.

72 million 20% CHIP 8 million 2% 2 HMA

2. Two Metrics That Really Matter The Uninsured The Costs of Health Care HMA 20 The Uninsured Why Does It Matter? Only super wealthy can self-finance

treatment Moral imperative majority view; richest country in the world should assure health coverage Uninsured create uncompensated care, especially for hospitals Prior to ACA, health insurance costs were eroding coverage, including small business and middle class (i.e., voters) HMA 21

HMA 22 HMA 23 Uninsured Adults More Recent Rates HMA 24 Health Care Costs Why Does It Matter?

Fewer can afford health insurance Even big business struggling to finance health insurance for employees Impact on economy health care becoming a larger and larger share of GDP Impact on competitiveness our health care costs dramatically higher than other developed nations Impact on federal budget eating up more and more of federal budget HMA 25

HMA 26 Average Annual Health Insurance Premiums More Than Doubled in Decade * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009

HMA 27 HMA 28 HMA 29 HMA 30 Paul Ryan On Health Care Costs HMA 31

3. ACA Status How Is It Doing? Expanding Coverage Protecting Consumers Controlling Costs HMA 32 ACA Win More Americans Covered

HMA 33 ACA Protects Consumers Persons with pre-existing conditions are protected in two ways: they cant be denied coverage or charged more due to their pre-existing condition Health insurance must provide coverage for essential benefits, a protection from health insurance policies that, for all

intents and purposes, provide minimal health coverage for typical services and costs HMA 34 ACA Hasnt Solved Health Cost Problem HMA 35

Health Cost Growth is Complicated HMA 36 Different Views of ACA Impact on Costs Forbes Individual market premiums up 69% 2013 to 2015 Kaiser Study Family premiums rose 20%

from 2011 to 2016; Lower than prior 5 years (31%); and even lower than previous 5 years (63% from 2001 to 2006) Other sources tend to reflect ideological bias of authors reality is that it is complicated Employer health costs (especially large employers) have been relatively stable HMA 37 perhaps because of ACA 4. Federal Reform Proposals

Repeal and Replace Proposals - House Passed AHCA - Senate Version (BCRA) - Graham-Cassidy Bipartisan Proposal - Alexander-Murray HMA 38 American Health Care Act Repeals individual and large employer mandates

Imposes late enrollment penalty in nongroup market for persons without continuous coverage Repeals income-based premium and cost-sharing tax credits; replaces with age-based tax credits Loosens some insurance requirements but retains essential benefits and certain consumer protections Repeals numerous ACA imposed taxes Encourages health savings accounts for individuals to self-finance costs of care HMA 39

American Health Care Act (cont.) Medicaid programs are clobbered: Enhanced matching rate (90% by 2020) is reduced to regular rate for all new expansion enrollees on 1/1/20; effectively ends expansion coverage Imposes a federal cap on Medicaid funding to states based on a per capita limit formula that uses trend factors that are less than decades of actual experience Provides a block grant option (excludes aged and disabled)

with even less funding but more flexibility for states (accompanied by less federal protection of their citizens) Restricts enrollment thru: prohibition of retroactive eligibility periods; mandated redeterminations every 6 months; allowing work requirements; requiring citizenship documentation in advance; and reducing minimum FPL for kids HMA 40 American Health Care Act Impact Congressional Budget Office (CBO) scored the Act to have

these impacts: 14 million more persons would be uninsured by 2018 and that would grow to 23 million more uninsured by 2026 Nongroup health insurance markets would be relatively stable but become less stable after 2020 in 1/6th of U.S. Purchase of health coverage will become more difficult and expensive for less healthy persons Premiums in nongroup market would be less in 2026 but out-of-pocket spending would increase Savings over 10 years (2017 2026) would be $119 billion HMA 41

HMA 42 Better Care Reconciliation Act Similar in most respects to AHCA Subsidies would be changed from primarily age-based (AHCA) to family income in relation to cost of insurance (both geographic and age factors) Lowers various benchmarks for subsidies including actuarial value (58%) and maximum qualifying income Changes phase-out of Medicaid expansion enhanced

match to incremental %age reductions after 2020 Changes per capita limit on Medicaid costs to an even lower growth rate (regular CPI) than the AHCA Adopts punitive DSH cuts for expansion states HMA 43 Better Care Reconciliation Act Impact Congressional Budget Office (CBO) scoring of BCRA very similar to AHCA:

15 million more persons would be uninsured by 2018 and that would grow to 22 million more uninsured by 2026 Nongroup health insurance markets would be relatively stable but may be problematic for a small fraction of the population after 2020 Purchase of health coverage will become more difficult and expensive for less healthy persons Premiums in nongroup market would be less in 2026 but out-of-pocket spending would increase Savings over 10 years (2017 2026) would be $321 billion HMA 44

BCRA Dollar Cuts in Federal Medicaid Payments to States, 2017 - 2026 $ Billions per Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 -20 -40 -60

