Health Care Reform and the ACA: Now What? Matthew D. All Executive - PowerPoint PPT Presentation

Health Care Reform and the ACA: Now What? Matthew D. All Executive Vice President and General Counsel Blue Cross and Blue Shield of Kansas

Year after year, health care costs consume more and more of our economy 20% Total national health expenditures as a percent of Gross Domestic Product, 1970-2015 17.8% 17.4% 18% 16.3% 15.5% 16% 14.8% 13.3% 13.3% 13.2% 14% 12.1% 12% 10.6% 10.0% 10% 9.2% 8.3% 7.9% 8% 6.9% 7.2% 5.0% 6% 4% 2% 0% 1960 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source : Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group

Year after year, we spend substantially more per person Total national health expenditures, US $ per capita, 1970-2015 In Constant 2015 Dollars Total National Health Expenditures Per Capita In Constant 2012 Dollars $12,000 $9,990 Per capita $10,000 $8,000 $6,000 $4,000 $1,742 Per capita in constant 2015 dollars $2,000 $355 Per capita $0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source : Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group

We spend more on health than other advanced countries Per Capita Total Current Health Care Expenditures, U.S. and Selected Countries, 2012 United States $8,745 Switzerland Netherlands Austria Germany Canada Comparable Country … $4,460 Belgium France Sweden Australia Japan OECD Average $3,493 United Kingdom $3,289 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Source : Kaiser Family Foundation analysis of 2013 OECD data: "OECD Health Data: Health expenditure and financing: Health expenditure indicators", OECD Health Statistics (database). doi: 10.1787/ data-00349-en (Accessed on June 25, 2014). Notes : Because 2012 data was unavailable, 2011 were used for Australia and the Netherlands. Data for Canada and Switzerland are estimated values.

More of our health care spending come from some form of insurance than in previous decades 100% 12.4% 13.9% 13.9% 15.3% 14.9% 17.3% 90% 22.5% 26.9% 8.4% 8.6% 8.6% 8.5% 80% 39.6% 8.9% 10.2% 4.2% 4.1% 4.2% 3.9% 3.7% 55.9% 12.1% 3.0% 70% 12.4% 17.9% 16.4% 15.8% 16.7% 15.7% 3.4% 16.0% 60% 4.4% 11.3% 13.5% 11.4% 50% 21.1% 22.0% 22.3% 22.3% 22.8% 5.2% 18.6% 17.4% 40% 8.0% 16.7% 15.8% 30% 11.5% 7.2% 20% 35.3% 34.9% 35.0% 34.8% 34.3% 34.2% 33.2% 28.3% 22.2% 21.1% 10% 0% 1960 1970 1980 1990 2000 2006 2008 2010 2012 2015 Private Health Insurance Medicare Medicaid Other Public Insurance Programs Other Third Party Payers Out-of- Pocket NOTE: Medicare and Medicaid were enacted in 1965; by January 1970, all states but two were participating in Medicaid. Starting with 2009 NHE data, CMS revised the “Source of Funds” measure from a classification that was either public or private to one that is more program-based. CMS’s rational was that “financing arrangements have become more complex and the lines between public and private payers have become blurred as a single program may have federal, state, local, and private funding.” As a result, the category “Other Third Party Payers” includes both public and private programs and also some programs that receive funds from both public and private sources, such as Workers’ Compensation, Worksite Health Care, and School Health. “Other Pub. Ins. Programs” includes CHIP, the Department of Defense, and the Department of Veterans Affairs. SOURCE: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2012; file nhe2012.zip).

