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					Trends in Health Care 2007:
Challenges and Implications
Course #201398

Santa Barbara Association of Health Underwriters
Pismo Beach – February 23, 2007

Alan Katz, RHU
CAHU Vice President, Public Affairs

Health Care Legislation 2007
1. Health Care Reform 2. Everything Else Today we’ll focus on health care reform

October 4, 2007

Trends in Health Care 2007

Slide 2

What We’re Up To Today
1. Why Health Care Reform Now 2. How We Got to Where We Are Now 3. Agents Focus 4. CAHU’s Healthy Solution 5. Taking Action 6. Conclusion / Q&A

October 4, 2007

Trends in Health Care 2007

Slide 3

Why Health Care Reform Now
The Health Care Reform Drumbeat Governor Schwarzenegger Democratic Leadership Presidential Candidates Single Payer Coalition Sicko Why Now?
October 4, 2007 Trends in Health Care 2007
Slide 4

A Broken Health Care System
 6.5 million uninsured  Stressed emergency rooms  “The hidden tax”  Rising health care costs  Chronic illness; poor health choices  Medical errors  Financial strain, bankruptcy
From a presentation by Governor’s staff
October 4, 2007 Trends in Health Care 2007
Slide 5

Legislative Leadership Key Messages
Current System is Broken Build on Existing Employer-based System
 Single Payer not politically practical

The Insurance Marketplace Needs Reforming
Insist on Affordability for Working Families
 Through public and private programs
Trends in Health Care 2007
Slide 6

October 4, 2007

Senate Republican’s Key Messages
Current System Needs Strengthening

Provide Californians with Access and Choice Make the Health Care System More Reliable Introduce No New Taxes
 Or fees or whatever you want to call them

October 4, 2007

Trends in Health Care 2007

Slide 7

Why This Matters: Three Political Laws
The Law of Political Reality: Political Reality trumps Real Reality for all parties at all times

The Law of Political Activity: Politicians are paid to address perceptions and that’s what they do The Law of Political Reporting: The media is paid to report on what politicians do and that’s what they do
October 4, 2007 Trends in Health Care 2007
Slide 8

The Three Laws and the Uninsured
Media Reports an Increase in Uninsured

Politicians Repeat the Story Deploring the Increase in the Number of Uninsured Media Reports the Politicians Repeating the Media Story and Deploring the Increase in the Number of Uninsured

October 4, 2007

Trends in Health Care 2007

Slide 9

Polls Reflect the Drumbeat
“Topped only by immigration (18%), health care (14%) is now second on Californians’ list of most important issues facing the state. In fact, 69 percent of residents and 72 percent of likely voters think California’s health care system is in need of major change.”
– Public Policy Institute of California (September 20, 2007)

“The findings show that a growing majority of voters (69%) express dissatisfaction with the way the health care system is working.”   Support for making reforms within the current system fell from 52% to 33%. Support for replacing the current system with a state government-run system rose from 24% to 36%.
– The Field Poll (August 22, 2007)

October 4, 2007

Trends in Health Care 2007

Slide 10

How We Got to Where We Are Now
2006: Governor Schwarzenegger makes health care reform a high priority in campaign January 2007: Democratic leaders introduce health care reform bills (SB 48 and AB 8). Governor introduces his proposal. Republicans introduce their proposal. June 2007: Democratic leaders combine bill into AB 8. Summer 2007: The Great Budget Debacle September 2007: Legislature passes AB 8. Governor promises veto and calls special sessions on water and health care reform.
October 4, 2007 Trends in Health Care 2007
Slide 11

Assembly Bill 8: Key Provisions
1. Pay-or-Play: Required all employers to spend 7.5% of payroll on health benefits or pay 7.5% fee
 Employees of “fee firms” required to enroll in state purchasing pool  MRMIB could increase percentage by any amount once per year

2. Admin Cap: Required health plans to spend 85% of premium on health services
October 4, 2007 Trends in Health Care 2007
Slide 12

Assembly Bill 8: Key Provisions
3. AB 1672 Expansion: Increased size of “small group and eliminated Risk Adjustment Factors 4. Guarantee Issue:
Required guarantee issue in individual market
 No requirement individuals must buy coverage

5. Plan Definitions: Required carriers to offer MediCare and Healthy Families look-alikes. Created category of Individual plans.

October 4, 2007

Trends in Health Care 2007

Slide 13

Key Differences with Governor
Individual versus Employer Centric Broad Financing versus Employer Financing 4% Employer Fee versus 7.5 Percent Fee

October 4, 2007

Trends in Health Care 2007

Slide 14

Current Situation
Staffs of Governor and Legislative Leaders are negotiating legislative language Document is circulating for comment from interested parties
 A “starting point” not a compromise  Substantial placeholders

Governor is lining up support for his plan Carriers, hospitals, CMA, Chambers of Commerce, SEIU, etc.
October 4, 2007

Trends in Health Care 2007

Slide 15

Goal of Special Session
Achieve a compromise concurrently with resolution of water-focused special session (mid-October) Enact legislation creating a framework of reform (majority vote required) Qualify an initiative with financial elements for the November 2008 ballot (part or all of framework contingent on passage)

