a bird’s eye view of the patient protection and affordable care act (ppaca)

A Bird’s Eye View of the Patient Protection

and Affordable Care Act (PPACA)

Claudia Chaufan, M.D., PhD

Physicians for a National Health Program-California

Outline

• 1) Measuring “goodness” in health care

• 2) US health care through March 23, 2010

• 3) US health care after March 23, 2010

Question

• 1) Who knows people who do not have health insurance and cannot financially afford their medical needs?

• 2) Who knows people who have health insurance and cannot financially afford their medical needs?

In the U.S., health insurance without health care

not exception but norm

www.pnhpcalifornia.org

U.S. world leader in…Medical Bankruptcies!

• In 2007, 62% of personal bankruptcies were medical

• Increase of ~50% from 2001

• Most debtors well educated, homeowners, middle class occupation

• 75% had health insurance at time of filing

The American Journal of Medicine, 2009

How do we assess “goodness” in health care systems?

• Overall attainment– Health measures (e.g. life expectancy, infant

and maternal mortality)– Financial fairness (e.g. whether people go

broke when they actually need care)

• Overall performance– How much you do with the money you spend

The World Health Report, World Health Organization, 2000

Quick overview of US health care (circa March 2010)


Poor qualityLowest life expectancy


Poor qualityHighest rates of infant mortality


Poor qualityHighest rates of maternal mortality


Poor qualityWorst mortality treatable causes


Huge financial barriers (lousy access)


U.S. world leader in…Medical Bankruptcies!

• In 2007, 62% of personal bankruptcies were medical

• Increase of ~50% from 2001• Most debtors well educated, homeowners,

middle class occupation• 75% had health insurance at time of

filing

The American Journal of Medicine, 2009

Decline in employer-sponsored health coverage accelerated three times as fast in 2009, Elise Gould, September 16, 2010http://www.epi.org/publications/entry/decline_in_employer-sponsored_health_coverage_accelerated

Erosion of employer-sponsored commercial insurance

Most expensive


Mediocre Performance

Note: U.S. Just above Slovenia and below Costa Rica

Summing up

• Lousy quality (poor health indices)

• Very unfair (54th in easing financial access)

• Most expensive (1st in the world!)

• Poor performance (37th bang for buck)

World Health Organization, 2000

Patient Protection and Affordable Care Act, March 23 2010

• WASHINGTON — With the strokes of 22 pens, President Obama signed his landmark health care overhaul — the most expansive social legislation enacted in decades — into law on Tuesday, saying it enshrines “the core principle that everybody should have some basic security when it comes to their health care.” New York Times


Promise

1. Patients will be protected (from the financial burden of health care)

2. Health care will be affordable (for federal government and individual patients)


Major strategies

1. Expand coverage: MEDICAID + SUBSIDIES TO PURCHASE COMMERCIAL INSURANCE

2. Contain costs: EXCHANGES, ELECTRONIC MEDICAL RECORDS, PAY 4 PERFORMANCE, FRAUD AND ABUSE, ETC.

3. Guaranteed issue: NO PRE-EXISTING CONDITIONS

4. Mandate coverage: EVERY NEEDS TO CARRY INSURANCE TO SPREAD RISK


Promises & Realities of PPACA


Promise-reality 1• Promise:

– “32 million will gain health coverage”

• Reality:– “Gain” obligation to buy commercial insurance under

penalty of a fine (~ driver’s insurance).

– Medicaid (Medical) expansions: “poor people’s programs”, underfunded, politically unpopular, threatened by budget cuts, losing health providers to low reimbursement rates


Gain coverage through Medicaid?

Senate Panel OKs Medi-Cal Cost Increases, Reimbursement Cuts, increase Medi-Cal beneficiaries' costs for certain health care services; cut Medi-Cal reimbursement by 10%. (California HealthLines February 17, 2011)

HS Staff to Help States Reduce Medicaid Costs, Retain Coverage Levels, by cutting optional services such as dental services, eyeglasses, prescription drugs, hospital admissions.(California Healthlines, February

23, 2011)



– The law will make coverage affordable, establish annual limits to on your medical expenses

• Reality: – “Coverage” (i.e. policies) affordable (maybe!) by

increasing out of pocket costs to you -- “coverage” without care

– “No annual limits” illusory! (only services included in policy!)


