Marcia L. Comstock, MD MPH Carol A. Staubach, MPH Health Care Coverage: Different Problems, Different Solutions, Everyone’s Issue Marcia L. Comstock, MD MPH Carol A. Staubach, MPH

Today’s Agenda on the Uninsured What does it mean? Why should you care? How did we get here? What do you think? What do others think? What can be done?

Cover the Uninsured Week Does insurance “coverage” equal “access”? Is each of us our “brothers’ keeper”? Should it matter to us as an individual, as a member of a family, as a member of society that many Americans are not assured access to healthcare that promotes and sustains health and productivity?

Key Facts About Health Insurance About 246 million people have health insurance that pays part of the costs of getting care. Almost 46 million individuals do not have health insurance. The likelihood of an individual or family being covered depends on many factors, including the kind of job they have, their income level, where they live, their age, and their health status. No additional notes needed

Who Lacks Access to Health Insurance? More than 1 in 7 Americans – almost 46 million – do not have health insurance. They are not necessarily “poor.” Over 80% are members of working families, often they can’t afford to buy health insurance. Over 80% of uninsured children live in families with at least one working parent. Some uninsured could afford to buy health insurance, but choose not to. This estimate of the number uninsured is for one point in time during the year. Other estimates of the number of people with no health insurance at ANY point in time during the year are significantly higher: an estimated 51.6 million in 2004. The number of people estimated to have no health insurance at all for more than a year is lower: 29 million people. In addition, millions more who do have health insurance have only very limited coverage.

Who are the Uninsured? Hispanics and low income adults are most likely to be uninsured. Source: Economic Research Initiative on the Uninsured; based on MEPS 2002 data.

Most Uninsured People Work No additional notes needed Note: Numbers may not add up to 100% due to rounding. Source: Economic Research Initiative on the Uninsured, 2005.

Most Uninsured People Have Incomes Above the Poverty Line Many still can’t afford health insurance. Their incomes may be too high to qualify for help. Note: Numbers may not add up to 100% due to rounding. Source: Economic Research Institute of the Uninsured, 2005.

In fact, the fastest growing segment of the population lacking insurance is for individuals and families with annual incomes over $75,000.

The Uninsured* are More Likely to Not Get Care Due to Cost No additional notes needed Source: Centers for Disease Control and Prevention, National Center for Health Statistics, 2005. *People under age 65 in 2003.

Becoming Uninsured Could Happen To You!!! Unexpected changes can affect coverage: Serious illness or injury Worsening of a chronic condition Losing or switching jobs (after federal COBRA protection runs out or is unaffordable) Changes to health insurance policies People can keep insurance from an employer for a limited amount of time after leaving a job under COBRA. COBRA (Consolidated Omnibus Budget Reconciliation Act ) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. 

What are the Consequences of Being Uninsured? People without insurance: Are less likely to get health care that they need, especially preventive care and treatments for chronic health problems Are at risk for the huge expenses of catastrophic health care May have worse health outcomes ~18,000 died last year because they did not have health insurance, according to IOM What do we mean by catastrophic? Medical care so serious in nature as to require extensive, long-term, and expensive medical treatment

What are the Consequences of Having Uninsured People in Our Community? A burden on hospitals for uncompensated care Cost-shifting to employers Negative impact on community health Drain on economic development

How Did We Get Here? In the beginning……. Insurance: Coverage by contract in which one party agrees to indemnify (guard or secure against anticipated loss) or reimburse another for any loss that occurs under terms of the contract.

Before Health Insurance… US railroads and wanted to insure productivity of employees Hired contract physicians (surgeons) to care for employees No insurance—healthcare services provided for employees…but in the interest of their employer!

