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The Affordable Care Act:A Foundation for Progressive Reform

PNHP-CA Speaker TrainingMarch 2, 2013

Deborah LeVeen, PhD, Professor EmeritaSan Francisco State University

dleveen@earthlink.net

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INTRODUCTION

• No CA single payer bill, first time in 8 years• But not no gains:

ACA, despite compromises, brings real gains for real people,brings us closer to progressive goals,offers foundation for further progress

• Key needs now: – Make ACA work as well as possible:

Protect gains which are essential to further progress.– Find ways to build on ACA toward stronger reform.

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OVERVIEW

I. The battle for reform.II. The ACA: What have we won?III. Changing the dynamics of the system.IV. Implementation:

California in the forefront;Vermont moving toward single payer.

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I. THE BATTLE FOR REFORM: Barely won

• Unprecedented struggle: Presidential leadership, Congressional effort,public mobilization, opposition violence.

• Painful compromises: Reproductive rights, unauthorized residents,the public option, a national exchange, Rx

costs

• Final passage: 219-212, 56-43. March 2010, PPACA and Reconciliation Act.

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I. THE BATTLE FOR REFORM:Surviving the Ongoing attacks

• Constitutional challenge filed March 23, 2010.26 states, Chamber of Commerce, NFIB

• 2010 elections: Republican victory, pledge to repeal• 2011-12 Republican House of Representatives:

Myriad votes to repeal/weaken ACA, + Medicare

• 2012 SCOTUS decision: ACA upheldMedicaid expansion rendered voluntary

• 2012 elections: Republican pledge to repeal.• Obama re-elected: ACA finally “the law of the land”

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I. THE BATTLE FOR REFORM: What if we lose?

WITHOUT REFORM:• ACCESS: uncontrolled increase in uninsured;

Devastating consequences: suffering, even death

• COSTS: uncontrolled increase in costs,Far outpacing wage increases, economic growth

• PERFORMANCE: far inferior to other countries:We spend more: 2X per capita. % GDP: 18% vs 10%

We get less: less utilization (drs, hospitals, etc)worse outcomes (infant mortality, life expectancy,

preventable deaths)

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I. THE BATTLE FOR REFORM:What if we lose?

THE REPUBLICAN VISION• Free the health care market:

Deregulate insurance“Empower” the consumer:

Vouchers (e.g. $2500/indiv) vs coverage• Privatize Medicare:

Vouchers for private insurance,And “traditional Medicare.”

Passed by House, 2011, 2012• Shrink government, roll back the New Deal

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I. THE BATTLE FOR REFORM: What are our goals?

• ACCESS: universal, comprehensive, affordable• QUALITY: high quality, cost-effective• FINANCING: fairly shared, sustainable• EFFICIENT EQUITABLE SPENDING:

costs controlled, profits limited• STRONGER GOVERNMENT ROLE

ESSENTIAL TO ALL OF THESE GOALS

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II. THE ACA: WHAT HAVE WE WON? Progressive Principles Now in Law

Despite painful compromises, a victory for progressive principles:– Society must ensure access to health care for everyone.– Share of income for health must be limited.– Insurance must cover sick people,

not discriminate against them.– Everyone must be in, everyone must contribute.

Most important: ensuring these principles requires a strong government role.

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II. ACA: ACCESS:More comprehensive, affordable, for almost all

1. Everyone* has access to one of three sources:Employer, Medicaid,** Insurance Exchange. *except undocumented residents.**except residents in states refusing Medicaid

expansion.2. Comprehensive: new essential benefits standard;

comprehensive benefits, limits on cost-sharing.3. Affordable: Subsidies for coverage through Exchange,

To limit % income for premiums and out-of-pocket costs:Max 9.5% income up to 4X FPL ($91,000).Reduced cost-sharing up to 250% FPL.

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II. ACA: ACCESSState Health Insurance Exchanges

• Certify and offer “Qualified Health Plans” to:– All individuals without alternative coverage;– Small businesses; larger (> 100) in 2017

• May be used to drive broader changes in system:– States must review premium increases, may exclude high-increase plans– State may choose “active purchaser” model, limit selection of QHPs based on other standards such ascost, quality, participation in payment and delivery reforms.

State Innovation Waiver:

Allows states to use federal Exchange funds to support alternative state programs if they provide coverage as good and as affordable coverageto as many people.

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II. ACA: ACCESS:Insurance reforms to protect consumers

• No denials: guaranteed issue, renewal• No exclusions of pre-existing conditions• No rescissions• No discrimination in premiums based on

health, gender; age rating limited.• Unprecedented transparency and

standardization in coverage,EHBs, “metal tiers,” cost-sharing

allowing comparisons on price, quality.

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II. ACA: ACCESS:Fair Financing

• Everyone in, everyone contributes– Employers: contribute if employees qualify

for subsidies in Exchange. Small businesses: exemption (<50), tax credits (<25)

– Individuals: must have coverage unless cost exceeds 8% income

• New taxes:– For Medicare: for high-income earners ($200,000/250,000)

increased payroll tax; tax on unearned income– On insurers, Rx & device manufacturers, high cost plans.

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II. ACA: Cost Containment:Limiting prices

• In Medicare: – Reduced rate of increase in payment rates;– Reduced subsidies to Medicare Advantage plans.

• Independent Payment Advisory Board: a global budget.Must propose ways to cap Medicare spending increase

without limiting benefits or increasing fees;Congressional approval, or equivalent savings, required.

• In private insurance:– Minimum MLR: % premiums on care;– Review of “unreasonable” rate increases (> 10%) Possible

exclusion from Exchange.

