The Affordable Care Act

CMC / UCLA Coachella Valley Economic Forecast Conference April 11, 2013

Health Care Spending

How did health care spending vary by nation in 2009?

Health Care Spending as a percentage of GDP
20 18 16 14 12 10 8 6 4 2 0

USA: 17.6% of GDP

Source: World Health Organization WHOIS database for all nations except United States. United States data is from the Janu ary 2011 release of national Health Expenditure Data by the Centers for Medicare and Medicaid Services. All data is for 2009. Note: These are the 30 OECD countries plus Singapore.

How did health care spending vary by nation in 2009?

Health Care Spending as a percentage of GDP
20 18 16 14 12 10 8 6 4 2 0

USA: $8,086 per person

Source: World Health Organization WHOIS database for all nations except United States. United States data is from the Janu ary 2011 release of national Health Expenditure Data by the Centers for Medicare and Medicaid Services. All data is for 2009. Note: These are the 30 OECD countries plus Singapore.

I thank Richard Scheffler and Steven Shortell at the UC Berkeley School of Public Health and The Health Care Forum for use of several slides.

Priority #1: Health SpendingAggregate

32% increase in GSP between 2000 2009 73% increase in healthcare spending in same time period

Healthcare spending in California is consuming an increasing share of the economy

*Preliminary analyses Data from CMS State Health Expenditure Accounts (SHEA) and Bureau of Economic Analysis

Priority #1: Health Spending - Aggregate

On average between 2000 - 2009, health care costs grew 2.6% faster per year than did GSP

Because of cyclical fluctuations, it is important to consider health care spendings share of the economy over an extended period of time e.g. 10 years
*Preliminary analyses Data from CMS State Health Expenditure Accounts (SHEA) and Bureau of Economic Analysis

Priority #2: Affordability Total Premium (ESI)

Total Single Coverage Premium as % of Median Household Income1 Total Single Coverage Premium as % of Median Household Income1

Percent of median household income spent on total employersponsored premiums has increased faster in CA versus the US

The Uninsured

Medicare vs. Medicaid

Medicare is the health insurance program for persons who have worked and paid social security taxes and are 65 years of age or older. Medicaid is a federal/state financed program for persons who are poor up to 133% of the poverty level. The federal contribution is related to wealth of the state.

The Affordable Care Act (ACA) Major aims: To expand access to health insurance coverage, increase consumer protections, improve on prevention/wellness, improve quality and the health delivery system, curb rising healthcare costs.

Access: Extend coverage to about 32 million persons

The Mandate: Citizens must have health insurance Employers cover their workers or pay a penalty (except for small employers) Create Exchanges (faux insurance markets) to help individuals and small business buy insurance Expand Medicaid to cover people below 133 percent of poverty level, if a state wishes to do so Require insurance plans to cover young adults on parent's plans until age 26 (already in effect)

Major Opportunities and Challenges

Greater fraction of population uninsured in Riverside County More families with incomes below the poverty line in CA Poorer educational attainment than in CA Very complicated law Getting the word out Encouraging young persons who are healthy to buy coverage.

Consumer Protection
Ban pre-existing condition clauses Cannot cancel coverage (called guaranteed issue) Medical loss ration no less than 80%

Prevention and Wellness

Prevention and public health fund to give grants to states for prevention activities, disease screening and immunizations Prevention without cost sharing required: immunizations, high blood pressure screening, mammograms

Challenges and Opportunities

Disparities in mortality rates by race in Riverside County Disparities in immunization rates Many children have physicians who do not talk about good nutrition and exercise. Help people understand it is free Make prevention more accessible by moving site of care, different times of day.

Quality and System Performance

Experiment with new types of payment for hospitals and physicians. Move away from feefor-service towards bundled payments and Accountable Care Organizations . Comparative effectiveness studies of different treatments for the same disease Improve Health Information technology such as electronic medical records, and RHIOs (Regional Health Information Organizations)

Curb Rising Health Costs

Prevention Better primary care Health information technology ACOs Bundled payments

Challenges and Opportunities

Higher burden of chronic disease than CA Higher age adjusted mortality than CA Very rural populations There will be a lot less money for providers, for teaching Medical schools need to join community and others in starting ACOs New medical school has fantastic primary care mission and big opportunity to teach doctors how to practice differently Safety net hospitals endangered without different models Rural care endangered

Congressman Ryans Proposal

(original idea proposed by Prof. Alain Enthoven in 1980-82)

Applies only to individuals 55 years of age or younger Now Medicare pays for as many services as beneficiaries use Wants to ignite competition in the health insurance market through providing Medicare

Congressman Ryans Proposal 2

Beneficiaries have a fixed amount of money (voucher) to buy private insurance or regular Medicare; compete on a minimum benefit set; government pays for the second lowest cost private plan or Medicare, whichever is lower.

Congressman Ryans Proposal 3

Insurers indicate how much it costs to buy their plan for the minimum set of benefits.

Congressman Ryans Proposal 4

Raise eligibility from 65 to 67 by 2034

Congressman Ryans Proposal 5

Cap spending at half percent above growth rate of the economy.