The Beginning of Health Insurance-”The Blues” Blue Cross 1st created by President of Baylor University to pay for hospital care If everyone paid a small amount ($15/wk), those that needed hospitalization could be cared for (benefit of $25,000) 1932-Texas Legislature passed the enabling statute to create the first blues plan Law became a national model It was expanded after a decade to include payment for physician services, “blue shield” The plans were NFP companies BODs represented community-citizens, providers, businessmen Concept of “shared social responsibility”

Employer Role in Healthcare Originally employer-based insurance was not for healthcare. It started as insurance for lost wages when ill Early 1940s: amendments to Tax Codes allow business to offer health insurance to help recruit workers despite wartime wage freezes 1950-1970: growth in cost & utilization of medical services by employees, supported by labor unions Health insurance typically 80/20; co-pays, deductibles 1980s: growth of managed care as response to rising costs-temporarily effective—1st dollar coverage, NOT insurance Late 1990s-resurgence of costs 2000+ move to consumer-directed health plans…..??solution Some employers offer on-site clinics/pharmacies….?Back to the future?

The 5 A’s of Access Health insurance does not equal access to the right healthcare! Affordability Accessibility Acceptability Assurance Appropriateness

Coverage & Access: What Does it Mean? Coverage refers to the ‘menu’ of what is available through an insurance policy (limited vs comprehensive.) Relates to technical adequacy and assurance of services Access refers to what is 'practically' available and encompasses barriers such as affordability and logistical accessibility Coverage opens the door but does not ensure access!

Issues with Coverage & Access What are we trying to achieve with coverage and access?? Language is important! People don’t use these terms to mean the same thing. If coverage equals insurance, we need to answer the question, insurance for what? We have not been able to reconcile our split approach to “sponsorship” of health insurance, or pick one over the other. Coverage means more than insurance. It is 'protection', 'security' that is defined at the individual level

Do you have health insurance? Did you purchase it yourself?

The Plight of Employers

Our Health Care Crisis Total health care spending represents 16 percent of the gross domestic product Estimated to reach 20 percent by 2015. The US has the highest per worker health care costs in the world Impact Erodes corporate profits Reduces growth of business For small enterprises or those with low profit margins Reduces number of jobs Reduces compensation packages Increases unemployment and uninsurance

What Do We Get for What We Spend? We spend 33% more than Canada, our nearest competitor on costs We do not have more doctors or nurses or hospital days We do have more MRIs and get more tests-many unnecessary We rank lowest of English speaking countries on patient satisfaction and access and on the doctor-patient relationship We rank well only on access to specialists and non-urgent care! Is this most important?

Health Care Costs and Profit Margins Source: Cowan CA, McDonnell PA, Levit KR, Zezza MA. Burden of health care costs: businesses, households and governments. Health Care Financing Review. 2004

Projections by 2015 Can Employers Really Afford It? 2015 rates: 15%-$29,128 12%-$22,362; 10%-$18,675; 8%-$15,544 Cost per employee per year Comparing Healthcare trend figures at compounded rates: 15%,12%,10% and 8% over a 10 year period. Starting point $7,200 or approximately $600 PEPM.

2005 Trends 9.2 % increase in premiums Previous years 2000 – 2004 – 14% Smallest employers (under 200) hit with highest increases across all sectors – 15% Manufacturing sector hit with highest increases – 11.2 %; healthcare and transportation the least at less than 8%

Reaction to Premium Increases For Employers Cost shifting to employees Cost sharing in premiums Increase co-pays and deductibles Reduce coverage Drop Insurance Employee Response Pay the Increase Drop Coverage

2005 Status of Employer Coverage 60% of employers offer insurance, down from 69% in 2000 98% for firms greater than 200 93% for firms between 50 – 199 87% for firms between 25 – 49 72% for firms between 10 – 24 47% for firms between 3 - 9 Large ers get great prices and programs from national health plans bec they have 10s of thousands of lives. Sm to mid size market is 40 mill Average NFIB member has 10 ees; this market extremely sensitive to price; primary concern is risk selection Sl incr in offering in small firms 80% of ees in small firms (<100 ees) have no plan choice;½ of companies w/<200 ees offer one health plan; 25% offer 2. 40% of ees in firms w/ < 100 ees get ins thru er; 83% of theose in firms w/ > 1000 ees get hlth ins there

