HEALTHCARE REFORM – A LOOK INTO THE CRYSTAL BALL Steve Markesich, CPAM Yale-New Haven Health...

HEALTHCARE REFORM A LOOK INTO THE CRYSTAL BALL Steve Markesich, CPAM Yale-New Haven Health System Philadelphia/Keystone Chapters September 21, 2010

The Evolution of PPACA The uninsured and under insured Richard Scruggs State battlegrounds Provena Healthcare 2008 The bruising 2009 legislative process Victory?

TODAYS OUTLINE The law itself and implementation schedule Impact on individuals, employers, providers and states Reaction from the states The looming constitutionality question 2010 elections Some anecdotal fun Informational Resources

Anecdote # 1: TRUE OR FALSE: Legislation can become law without a vote being taken?

ANSWER: TRUE

The Deem Team Self-executing rules exist in Congress under which something can be deemed into law. Speaker Pelosi indicated last winter that she actually favored a deem and pass legislative maneuver which would allow the House to pass the Senates bill without actually having to vote on it.

Reform Implementation Schedule Insurance

2010 Establish temporary high risk pool to provide health coverage to individuals with pre-existing conditions (effective 90 days following enactment until 1/1/2014. Provide dependant coverage for adult children up to age 26 for all individual and EGHPs (9/23). Prohibit plans from placing lifetime limits on dollar value of coverage prior to 2014. Plans may only impose limits on coverage as determined by the HHS Secretary. Prohibits insurers from rescinding coverage except in cases of fraud. Prohibits pre- existing exclusions for children.

2010 ins. reforms (cont) Requires qualified health plans to provide minimum coverage without cost sharing for preventive services rated A or B by the U.S Preventive Services Task Force (essential outpatient, inpatient, emergency, maternity, neonatal, mental health, lab), recommended immunizations, preventive care for infants, children and adolescents, additional preventive care and screenings for women, and some prescription drugs. Provide tax credits to small employers (no more than 25 employees with average annual wages of less than $50K) that provide EGHPs.

2010 ins. reforms (cont.) Create a temporary reinsurance program for employers providing EGHPs to retirees over age 55 who are not eligible for Medicare (effective 90 days following enactment until 1/1/2014) more on this later Require health plans to report the proportion of premium dollars on clinical services, quality and other costs. Provide rebates to consumers for the amount spent that is less than 85% for plans in large group market and 80% for individual and small group market.

2010 ins. reforms (cont) Establish a process for reviewing increases in health plan premiums - Require plans to justify increases. Require states to report on trends in premium increases and recommend whether certain plans should be excluded from the Exchange based on unjustified premium increases.

2013 Create a CO-OP program to foster the creation of non-profit, member-run health insurance companies in all 50 states and DC to offer qualified health plans. Appropriate $6B to finance the program and award loans and grants to establish Co-Ops by 7/1/13

2013 Ins. Reforms, (cont.) Simplify health insurance administration by adopting a single set of operating rules for eligibility verification and claim status (rules adopted 7/1/11; effective 7/1/13), electronic funds transfers and health care payment and remittance (rules adopted 7/1/12 effective 7/1/14), and health care or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, and referral certification and authorization (rules adopted 7/1/14 effective 7/1/16) Health plans must document compliance with these standards or face penalties of no more than $1 per covered life (effective 1/1/14)

2014 Create state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, through which individuals and small businesses with up to 100 employees can purchased qualified coverage. Reduce out-of-pocket limits to those with incomes up to 400% FPL to the following limits

2014 Ins. Reforms, (cont.) Limit deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits. Limit any waiting period for coverage to 90 days. Create an essential health benefits package that provides a comprehensive set of services, covers at least 60% of the covered benefit, limits annual cost-sharing to the current law HSA limits ($5,950 per ind./$11,900 per family in 2010) and is not more extensive than the typical employer plan.

2014 Ins. Reforms (cont.) Require the Office of Personnel Management to contract with insurers to offer at least 2 multi-state plans in each Exchange. At least 1 plan must be offered by a non-profit entity and at least 1 plan must not provide coverage for abortions beyond those permitted by federal law. Permit states the option to create a Basic Health Plan for uninsured individuals with incomes between 133-200% FPL who would otherwise be eligible to receive premium subsidies in the Exchange.

