1. Healthcare Reform MDI Rotary September, 2010

2. Mount Desert Island Hospital Agenda The Problem Health Reform Bill Outstanding Issues / Challenges Questions

3. Mount Desert Island Hospital Health Reform Overall problems – broadly recognized Highest spending per person among industrialized nations, without comparable measurable higher outcomes Unequal access creates gaps High employer costs weaken America in today’s global economy Americans are increasingly angry about high costs, and how they are distributed

4. Mount Desert Island Hospital McKinsey International Report Potential Savings (2003) Drugs - $66 billion Physician remuneration - $58 billion Nursing staffing and complexity - $50 billion Provider profits and taxes - $75 billion Administration costs (insurance only) - $98 billion “Other” - $147 billion (includes inefficient incentives)

5. Mount Desert Island Hospital McKinsey International Report Conclusion: “ Most components of the US healthcare system are economically distorted.... No single factor is either the cause or the silver bullet for reform actions.”

6. Mount Desert Island Hospital The Overall Challenges Expand Access & Coverage Reduce Costs/Spending Improve Quality

7. Mount Desert Island Hospital Expand Access & Coverage Major focus of current reform Restructure the insurance market Expand government support for lower income individuals and families beginning in 2014 Mandated coverage beginning in 2014

8. Mount Desert Island Hospital Insurance Reforms Individuals/employers have opportunity to purchase coverage through State Exchange starting in 2012 Require all insures to offer coverage that meets essential benefits package including preventative coverage Subsidies for low-income individuals (2014) on a sliding scale up to 400% FPL Limits on out of pocket expenses State specific, includes national plan overseen by Federal Office of Personnel Management Projected to cover 95% of legal residents

9. Mount Desert Island Hospital Medicaid Expansions Expand coverage to everyone at or below 133% of the Federal Poverty Level in 2014 Increased Federal funding Current Maine Medicaid 100% FPL Childless Adults 200% FPL Children 200% FPL Parents of Children

10. Mount Desert Island Hospital How Reform is Paid For Elimination of subsidy to insurance companies for Medicare Advantage Reduced Medicare reimbursement to hospitals (CAH’s excluded) Across the board cuts to payments Reduced payment and penalties for complications Reduce payment for readmissions

11. Mount Desert Island Hospital How Reform is Paid For Increased taxes Medicare tax on high incomes (2013) “Cadillac Plan” tax (2018) Assessments on other providers/insurers Closing of the “Doughnut Hole” Geographic variation $200 million per year lowest quartile states (2011 & 2012) IOM study

12. Mount Desert Island Hospital Insurance Reforms - 2010 Community rating (standard) pricing Continued coverage up to age 26 Prohibit insurers from denying coverage for children based on pre-existing conditions Ban on lifetime coverage maximums Minimum medical loss ratio required

13. Mount Desert Island Hospital Insurance Reforms - Ultimately Ban on denying coverage to adults for pre-existing conditions No cost sharing – preventative services Elimination of annual limits Limits on FSA’s and HSA’s Individual mandate to buy coverage (2014) penalties phased in Individual penalty – $95 (2014) - $695 (2016) Family maximum $2,085 (2016) or 2.5% household income

14. Mount Desert Island Hospital Employer Provisions - Current Current tax credit for small business Up to 50 FTE’s/avg. wages $50,000 Employer cont. at least 50% of cost Not available to sole prop./self-emp. Maximum credit 35% for 10 or fewer FTE’s and avg. wages less than $25,000 Credit to withheld taxes for nonprofits Starting 2014 – 2 year transition 50% credit

15. Mount Desert Island Hospital Employer Provisions - Future Current health plans grandfathered Employers of 50 FTE’s or more may be required to pay an assessment for coverage Full time = 30 hours per week Seasonal employees with fewer than 120 days excluded Assessment different if you offer insurance or not – and if employees are subsidized by the exchange

16. Mount Desert Island Hospital Employer Provisions - Future All employers who offer insurance to provide vouchers for employees not taking insurance Employers of 200 FTE’s or more must automatically enroll employees Employers must provide coverage information on W-2 forms Exclusions available for hardship ?

17. Mount Desert Island Hospital Other Provisions Various Quality Intiatives Medicaid demonstration projects Expansion of various “rural” provisions Improved Medicaid reimbursement for Primary Care Physicians (2013) $50 million for liability reform demonstration projects

18. Mount Desert Island Hospital Outstanding Issues / Challenges Cost drivers not directly addressed Complexity of implementation Physician payment “fix” Adequacy of fines for not buying coverage Political will to implement payment cuts and taxes