central california association of health underwriters may 3, 2007 alan katz, rhu vice president...

Central California Association of Health UnderwritersMay 3, 2007

Alan Katz, RHUVice PresidentPublic Affairs

CAHU’s Healthy Solutions

May 3, 2007 CAHU Healthy Solutions -- CCAHUSlide 2

1. Health Care Reform: Current Status

2. CAHU’s Healthy Solutions: Overview

3. CAHU’s Healthy Solutions: Core Elements

4. What Agents Need to Do

5. Conclusion / Q&A

What We’re Up To Today






5. Conclusion / Q&A



President Bush, Congress and Presidential Candidates have put forward national health care reform proposals

Likely Outcome: Nothing

States won’t wait

Reform Proposals: Federal


Four leading reform proposals:

1. Governor Arnold Schwarzenegger

2. Senate Republicans

3. Senate President Pro Tempore Don

Perata

4. Assembly Speaker Fabian Nunez

What’s On California’s Table


Current System is Broken Been a problem for a long time Sacramento hasn’t addressed it – he will

Uninsured impose a “Hidden Tax” Need to eliminate the tax if we’re gong to keep

the state’s economy strong

Everyone is responsible for the solution and everyone has something to gain

The gain outweighs the pain for everyone

Governor’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

Senate Republican’s Key Messages


Current System is Broken

Share Responsibility: No More “Free Riders” Focus: 4.2 million uninsured in “working families” Employers and employees share cost

Focus Competition on Price and Quality … … Not Underwriting

Through current plans or MRMIB-run “Connector”

Changes to AB 1672

Senator Perata’s 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

Speaker Nunez’s Key Messages


Political Perception of a Need for Change

+Well Designed Reforms

=Opportunity

Ingredients for Positive Change


Political Perception of a Need for Change

+An Overwhelming Desire to Be Perceived as Doing Something

=Disaster

Ingredients for Negative Change






5. Conclusion / Q&A



Moves us from opposing everything to supporting something

Creates a context in which our key issues can be addressed

The Cap The Pool The Mandate

Provides a yardstick against which all proposals can be measured



Lots of Hot Button issuesLots 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 …….

Agents: A Need for Focus


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

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

Agents Focus: Issue #1


Purchasing Pool Consumers 100-250% of the FPL receives

subsidies usable only in a state purchasing pool (“Connecter”) and employers may place low income workers into the pool

Limited anti-crowd out provisions E.g., 4% employer “in-lieu fee” paid to the pool

and Employer contribution levels higher than employee-only premium contribution levels

Concern: Unlevel playing field Ineffective anti-crowd out provisions



Mandate to Issue: Guarantee Issue in the individual market Consumers can buy coverage at any time time 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



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

CAHU’s Key Messages


Key Questions for All Reform Plans1. Affordability

Can the state afford the plan? Can the people afford it?2. Universal Participation

Does it ensure that every Californian has access to basic health care coverage?

3. Cost ContainmentDoes is constrain rapidly rising medical costs

4. Consumer ChoiceDoes it empower Californians to find and choose the health care coverage that best fits their unique needs?

5. Evolving NeedsDoes it enable health care coverage to evolve with changes to the state’s population, their needs and expectations?

Indicators of Healthy Reform






5. Conclusion / Q&A



Enroll the one million Californians eligible for state programs who fail to participate in them

At least 15% of the uninsured Improve outreach through:

Enrollment when accessing public health care Enrollment when signing up for school Coordinate qualifications with other programs

(e.g., Section 8 Housing and food stamps). Create single point of entry to private and public

health care coverage programs by enabling employers and health plans to create common applications

Healthy Solutions: Access for All


Expand state programs to: Children up to 300% of FPL Single Adults up to 100% of FPL Responsible Reform:

Expand only after 85% of those currently eligible enroll in state programs and as state finances permit



Provide subsidies to Californians below 250% percent of the 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



Subsidies should be set at average cost of basic coverage

Subsidized individuals should be required to accept qualified employer-sponsored coverage if offered