2014 Ins. Reforms, (cont.) Allow states the option of merging individual and small group markets. Create a temporary reinsurance program to collect payments from health insurers in the individual and group markets to provide payments to plans in the individual market that cover high-risk individuals. Require qualified health plans to meet new operating standards and reporting requirements.

2015 and beyond Permit states to form health care choice compacts and allow insurers to sell policies in any state participating in the compact. Compacts may not take effect before 1/1/16.

Reform Implementation Schedule Medicare

2010 Provide a $250 rebate to beneficiaries who reach Part D gap (doughnut hole) and gradually eliminate the Part D coverage gap by 2020. Expand coverage to individuals who have been exposed to environmental health hazards from living in an area subject to an emergency declaration as of 6/17/09 and have developed certain health conditions as a result. Improve care coordination for dual eligibles by creating a new office within CMS the Federal Coordinated Health Care Office

2010 M/C reforms (cont.) Reduce annual market basket updates for inpatient hospital, home health, SNF, hospice and other Medicare providers, and adjust for productivity. Ban new physician-owned hospitals, requiring hospitals to have a provider agreement in effect by December 31. Limit the growth of certain grandfathered physician-owned hospitals

2011 Reforms - Medicare Require drug manufacturers to provide a 50% discount on brand-name prescriptions and begin phasing in federal subsidies for generic prescriptions filled in the MCR Part D coverage gap. Provide a 10% bonus payment to PCPs and to general surgeons practicing in health professional shortage areas (effective 2011-2015). Restructure payments to Medicare Advantage plans by settling payments to different percentages of MCR fee-for-service rates. Reduce annual market basket updates for Medicare providers

2011 Medicare Reforms, (cont.) Provide Medicare payments to qualifying hospitals in counties with the lowest quartile Medicare spending for 2011 and 2012. Freeze income thresholds for income-related MCR Pt B premiums for 2011 through 2019 at 2010 levels and reduce the Part D premium subsidy for those with incomes above $85K/individual and $170K/couple. Create an Innovation Center within CMS

2012 Reduce Medicare payments that would otherwise be made to hospitals by specified percentages to account for excess (preventable) hospital readmissions Create a Medicare Independence at Home demonstration program Establish a hospital value-based purchasing program in Medicare and develop plans to implement value- based purchasing programs for SNFs, HHAs and ambulatory surgical centers. Provide bonus payments to high-quality Medicare Advantage plans Reduce rebates for Medicare Advantage Plans

2013 Establishes a national pilot program in which doctors, hospitals and other providers are paid a flat rate by Medicare for each patient episode of care

2014 Reduce out of pocket amount that qualifies an enrollee for catastrophic coverage in Medicare Pt D (thru 2019). Establish an Independent Payment Advisory Board (IPAB) comprised of 15 members to submit legislative proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds a target growth rate. Reduce DSH payments initially by 75% and increase payments based on the % of the population uninsured and the amount of uncompensated care provided. Require Advantage plans to have medical loss ratios no lower than 85%.

More on the IPAB This is a somewhat radical idea. Over the past decades, Congress has been gutless when it comes to reforming Medicare. Even though the program might be bankrupting the country, elected officials face re-election so theyve punted on the issue. The hope is that the IPAB frees Congress to permit cuts by making it easier for them to dodge the blame. It puts the knife in someone elses hands.

IPAP Will consist of 15 presidential appointees from the health care industry, academia, think-tanks and consumer groups each confirmed by the Senate, who will serve staggered six-year terms. Their reform proposals will have to pass through Congress, and if Congress does not act the recommendations go into effect. If Congress wants to change their recommendations it requires 3/5 majority, and no filibusters are allowed. If Congress wants to change the IPABs recommendations then they must come up with alternatives that would save a similar amount.

