Financing%20Healthcare%20and%20The%20Uninsured

1
Financing Healthcare and The Uninsured

• Kiersten Adams
• Jay Singerman
• Jen Storch
• Ashley Thomas
• James Trinidad

2
Agenda

• Overview of Financing
• Overview of The Uninsured
• Key Issues for Republicans
• Key Issues for Democrats
• Current Legislation
• Proposed Legislation

3
Overview of Financing
4
Overview- Medicare

• Medicare- started in 1965 with Title XVIII of the
  social security amendments
• Medicare-
• Part A- Hospital Insurance
• Part B- Supplemental Medical Insurance
• Part C- Medicare Advantage
• Part D- Prescription Drug Coverage

5
Overview- Medicaid

• Medicaid- started in 1965 with Title XIX of the
  social security amendments
• States determine eligibility, receive portion of
  funding from Federal government

6
Employer- Sponsored Blue Cross Blue Shield

• Employer-Sponsored Plans
• 19th century Europe- to compensate for dangerous
  jobs
• WWII wage controls
• 1954- HI benefits tax deductible to employers
• Blue Cross Blue Shield
• 1930s- community-based, voluntary, not for
  profit
• Blue Cross- Hospitalization
• Blue Shield- Physician Services

7
National Health Expenditures

• In 2004, national health expenditures equaled
  1.8 trillion
• Expected to increase approximately 8 annually
• 17 of the GDP, increasing annually
• U.S. health care spending is expected to increase
  at similar levels for the next decade reaching 4
  TRILLION in 2015, or 20 percent of GDP
• Trends equate to higher premiums, higher out-of
  pocket spending and higher taxes

8
Self-Pay v. Third-Party Spending

• Self-Pay 12.6 of all healthcare expenditures
• Third-Party 87.4
• Percentage of third-party spending increased
  dramatically from the 1950s-1990s and has since
  been stagnant

9
Public v. Private Spending

• Private 54.9 of all healthcare expenditures
• Public 45.1
• Public spending has been increasing dramatically
• 32 of Americans are covered by Medicare or
  Medicaid

10
Financing Trends

• Healthcare is unique because the person who pays
  is often not the person who receives health
  services
• Financing has shifted from individuals to
  employers and the government

11
Financing Trends

• Premiums are increasing faster than inflation and
  increases in wages
• Many employers are no longer offering health
  benefits
• Therefore, an increasing number of people can no
  longer afford health insurance
• Those who can are facing increased premiums,
  deductibles, employee contributions and taxes

12
Overview of the Uninsured
13
Number of Uninsured

• Number reached 46.1 million in 2005
• 80 of these live in households below 300 of the
  poverty level
• 25 eligible for SCHIP or Medicaid
• 56 not eligible, but need assistance in
  obtaining private insurance

14
Characteristics of Uninsured

• With Children
• Predominantly US Citizens
• Majority have one worker in family
• Mostly Hispanic
• Live primarily in South

• Without Children
• Predominantly US Citizens
• 56 come from families with no workers
• Mostly White
• Live primarily in the West and Northeast

15
Health Status by Race/Ethnicity and Income
16
Health Insurance Coverage by Race/Ethnicity
17
Uninsured among those who work
18
Uninsured Children

• 8 million are uninsured
• 74 are eligible for SCHIP
• 60 of these children live in families with
  income at FPL

19
Characteristics of Uninsured Children

• Mostly teens
• 25 under age 6
• 40 Hispanic
• 33 White
• 18 Black
• 85 US Citizens
• Live mostly in West and South

20
Characteristics of Uninsured above 300 FPL

• Age 19-29 with income above 300 FPL more likely
  to be uninsured
• Hispanics with income above 300 FPL
• More likely to have one worker in a small firm
• Less likely to report excellent or very good
  health

21
Illegal Aliens (AKA Undocumented Non-US Citizens)

• Comprise 5 million of the uninsured
• NOT eligible for public assistance programs
• Numbers skew uninsured characteristics

22
Elderly Without Health Insurance

• Some have only Medicare Part A to fall back on
• 17 (41 million) of those 65 and older have no
  other insurance

23
Access and Outcomes for Uninsured

• Study used Medical Expenditure Panel Surveys to
  assess peoples SES, insurance coverage and
  access to care.
• Found
• Those uninsured who have an injury or new chronic
  condition have trouble accessing care and it
  takes longer for them to return to full health
• No difference in referral of additional services
  (PT, Home Health, etc)
• More difficult to obtain health insurance in the
  future
• Those with chronic conditions less likely to
  receive treatment beyond initial consultation.

