Health System Reform Bringing the Consumer Back into the Health Care Equation

Why Reform? Increasing Premium Costs Consumers are Detached from Market Employers Dropping Insurance Too Many Uninsured Ineffective Delivery of Care Need Vision Plan

Source: GOPB analysis of data from the Agency for Healthcare Research and Quality Medical Expenditure Survey and Kaiser Family Foundation Annual Employer Benefits Survey Premium Costs Have Doubled in Eight Years Need Vision Plan

Source: GOPB Analysis of Centers for Medicare & Medicaid Services, National Health Expenditure Accounts The Consumer Has Been Removed Consumer Out of Pocket Payments Private Health Insurance Payments Need Vision Plan

Source: Kaiser Family Foundation Fewer Employers are Offering Health Benefits Need Vision Plan

Source: Agency for Healthcare Research and Quality Medical Expenditure Survey Fewer Employers are Offering Health Benefits Need Vision Plan

Vision of Reform Develop a consumer driven health care and insurance market that provides: Greater choice Better access Individual responsibility Affordability Higher quality Improved health Need Vision Plan

Vision of Reform "We all knew from the beginning our state was too compassionate, too good, too smart, too creative to let 300,000-plus people go without coverage and insurance... Today is a significant step toward getting to where we all know we can be in closing that gap and taking the superfluous costs out of health care.“ Governor Huntsman, March 11, 2009 Need Vision Plan

Plan During the 1st year, specific actions have been taken to establish foundations for future success It may take as long as 3 years to fully develop a plan of action The plan will address 6 critical areas of need It may take as long as 10 years to realize the full implementation of the reform Need Vision Plan

Six Areas of Emphasis Health Insurance Reform Personal Responsibility Transparency and Value Maximizing Tax Advantages Optimize Public Programs Modernizing Governance Need Vision Plan

Action to Date 2008: Health System Reform Task Force Office of Consumer Health Services Establish an “internet portal” Standardized insurance applications Medicaid waivers submitted Outreach programs for CHIP & UPP 2009: Administrative Simplification Payment Reform (Demonstration Projects) State Contracting Policies – Level Playing Field Tort Reform – Additional protection for E.R. physicians Insurance Market Reforms – “The most important piece of legislation during my tenure as Governor.” Gov. Huntsman Need Vision Plan

A Defined Contribution Market for Health Insurance H.B. 188 creates a new type of insurance market Similar to the defined contribution retirement system Employers set a payment amount for each employee Employees are empowered to use those funds to meet their needs Choice and accountability move to the employee side of the equation Need Vision Plan

A Defined Contribution Market for Health Insurance A major goal is to keep the health benefit paid with pre-tax dollars Federal law places some limits Employees must not be penalized based on their health status Employees must have access to the same options (guaranteed issue) Contributions do not have to be equal, but cannot be discriminatory Need Vision Plan

A Defined Contribution Market for Health Insurance Advantages to the Employer Simple - The only decision is how much to contribute Expand Benefit Offerings – No need to try to make everyone happy with one choice Predictable future costs – Next year’s cost decision is yours, not the insurer’s Tax Advantages – All premium are pre-tax, reducing employer’s FICA costs Need Vision Plan

A Defined Contribution Market for Health Insurance Advantages to the Employee Individual Control & Choice – The employee chooses the plan that works for them Pay with Pre-Tax Dollars – Up to 40% off Expansion – More employees may be able to participate as new employers join Portability – May be able to keep the same plan as they switch employers Premium Aggregation – Families can pool contributions from multiple sources Engagement – Employees are now in control and have the power to effect change Need Vision Plan

A Defined Contribution Market for Health Insurance Impacts on the health system Informed choice leads to competition Plans respond directly to consumers Consumer involvement leads to better health choices and outcomes Need Vision Plan

The technology backbone for consumer- based reforms Internet-based information portal Connect consumers to information Execute informed choices electronically Why an Exchange? Consumer-based system Individual responsibility Single shopping point with reliable information Side-by-side comparisons Need Vision Plan exchange.utah.gov

exchange.utah.gov Three Core Components: 1.Health, Cost & Quality Information 2.Individual & Family Products (IFP) – Three ways to shop: Find a broker Buy direct Comparison shop (a la Travelocity.com) 3.Employer-sponsored plans Backbone of the Defined Contribution Market Facilitates transactions Enables comparison and choice Need Vision Plan

exchange.utah.gov 2009 Launch Details Open to businesses with 2-50 employees on Aug. 19, 2009 (Large businesses come in Fall 2011) Step 1 – Employer signs up Step 2 – Collect employee information Step 3 – Premiums are generated Step 4 – Employee comparison shopping and open enrollment period Step 5 – Finalize enrollment Step 6 – Plans go into effect Jan. 1, 2010 Need Vision Plan

For More Information John T. Nielsen Advisor to the Governor on Health System Reform Phone: Norman Thurston Health Policy and Reform Initiatives Coordinator Phone: Need Vision Plan