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II. ACA Cost Containment:Payment and delivery reforms

• Increased research (CER) and innovation.• Payment incentives for cost-effectiveness:

Alternatives to FFS, value-based payment, shared savings, revised Medicare codes.

• Improved delivery: increased coordination, “medical homes,”

• Improved quality: reducing excess treatment,value-based payment.

• For private insurance: must report on efforts to encourage higher quality & efficiency.

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II. ACA: Major Gains

• Increased coverage: 30m by 2022Reduction in uninsured: 30m vs 60m;Remaining uninsured: Ineligible due to immigration status (about 1/3)or state rejection of Medicaid expansion (about 6m) Eligible but uninsured: as high as half the uninsured

• Reduced costs– Deficit reduction:

$109B, 2013-2022; about $1.2Tr, 2021-2031.– Reduced rate of increase in health spending

by ½ to 1 percentage point per year.

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III. ACA: Changing the dynamicsof the health care system

Current dynamics: simplified…

Providers: Determine treatment, use of technology.Increasing role as owners/investors. Evidence of over-treatment.Increasing consolidation, market dominance.

Insurers: Intrusive, abusive, but fail to restrain costs. Limit risk instead.Concentration of insurance market allows raising premiums.

Purchasers—Employers: weakest player. Self-insure, shift costs to workers

Purchasers--Medicare: Effective price controlsConstrained/threatened by power of private system.

Individuals: consumers/taxpayers/employees/patients bear the ultimate cost.

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III. ACA: Changing the dynamicsof the health care system

Potential impacts of ACA • Providers: Medicare payment/delivery reforms. Global budget.

Medicare policy shapes private system.MDs “Choosing wisely:” initiative to reduce overtreatment.

• Insurers: worst abuses prohibited. “Traditional business model untenable.” Aetna executive.Must manage vs exclude risk.

• Purchasers: growing cost burden should increase political pressure for greater cost-effectiveness.

• Key needs:– Stronger public authority (single payer best)– “Alignment” of public and private sector efforts:

• E.g. all-payer reimbursement systems.

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IV. ACA IMPLEMENTATION:An ongoing struggle

• Inherent complexity of necessary tasks: e.g.Enrolling people in new coverage, certifying/overseeing plans;Measuring quality, identifying overtreatment;Developing effective reimbursement mechanisms.

• Powerful resistance: e.g. Republican states and politicians, stakeholder interests. Continuing effort to weaken implementation: Rejecting Medicaid (16, 8 maybe) & state-run Exchanges (26)

• Unexpected demands on federal government, e.g.:Establishing exchanges in non-participating states.

• Political obstacles to needed improvementse.g. Republican-dominated Congress.

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IV. ACA IMPLEMENTATION: California in the forefront

California Health Benefits Exchange: “Covered California”• The first state exchange, 2010 • “Active purchaser” vs “open marketplace” model:

Mandated to bargain for best cost, quality, service. • Sole source of catastrophic plans for young people • Needs maximum participation: critical to increased coverage + leverage

Thus “robust” outreach and retention; “seamless” enrollment. • Seeking maximum affordability & continuity of coverage:

Medicaid Expansion: approved.Additional legislation already passed

to authorize provisions of ACA,e.g. review of MLRs, consumer protections, benefit expansions.

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IV. ACA IMPLEMENTATION: California in the forefront

Ongoing tasks• Additional legislation to implement ACA;

Special legislative session called for:1) Insurance reforms: guaranteed issue, rating restrictions, etc2) Medi-Cal changes: e.g. streamlining; eliminating “asset test.”3) Establishment of a “bridge plan”

to provide affordability and continuityto people transitioning from MediCal to Covered California.

• Measures to strengthen the ACA, e.g.Authority to reject excessive premium increases:

The Insurance Rate Accountability Initiative on 2014 ballot,• Support and advocacy for maximum effectiveness of Covered California:

Maximum enrollment, rigorous conditions for plan participation, opportunities for local public options.

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IV. ACA Implementation: Foundation for Single Payer: Vermont

Green Mountain Care

Act 48: Act Relating to a Universal and Unified System. May 2011 Intent: “…to contain costs and provide, as a public good, publicly financed health care

coverage for all Vermont residents regardless of income, assets, health status, or availability of other health coverage.”

Policy governance: Green Mountain Care Board (GMCB)Major components:

Global budget: cap on total state spendingPayment and delivery reforms , moving away from FFS, to transform provider

incentives and drive fundamental changes in delivery. All-payer system of reimbursement and ratesBenefit design to increase consumer incentives for health managementInsurance rate increases limited through requirement for approvalCapacity increases limited through requirement for CONs

Financing: plan just released, January 2013

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IV. ACA Implementation: Foundation for Single Payer: Vermont

• Using the Exchange as “a platform” for single payerIncluding implementation of administrative, delivery and payment reforms

• Using ACA funding to support immediate expansion of coverage• Using the ACA waiver

Key Elements in success?– William Hsaio, single payer designer: Move incrementally toward single payer while

working to develop the political support needed to adopt the system as a whole.– Leadership role of single payer advocates

• Dr Deb Richter, PNHP leader. “…we want to strengthen the exchange so that as many people can get broad coverage that’s affordable in the meantime.”

• Anya Rader Wallack, chair of GMCB: “…Vermont’s most meaningful work … will be aimed at changing our health care payment and delivery systems. I am convinced that that’s where the real savings, and the sustainability, lie.”

• Representative Chris Pearson: “…begins the cultural shift necessary to make a truly universal system possible…”