24
Why are so many uninsured?

• Lack of employer sponsored insurance
• Health costs are outpacing inflation increases
• Limited Medicaid coverage for low income adults
• Variations in state economies

25
Key Issues for Republicans
26
Republican Views

• Freedom to Choose Health Savings Accounts
• Individuals to Choose Their Own Health Insurance
  Benefits
• Providing More Affordable Health Care Choices by
  Expanding Competition
• Expanding Coverage Options for the Working
  Uninsured

27
Task Force on Health Care Costs and the Uninsured

• 2004
• Republican Senate Majority
• Senator Judd Gregg, chairman

28
Proposed Solutions

• Create incentives for young adults to purchase
  lifetime, portable insurance
• Improve enrollment in existing public programs
• Association Health Plans
• Encourage more doctor and provider participation
  in the safety net of care

29
On National Health Care

• BUSH Im absolutely opposed to a national health
  care plan. I dont want the federal government
  making decisions for consumers or for providers.
  I remember what the administration tried to do in
  1993. They tried to have a national health care
  plan, and fortunately it failed. I trust people
  I dont trust the federal government. I dont
  want the federal government making decisions on
  behalf of everybody.

30
Reasons Why Not

• Inefficiency of federal government
• Decrease in patient flexibility
• Reduce doctor flexibility
• Healthy people to pay the burden
• No benefit to be a practicing physician

31
Defending John Q.

• an uninsured worker who forces doctors at
  gunpoint to treat his son 
• a legitimate right doesn't impose obligations on
  anyone else

32
Competition

• "Competition must be seen as a process in which
  people acquire and communicate knowledge
• Nobel laureate Friedrich Hayek

33
Competition

• Where real market competition can be found in
  health care, it drives quality upward and prices
  downward
• Laser eye surgery cosmetic surgery

34
Competition- The Problems

• we have disabled market competition throughout
  the health care sector
• too little competition, too little choice, and
  too little attention paid to costs and quality.

35
Health Savings Accounts

• Medical savings account
• accompanied by a health plan with a high
  deductible

36
Health Savings Accounts

• reduce medical spending by making consumers more
  sensitive to the costs of care
• together with high-deductible health plans should
  encourage consumers to make prudent treatment
  decisions because they are spending their own
  money

37
Key Issues for Democrats
38
Unimaginable Choices

• A severely disabled mans wife leaves her
  low-paying service sector job (which did provide
  health benefits) so she can care for her
  increasingly frail husband
• Although he qualifies for Medicare they cannot
  afford the 600 a month in prescriptions he
  requires
• In desperation she takes another service sector
  job, but it doesnt offer benefits and now she
  cant help her husband

NCMJ January/February 2002, Volume 63, Number 1
39
Uninsured

• The above stories represent just some of the
  causes for uninsured status
• Others include
• - small business who cannot afford health
  coverage
• - low income populations not realizing their
  eligibility status

40
Results

• These people will either delay treatment as long
  as possible, or they will simply not get care
• When they do get care, it often is in a free
  clinic, public hospital, or emergency room
• Now, their condition has become far more serious
  and expensive to treat because of the delay

41
What must happen next?

• Uninsured Americans have
• - Limited access to medical care
• - Social/physiological environment that
  increases their vulnerability to disease
• - Differences in life-style that account for
  differences in health rates
• Uninsured Americans need programs that will help
  remedy their plight!

42
Democratic Views

• Democrats aim to pursue a legislative agenda that
  reflects the interests of middle- and
  working-class Americans
• Democrats want to extend health insurance to
  people who cannot afford coverage
• The following will be major issues for
  consideration

43
Three Major Issues

• 1. Expanding insurance to as many children of
  low-income families as possible
• Empowering Medicare to negotiate prices of
  prescription drugs
• Eliminate health insurance companies
  discrimination on the basis of pre-existing
  conditions

44
Boost S-CHIP

• Title XXI of Social Security Act jointly
  financed by Federal State governments and
  administered by the States
• Democrats must focus on expanding insurance to as
  many children of low-income families as possible
• SCHIP offers states federal funds for insurance
  coverage for children

NEJM, Volume 3561-4, Jan. 4th, 2007 Centers for
Medicare/Medicaid Services DHHS
45
S-CHIP