Massachusetts @ 3 years of “health care overhaul”

• Least expensive individual policy 56 yr. male, annual income $32,670, 300% of poverty, no subsidies (taxpayers’ $$$!) – $5,616 (policy) – $ 2,000 (deductible) – 20% of next $15,000 for covered services

• Total: $10,616

• Uncovered services (e.g. physical therapy, drugs, home health) are on you!

“Coverage” does not protect from bankruptcy

California Healthlines, March 14, 2011:

Some Blue Shield Members To Face Dramatic Rise In PremiumsAbout 900 Blue Shield of California members with individual policies could see their premiums rise by 80% or more cumulatively as a result of two recent rate hikes and a third premium increase scheduled to take effect on May 1.

Control costs…?


Promise-reality 3

• Promise: “Achieves (near) universal health care”

• Reality: – Not universal:

• ~50 million uninsured next three years (CBO)-- 50,000 estimated preventable deaths per year, 1,000 per million uninsured)

• 23 million will remain uninsured by 2019 (CBO)

– Not health care: • Insurance is means to end; commercial insurance is

defective (pushes paper around to avoid the sick!)



– No more health discrimination

• Reality: – Discrimination (price “adjustments”) continues, by

• Age• Geographical location (occupation and poverty rates)• Fitness (some penalties if you flunk “wellness” tests)• Residency status (undocumented immigrants can’t buy from

“exchanges”, even with own money)


No discrimination based on health status..?

California Healthline, October 14, 2010, Insurers Can Set Higher Rates for Kids Who Have Pre-Existing Conditions

On Wednesday, HHS said that health insurers can charge higher premiums to cover children with pre-existing conditions, in an attempt to persuade companies to offer child-only policies, the New York Times reports (New York Times, 10/13/2010).


Wait a minute…

• Something must be good!! – Children can stay in parents’ plans until age 26

(assuming parents have plan and money to pay)?

• Why should it be “either” current mess “or” PPACA? – Why 26? Age is irrelevant in other health care

systems that cover everybody, automatically, from cradle to grave! And they do not need to pay $400 billion in subsidies so that millions of captive customers buy commercial insurance!


But is PPACA not better than nothing?

A step in the right direction..?


Employed, health coverageYoung, healthy, secure jobs (?)c

Working (near) poorSelf-employed

Working poorUnemployed

Elderly (poor and non-poor)Disabled

Renal Failure

Public insurers ~30%

•Medicare•Medicaid

•Private Medicare•/Medicaid

SCHIP

$$$$$$$$Private insurers

Employer Market55%

Black hole(uninsured) ~15%

$$$$

Private insurersIndividual Market $$

Self-employed$$$

(Near) poor kids

US health care before March 2010

Out of pocket$$$$$$$

•Groups divided by actuarial risk/income•Pay according to plan•Services according to plan•Profit ok for medically necessary services





Renal Failure




SCHIP


Employer Market55%

Uninsured circa 2019, 23 million? (7%)

$$$$

EXCHANGESIND.MARKET $$

Self-employed$$$

(Near) poor kids

US health care after March 2010



•TAXPAYER FUNDED SUBSIDIES

•TAXPAYER EXPANSIONS OF PUBLIC

HEALTH CARE (MEDICAID)

•MANDATE TO PURCHASE COMMERCIAL INSURANCE

•REGULATIONS / REGULATIONS / R

EGULATIONS

Would it have been better with a public option?





Renal Failure




SCHIP


Employer Market55%

Black hole(uninsured) ~15%

$$$$

EXCHANGESIND.MARKET $$

Self-employed$$$

(Near) poor kids

US health care after March 2010



•TAXPAYER FUNDED SUBSIDIES

•TAXPAYER EXPANSIONS OF PUBLIC HEALTH CARE

(MEDICAID)

•MANDATE TO PURCHASE COMMERCIAL INSURANCE

•REGULATIONS / REGULATIONS / R

EGULATIONS

Public option2% (6 million)

?

What’s the evidence that this model will work…?

• None

• For profit insurance + subsidies + expansion of means-tested public insurance (Medicaid) + (mandate), have failed in:– 1988 Massachusetts, 1989 Oregon, 1992

Minnesota, Tennessee y Vermont, 1993 Washington State, 2003 Maine

– 2003, 2006 MassachusettsReport from the United States, State Health Reform Flatlines, Steffie Woolhandler, Benjamin Day, and David U. Himmelstein, International Journal of Health Services, Volume 38, Number 3, p. 585–592, 2008

Massachusetts 2006 Window into future of PPACA

• No reduction in medical bankruptcies from 2007 to 2009 (7,504 to 10,094), still around 50%

• 89% had insurance at time of filing!