More of our health care spending come from some form of insurance than in previous decades 100% 4.4% 1.2% 9.5% 7.6% 10.2% 13.8% 15.3% 7.5% 90% 23.4% 4.5% 29.0% 8.1% 80% 11.5% 17.7% 25.9% 30.6% 70% 22.7% 9.7% 23.3% 60% 27.2% 17.8% 45.1% 19.7% 3.5% 50% 9.7% 82.4% 22.7% 40% 3.4% 9.0% 30% 49.5% 45.7% 44.4% 28.6% 20% 36.4% 32.5% 29.4% 10% 8.8% 0.2% 7.9% 0% 1970 2012 1970 2012 1970 2012 1970 2012 Nursing Care Facilities & Hospital Care Physician & Clinical Retail Prescription Continuing Care Retirement Services Drugs Communities Priv. Health Ins. Out-of-Pocket Medicare Medicaid Other NOTES: Medicare and Medicaid were enacted in 1965; by January 1970, all states but two were participating in Medicaid. “Out-of-Pocket” includes direct spending by consumers for all health care goods and services not covered by insurance, except for health care premiums. “Priv. Health Ins.” includes premiums paid to health insurance plans and the net cost of private health insurance (administrative costs, reserves, taxes, and profits or losses). “Other” includes Other Public Health Insurance Programs (CHIP, Depts. of Defense and of Veterans Affairs) and Other Third Party Payers (e.g., worksite health care, other private revenues, workers’ compensation, maternal/child health, other state and local programs, etc.). SOURCE: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group at https://www.cms.gov/NationalHealthExpendData/ (see Historical; NHE Web tables, Tables 7, 8, 15, 16).

The problems of health care, therefore, are the problems of insurance • Adverse selection: those who expect to suffer a loss will buy insurance more than those who don't. • Moral hazard: the existence of insurance changes the insured's (or his proxy's) behavior. – In fee-for-service health insurance, providers have an incentive to give more care and more expensive care. – You and I believe we're better off with more care and more expensive care. 7

Higher health care costs translate into higher premiums 1999 $5,791 $1,543 $4,247 Worker Contribution $6,438* 2000 $1,619 $4,819* 2001 $7,061* $1,787* $5,274* Employer Contribution 2002 $8,003* $2,137* $5,866* $9,068* 2003 $2,412* $6,657* 2004 $2,661* $7,289* $9,950* $10,880* 2005 $2,713 $8,167* 2006 $11,480* $2,973* $8,508* 2007 $3,281* $8,824 $12,106* $12,680* 2008 $3,354 $9,325* 2009 $13,375* $3,515 $9,860* $13,770* 2010 $3,997* $9,773 2011 $15,073* $4,129 $10,944* 2012 $4,316 $11,429* $15,745* 2013 $16,351* $4,565 $11,786 2014 $4,823 $12,011 $16,834* 2015 $4,955 $12,591* $17,545* $18,142* 2016 $5,277 $12,865 *Estimate is statistically different from estimate for the previous year shown (p < .05). SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2016.

Premiums have outpaced workers' raises 300% Health Insurance Premiums Workers' Contribution to Premiums 242% Workers' Earnings 250% Overall Inflation 213% 200% 167% 150% 160% 98% 100% 92% 60% 45% 50% 24% 44% 35% 21% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2016. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2016; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2016 (April to April).

This is true for public programs, too. Medicare has grown as a percentage of the economy Medicare Spending as a Share Medicare Spending as a Share of Federal Budget Outlays of Gross Domestic Product (GDP) 3.7% 16.9% 3.6% 15.1% 12.1% 2.2% 1.9% 8.5% 1990 2000 2010 2020 1990 2000 2010 2020 Total Federal Outlays (trillions) Gross Domestic Product (trillions) $1.3 $1.8 $3.5 $5.0 $5.7 $9.8 $14.5 $22.9 SOURCE: CBO Budget and Economic Outlook, January 2011 (for 1990-2010 data) and May 2013 (for 2020 data).

Medicare spending is projected to consume even more of the economy in the years to come 6% 4.8% 5% 4.4% 3.9% 4% 3.4% 3.1% 2.9% 3% 2% 1% 0% 2015 2020 2025 2030 2035 2040 SOURCE: Congressional Budget Office, NOTE: Estimates are net Medicare spending as percentages of gross domestic product (GDP), based on the extended alternative fiscal scenario, under which Medicare’s physician payment rates would be maintained at current levels, rather than reduced. The 2014 Long-Term Budget Outlook (July 2014).

Even though we spend more, we leave many uninsured Share of population uninsured: 20 18.2 17.5 18 17.2 16.7 16 16.3 16.1 14 13.3 12 12.0 10 10.5 10.3 8 6 4 2 0 1972 1974 1976 1978 1980 1982 1983 1984 1986 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Note: 2016 data is for Q1 – Q3 only. Source: CDC/NCHS, National Health Interview Survey, reported in http://www.cdc.gov/nchs/health_policy/trends_hc_1968_2011.htm#table01 and https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201702.pdf.