IPAB The boards first recommendations will be for 2015. If Medicare spending exceeds targets set in the law they will recommend changes in the way Medicare pays for services in order to reduce spending. Its purview over hospitals doesnt occur until 2018. The IPAB can not change eligibility rules, or modify benefits This is THE linchpin to assure cost controls because PPACAs savings as deemed by the CBO arrive only the policies behind the savings do their jobs. If the IPAP is stripped then the status quo on Medicare is maintained. Republicans are taking aim at the IPAP, looking to abolish it before it gets started.

2015 and after Reduce Medicare payments to certain hospitals for hospital acquired conditions by 1%

Reform Implementation Schedule Medicaid

2010 Creates a state option to cover childless adults through a Medicaid State Plan Amendment. Creates a state option to provide Medicaid coverage for family planning services to certain low-income individuals through a Medicaid State Plan Amendment up to the highest level of eligibility for pregnant women, Creates a new option for states to pick up CHIP coverage to children of state employees eligible for health benefits if certain conditions are met.

2011 Prohibit federal payments to states for Medicaid services related to health care acquired conditions. Create a new state plan option to permit MCD enrollees with at least two chronic conditions, one condition and the risk of developing another, or at least one serious and persistent mental health condition to designate a provider as a health home. Provide states taking up this option with 90% FMAP for 2 years for health home related services including care management, care coordination and health promotion.

2011 MDC reforms, (cont.) Create a State Balancing Incentive Program in MCD to provide enhanced federal matching payments to increase non-institutionally based long term care service. Establish the Community First Choice Option in MCD to provide community-based attendant support services to certain people with disabilities.

2012 Create new demonstration projects to pay bundled payments for episodes of care that include hospitalizations (effective 1/1/12 through 12/31/16) Provide MCD payments to institutions of mental disease for adult enrollees who require stabilization of an emergency condition (effective 10/1/11 12/31/15).

2013 Increase Medicaid payments provided by PCPs for 2013 and 2014 with 100% federal funding.

2014 Reforms - Medicaid Expand Medicaid to all non-Medicare eligible individuals under age 65 with incomes up to 133% FPL based on modified adjusted gross income and provides enhanced federal matching for new eligibles. Reduce states Medicaid DSH allotments.

Reform Implementation Schedule Quality Improvement

2010 Support comparative effectiveness research by establishing a non-profit Patient-Centered Outcomes Research Institute.

2011 Develop a national quality improvement strategy that includes priorities to improve the delivery of health care services, patient health outcomes and population health. Establish the Community-based-Collaborative Care Network Program to support consortiums of health care providers to coordinate and integrate health care services for low-income and underinsured populations. Establish a new trauma center program to strengthen emergency department and trauma center capacity.

2011 Q/I reforms, (cont.) Improve access to care by increasing funding by $11B for community health centers and the National Health Services Corps over five years. Establish new programs to support school-based health centers and nurse-managed health clinics

2012 Require enhanced collection and reporting of data on race, ethnicity, sex, primary language, disability status, and for underserved rural and frontier populations.

2013 Require disclosure of financial relationships between health entities, including physicians, hospitals, pharmacists, other providers, and manufacturers and distributors of covered drugs, devices, biologicals, and medical supplies.

Reform Implementation Schedule Prevention and Wellness

2011 Cover only proven preventive services and eliminate cost sharing for preventative services in Medicare; Increase Medicare payments for certain preventative services by 100% of actual charges or fee schedule rates. For states that provide Medicaid coverage for and remove cost-sharing for preventive services recommended by the US Preventive Services Task Force, and recommended immunizations, provide a 1% point increase in the FMAP (federal matching funds) for these services

2011 Prevention/wellness (cont.) Provide M/C beneficiaries access to a comprehensive risk assessment and creation of a personalized prevention plan and provide incentives to MCR/MCD beneficiaries to complete behavior modification programs. Provides grants for up to five years to small employers that establish wellness programs. Establish the National Prevention, Health Promotion and Public Health Council to develop a national strategy to improve the nations health. Require chain restaurants and food sold from vending machines to disclose nutritional content on each item.