October 4, 2007

Trends in Health Care 2007

Slide 16

Agents: A Need for Focus
Lots of Hot Button issues Lots of interest groups focused on each element of the plan
For Agents, two key questions:
1. If the provision becomes law will it harm our profession or our clients? 2. Is changing the provision an absolute necessity for other stakeholders? Applying this means agents should focus on …….
October 4, 2007 Trends in Health Care 2007
Slide 17

Agents Focus: Issue #1
Carrier Administrative Expense Cap
   Governor would require carriers to spend 85% of premium dollars on medical claims Result: Little or no funds left for distribution Draft language provides some “space”

Concern:
   Limits funds available for distribution Likely to deter new entrants into the market Doesn’t guarantee lower costs, just eliminates agents and reduces customer service levels
Trends in Health Care 2007
Slide 18

October 4, 2007

Agents Focus: Issue #2
Purchasing Pool



May require employees of fee-based companies to enroll May require subsidized individuals to enroll

Concern:
   Could “crowd-out” individual market Discriminates against those receiving subsidies Imposes tax on employees of fee-based companies to extent better value available outside of pool
Trends in Health Care 2007
Slide 19

October 4, 2007

Agents Focus: Issue #3
Mandate to Issue:



Guarantee Issue in the individual market without a strong, enforceable mandate to buy Assumption: Enforcement will work

Concern:
 Failure to enforce mandate to purchase will result in dramatic premium increases and commission reductions or eliminations
 Current requirement for auto insurance is only 75% effective
Trends in Health Care 2007
Slide 20

October 4, 2007

CAHU’s Healthy Solutions
All Californians deserve a health care system which  delivers both world class care and financial security  is accessible, affordable and fair  boosts the state’s economy, attracts new businesses and strengthens existing enterprises  is realistic about what one state can do

October 4, 2007

Trends in Health Care 2007

Slide 21

Requirements of Reform
CAHU believes a Healthy Solution is one which:
    neither bankrupts families nor busts the state’s budget. assures all Californians have at least basic health care coverage. provides the state’s diverse population with diverse choices. promotes ongoing and long-term innovation and experimentation to enable the state’s health care system to adapt over time to evolving needs. assures consumers access to meaningful information and expert advice and counseling.
Trends in Health Care 2007
Slide 22



October 4, 2007

CAHU’s Healthy Solutions
Enroll the one million Californians eligible for state programs who fail to enroll
  At least 15% of the uninsured Achieve 85% enrollment then expand eligibility gradually to 300% of Federal Poverty Level

Expand subsidies gradually to Californians earning up to 400% of FPL
 


Expand subsidies to those earning up to 400% as state finances permit Allow those receiving premium subsidies to use them in the open market – no segregation into state-run risk pools Allow assignment to employers to encourage companies to buy coverage
Trends in Health Care 2007
Slide 23

October 4, 2007

CAHU’s Healthy Solutions
Require carriers to guarantee issue individual coverage once 90% of Californians are enrolled
  Until 90% coverage is achieved, expand MRMIP to be a true insurer of last resort Even under guarantee issue, pre-existing condition exclusions and rate-ups may be applied
 Length of exclusion and rate-up tied to duration previously uninsured

Finance reform through measures which include:
   Broad tax (e.g., sale tax) Targeted taxes (e.g., tobacco, fast food, handguns) Tax on carriers (including raising revenue from selfinsured through indirect means)
Trends in Health Care 2007
Slide 24

October 4, 2007

CAHU Healthy Solutions
Reduce the underlying cost of health care
     Pay for performance Electronic Health Records Electronic Rx Evidence based medicine Hospital error reduction programs

October 4, 2007

Trends in Health Care 2007

Slide 25

Dealing with Reality
 There’s tremendous momentum for health care reform  The drive comes from all sides and both parties  Stakes are high: The results can make the system better or far worse

October 4, 2007

Trends in Health Care 2007

Slide 26

What’s Required: Get Involved
 Join Health Underwriters – Today!

 Contribute to CAHU PAC – Today!  Be a communicator
     
October 4, 2007

Inform clients of what’s at stake Respond to articles in your local paper Volunteer to speak in your community Attend town hall meetings Meet with legislators in their districts Promote CAHU’s Healthy Solutions plan
Trends in Health Care 2007
Slide 27

What’s Required: Stay Informed
Helpful publications: Health Underwriter newsletters and magazines California Broker Helpful web sites: Health Underwriters: www.CAHUHealthySolutions.org California HealthCare Foundation Site: www.CalHealthReform.org My Blog (a shameless plug): www.AlanKatz.WordPress.com
October 4, 2007 Trends in Health Care 2007
Slide 28

Keep Things in Perspective
We’ve faced challenges like this before:  1990-1993: AB 1672  1993-1994: ClintonCare  1996: Single Payor Initiative Lawmakers are listening

October 4, 2007

Trends in Health Care 2007

Slide 29

Helping to Get it Right
Agents have tremendous power:
   Subject matter expertise Clients that are constituents Presence in every community

If we work together … … If we stay focused …
We can make health care reform a change for the better for our clients and our profession
October 4, 2007 Trends in Health Care 2007
Slide 30

Trends in Health Care 2007:
Challenges and Implications

Alan Katz, RHU
CAHU Vice President, Public Affairs