The Small Employer Firms with less than 20 employees make up 89% of American business and 19% of the working population. Firms with 20 – 499 employees make up 10% of businesses and represent 33% of the working population

Who Provides Coverage & Who Doesn’t Firms with higher wages where 65% or more of workers earn $20,000 or greater have higher coverage rates than where the majority earn $20,000 or less annually. Nearly 50% of employers not offering health benefits, pay annual wages of less than $15,000 per year to 40 percent or more of their employees, compared to 13 percent of companies that do offer health benefits. There are a greater proportion of part-time workers in smaller firms who do not offer benefits. The demographics reflect a larger proportion of females, workers under age 30, and minority employees. 65 percent of those small employers’ not offering benefits have annual gross revenues that are less than $500,000, 65 percent. For employers with $1,000,000 in gross revenues or more, only 18 percent do not offer benefits. Firms in business less than five years are less likely to offer benefits.

Hidden Costs of Insurance Employee Retirement Income Security Act of 1974 - Federal governs self-funded plans; states oversee fully insured plans. Rules, regulations and offerings differ from state to state Variables Risk Rating & Underwriting – Some less fair than others Administrative Costs – can be as high as 40% of premium

WHAT DO YOU THINK?

What is good public policy to promote adequate coverage & access for all? Is there a level of health services that everyone should be guaranteed? Should it be heavily subsidized by government and employers? Should individuals who can afford to be allowed to "buy up?"

Should we work toward financial equity (justice/fairness)? What does pluralism mean in healthcare? Pluralism that meets the needs of individuals for the kind of care and setting that is appropriate to them? Pluralism in funding streams? Do we need to ration healthcare? How should it be done?

WHAT DO OTHERS THINK?

Voices from Communities… “The measure of a health care system is how it cares for the have-nots.” CEO, Community Health Center, California “Will the majority of the voting public support giving something up to get everyone covered?” Psychologist, Mississippi “Are we willing to ration for ourselves? When we get sick, we want everything available.” Physician representative of the White House “More people realize now [than in the early 90s] that the uninsured represent a threat to all of us.” Physician Leader, NH

Harris-Commonwealth Fund Opinion Leaders Survey Covering the uninsured should be Congress’ top priority over the next 5 years The proportion of Americans without health insurance (currently 18% under 65) should be reduced by half to about 8% in 10 years.

The Citizens’ Health Care Working Group Charged by Congress with engaging the public in a dialogue on healthcare What healthcare benefits and services should be provided? How does the American public want healthcare delivered? How should healthcare coverage be financed? What trade-offs is the public willing to make? Recommendations and an action plan will be presented to Congress

What Does the Public Think? 95% thinks the US healthcare system is in a state of crisis or has major problems >90% believe it should be public policy that all Americans have affordable health care coverage ~90% think it would be better to provide a defined level of services for everyone, rather than providing coverage for particular groups of people as it is now (elderly, poor, employees)

What Does the Public Think? >60% believe the most important reason to have health insurance is to pay for high medical costs ~30% believe the most important reason to have health insurance is to pay for everyday medical expenses ~74% believe everyone should be required to enroll in basic health coverage, either public or private

What Does the Public Think? ~ 69% think some people should be responsible for paying more than others Criteria varied: Income most popular response; health behaviors also quite high Should public policy continue to use tax laws to encourage employer-based health insurance? Yes 47.9% (29.3-86.8) No 52.1% (13.2-70.7)

What Does the Public Think? Guaranteeing all Americans have health insurance was cited as the number 1 spending priority in nearly all communities Guaranteeing all Americans get healthcare when they need it through public “safety net” programs, (if they cannot afford it) also ranked quite high in most places

