Guide to Health Care Reform

Insurance ReformPublicOption

By Rep. Jim Cooper, July 8, 2009

Informed, cost-consciousindividual choice

Good Medicine

Annual, menu-basedshopping

Get the same healthcare as your Congressman

Agreement on the “dog”

• Near-community rating• Guaranteed issue and renewability• Large risk pools• Modernize employer-based insurance• Shared responsibility for coverage• Everyone gets more health insurance choices• Purchase of private insurance should not be

included in federal budget

Reform is really all about coverage…

We are familiar with Individual and Group Coverage…

Self-employed Company employees

Individual coverage doesn’t work well

Small group coverage isn’t much better…

Why not offer large-group

coverage by state or region?

Everyone is invited to the party and

they wait on you, hand and foot

to serve your needs,

unlike their old attitudes.

Three figments of your imagination:

Tooth Fairy Easter Bunny Boss Claus

There is no such thing as employer-paid health insurance

Only employer-sponsored.The boss picks, but employees pay…

…by means of foregone pay raises.

The employer system was caused by a historical accident in 1942

Side-effect of WWII wage & price controls;never clearly ratified by Congress

Uncle Sam tried to keep lid on…

… but employers outbid each other to get good workers. They offered “free” health and life insurance and other benefits.

Median cash wages have flat-lined for decades

1977-2008

… Sucked up by employer-sponsored fringe benefits, mainly by health care

Lost pay raises are to health care like oxygen to a jet engine

2009 pay raise 2010 pay raise 2011 pay raise

2009 insurance 2010 insurance2011 benefits

2.32

2.46

2.64

2.8

2.97

3.15

3.35

3.55

3.76

3.98

2.33

2.5

2.7

2.89

3.09

3.3

3.54

3.79

4.04

4.32

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Year

Tri

llio

n o

f D

olla

rsWe must slow down

health care spending by at least 1%!

Lewin Group, Cost and Coverage Estimates for the “Healthy Americans Act,” Dec. 12, 2006

Trends under a reformed system

CurrentTrends

HAA creates ten-year savings = $1.48 Trillion (4.5%)

Portability: a good set of luggage

You know you can take your insurance coverage with you

Paying for reform

• Decision: New taxes or savings from system?– Wasting $700 billion annually, so don’t need taxes– New taxes would add fuel to fire

• Target: $250 billion health insurance tax break– Unlimited exclusion for employees– Benefits highest-paid workers at largest firms– By far the biggest pool of savings for reform

How to “Cap” the Tax Break

• Slow the growth of the tax break for workers– Soft cap at level above today’s health benefits

• $15,000 or 90th percentile benefits?• Grandfather union health benefits? High-cost regions?• Workers understand total cost of benefits; start to shop

– Grow cap with inflation, but not inflation plus• CPI not medical cost index• 1% reduction in growth solves 2/3 of entitlement issues

– No fixed cap or freeze; raises $410 billion over 10• No one is “cut” – ratchets down growth rates

Why not convert boss’ benefits to cash?Like Healthy Americans Act does?

Some Transition Issues

• Size of exchanges– Surely “multiple competing exchanges” is a non-starter– Micro-businesses of 2-10 employees too small

• Exchanges lack bargaining power, scale• Would help with primary care physician shortage

– Ideally firms with 1,000 or fewer employees join• Exchanges large enough, but threatens existing coverage?

– Compromise at 200?

• Expand employee choices– Most workers today get only 1 or 2 choices– Minimum 3 options?

1st Senate Bill

• Subsidizes up to 400% of poverty• Income of $88,000 for

family of four

• New disability entitlement program

• Expensive employer mandate

• HELP!

Senate Finance Proposal

• Leaves insurance agents, companies, and commissioners in place

• 7.5x premium variation allowed

• 100% federal Medicaid thru 2016 for new populations

• Eliminates wait for Medicare disability– Buy-in at 55

Omiting Medicaid reform?

• 2nd Class medical care?– Low reimbursement

– 2/3 doctors shun patients

– Wide variation between states

– Dominating most state budgets

• Long-term care, end-of life issues ignored

House Tri-Committee bill

-Partial bill – -no discussion of Pay-Fors or scoring by Congressional Budget Office

-National exchange – how to implement in different regions?

-Subsidize up to 400% FPL

-Weak on delivery system reforms

Healthy Americans Act

• Covers everyone

• Bipartisan

• No new taxes

• Scored by CBO

• Fits Obama’s 8

principles

The perfect breed?

Other bills to come…?

Obama’s Choice Matters Most

Big issue is the tail: public option

• Tail must fit dog

• Must not wag dog

Some tails look ridiculous

Who wants unfair competition?

Single-payer advocates

Schumer Option

Fair competition between dogs

Conrad’s Co-op Option

No, it’s bipartisan.The bill has 13 Senate co-sponsors:

8 Democrats and 5 Republicans.

Is the HAAradical?

No matter how great the plan, cleanup neededafterwards