Reform Implementation Schedule Taxes

2010 Impose additional requirements on non- profit hospitals. Impose a tax of $50K for failure to meet these requirements. Limit the deductibility of executive and employee compensation for health insurance providers to $500K per applicable individual. Impose a tax of 10% on the amount paid for indoor tanning services.

2010 Tax reforms, cont. Tax credits available for small businesses (through 2013). Must have fewer than 25 employees with average annual wages

2014 Require U.S Citizens and legal residents to have qualifying health coverage (phase-in tax penalty for those without coverage). Assess employers with > 50 employees that do not offer coverage and have at least one FTE who receives a premium tax credit, a fee of $2K per FTE, excluding the first 30 employees from the assessment. Employers with > 50 employees that offer coverage but have at least 1 FTE receiving a premium tax credit will pay the lesser of $3K for each employee receiving the credit or $2K for each FTE.

2014 Tax reform, cont. The tax credit established in 2010 increases to 50% of the employers contribution for for-profit employers and 35% of the contribution for non- profit organizations. This small business tax credit is only available for two consecutive tax years. Lawmakers concluded that other cost-containment provisions in the law would be in full force by 2016, and small businesses would no longer need this help. The small business tax credit is therefore potentially available for a total of six years.

2014 Tax Reforms, cont. Provide refundable and advanceable premium credits and cost sharing subsidies to eligible individuals and families with incomes between 133- 400% FPL to purchase insurance through the Exchanges.

2014 Tax Reforms, (cont.) Require employers with more than 200 employees to automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of coverage.

2015 and beyond Impose an excise tax on insurers of employer-sponsored health plans with an aggregate value that exceed $10,200 for individual coverage and $27,500 for family coverage. Effective 1/1/18.

Reform Implementation Schedule Other 2010

Workforce Establish Teaching Health Centers to provide Medicare payments for primary care residency programs in federally qualified health centers.

Prescription Drug Reforms Authorize the FDA to approve generic versions of biological drugs and grant biologics manufacturers 12 years of exclusive use before generics can be developed (currently 20 years).

Long Term Care Establish a national, voluntary insurance program for purchasing community living assistance services and supports (CLASS program).

Malpractice Award five year demonstration grants to states to develop, implement and evaluate alternative to current tort litigations.

Accountable Care Organizations Provides incentives for doctors to join together in Accountable Care Organizations that can coordinate care, which ideally will prevent unnecessary hospitalizations and treat patients more cost-effectively. These groups will be allowed to keep part of the savings if they are successful.

Prevention and Wellness Permit employers to offer employees rewards of up to 30%, increasing to 50% of the cost of coverage for participating in a wellness program and meeting certain health-related standards.

Mandatory Coverage 2014 is the year when everyone is required to have health insurance, either on their own or through their employer

Anecdote #2: TRUE OR FALSE: Politicians are not above publically wishing ill will on their colleagues if it furthers their or their partys agenda.

ANSWER TRUE

December 21, 2009 After trekking through a snowstorm and 12 hours of acrimonious debate, Senate Democrats win a milestone victory approving a procedural motion to move reform legislation to final passage later in the week by a 60-40 vote. Not a single Republican voted to advance the measure.

How acrimonious was it? Sen. Tom Colburn (R-OK) said on the Senate floor: What the American people ought to pray for is that somebody cant make the vote tonight. It was difficult the escape the conclusion that he was referring to 92 year old, wheelchair-bound Sen. Robert Byrd (D-WV) who had been in and out of hospitals and lay at home ailing. It would not be easy for him to get out of bed in the wee hours with deep snow on the ground and ice on the roads.

IMPACT ON INDIVIDUALS The Good No pre-existing condition exclusions for Children under 19. No unjustified rescissions of coverage. No lifetime limits on coverage. Restricting annual limits on coverage. Remove insurance-company barriers to ED services. Relief for the Part D doughnut hole. Free preventive care under Medicare and new plans. Help for early retirees.

Individuals, cont. Extend coverage for young people up to 26 th birthday though patents insurance. Immediate help for the uninsured with pre-existing conditions (interim high-risk pool). Prohibition of pre-existing clause Ban on higher premiums for women Cap on out of pocket expenses for private health plans. New long-term care insurance program (CLASS) Greater access to insurance.