What Does the Public Think? REACTION TO PROPOSALS TO ADDRESS UNINSURED: Not Popular: Offer uninsured Americans income tax deductions, tax credits or other financial assistance to help them purchase private insurance: Rely on free market competition among doctors, hospitals, other healthcare providers and insurance companies rather than having government define benefits and set prices

What Does the Public Think? REACTION TO PROPOSALS: Mixed reactions: Expand state government programs for low income (Medicaid, SCHIP) Require businesses to offer health insurance to all employees Require all Americans to enroll in basic healthcare coverage, public or private

What Does the Public Think? REACTION TO PROPOSALS: Most popular: Create a national health insurance program, financed by tax payers, in which all Americans would get their health insurance: (1st in almost all cities) Expand neighborhood health clinics Open up enrollment in federal programs, e.g., Medicare or FEHBP

WHAT CAN BE DONE?

If you segment the uninsured, it is apparent that different answers are needed for different groups: The working poor Those temporarily uninsured between jobs Those who can afford but do not choose to buy insurance The young and healthy who feel it is not worth the investment for them

Solutions for Employers

Potential Solution Join a Purchasing Pool Small employers join forces to create purchasing power and reduce individual inequities by virtue of their size Share risks Negotiate competitive prices Gain access to a variety of plans Provide affordable co-pays Streamline and reduce administrative costs

Examples COSE – Council of Smaller Enterprises, part of Cleveland Chamber of Commerce Assume role of purchaser At least three health plan alternatives Health Pass – New York Business Group on Health – for employers with less than 50 workers 28 benefit plan designs Provides consulting services Handles all administrative duties PacAdvantage – California – Pacific Business Group on Health – 2 – 50 employees

Community and Private Sector Partnerships Muskegon County, Michigan – for those businesses with median hourly wage of $11.50 or less and have not offered any coverage in previous 12 months County pays 1/3; employer pays 1/3; employee pays 1/3 Plans offered are ½ of cost if employer sought plan as an individual employer New Mexico Health Insurance Alliance

Another (But Risky) Solution – Self Insurance Financial strategy used primarily by large employers – employer assumes all or part of risks Sets funds aside to pay claims as they come in (Vs paying an insurance company a premium) - actors out administrative costs Exempts the company from state mandates that can be costly and cumbersome for employers who operate in multiple states Increase risk for small firm – one catastrophic medical case could be devastating Purchase Stop Loss Insurance to cover any individual’s medical expenses higher than $25,000

Latest Health Plan Solution Consumer Directed Health Plans High Deductibles HSAs Requirements Learn to manage an HSA Learn to be a savvy medical consumer Learn to lead a healthier life

Employer Costs for Poor Health R. Goetzel, JOEM, Jan. 2001 Reduced Productivity: Poor Results; Reduced Co-Worker Morale; Training for Replacement Impact on Competitiveness: Higher % of Profits for Healthcare; Increased Insurance Premiums; Increased Training and Overtime Costs; Risk Management and Safety Costs Total = $9,992

Trends in Health Status - CDC In 10 years Obesity increased 61% Diabetes increased 49% Serious smoking related illness affects 8.6 million Americans $92 billion in lost productivity annually $75.5 billion in medical expenditures

Less Healthy People – Huge Costs

Determinants of Healthcare Costs Source: Center for Disease Control and Prevention

Statistically….For Every 100 Employees 64 are overweight 25 have high blood pressure 18 or more have high cholesterol 6 have diagnosed diabetes 4 have undiagnosed diabetes 16 smoke 8 are heavy drinkers 29 don’t wear safety belts regularly 50 sit all day to do their work 21 have cardiovascular disease Source: Wellness Council of America 2005

Strategies to Integrate Benefits and Work Site Health Management WEYCO Inc. - service company for benefit plans and management - 186 Employees Healthcare – eating the bottom line Employers give employees an unrestricted medical card Employees are making unilateral lifestyle decisions that affect the bottom line and other employees’ paycheck

