Health System Reform in the USA – What Medical Students Need to Know Pauline Vaillancourt Rosenau Management, Policy, and Community Health School of Public Health University of Texas Health Science Center Houston, Texas, USA For Baylor College of Medicine; Dr. Stephen Whitney’s class October 18, P. Rosenau; US Health Reform 20111

The “Agenda” Do we need health system reform? (3-6) History of reform in the USA (8-9) Why does healthcare cost so much? (10-11) What is in the bill ? (an 8 min. video) (12) MD community: mixed opinion but clear compensation effects (13-16) Public Health, Medicare, and Medicaid (17-23) The Public (25) Repeal or Revise: Congress and the Supreme Court (27-33) Conclusion (34) P. Rosenau; US Health Reform 20112

Do We Need Health System Reform in the USA? Most expensive system in the world Outcomes are better in other countries Mortality amenable to health care is poorest in the USA compared to other countries But variations across the states – very large P. Rosenau; US Health Reform 20113

See slide : Commonwealth Fund International Health Policy Survey: Adults’ Health Experiences in seven Countries, 2007 – for methodology P. Rosenau; US Health Reform 20114

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A Short History of Failed Efforts to Reform the US Health System A Short History of Failed Efforts to Reform the US Health System 1912: Teddy Roosevelt – single national health service; opposition from Unions and Doctors 1930: FD Roosevelt – social security enacted but not health insurance 1945: Harry Truman Richard Nixon Jimmy Carter 1993: Bill Clinton P. Rosenau; US Health Reform 20118

Exhibit 9. National Health Expenditures (NHE) Under Alternative Scenarios, U.S. Constant 2010 Dollars, 1960–2010 P. Rosenau; US Health Reform NHE in billions Data: The Centers for Medicare and Medicaid Services; Bureau of Labor Statistics, Office of Management and Budget, Congressional Budget Office. 5.2% annual growth 4.8% annual growth 4.3% annual growth 4.2% annual growth $2,110 $1,702 $1,583 $2,624

Why Does the US Health System Cost So Much? Administration accounted for the largest p/p difference between cost US and Canada, 39%. Payments to MDs and hospitals accounted for 31% More intensive provision of medical services accounted for 14% of the difference Alexis Pozen, David M. Cutler (2010) Medical Spending Differences in the United States and Canada: The Role of Prices, Procedures, and Administrative Expenses. Inquiry: Summer 2010, Vol. 47, No. 2, pp P. Rosenau; US Health Reform

Pozen and Cutler. Inquiry Summer;47(2): P. Rosenau; US Health Reform

What’s In the Bill – Brief Review Health Reform Hits Main Street; animation.aspx animation.aspx 1000 pages - summarized in 8 minutes! 480 major changes P. Rosenau; US Health Reform

Does the Medical Provider Community Support the 2010 Health Insurance Reform Bill and Why? AAMC (Association of American Medical Colleges) AMA – ACOG “qualified support” – lots to like assn.org/ama/pub/health-system-reform/hsr-impacts-practice.shtmlhttp:// assn.org/ama/pub/health-system-reform/hsr-impacts-practice.shtml – Increased access and demand for services – “strain complain” is being heard now – Improve insurance competition and choice – Eliminate lifetime coverage caps and pre-existing conditions restraints – Encourages prevention and wellness programs – Practitioner professional associations also wanted malpractice reform and a promise to rescind Medicare cuts – Informal promise to rescind Medicare cuts P. Rosenau; US Health Reform

Who Does Not Support Texas Medical Association – Austin American- Statesman March 2010 – The Reform Bill will increase insurance costs – It will increase federal government interference in health care – It will create incentives for patients to pay a fine for not having insurance – It fails to address malpractice issues Physicians for a National Health Program, Medical device manufacturers (2.3% tax ; starts in 2013) P. Rosenau; US Health Reform

Policy Implications for MD Compensation Increased demand may not translate into a need for more primary care physicians (Massachusetts experience) – Better pay for primary care; but longer hours possible – Competition from physician substitutes Payment systems: more “innovative”, complex, varied… – More MDs on salary- example FQHC – Fewer fee-for-service systems & more capitation payments – Better incentivized Pay-4-Performance including in ACOs Higher % reimbursement of bills issued because more patients with insurance (MDs receive 67% of each $1.00 billed now ) P. Rosenau; US Health Reform

MD Compensation Considerations ….. Continued Payment for Medicaid patients will be better in Compensation from Medicare unlikely to remain as high as it is now. If doctors refuse Medicare/Medicaid patients these patients may move to Federally Qualified Health Centers and Community Health Centers for some of their basic needs P. Rosenau; US Health Reform

Public Health What’s Included for Public Health Access increased; 32 million more with insurance and subsidies for those with lower incomes levels Encourages primary care Council on Prevention to prepare a national plan Expansion of public programs: CHIP, Medicaid, HUGE Expansion of Federally Qualified Health –10-11 billion over 5 years (note: doctors are on salary at FQHCs) Improves payment for wellness and prevention (500 million) P. Rosenau; US Health Reform

