Health Reform: A California Perspective Insure the Uninsured Project ( September 3, 2009 Kaiser Family Foundation Washington, DC

The Uninsured in California Surveys CHIS vs. CPS ▫CHIS is a California specific survey of health insurance and health status.  According to CHIS (2007), about 5 million Californians are uninsured at a point in time and 6.5 million over the course of the year. ▫CPS is a national survey; a point in time response  The 2008 report found nearly 6.7 million Californians are uninsured over the course of the year. ▫The high unemployment due to the recession has increased this figure to over 7 million.

The Uninsured in California Populations 7 million uninsured (7 th highest by percentage) ▫55% between 18 and 40 years old ▫Young adults have highest uninsured rate at 25% ▫61% have incomes under 200% FPL ▫25% have incomes over 300% FPL ▫85% are working or the spouses/children of workers ▫15% are legal permanent residents ▫64% are US citizens

The Uninsured in California Populations

*Residents under 65 with no health insurance at some point in 2006 Source: P. Reese, Interactive Map: Counties with the Most Uninsured, The Sacramento Bee, Aug. 16, 2009 The Uninsured in California Variation by County

Regional variation in uninsured rate Bay Area (9.3%) Sacramento (9.6%) San Joaquin Valley (17.2%) Los Angeles (17.8%) Much poorer access to care ▫49% report no usual source of care, compared to 6% of privately insured and 12% of publicly insured The Uninsured in California Variation by Region

Private Coverage in California 60% of Californians privately insured Employer coverage ▫70% of businesses offer coverage (63% nationally) ▫3-9 employees: 60% offer coverage ▫10-50 employees: 83% offer coverage ▫27% of lower wage firms offer coverage ▫Rate of coverage shrunk by 4% from due to high premium increases Individual coverage ▫2 million buy through individual market ▫Prices rising sharply and extent of coverage shrinking

Public Coverage in California Medi-Cal Covers 6.8 million in 2009 $40B in spending ▫$2,740 per beneficiary in FY 2006 (2 nd lowest in nation) CA recently discontinued these services to adults: dental, vision, podiatric, hearing

Public Coverage in California Healthy Families/AIM Covers 925,000 children ▫Over 70,000 on wait list and growing, with coverage terminations scheduled for November $1.2B in spending Subscribers choose among competing public and private plans

Public Coverage in California Eligibility

Building Blocks in California Medi-Cal Managed Care Models County Organized Health Systems Single, local public HMO Covers families, disabled, and elderly in 9 large, medium, and small sized counties, such as Orange Two-plan models Two competing health plans, one local public and one private Covers families in 12 large counties, such as LA Geographic managed care Multiple competing private plans Covers families in San Diego and Sacramento

Medically Indigent Adults (MIAs) MIAs: adults not otherwise eligible for Medi-Cal ▫1.5 million persons under 200% FPL ▫Medi-Cal coverage discontinued in Counties are responsible for care ▫$1.8B in spending  $367 per uninsured person, compared to $4,900 average employment based coverage premium

Medically Indigent Adults (MIAs) County Models ModelDescriptionCounty Provider Operate public hospitals and clinics Los Angeles, San Francisco and Santa Clara Payor Pay private hospitals, providers, and clinics Orange, San Diego Hybrid Operate public clinics and pay private hospitals Tulare, Sacramento, Stanislaus Small County Pool resources and pay private hospitals, doctors, and clinics Humboldt, Imperial, Kings

California’s Flex Workforce Temporary, seasonal, part-time, self- employed micro-businesses and contract workers (estimated 16% of workforce) ▫Child care, agriculture, real estate, construction, service industries High rates of uninsured ▫12% receive coverage through job Industry wide coverage (Taft Hartley trusts, MEWAS) ▫Potential building blocks if financing for care to low wage workers can be accessed