• Families that do not currently have health
  insurance may be eligible
• States have different eligibility rules, but in
  most, uninsured children under the age of 19,
  whose families earn up to 36,200 a year (for a
  family of four) are eligible.
• This insurance pays for 
• - doctor visits
• - prescription medicines
• - immunizations
• - hospitalizations
• - emergency room visits

http//www.insurekidsnow.gov/
46
S-CHIP

• We must provide more funding to local health
  departments
• In 2005, 8.3 million children w/o coverage
• Pelosi has said repeatedly that she will take up
  her gavel "on behalf of America's children"

47
Prescription Drugs

• The current Medicare Rx drug law has failed to
  slow the rapid growth in drug prices they are
  not containing drug price inflation
• Big drug companies report record profits and
  seniors pay higher drug prices

http//www.house.gov/pelosi/ http//www.wvec.com/n
ews/health/stories/wvec_medical_011207_medicare_dr
ugs_house.32d0fd62.html
48
Tricky

• One way to win discounts is to favor some drugs
  over others
• Beneficiaries could face a more limited choice of
  medications
• Lobbyists may influence which drugs are available
  
• Pharmaceutical industry could discourage the
  development of new drugs

Washington Post December 9, 2006 Article
AR2006120801578
49
Mandatory Discounts on Drugs

• Dept of Veterans Affairs negotiates effectively
  to secure better prices for the 4.4 million
  veterans who use its drug benefit
• "43 million people can have the purchasing power
  to perhaps encourage these drug houses to give
  the government and the American retirees a better
  price"
• - John Dingell, D-Mich., Chairman of the House
  Energy and Commerce Committee

Piper Report http//www.piperreport.com/archives/
2007/01/medicare_drug_p.html http//www.wvec.com/n
ews/health/stories/wvec_medical_011207_medicare_dr
ugs_house.32d0fd62.html
50
Comprehensive Health Insurance

• Provide health insurance coverage to Americans
  who would not have it due to a pre-existing
  condition
• Not a welfare or entitlement program
• You must pay premiums to participate in this plan
• Comprehensive major medical indemnity plan for
  persons not eligible for Medicare

http//www.illinoislegalaid.org/index.cfm?fuseacti
onhome.dsp_contentcontentID256
51
Current Legislation
52
Current Reform Proposals

• Massachusetts
• Requires everyone to purchase health insurance
• Connecter links individuals with the insurance
  plan that is right for them
• Employers with over 10 employees must offer a
  plan or possibly pay into a state insurance pool
  (debate between gov. and leg.)
• Government subsidizes those who are unable to
  afford coverage
• Enforcement through income tax penalties

53
Current Reform Proposals

• California
• Focus on preventative care
• Everyone must purchase insurance, no employer
  mandate
• Low income individuals will be offered expanded
  state insurance and will be provided financial
  assistance to purchase insurance through a state
  pool
• Insurers will be required to guarantee coverage
  and charge like prices for like populations.
• State program reimbursement rates to providers
  will increase
• Providers will take on responsibility for
  enrollment
• Will uses tax penalties to enforce the mandate

54
State of the Union and Financing Health Care
www.youtube.com/watch?vICEwfkNxhkA
55
Proposed Legislation
56
Proposed Legislation Part 1

• Standard deduction
• All health insurance becomes subject to income
  tax above the tax deductible amount
• Singles can deduct up to 7,500
• Families can deduct up to 15,000
• Standard deduction follows MPI
• Eliminates tax-deductible health care
  expenditures incurred by employers

57
Rationale Standard Deduction

• Higher wages and health expenditure visibility
• Consumer choice between taxed wages and mostly
  non-taxed health insurance
• Increases visibility of health care costs
• Level playing-field
• Non-employer-sponsored health insurance tax code
  penalization
• Penalizes non-employer sponsored health insurance
• Penalizes less expensive employer-sponsored
  insurance
• With standard deduction, all workers receive tax
  benefits

58
Proposed Legislation Part 2

• Affordable Choices Initiatives (ACI)
• Provide States financial incentives to make
  basic, affordable private health insurance
  policies available
• Shifts funds aimed at alleviating bad debts
  expenditures of health care providers to insuring
  the uninsured
• HHS and states work closely to find innovative
  ways to insure uninsured in each states market

59
Rationale ACI

• Allocation of funds for more efficiency
• Theoretically, fiscally-neutral
• Publicly-funded health expenditures have risen
• State reduction inefficient expenditures can be
  supported with reallocated federal funds (e.g.,
  Medicaid)
• Competition consumer-directed health care
  (CDHC)
• Combined with the standard deduction, the market
  of health insurance will be more accessible to
  more consumers
• Increases in competition among health insurance
  plans
• Affordability and responsibility brought to
  consumer
• Deregulation

