Jonathan K. Henderson K&L Gates Fort Worth, Texas Bret Tate Associate General Counsel Cook Children’s Healthcare System Fort Worth, Texas Park City Club Park City Club 5956 Sherry Lane, Suite 1700 Dallas, Texas

Overview Uninsured and Underinsured Problem Universal Healthcare The Future Is On Its Way

Uninsured and Underinsured Problem – Definitions Universal Health Insurance Coverage & Universal Health Coverage (UHC) - used interchangeably UHC: “Healthcare coverage that equally provides access to some type of healthcare through health insurance or direct provision of healthcare” Focus on UHC as the principal means to assure healthcare access for all Americans

Uninsured and Underinsured Problem – Definitions Uninsured  Persons who do not have coverage under private health insurance, Medicare, Medicaid, public assistance, a State-sponsored health plan, other government-sponsored programs, or a military health plan. National Center for Health Statistics, Centers for Disease Control and Prevention

Uninsured and Underinsured Problem – Definitions Underinsured “...[I]ndividuals who are exposed to significant financial losses or unable to obtain needed care because their insurance coverage is inadequate. The problem for analysts involves distinguishing what is considered adequate coverage from inadequate coverage.” Healthcare In Connecticut: The Uninsured, Healthcare Financing, Access and Uncompensated Care

Uninsured and Underinsured Problem – Statistics Healthcare Costs  Total spending up 6.9 % in 2005, to $2.0 trillion ($6,697 pp)  Annual cost of insuring the average family nearly doubled from 1999 to 2006  Analysts predict aggregate expenditures to double (to $4.1 trillion) by 2016 (20% of economy)

Uninsured and Underinsured Problem – Statistics Access  46.5 million uninsured (est.)  million underinsured (est.)  Slow recovery from 2001 economic downturn; eroding employee/employer buy-in as premiums spike

Uninsured and Underinsured Problem – Statistics Lack of insurance not an equal opportunity problem  Poor and near-poor account for two-thirds of uninsureds nationally  Minorities most likely to be uninsured (approx 33% Hispanics & Native Americans, 22% African-Americans, and 17% Asian- Americans uninsured, vs. 13% non-minorities)  Still, problem affects all social classes (8.4% of uninsureds from households making $75,000 or more)

Uninsured and Underinsured Problem – Statistics  The 46.5M includes 9.5M non-citizens, arguably reducing uninsured Americans to 37M.  Also includes another 17M citizens who earn more than the medium household income and can “afford” health insurance  Subtracting non-citizens and “immortals” leaves 20M (less than 7% of population)  Kaiser Family Foundation: true number of uninsured Americans = 8.2 to 13.9M, 45% of whom will have insurance within 4 months

Uninsured and Underinsured Problem – Perceptions So, is there really a healthcare crisis? Does the problem warrant system overhaul vs. incremental change?

Uninsured and Underinsured Problem – Perceptions Voters have identified healthcare as one of the leading domestic issues. They want to hear candidates’ positions on reducing cost and expanding coverage. They won’t entertain talk of limiting expectations or outcome…. USA Today

Uninsured and Underinsured Problem – Perceptions The presidential contenders say there’s a crisis. And they all have a plan to address the impact of the crisis.…

Uninsured and Underinsured Problem – Impact Patients Hospitals Physicians Employers Third-Party Payors Society

Uninsured and Underinsured Problem – Solutions Consumer Driven Healthcare Incremental Reform Major Reform

UHC – Models Single Payer -- Financed by one source  Example - Medicare Multi-Payer -- Funded by a combination of private and public sources  Employer/Employee plans  Regional public health plans

UHC – Overview Federal Government State Government Private Support of UHC

UHC – Federal Government Comparative Data Points Between Single and Multi-Payer Models  Access  Affordability  Financial Impact/Profitability  Administrative Expense  Jobs

UHC – Federal Government Brief History  Federal Government attempts at creating a UHC system are nothing new  But to date, every such attempt has failed  Teddy Roosevelt, FDR and Truman proposed such plans.  More recently…

UHC – Federal Government

UHC – Federal Government Nixon unveiled his “Comprehensive Health Insurance Act” during his 1974 State of the Union  Built on the employer-sponsored health benefit plan model prevalent in the post-WW II era  Provide federal subsidies to self-employed and small businesses to guarantee UHC access  No new federal bureaucracy: not government run

UHC – Federal Government

“HEALTHCARE: To establish a comprehensive national health program which will make adequate healthcare a right for all people, be uniform in scope, and preserve the private relationship between doctor and patient.” Jimmy Carter for President 1976 Campaign Brochure

UHC – Federal Government “National Healthcare Plan” not actively pursued. Ted Kennedy proposed “Healthcare For All Americans.” Carter proposed “HealthCare” - fell short of UHC and preserved significant role for private insurers. The two negotiated a compromise bill resembling Kennedy's plan but retaining private industry involvement. The bill died soon after. Carter replaced 5 cabinet members, including Califano, his Secretary of HEW.

UHC – Federal Government

1992 – Clinton campaigned for President on a two-fold platform:  “It’s the economy, stupid.”  “Don’t forget about healthcare.” Pledged to implement a national healthcare policy reaching all Americans.