Subsidies should be offered on a sliding scale

Household Income Percent Subsidized 101-150% of FPL 90% 151-200% of FPL 70% 201-250% of FPL 50% 251-300% of FPL 30% 301-350% of FPL 20% 351-400% of FPL 10%



Mandate to Purchase: Require all Californians to obtain health care coverage

Encourage and Enforce through: Making all health insurance premiums tax deductible Rationalize California and federal tax codes

(e.g., HSA compatibility) Tax penalty of five percent of gross income for failure

to demonstrate coverage Prorated for time spent insured

Proof of enrollment to obtain state provided privileges (e.g., drivers license)



Mandate to Sell:After 90% comply, require carriers to issue

policies to all applicants (guarantee issue)

Challenge: Only 75% compliance with auto insurance requirement

Until 90% comply, expand MRMIP to be the insurer of last resort



Need to protect system from those “gaming” the system:

Permit rating bands and pre-existing condition exclusions on those who violated law by avoiding coverage

Previously Uninsured for: Rating Band Pre-Existing Exclusion Period:

More than 24 months: +/- 30% for 3 years 36 months19-to-24 months: +/- 25% for 3 years 24 months 13-18 months: +/- 20% for 3 years 18 months12 months or less: +/- 20% for 2 years = to months uninsured



Meeting the Basic Coverage Requirement: state provided health care coverage

(Healthy Families, MediCal and MRMIP) HSA-eligible high deductible plans catastrophic coverage core coverage

Carriers are free to offer any design which satisfies these criteria

MRMIP has to offer catastrophic and core coverage



Catastrophic Coverage: $7,500 maximum annual out-of-pocket minimum of four doctor visits per year negotiated hospital expenses generic drugs preventive care at least $5,000,000 in lifetime coverage



Core Coverage: Annual deductible of no more than $500 minimum of twelve doctor visits per year negotiated hospital expenses for up to $50,000

per year prescription drugs with varying cost sharing

arrangements for generic, brand and non-formulary drugs

Maximum $500 prescription deductible

preventive care



Selecting revenue sources is a political decision – some to considered:

Health plan fees based on carrier’s overall market share

Taxes on hospital operating revenues and physician gross revenues

or other mechanism reaching self-insured plans Taxes on products known to increase health

care costs such as: tobacco products alcoholic beverages handguns and ammunition food products that contribute inordinately to obesity

through high fat and/or sugar content and fast-food restaurant meals

Healthy Solutions: Financing


Constraining skyrocketing medical costs is the most critical – and vexing – aspect of health care reform

Key reason for health insurance premiums increases

Reasons medical care costs skyrocket,

including: an aging population new medical technologies and drugs changing consumer expectations and values

Healthy Solutions: Constraining Costs


CAHU supports several initiatives put forth by others to control costs:

Pay for performance programs Electronic health records Electronic prescription programs Evidence-based medicine Hospital error reduction programs Healthy lifestyles and wellness programs

Healthy Solutions: Constraining Costs






5. Conclusion / Q&A



Helpful publications:Health Underwriter newsletters and magazinesCalifornia Broker

Helpful web sites:Health Underwriters:

www.CAHU.org

My Blog (a shameless plug):

www.AlanKatz.WordPress.com

What’s Required: Stay Informed


Join Health Underwriters – Today!

Contribute to CAHU PAC – Today!

Be a communicator Inform clients of what’s at stake Respond to articles in your local paper and

other media Speak out in your community Get involved in local campaigns Meet with legislators in their districts

What’s Required: Get Involved


We’ve faced challenges like this before: 1990-1993: AB 1672 1993-1994: ClintonCare 1996: Single Payor Initiative

Agents have unsurpassed grassroots strength

CAHU helps us speak with one voice

What’s Required: Perspective


If we work together …

If we stay focused …

We can make it a change for the better for our clients and our profession

A Healthy Opportunity

Alan Katz, RHUVice PresidentPublic Affairs


central california association of health underwriters may 3, 2007 alan katz, rhu vice president...

Documents

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health care system

todayhealth care reform

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key questions

core elementswhat agents

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