Public Health Continued…. What’s Included for Public Health $1.5 billion for visiting nurse programs for pregnant teens and new moms Student education repayment programs for public health Prevention and Public Health Fund – 7 Billion from and then 2 billion per year (includes research) Taxes indoor tanning shops Require chain restaurants/vending machines to disclose the nutritional content including calories P. Rosenau; US Health Reform

Medicare What’s Included – Medicare Medicare matters: because it sets the payment scales that influence other payers Medicare’s fiscal life is expanded by 10 years via increase new taxes on the wealthy More preventive care without co-pays and deductibles; includes annual physicals (starts in 2011) Improved pharmaceutical benefits: 2011 – 50% discount on brand name drugs purchased in the Doughnut Hole (NYT 3/22/10 p A 18) Doughnut Hole of the Pharmaceutical Part D Rx insurance program will disappear in 2020 Reductions in Medicare fraud which may be about 10% (20% in Florida ?) P. Rosenau; US Health Reform

Medicare. Continued… Medicare Medicare Advantage: More closely regulated and federal government subsidy reduced Unfair aspects curtailed; “you can still have it but you will have to pay for it “ Benefits will be lower in some areas and increased in others The 455 billion Medicare spending cuts over 10 years are mostly from Medicare Advantage UPDATE: As of 2011 enrollment has increased and premiums are lower despite predictions to the contrary Medicare’s Accountable Care Organizations (ACOs) must agree to take responsibility for overall care of their Medicare beneficiaries; more below…. P. Rosenau; US Health Reform

Medicaid Federal eligibility rules imposed on the states to curtail wide variation across states on eligibility States may not reduce their current Medicaid eligibility rules between but waivers for some states are easing the pain In 2014 all those at or below 133% the Federal Poverty Level (FPL) will be eligible for Medicaid Federal government pays for most of the costs of the newly enrolled in Medicaid -- states obliged to pay for 10% after 2019 States with the highest number of new enrollees in Medicaid gain the most - that’s Texas P. Rosenau; US Health Reform

P. Rosenau; US Health Reform

Medicaid continued… Medicaid There will be many many more patients with Medicaid in the future Doctors likely to do more preventive medicine for this population because they will have insurance policies with no out-of-pocket cost. Doctors will worry less about whether or not these patients can “afford” the medication or prescribed procedure – big change in practice patterns P. Rosenau; US Health Reform

P. Rosenau; US Health Reform

Public Support for the ACA 20% think the ACA was already repealed; 36% aren’t sure…. Over the last year between 40% and 70% indicated they were against it. Most components of the bill individually are popular! – Mandate – less than 50% and going lower – Exchanges - 92% and going higher A family of four making $33,525 could save up to $14,900 a year on the cost of coverage in 2014 since they will qualify for tax credits and subsidies. Those who will get large subsidies will be a real bargain yet they don’t support it. Why: – don’t know about it – know about it but say it will take too long P. Rosenau; US Health Reform

P. Rosenau; US Health Reform

2013 Congress Will Decide the future of Medicine P. Rosenau; US Health Reform

Congress Can withhold funding for implementation?  It already has for some elements  Pilot programs have gone unfunded  Not all new elements require funding  Absence of funding results in delay or “repeal” without the hassle P. Rosenau; US Health Reform

Congress AND the ACA  Congress can repeal the bill after 2013 if there is a Republican President  Reduce subsidies to help low income people buy insurance  Who’s against?  Who’s for?  Congress can reduce funds to the States for Medicaid expansion and start-up funds to establish exchanges P. Rosenau; US Health Reform

P. Rosenau; US Health Reform

When will the Supreme Court Act? Can take the case anytime: October through December likely Could rule before the 2012 election? Could rule the mandate unconstitutional Could declare the entire bill is unconstitutional P. Rosenau; US Health Reform

Intrade: Individual Mandate to be ruled unconstitutional by US Supreme Court…. before midnight ET 31 Dec %chance before midnight ET 31 Dec %chance P. Rosenau; US Health Reform

If the Mandate Is Unconstitutional ….  Pressure from insurers is on!  Congress could fix it….  Buy now or pay more later ; late enrollment penalties, no uncompensated care reimbursed  Open enrollment expanded to two years or longer (Uccello)  Opt out without a penalty, for 5 years but results in big limits on individual (Starr)  Encourage the states to adopt a mandate. Good luck….  Status quo – not required to purchase but 2 year preexisting conditions in effect P. Rosenau; US Health Reform

Conclusion: Important Points: The most important element in the reform bill that has not received much attention: insurance regulation! Health system reform is never final – But the current legislation sets the basis for future change – Legislation is constantly being revised after it is adopted The rules for implementation are very important; many are still being written and some are already being changed Are stakeholders supporting legislation: that they can live with? that they think they can weasel out of, get around, find loopholes in, etc? P. Rosenau; US Health Reform