IMPACT ON INDIVIDUALS The Bad Tax on indoor tanning services. Higher taxes on wealthiest Americans. Higher deduction limit for unreimbursed medical expenses. PCP shortage? Reduces HSA exemptions potentially eliminates FSAs and HSAs? Shift from EGHPs to State Exchange plans? Unfunded mandates? Healthy Americans who dont use services or buy insurance now required to. More IRS Agents

Individuals, cont. Does access to care ultimately get rationed? Does employer mandate lead to job cuts? More government involvement in Health Care? Short-term increases for EGHP cost share? Expansion of MCR/MCD = more cost shifting? Rebirth of HMOs Death of Medicare Advantage? Does this ultimately lead to higher costs for individual who engage in high-risk lifestyles? Smokers Diabetics Overweight/obese

Sidebar on Care Rationing Dr. Donald Berwick was appointed to be the administrator for CMS. As president of the Institute for Health Care Improvement, he is renowned for his experience in changing health care practices for the better, and is a champion of health care improvement based on changes who have knowledge to make it happen. He explained in an interview last year that the British National Health Services has developed very good and very disciplined, scientifically grounded, policy- connected models for the evaluation of medical treatments from which we ought to learn.

More on Berwick He added that The decision is not whether or not we will ration care the decision is whether we will ration with our eyes open. And right now, we are doing it blindly. Dr. Berwicks job as the chief purchaser of healthcare appears to be to find ways to offset higher insurance and medical costs that the legislations subsidies and mandates will cause, which could inevitably mean the political rationing of care.

Impact on employers - The Good Help covering cost for their retirees Tax credits for small business Companies with < 100 employees can purchase insurance from Small Business Options Program Exchange Subsidies for self-employed Small businesses no longer at a competitive disadvantage Save money by paying the fine for not offering EHPGs to employees? Wellness program incentives

Impact on Employers The Bad Not providing coverage no longer an option without financial penalties. Short term uncertainty in the insurance market leads to significant short term premium increases. Uncertainty about what this ultimately will do to the bottom line. Nothing in legislation to promote HSAs. Penalties for larger businesses Need to report HC benefits on W-2s in 2011 Significantly more paperwork/bureaucracy Need to send 1099s to every independent contractor/self employed individuals paid over $600

More specifics on taxes Individuals who do not obtain insurance or a hardship waiver would be penalized. The penalty is based on a complicated formula based on the greater of a flat $ amount or % of household income per family members not covered. Individuals eligible for but not enrolled on EGHPs may still be eligible for credits if the employees contribution would have exceeded 9.5% or if the plan covers 60% of allowed costs. Out of pocket premium credits for individual plans purchased through an Exchange: 100-150% of FPL: 2 to 4.7% of monthly income 150-200% of FPL: 4.7 to 6.5% of monthly income 200-250% of FPL: 6.5 to 8.4% of monthly income 250-400% of FPL: 8.4 to 9.5% of monthly income

Impact on Providers Less uninsured and more insured patients but also more Medicaid higher co-pays and deductibles? ED overcrowding becomes worse with PCP shortage? Significant reductions in DSH/ changes in cost reporting? Bundled payments across providers? Uniform transaction sets to become a reality? Electronic medical records regional/national data warehouses ($19B in budget) Rebirth of HMOs Death of Medicare Managed Care? More integrated health systems? The bottom line is that a large part of the cost of this program will come from hospitals getting paid less.

Impact on Providers - Medicare Medicare cuts are going to be a reality. The Independent Payment Advisory Board will charged with monitoring the outcome of the Medicare changes in this legislation and will fast-track recommendations to reduce Medicare spending if spending exceeds targets.

Provider impact preventable readmissions Beginning in 2012, HHS will publish each hospitals readmission track record. In 2012, MCR will stop paying hospitals for preventable readmissions tied to health conditions such as heart failure or pneumonia. Will expand in 2014 to cover four additional health conditions.