60
Target Groups Standard Deduction

• Winners
• 80 of employees receive tax benefits or choose
  higher wages
• Neutral
• 20 of employees generous health care policy
  owners will have to decide between higher taxed
  wages or better, but taxed health care coverage
• Losers
• Employers tax-deductible health expenditures
  will disappear

61
Target Groups ACI

• Winners
• Uninsured and hard-to-insure peoples with more
  innovation in the individual markets, the number
  of privately-insured will rise
• Tax-payers with more privately-insured, the less
  government needs to pay for health care thus,
  less tax-payers dollars can be better allocated
• Out-patients services increases in number of
  insured increases utilization of out-patient
  services
• Neutral
• Hospitals with less uninsured patients,
  hospitals will receive less government subsidies,
  but they will also be able to allocate care to
  more deserving health needs

62
Mechanism Standard Deduction ACI

• Increasing the risk pools
• Higher wages and a non-restrictive benefit plan
  offered by employers under standard deduction
  will allow employees to shop around
• ACIs may allow uninsured to shop in same market
• E.g., Commonwealth Health Insurance Connector
• Increased visibility of health-care costs
• A standard deductible will allow peoples to
  realize the actual cost of health insurance
• Combined with cafeteria and other CDHC plans
  proposed via ACIs, both the uninsured and insured
  will purchase only what they need

63
Financing Standard Deduction ACI

• Government intervention
• Fiscally neutral solution
• It shifts tax-deductible health expenses from
  employer to employee
• Successful ACIs may shift cost of uninsured unto
  insurance companies rather than tax-payers
• ACIs income-related subsidies/premium assistance
• Market forces
• More consumers in non-employer sponsored market
  more competition
• Aided by CDHC, e.g., HSAs

64
Limitations

• Standard deduction limitations
• Higher wages misplaced priorities
• More consumer choice will cause adverse (and
  favorable) selection
• The ability for consumers to jump in-and-out of
  risk pools due to favorable selection by
  insurance companies may cause adverse selection
  for sicker patients
• Can be remedied by subsidies and other
  interventions
• Assumes that consumers can be responsible for
  their own health care
• Though employers can still be a source of a risk
  pool, other sources of risk pool may arise, from
  small pools made up of likeminded people to
  connector plans instituted by the govt

65
Strengths

• Considered fiscally neutral
• Incremental, but bold
• Increased consumer awareness (transparency) of
  health care costs drives
• Increases in private health insurance
  expenditures, which drives
• Bigger risk pools, which drives
• Lower premiums, which results in
• A greater number of insured

66
References

• Levit, Katharine, Cathy Cowen, Business,
  Households and Governments Helathcare Costs
  1990- Healthcare Financing Trends, Helathcare
  Financing Review. http//findarticles.com/p/artic
  les/mi_m0795/is_n2_v13/ai_12160563.
• Smith, Cynthia, Cathy Cowan, Stephen Heffler,
  Aaron Catlin, and the National Health Accounts
  Team, National Health Spending in 2004 Recent
  Slowdown Led by Prescription Drug Spending,
  Health Affairs Vol. 25, No. 1 (January/February
  2006) 186-196.

67
References

• Centers for Medicare/Medicaid Services
  http//www.cms.hhs.gov/LowCostHealthInsFamChild/
• North Carolina Medical Journal January/February
  2002, Volume 63, Number 1
• AARP Public Policy Institute, August 2002
• The Health Insurance In The Private Sector (HIPS)
  Survey of Private Sector Firms September 2001
  http//www.moh.gov.jo/phr_studies/hips.htm
• New England Journal of Medicine, Volume 3561-4,
  Jan. 4th, 2007
• Illinois Green Party http//www.ilgp.org/new-grou
  ps/media/ilgp-press-coverage/can-state-s-uninsured
  -be-helped/view
• U.S. Chamber of Commerce http//www.uschamber.com
  /issues/index/health/ahps.htm
• Health Resources and Services Adminstration
  http//www.insurekidsnow.gov/
• http//www.house.gov/pelosi/
• Washington Post December 9, 2006 Article
  AR2006120801578
• Piper Report http//www.piperreport.com/archives/
  2007/01/medicare_drug_p.html
• http//www.wvec.com/news/health/stories/wvec_medic
  al_011207_medicare_drugs_house.32d0fd62.html
• Illinois Legal Aid http//www.illinoislegalaid.or
  g/index.cfm?fuseactionhome.dsp_contentcontentID
  256