WEYCO, Inc. Health plans do not emphasize prevention, personal health improvement and compliance Little or no employee involvement in cost Plan Strategy Align plan with Weyco health strategy Involve employees and families in prevention Move to qualified high deductible plans with health savings accounts (HSA) by 2007

WEYCO, Inc. Health Strategy – As important as customer service, quality, & safety Personal health improvement Reduce demand to reduce costs Eliminate lifestyles that create risk Illegal drugs and tobacco Excess use of alcohol Unhealthy eating Physical inactivity

WEYCO Inc. Worksite Programs HRA & Biometrics Health Education: Cardio, Strength & Flexibility, Weight Management, Stress Management Web-based info & Telephonic Health Coach Physical Evaluations Screenings

WEYCO Inc. Incentives Employer contributions/credits for participation in preventive exams, personal evaluation, physical evaluation Credits used to reduce employee contributions to plan. Employee pays if chooses not to participate. Preventive Exams at 100% - Health Credits if exams are completed & verified by 12/31 of each year If employee waives coverage, WEYCO provides $1560.00 in an HRA if employee provide proof of other medical coverage

WEYCO Policy Tobacco-Free Program Stop hiring or retaining tobacco users Ban the use of tobacco on property Tobacco assessments and voluntary testing Company sponsored smoking cessation programs Mandatory testing Random testing for all employees Extend program to spouses

Recent State & Federal Efforts

S. 1955: Health Insurance Marketplace Modernization and Affordability Act of 2005 A bill to amend title I of the Employee Retirement Security Act of 1974 and the Public Health Service Act to expand health care access and reduce costs through the creation of small business health plans and through modernization of the health insurance marketplace Introduced by Senator Michael Enzi (R-WY) approved by the Senate Health, Education, Labor and Pensions (HELP) Committee

Critics Fears Legislation, eliminates state jurisdiction and with it almost all state-enacted consumer protections for people buying insurance individually or through their employers States will no longer be able to mandate coverage of benefits, services, or categories of providers for individuals, small groups, or large group Premium rating protections, enacted by states to make small group insurance more affordable to older and sicker workers, will be set aside Insurers will be allowed to sue states that do not comply. The bill sets a ceiling on, but no floor under, what states can do to protect insurance consumers 

Massachusetts Universal Health Care Coverage Those without coverage must purchase an “affordable” plan (to be defined) or pay financial penalties Businesses with at least 11 workers will provide insurance or pay $295 per employee per year to the state Residents with coverage must certify their insurance status on state income tax forms, or face tax penalties State will provide sliding-scale subsidies for people who can't afford to buy a health plan on their own

Observations Ability to gain consensus Compromise may be a way to break the gridlock and logjam that exists in Washington and in states across the country Details important to the overall acceptability of the new program How much people will have to pay to get insurance What will the affordable plans cover Massachusetts precedent of agreeing to expanding coverage with Medicaid waiver program provided the building blocks of working together at state level to allow this next step

What About the Future??

Perspective of Leaders Comprehensive proposal in the short-term unlikely…until the REAL crisis strikes…?? By 2008 or 2012 elections To develop a long range plan, create a sense of urgency! Healthcare industry leadership must agree that solving the problem will require compromise

How Can We Make Real Progress? We need to clarify what we want to achieve long-term! Don’t assume the federal government will solve the problems Look to communities for solutions Focus on health—not just healthcare Everyone needs to be involved! Our health is too important to leave to others

A Vision for Patient-Centered Care "The care we need and no less, the care we want and no more." Albert Mulley, MD Chief of Internal Medicine, Massachusetts General Hospital

Marcia L Comstock, MD MPH COO WRGH/FAHCL 117 Lafayette Road Wayne, PA 19087 Phone: 610-687-2320 Fax: 610-687-5963 mlcomstock@wrgh.org www.wrgh.org

CA Staubach & Associates Carol A Staubach, MPH CA Staubach & Associates 305 E. St. Andrews Drive Media, PA 19063   Phone:  610-891-6034 Fax:      610-891-6035 email:   castaubach@comcast.net