EHR Incentive payments Topic is so voluminous it could be a presentation of its own. The American Recovery and Reinvestment Act (part of the 2009 stimulus package) includes a series of incentives for providers to switch to electronic health records. In the first few years they can get bonuses for doing so. But in 2014, the government will slash reimbursement for those without sophisticated systems. $2M base + per discharge amount (based on MCR/MCD share) No maximum incentive amount.

More on Electronic Health Records (EHRs) Need to know meaningful use, clinical quality measures. The theory: Data capture and sharing lead to advanced clinical processes with leads to improved and more cost-effective outcomes. RECOMMENDATION: Get wired and plug in!

Provider impact Medical Harm Tied to HACs stemming from medical errors or infections. In 2012 hospitals will no longer be paid for just reporting their performance, but will be paid commensurate to their scores. Higher scoring hospitals will be paid more. In 2015, HHS will start reporting each hospitals record for medical errors and infections pertaining to M/C pts. In 2015, MCR will reduce its payments by 1% to hospitals with the highest rate of medical errors and infections, and MCD will no longer pay for treatment when a patient is harmed during a hospital stay.

Provider impact - penalties Not only will hospitals potentially lose real $$$ at a time when they are struggling to keep up with escalating costs, but be vulnerable to an even bigger risk a tainted reputation. Will private insurers follow Medicares lead?

Provider impact - physicians Current legislation reduces physician rates an additional 21%. The house approved a 19 month fix, raising rates paid to physicians by $1B over current rates and $23B over the rates that would be imposed on the cuts went through. Sets target levels for per Capita Medicare spending in 2015 these targets may be hard to reach. PCP care emphasized. Legislation doomed if more drs. opt out of program? More hospital owned practices or physician partnerships? (discussions of partnerships have dramatically escalated since Obama signed the bill)

More on Physicians The Medicaid program will raise reimbursement for PCPs and largely leave specialists rates unchanged.

Summary on provider impact A large portion of the cost this program will come from hospitals getting paid less. The legislation hopes to reduce wasteful spending eventually hospitals and doctors will be paid based on quality and value. Privately owned physician practices will become like dinosaurs. In order to thrive in this environment physicians will have to merge into larger groups to make it easier to adopt management practices to evaluate their care, and conduct internal quality reviews. Either that or simply become hospital employees. The law includes incentives for hospitals to shift business away from traditional acute care inpa tient facilities into more cost-effective settings.

Summary, cont. Hospitals are often the largest employer in suburban and rural communities. That may change. There are going to be major changes, but nobody is exactly sure what these are going to look like. This kind of uncertainty is much harder for smaller organizations to face than a large organization.

Impact on States Are central to the implementation of reform legislation. States will oversee the expansion of Medicaid, enforce new insurance reforms and run the new insurance Exchanges. Must decide by 2013 if they want to run the exchanges or let the federal government do it instead. Concern that funding received from Feds is not enough and creates a bigger problem for those states already struggling with budget deficits.

States (cont.) Some states will experience a financial windfall. These are the States that are already paying for something that the new legislation will mandate. The feds will pick up much of the burden they are now bearing.

The battle shifts to the courts While the ink is still drying on the bill that President Obama signed on March 23 rd, AGs from 14 states filed lawsuits against the Departments of HHS, Treasury and Labor immediately after the ceremony. AGs from Florida, South Carolina, Nebraska, Texas, Michigan, Utah, Pennsylvania, Alabama, South Dakota, Louisiana, Idaho, Washington, and Colorado all signed on to one complaint. The Virginia AG filed a separate complaint.

Since then Arizona, Indiana, Mississippi, Nevada and North Dakota have joined the Florida suit. Association of American Physicians and Surgeons filed a separate lawsuit. So did the U.S Medical Society. So did a host of other groups too numerous too mention.

The states rebel 70% of Missouri voters passed Proposition C, which declares that the government cannot tell Missourians they must have health insurance. Virginia, Idaho, Arizona, Louisiana have passed legislation similar to Proposition C. So did Oklahoma and Florida, but these were vetoed by their governors. Colorado is placing a similar initiative on this years ballot. Constitutional law professions doubt these can withstand a Supreme Court Challenge.