• Least expensive individual policy 56 yr. male: $5,616 (policy) + $ 2,000 (deductible) + 80% of next $15,000 for covered services (annual income 300% of poverty $32,670)

American Journal of Medicine, March 2011

Why…?

Social/Public vs. Commercial Insurance:

Similar NAMES, different GOALS• Commercial (for-profit) insurance

– Business of slicing and dicing patients according to risk categories and services contracted for, and collect as much money as possible while actively avoiding to pay for services, with the goal of yielding the maximum profit possible for shareholders

– Health care as market good (TV/cell phone)

• Social insurance (taxes / payroll ): – Marriage between social solidarity to protect from medical need

and market forces to buy services in bulk, get better prices, and avoid waste (advertising, marketing, shareholders profit, fat CEO salaries)

– Treats health care as a right and social good

Key problem of PPACA:

Implements a health care system built upon a defective product:

commercial, for profit insurance,that survives and thrives

the more it turns down “bad customers” and the less it pays for

health care

Paradox: Health insurance without health care


What’s the experience with guaranteed, universal,

social (public) health insurance?


International model:Social insurance / National Systems

(general or dedicated taxes)

Patients

Single payerCanada, Taiwan, UK

Public or private Health providersPharmaceuticalsMedical technology

“buyers” “sellers”

Financing

Mutual funds (non profit)Germany, France, Japan

•Everybody in, nobody out! (true universality)•Always a function of income, receive medical care according to need•Unified benefits package of “medically necessary services”•Profit banned from sale of insurance for medically necessary services


MILLION DOLLAR QUESTION:How do they control costs

for the system and for individuals?

1. ADMINISTRATIVE OVERHEAD

2. BULK PURCHASES

3. SPREADING RISK IN LARGE POOLS


Power of Economies of Scale (Market Forces!) to pursue to goal of social solidarity

Less administrative overhead, less waste

Bulk purchases, lower prices

Expenditures per person

$2,249 $5,711

Practicing physicians per 1000 persons

1.9 2.7

Physician visits per person per year

16 (Belgium 8; Canada 6.6, Germany 6.2)

6

MRI units/million persons 18.8 7.6

Population over 65 years 20% 12%

Japan United States

www.pnhpcalifornia.orgOrganization of Economic Cooperation and Development, OECD 2000/2003

Risk pooling allows to cross-subsidize for socially useful purposes

• In all insurance systems, for profit or non-profit, there is cross-subsidizing, i.e., collective contributions pay for whoever needs services

• HOW THE POWER OF CROSS-SUBSIDIZING IS USED DEPENDS ON GOAL OF SYSTEM

– In COMMERCIAL SYSTEM, profit! YOUR POOL MUST BE LARGE AND FULL OF HEALTHY PEOPLE

– In SOCIAL/PUBLIC SYSTEM, to pay for health care!YOUR POOL MUST BE LARGE AND INCLUDE ALL SICK AND HEALTHY

• Key problem of Medicare: all members of pool need a lot of health care

0

10

20

30

40

50

60

70

80

10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

20% account for 80% of costs

Agency for Healthcare Research and Quality, MEPS, 1999

Who pays more taxes for health care?Social vs. Commercial insurance

$3,001

$2,996

$2,903

$2,520

$2,231

$2,139

$5,635U.S.

Canada

Germany

France

Sweden

U.K.

Japan

$ Per Capita

Source: OECD Health Data 2005Government-spent fraction in red

Who wins and who loses with socialized financing (social insurance)

• Winners:– Businesses can mind their own business! Reduce costs,

more competitive, reduce employee turnover, lower costs. – Patients: health security for self, children, friends and

community; no false “choices”, lower costs. – Health providers: back to real business, providing health

care, lower operation costs

• Losers:– For profit insurers: no profit from medically necessary

services– Drug companies: truly need to negotiate prices– Shareholders: can’t make fortunes from medically

necessary services– Politicians: no tons of money from all of the above

Type of system is a moral decision

a bird’s eye view of the patient protection and affordable care act (ppaca)

Documents

health insurance

health care2 us health

landmark health care

health care systems

buckworld health organization

spendthe world health

medical needs

personal bankruptcies