68
References

• Holahan, J., Cook, A. and Dubay, L.
  Characteristics of the Uninsured Who Is
  Eligible for Public Coverage and Who Needs Help
  Affording Coverage? Kaiser Commission on
  Medicaid and the Uninsured. Feb. 2007.
• QuickStats Reasons for No Health Insurance
  Coverage Among Uninsured Persons Aged lt65
  Years. National Health Interview Survey, United
  States, 2004 JAMA. 20072971054.
• Hadley, J. Insurance Coverage, Medical Care Use,
  and Short-term Health Changes Following an
  Unintentional Injury or the Onset of a Chronic
  Condition. JAMA. 20072971073-1084.
• Key Facts Race, Ethnicity and Medical Care, 2007
  Update. Kaiser Family Foundation
• The Uninsured and their access to health care.
  Kaiser Commission on Key Facts Medicaid and the
  Uninsured, October 2006.
• Massachusetts Health Care Reform Plan. Kaiser
  Commission on Key Facts Medicaid and the
  Uninsured. April 2006
• Governors Health Care Proposal
• http//www.adp.ca.gov/pdf/Governors_Health_Care_
  Proposal.pdf

69
References

• D. K. Remler and S. A. Glied, How Much More
  Cost-Sharing Will Health Savings Accounts Bring?,
  Health Affairs, July/August 2006 25(4)107078
• http//www.cmwf.org/publications/publications_sho
  w.htm?doc_id382001
• Cannon, Michael F. Real Competition is the Cure
  for Health Care. September 26, 2005.
  http//www.cato.org/pub_display.php?pub_id5137
• http//www.ontheissues.org/Health_Care.htmHeadlin
  es
• Goodman, John C. and Musgrave, Gerald. Twenty
  Myths About National Health Insurance.
• http//www.ncpa.org/studies/s166/s166.html
• Republican.Senate.Gov http//republican.senate.g
  ov/costcoveragecare/index.cfm
• Eric Robinson, Chairman of the Sarasota County
  Republican Party
• Dunn, Wayne. Defending rights of John Q- dr.
  John Q. Capitalism Magazine. February 2002.
• http//www.capmag.com/article.asp?id4903

70
References

• Affordable, Accessible, and Flexible Health
  Coverage. Online analysis. Health Initiatives.
  www.whitehouse.gov/stateoftheunion/2007/initiative
  s/healthcare.html. Accessed March 18th, 2007
• Wages and health expenditure visibility, from
  Sherk, J. Owcharenko, N. (2007). How Bushs
  Health Care Tax Plan Will Raise Wages. WebMemo
  1345. Heritage Foundation. www.heritage.org/Re
  search/HealthCare/wm1345.cfm. Accessed March
  18th, 2007
• Woolhander, S. Himmelstein, D. U. (2002).
  Paying for national health insurance And not
  getting it. Health Affairs, 21(4), 88-98
• Furrow, B. R., Greaney, T. L., Johnson, S. H.,
  Jost, T. S., Schwartz, R. L. (2004). Health
  Law Cases, Materials, and Problems, 5th ed.
  West Pub., St. Paul, MN.
• Hadley, J. Holahan, J. (2004). The Cost of
  Care for the Uninsured What Do We Spend, Who
  Pays, and What Would Full Coverage Add to Medical
  Spending? KFF. Medicaid and the Uninsured
  Issue Update.

71
References

• Hadley, J. (2007) Insurance Coverage, Medical
  Care Use, and Short-term Health Changes Following
  an Unintentional Injury or the Onset of a Chronic
  Condition. JAMA. 20072971073-1084.
• Massachusetts Health Care Reform Plan. (2006).
  KFF. Medicaid and the Uninsured.
• Butler, S. M. Owcharenko, N. (2007). Making
  Health Care Affordable Bushs Bold Health Tax
  Reform Plan. WebMemo 1316. Heritage Foundation.
  www.heritage.org/Research/HealthCare/wm1316.cfm.
  Accessed March 18th, 2007
• National Survey of Enrollees in Consumer Health
  Directed Health Plans. (2006). Online Summary.
  KFF. http//www.kff.org/kaiserpolls/upload/7594.pd
  f. Accessed March 20th, 2007
• Herzlinger, R., Ramin, P. (2004).
  Consumer-driven health care Lessons from
  Switzerland. JAMA, 292(1213-20)