A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association 1 Health Reform: The Impact on Michigan Michigan Purchasers Health Alliance Annual Kickoff Conference September 23, 2010 Marianne Udow-Phillips Director A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association

Health Reform: The Fundamentals Expansion of Insurance and Insurance Reform Requires everyone to have health insurance Expands Medicaid and subsidizes the poor and near poor Larger employers not offering health insurance pay a penalty for those employees receiving a subsidy and to automatically enroll employees in coverage 2

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Health Reform: The Fundamentals Expansion of Insurance and Insurance Reform (cont’d) Reforms insurance practices such as exclusions for pre-existing conditions, guaranteed issue, rating practices, loss ratios, coverage for children to age 26 Expands benefits to include preventive care, eliminate lifetime and annual limits Defines benefit packages for those with subsidies 3

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Health Reform: The Fundamentals Cost Control, Quality Improvement, Work force, and Public Health Hundreds of pages and provisions related to these issues Virtually every idea ever suggested by anyone academic or practitioner $115 billion in provisions authorized but not appropriated 4

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Health Reform: The Fundamentals Funding and Deficit Reduction Medicare changes, including higher Medicare part A tax rate for high income individuals, eliminates employer tax deduction for retiree drug subsidy benefits, reducing payments for DSH, home health, hospital wage index, some other procedures ($575 billion, ) Revises payments to Medicare Advantage plans (savings of over $140 billion, ) 5

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Health Reform: The Fundamentals Funding and Deficit Reduction (cont’d) Penalty payments for those not complying with mandate (estimated at $120 billion, ) Other: adjustments to HRA/FSAs, change threshold for deductibility of medical expenses, limit deductibility of executive compensation, 10% tax on tanning services 6

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Health Reform: The Fundamentals Funding and Deficit Reduction (cont’d) Fees on pharmaceutical companies, medical devices, insurance sector Excise tax on “Cadillac” health plans effective 2018 (premiums at $10,200, individuals; $27,500, families; 40% tax above this threshold $32 billion in revenue, ) Total 10 year cost of $938 billion; deficit reduction of $124 billion 7

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association This week in health reform: Sept 23 – the six month mark No more lifetime caps on insurance payments Children with pre-existing conditions cannot be excluded from coverage Children to age 26 now able to stay on parents’ benefit plans Requirement to cover certain preventive services with no cost sharing in new health plans Beginning of phase out of annual benefit limits 8

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Health Care Reform: Major Pieces Already in Place Temporary high risk pool for those with pre- existing conditions Medicare drug rebates for those who reached the “doughnut hole” Consumer information at state and federal level (healthcare.gov) Small business tax credits Certain grants awarded (e.g. Prevention and Public Health fund, FQHCs, nurse home visit programs) 9

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association A lot has to happen at the state level by 2014 Insurance exchanges: American Health Benefits Exchange; Small Business Health Option Program (SHOP) Medicaid coverage to all up to 133% of poverty Reinsurance contract Electronic communications and enrollment between Medicaid, CHIP, exchanges Data reporting 10

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association State has many program options in health reform* Examples include: Medicaid global payments Early childhood home visitation programs Initiatives for seniors Patient centered medical home Workforce development grants Immunization grants * not all funded 11

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association State has many program options in health reform* (cont’d) Examples include: Grants for malpractice reform Bundled payments demonstration Accountable care organization demonstration Co/op plan State basic plan * not all funded 12

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Local providers/communities have many program options* Demonstration projects such as: Accountable care organizations Care transition services for Medicare Payment bundling Other projects identified by the Center for Medicare and Medicaid Innovation * not all are appropriated 13

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Local providers/communities have many program options*(cont’d) Research and innovation grants such as: Center for Quality Improvement and Patient Safety Patient Centered Outcomes Research Institute Expansion of Federally Qualified Health Centers Depression Center Network * not all are appropriated 14

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Local providers/communities have many program options*(cont’d) Training and work force development: Primary care education programs Advanced practice nurse training Support for care in rural areas 15 * not all are appropriated

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association National Impacts on Cost and Coverage of the ACA Latest census figures: uninsured: –2008: 15.4% of the US population, 46.3 million –2009: 16.7%, 50.7 million Post reform uninsured expected: –(2014): 7.3%, 18.5 million Spending growth expected to be.2% higher than without the ACA. Expected % of GDP: –w/o the ACA: 19.3% –w/ the ACA: 19.6% 16

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association An Overall Picture of Coverage and Possible ACA Change In Michigan /2008 Source: Center for Healthcare Research & Transformation

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Coverage Impact on the Uninsured if Health Reform Had Taken Effect in 2007/ Source: Center for Healthcare Research & Transformation

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Total Michigan Non-elderly Population by Income, 2007/ Source: Center for Healthcare Research & Transformation

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Insurance Exchange in the Individual Market 20 Population Type Source: Center for Healthcare Research & Transformation

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Distribution of Employees by Employer Size in the Private Sector, Michigan, Source: Center for Healthcare Research & Transformation

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association Private Sector Establishments and Employees by Firm Size in Michigan, Small business size Number of private businesses Total number of employees Fewer than 10 employees119,375428, employees25,026337,867 Total (all businesses with fewer than 25 employees) 144,401766,538 Source: Medical Expenditure Panel Survey

A non-profit corporation and independent licensee of the Blue Cross Blue Shield Association 23 Center for Healthcare Research &Transformation 2929 Plymouth Road Suite 245 Ann Arbor, MI (734) Website: Follow us on