Underwriting and Purchasing Pools 1992 reform, small employers (2-5o employees) ▫Guaranteed issue and renewal, age rating ▫4 family sizes, 9 geographical areas ▫HIPC/PacAdvantage – purchasing pool fell victim to adverse selection Individual market ▫High rate of denials, rescissions, and other practices ▫MRMIP - Bad risk pool for medically uninsurable  Enrollment frozen at less than 8,000 with over 170,000 eligible

Cost Containment and HMOs California: competitive model since High HMO penetration (twice national average) ▫50% of insured employees ▫50% of Medi-Cal subscribers CA changed from low priced to medium priced HMO market ▫Employer premiums increased 9.2% in 2008 (4.8% nationally)  Small employer premiums increased 30% more than large employers ▫Premiums increased 4X faster than inflation from Competition resulted in lower costs in urban areas (SD, LA) but is not a viable strategy in rural and single-hospital regions

The Safety Net 12 major urban areas 12% of hospital beds Public Hospitals 6 counties without public hospitals Public outpatient clinics 875 sites deliver primary care Non-profit community and free clinics Located in poor communities Private Hospitals 13 plans in 23 counties Public Managed Care

The Safety Net Delivery System (2006) Community clinics ▫Average 1 visit/uninsured  Range by county from 0.2 to 3 visits/uninsured Counties ▫Pay or provide: (per 1000 uninsured)  85 inpatient days  90 emergency room visits  900 outpatient visits ▫Eligibility limits for MIAs range from 63% to 500% FPL

Uncompensated Care (2006) Hospitals ▫$1.7B in bad debt/charity care to uninsured in 2006 (3.3% of expenses) ▫$2B in uncompensated care to Medi-Cal patients ▫Net operating losses of $2B (almost 4% of revenue) in 2006

Uncompensated Care (2006) Clinics ▫$231M in uncompensated care to uninsured (12% of expenses) in 2006 DSH and supplemental payments ▫Public hospitals receive $1B in DSH, $578M in Safety Net Care Pool funds ▫Private hospitals receive $669M to offset uncompensated care

Local Pilots 10 counties using different designs targeted to most urgent local needs ▫$180M in competitive federal allocations Children’s Health Initiatives (CHIs) for uninsured children

Local Pilots County Examples Local PilotDescription Healthy San Francisco, Contra Costa Basic Health Care Deliver managed care through local health plan to uninsured using safety network of hospitals and clinics San Diego FOCUS, Sacramento SacAdvantage Small employer purchasing pilots Alameda County for Excellence Shift emergency room users to medical homes San Diego Coverage Initiative Improve care management for chronic conditions Ventura Access Coverage Enrollment Program, Kern Medical Center Health Plan Integrating community clinics with county delivery

Proposed Bi-Partisan Reform ABX1 1 Individual Mandate with hardship exclusions Employer pay or play and required offering of §125 plans Financing: individuals, employers, government and providers ▫Counties and federal government to pay part of coverage match for MIAs ▫Hospitals to pay part of match for rate increases and coverage expansions to the uninsured MRMIB (state purchasing pool) to set benefits level

Expand Medicaid to 150% FPL, CHIP to 300% FPL Refundable tax credits on a sliding scale to 400% FPL through state purchasing pool (Exchange) Require cost/quality transparency, P4P Managed competition Triggered repeal of reforms if costs exceeded revenues and the state government failed to balance the program’s deficit Proposed Bi-Partisan Reform ABX1 1

Observations ITUP Board of Advisors

Recommendations ITUP Regional Workgroups Coordinate coverage for those with Medicare and Medi-Cal (the Medi-Medis) Improve consistency and coordination of reimbursement incentives between Medicare, Medi-Cal and private insurance No federal subsidies for state mandated benefits in excess of the federal minimum benefits package Phase in coverage for MIAs as quickly as possible Assure adequate risk adjustments for plans within and outside of the “Exchange” Assure opportunities for COHS and Local Initiatives to participate in the Exchange

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