UHC – Federal Government Task Force on National Healthcare Reform  Headed by Hillary Rodham Clinton  Charged with creating a comprehensive health plan for all Americans  To be cornerstone of Clinton’s first-term agenda

UHC – Federal Government “Health Security Act” (“HillaryCare”) presented to Congress in November, 2003  Employer mandate model, featuring a system of regional purchasing monopolies  Price controls on healthcare premiums & national quality oversight  Uneven impact on large and small businesses, with many larger businesses receiving financial relief

UHC – Federal Government GOP critics (organized medicine/pharmaceutical industry): inefficiency, bureaucracy, pandering to insurers; challenged need for such a program and even the existence of a healthcare crisis. Proposal defeated (8/94) - latest casualty among failed UHC bills. Mid-term “Republican Revolution” (Newt Gingrich) – GOP wins both houses, killing Clinton’s hope of comprehensive healthcare reform. Then, Clinton had other problems to address…

UHC – Federal Government Why has every attempt to pass UHC failed Reasons vary widely  Rejection of government involvement (“socialized medicine” or “red menace”)  UHC cannot coexist with employer-based coverage U.S. is the only industrialized nation that does not provide UHC for its citizens

Democratic Candidates  Senator Barack Obama  John Edwards  Senator Hillary Clinton  Senator Joe Biden  Senator Chris Dodd  Congressman Dennis Kucinich  Governor Bill Richardson 2008 Presidential Elections

Republican Candidates  John McCain  Mitt Romney  Senator Sam Brownback  Rudy Giuliani  Governor Mike Huckabee  Governor Tommy Thompson

Senator Clinton Universal Health Care – Yes, private policies and a new federal “public plan” Businesses required to offer insurance or pay into a pool Tax credits tied to income to prevent premiums from exceeding a certain percentage of income Same choice of plans that members of Congress have

Senator Clinton No discrimination for pre-existing conditions Invest in technology to improve efficiencies Drug companies required to offer “fair prices and accurate information” Potentially expand Medicare, Medicaid and SCHIP Raise taxes on wealthier families

Senator Obama Universal Health Care – Yes, for children Requires employers to share costs of insuring workers Paid in part by savings from gained efficiencies Offer similar coverage to that of federal employees (FEHBP)

Senator Obama No discrimination for pre-existing conditions Invest in technology to improve efficiencies Focus on prevention and management of chronic conditions Increase insurance industry competition Reinsurance for catastrophic coverage Raise taxes on wealthier families

Senator McCain Universal Health Care – No Expand access by providing tax credit of $2,500 for individuals / $5,000 for families to make insurance affordable Reform tax code to eliminate bias for employer- sponsored health insurance Require states receiving Medicaid to develop “risk adjustment” bonus to high-cost and low-income families to supplement tax credits and Medicaid funds

Senator McCain Health insurance available nationwide, not confined to state lines Seek alternative avenues of insurance – churches and professional associations Provide information on treatment options and transparency regarding medical outcomes, quality of care, costs, and prices Tort Reform

UHC – Federal Government Barriers to Entry and Public Opinion of a Federal Solution  Desire to maintain individual responsibility  Skeptical assessment of the institutional arrangements through which health insurance is financed and administered  The commitment to choice among health plans  Disagreement over the public/private insurance mix  Regional disparities for expanding health insurance enrollment  Fragmented and decentralized system of policy making  Weak political parties

UHC – Federal Government Barriers to Entry (continued)  Personal politics  Congressional policy-making strategies  Strong interest group opposition  Reelection incentives  Financial contributions  Presidential tactics and strategy  Powerful congressional personalities  Character and judgment flaws of key actors

UHC – Other Countries Canada  UHC provided by provincial governments  Supplementary insurance common France  State-run health insurance for employees  Private insurance to supplement care common Germany  Compulsory state health insurance  10% utilize private insurance

UHC – State Government So, what role should states play?  Perceived vacuum of coherent national healthcare policy  Escalating Medicaid obligations and insufficient federal subsidies to fund them

UHC – Maine First state to pass UHC (2003) Provides insurance subsidies and access to coverage through private carriers One-time $50M Medicaid subsidy 14,000 enrollees to date; future funding uncertain

UHC – Vermont Healthcare Reform Act (2006) Provides insurance purchase subsidies and coordination Medicaid/voluntary citizen contributions/ employer funding mandate

UHC – California Closely watched, with one of highest number of uninsureds nationally Several failed attempts to enact UHC RReferendum would mandate employer subsidies (2004) SSingle payor plan would eliminate private insurance (2006) MMulti-payor plan would require employer contributions of 7.5% of wages (2007)

Gov. Schwarzenegger’s hotly debated “AB X1-1” (2007)  Incorporated core principles of plan he vetoed  Multi-payor, retaining role for private insurers  Employer/individual mandates, purchasing pool subsidies, and hospital/physician taxes  Just “terminated” in Committee

UHC – State Mandates; Prescribed or Preempted? Problem:  Most require employers to either “play” (contribute a specified percentage of payroll or a dollar amount/employee toward healthcare coverage) or “pay” (contribute to a state fund).  These violate ERISA and are subject to litigation challenges.

UHC – State Mandates; Prescribed or Preempted? What’s at issue?  Any state, municipal or county statute, regulation or ordinance requiring employer mandates to fund employee health benefits

The Future Is On Its Way Providers Payors Federal Government State Government Legal and Regulatory Issues

The Future Is On Its Way – Providers Urgent Care Centers Retail Centers Treatment in Foreign Countries Wellness Programs Self-Help

The Future Is On Its Way – Payors Managed Care Plan Consolidation Catastrophic Coverage Insurance Policies

The Future Is On Its Way – Federal Government SCHIP Program Medicare Part D

The Future Is On Its Way – State Government Employer Mandates Expanding Age of Dependent Coverage High-Risk Pools Expansion of Medicaid Programs Health Purchasing Cooperatives

The Unknown? Is affordable and accessible healthcare a “right” for all Americans? Will the public accept UHC (or only incremental change)? Would the cure of UHC be worse than the disease? What impact of financial viability of current Medicare system? What will happen to the quality of care? How do we make the system more efficient? How will healthcare reform impact affordability, cost, and personal accountability? What role should the healthcare bar play? ????