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DAVID F. POLAKOFF, MD, MSc Chief Medical Officer,MassHealth Commonwealth Medicine, University of Massachusetts Medical School Increasing Health Insurance.

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Presentation on theme: "DAVID F. POLAKOFF, MD, MSc Chief Medical Officer,MassHealth Commonwealth Medicine, University of Massachusetts Medical School Increasing Health Insurance."— Presentation transcript:


2 DAVID F. POLAKOFF, MD, MSc Chief Medical Officer,MassHealth Commonwealth Medicine, University of Massachusetts Medical School Increasing Health Insurance Coverage in Massachusetts, United States: The Political Economy of Reconciling the Right to Health with Budgetary Limits First Latin American Conference on the Design, Implementation, and Adjustment of Health Benefits Packages

3 Structure of Health Coverage in the USA Private (Commercial)MedicareMedicaid Founded:1920’s1965 Population:EmployedElderly (>65) and disabled Poor and children Benefits Hospital ✓✓✓ Physician/Clinic ✓✓ optional ✓ Pharmacy ✓✓ 2006 ✓ Lab./Diagnostic ✓✓ optional ✓ Nursing Home/ Long Term Care Limited100 Days ✓

4 Other Coverage Department of Veterans Affairs Department of Defense Bureau of Indian Affairs Supplemental/Secondary Coverage –Medicare –Medicaid –Private

5 Core Problems in the US Health Care System COST: 17% GDP 5-9% Annual Growth Rate Highest per Capita Cost in the World QUALITY International Comparisons Show Highly Variable, and inconsistent ACCESS (COVERAGE) Uninsured 10 - 20% of population (varies by State)

6 MASSACHUSETTS: The Picture in 2006 Population stable ~6 million Relatively affluent: median income 6th among US states Lowest uninsured rate in the USA: ~9% Population ethnically and socially diverse Health care is high in quality and high in cost Strong liberal tradition Health care is a very important industry in the state –Hospitals –Medical Schools –Biotechnology Companies –Pharmaceutical Companies –Medical Device Manufacturers Most private health insurers are local, non-profit, and nationally recognized

7 Recent Trends in Health Coverage in the USA Percent without insurance rising –Increasing cost of insurance Employers discontinuing coverage Cost shifting to employees More employees electing non-participation Insurance unaffordable during periods of unemployment Increasing numbers of self-employed can’t afford coverage Insufficient regulation of insurance markets leaves some without options

8 Rationale for Reform at the State Level Social Safety Net made some health services (emergency and hospital) available to all Costs of this “free” care was shifted to other parts of the system Cost of private insurance rising at unsustainable rates Pressure from industry for reform rising Quality was/is highly variable, and significantly related to coverage

9 Short History of Attempts at Health Care Reform in the USA Teddy Roosevelt Franklin Roosevelt Richard Nixon Ted Kennedy Bill Clinton George W. Bush Barack Obama

10 Politics of Health Reform in the USA THE OPPOSITION Doctors –S–Specialists ☟ –G–General Practitioners ☝ Pharmaceutical Industry Hospitals Health Insurance Companies Employers & Trade Associations Unions Conservative Politicians

11 The Public Perspective Colored by political views and party allegiance Believes that the existing system is “better” than reality Holds strong misperceptions about health care systems in other nations Has lost the capacity to act as a “rational economic actor, due to: –Generations of third party payment insulating from costs –Lack of contact with other national systems –Complexity of cost/price reimbursement structure

12 Massachusetts Health Care Reform 2006 Priority on enhancing ACCESS –Target 100% coverage of the population Deliberate decision made to leave cost control to a subsequent effort Some modest efforts to improve quality POLITICS IN MASSACHUSETTS IN 2006 Governor: Republican, Presidential aspirations Legislature: > 80% Democratic Powerful Medical Community: generally liberal philosophy, despite economic interests

13 Massachusetts Reforms of 2006 Expanded eligibility for MassHealth-Increased income ceiling for children and adults Creation of the “Commonwealth Health Insurance Connector - a market or exchange –For individuals & small business (<50 employees) –Regulation of product offerings –Government subsidies for lower income individuals –Premiums can be paid with pre-tax funds (equivalent to employer sponsored insurance)

14 Massachusetts Reforms of 2006 (cont’d) Individual mandate to have insurance –Financial penalties for nonparticipation, rising over time –Enforced through annual tax filing Employer mandate –>11 employees –Penalties for nonparticipation

15 Massachusetts Reforms of 2006 (cont’d) Health insurance market reforms –Small group and individual markets merged –Creation of “young adult plans” for 19-26 year olds –Young adults may remain on parent’s family policy up to age 26 –Existing small group regulatory structure was maintained - guaranteed issue and renewability

16 So, What Happened? Uninsured declined from 9% ➛ 2.6% (576,000 ➛ 167,000) Government payments for care of the uninsured have declined >50% Employee “take-up” of offered benefits has increased –Result: collection of penalties below expectations Medicaid enrollment and expenses have risen sharply >20%

17 So What Happened? (cont’d) Health expenditure costs continue to rise at 5 - 9% annually Medicaid and CommCare eligibility has increased more than expected due to increased unemployment rate State tax revenue has declined due to recession The recession has raised questions around the decision to defer cost control –Increased Medicaid enrollment –Decreased tax revenues to fund Medicaid and subsidies –Benefit cuts have been necessary “It’s the economy, stupid!” Bill Clinton, 1992

18 Costing of Public Health Benefit Plans Law requires that all Medicaid Plans be “actuarially sound”. Rates set after evaluation by consulting actuaries Benefit packages in Medicaid and other public HBP designed to closely follow those available to commercial population - to avoid appearance of a 2-class system.

19 Lessons from Massachusetts Design principles for benefit expansion: –Equity with previously insured population –Will likely cost more than expected –Previously insured population must perceive a gain –Ideally, implement during a phase of strong economic growth

20 Questions and Comments Commonwealth Medicine is a public-sector consulting and services group, which is a part of of the University of Massachusetts Medical School. We manage large components of MassHealth, provide similar services to other US states, and are active in over 20 other nations CONTACT:

21 Other Complexities in the US Health Insurance System Multiple, overlapping coverage Cost-sharing –As cost control –As benefit design –Forms Premium sharing Co-insurance Co-payments Prior authorization requirements Tiering Many otherings

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