-12 -23 -52 -70 -80 -87 -100

-103 -120 -140 -160 -180 Total 10 Year Reduction: $772 Billion

-124 -142 -158 Source: HMA, based on CBO Scoring of H.R. 1638, Better Care Reconciliation Act of 2017, June 26, 2017. HMA 45 AHCA Dollar Cuts in Federal Medicaid Payments to States, 2017 - 2026

$ Billions per Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 -20 -40 -14 -26 -60

-80 -65 -89 -100 -120 -140 -160 -105

Total 10 Year Reduction: $834 Billion -117 -129 -139 -150

Source: HMA, based on CBO Scoring of H.R. 1638, The American Health Care Act of 2017, May 24, 2017. HMA 46 Graham-Cassidy Similar to AHCA and BCRA in repealing individual and large employer mandates and making dramatic reductions in federal spending on health care Replaces subsidies and tax credits for individuals with block grants to states, albeit with substantially fewer dollars

Cuts Medicaid funding by roughly $1trillion according to CBO estimate Provide states with flexibility thru various waivers Medicaid and other block grant funding would be redistributive across states HMA 47 Graham-Cassidy $ Shifts Across States Source: Avalere

HMA 48 Graham-Cassidy Bottom Line Greatly reduce federal funding for health care Give it to the states in the form of a block grant Add insult to injury for expansion states by redistributing dollars to non-expansion states Give states unprecedented flexibility Hope for a miracle

HMA 49 Alexander-Murray First bipartisan approach Much narrower in its scope intended primarily to stabilize nongroup health insurance markets Maintains existing cost-sharing subsidies for low income persons covered on the Exchanges Restores funding for outreach and enrollment Provides increased federal regulatory flexibility but

limited to 1332 waivers and interstate compacts Political outlook uncertain complicated by rival partisan proposal from Hatch and Brady HMA 50 ACA Public Opinion HMA 51 AHCA Incredibly Unpopular Quinnipiac poll found support at 21%

USA Today/Suffolk University poll at just 12% Roper Center has support at 28.2% but that is lower than any proposed major legislation in 3 decades (includes failed Clinton plan from 94) Opinion polls consistently below 20% for BCRA Initial reaction to Graham-Cassidy only HMA 52

Public Conflicted and Cautious HMA 53 5. Change Through Executive Action

Executive Orders Regulation Medicaid Waivers 1332 Waivers HMA 54 Trump Executive Orders First EO was within hours after Trump took office and was intended to weaken the ACAs fiscal and regulatory burdens

Recent EO (10/12/17) promotes purchase of health insurance across state lines, expand association health plans, expand availability of short-term, limited-duration insurance, and expand use of Health Reimbursement Arrangements To be effective, EOs are typically HMA 55 implemented through regulation Regulation

Most regulation pertains to Medicare and Medicaid since insurance is regulated by the states (although the ACA intruded) Thrust of recent Medicare regulation has been to promote innovation in service delivery and methods of reimbursement but Trump Administration has rolled some elements back Medicaid regulation has continued on the track of limiting state funding strategies HMA 56

Waivers Many types of Medicaid waivers 1115 is most expansive - HHS Secretary has broad discretion for approval; - Criteria is that it be a demonstration proposal that promotes the objectives of the Medicaid program - Only limitations are budget neutrality for federal government and not change the FMAP formula 1332 waivers were new with the ACA and allow

states to innovate with different health coverage models but deliver comparable or improved coverage and be budget neutral HMA 57 6. Health Care Trends

Managed (organized) care Consumer-directed care Value-based reimbursement Emphasis on social determinants of health HMA 58 Managed (Organized) Care Managed Care Organizations (MCOs) cover around 75% of all Medicaid enrollees nationally

Healthcare mergers and acquisitions have been on a tear in the past few years (Healthcare Finance -10/6/17) Medicare heavily promoting Accountable Care Organizations (ACOs) as vehicle for better coordinated and effective care Other forms of organizing providers including Coordinated Care Organizations (CCOs) and Patient-Centered Medical Homes (PCMH) HMA 59

Consumer-Directed Care Asserts the centrality of the consumer in health care decisions Emphasizes healthy behaviors and preventive services as part of consumer engagement Places significant responsibility on consumer for financial choices in health care consumption Assumes that health care markets can function as others in our economy and

HMA produce similar efficiencies (thereby 60 Value-Based Reimbursement Changes focus of reimbursement from volume of services to outcomes, quality, and value Easier to write than accomplish Huge point of emphasis across the health

care insurance and services systems with Medicare playing a leading role nationally Helps drive organization and coordination of services given interdependency of different providers and their impact on HMA outcomes 61 Social Determinants of Health

There is clear evidence that social determinants have a significant impact on health status and outcomes Social determinants include nutrition, housing, transportation and other basic necessities While there is a theoretical understanding that community social services play and important role in health, linking health and community social services systems is difficult and in the very early stages

HMA 62 7. Predicting the Future Significant legislation will be passed sooner or later It will claim to provide equal or expanded coverage for the U.S. population It will have to reduce the rate of health cost growth over the long term Beyond that, who knows

HMA 63 HMA 64 Bernies Medicare for All HMA 65 Paul Ryans Better Way HMA 66

Pace of Change Hang On HMA 67 Questions HMA 68

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