States Pushing Back Why? Even states with Democratic governors have expressed pessimism about complying with the law. Reason #1 is the legislation will leave public and private payers with huge new costs at a time when most are struggling to recover from the recession. Reason #2 is that the law will dramatically curtail individual freedom and force people to comply with Washingtons dictates on what constitutes acceptable health insurance.

More on states The bulk of the costs are hidden, which is what most are worrying about. Insurers administrative costs will increase as they rewrite policies in accordance with the law. State officials will have to spend local tax dollars to set up new institutions such as appeals tribunals for reviewing insurance rates. Employers will force employees to pony up more cash for their health insurance premiums in response to the higher premiums they are receiving from their carriers, who are responding to the uncertainty of the market and the presumed increase in their administrative costs. States are responding to the feedback from their constituents.

Its all about ME Even though Missouri overwhelmingly passed Proposition C, the state will change its tune in a heartbeat if the feds are willing to underwrite healthcare benefits for retirees. In September, the feds released a list of 2,000 corporations, unions and government entities that have asked to participate in the $5B reinsurance program created under the law. Missouri was among those bellying up to the bar. Arizona, Idaho, Indiana, Louisiana, Michigan, Nebraska, and Nevada have also applied.

The conspiracy of the hypocrites? The states of lined up for one simple reason: This program could protect the health care benefits for thousands of people who retired too young to qualify for Medicare. Under the program, the feds will pick up 80% of the costs for retirees with medical claims between $15K - $90K Not many people run up bills that high, but only a few claims like these drive premiums through the roof for companies and governments that provide healthcare benefits for retired workers. So the real lesson behind Proposition C and other states who have squawked is that we dont want the federal health reform only the parts that benefit us. When you look at the details its pretty much all of the law.

The Legal Challenges The Individual Mandate: The Constitution allows Congress to regulate commerce. Historically, insurance contracts were not considered commerce, but the Supreme Court has long allowed Congress to regulate and prohibit all sorts of economic activity that are not, strictly speaking, commerce. Opponents argue the individual mandate extends the commerce clauses power beyond economic activity to economic inactivity, which is unprecedented. They view the mandate as similar requiring everyone to buy American cars to help the car industry

Legal Challenges, Cont. Others argue that Congress does have the power to regulate activities that have a cumulative effect on the economy. The Constitution allows for Congress to tax and spend for the common defense and general welfare of the United States.

Potential Legal Challenges, cont. Constitutional Amendments: The Constitution gives states legislative powers to require Congress to convene a convention to propose an amendment to the Constitution. If two-thirds of state legislatures demand an amendment barring the federal regulation of health insurance or an individual mandate, Congress would be Constitutionally-bound to hold a convention. The very threat of an amendment convention would probably induce Congress to repeal the bill. However it would take 34 states to accomplish this.

More on lawsuits Not surprising, many of the officials behind the suits are running for re-election or higher office. A recent Supreme Court decision involving Sarbanes-Oxley (SO) supposedly dealt a blow to reform opponents. The court ruled that although a part of SO was unconstitutional, and therefore should be struck down, the rest was OK and should remain in place. Why is this a big deal?

Sarbanes-Oxley Decision Opponents of reform are hoping that if just one part of PPACA, namely the individual mandate, was struck down by the court, then the court would have to decide that the entire act was unconstitutional. Why? Because PPACA does not have a severability clause a sentence declaring that if one part of the law is found invalid, the rest of the law could still be enforced. S.O. doesnt have a severability clause either, but the court let the rest of the act stand. Not the end of legal challenges, but could close out one path for appeal.

Anecdote #3: TRUE OR FALSE: Once fully implemented the uninsured will disappear?

ANSWER FALSE It is believed this legislation will cover around 30-35M of the 54M that are currently uninsured.

The 2010 Elections As soon as Congress passed the legislation, money started pouring into political advertising. Pro-reformers put out ads thanking Democrats who voted for the bill despite facing tough re-election campaigns. Meanwhile the RNC produced ads characterizing the legislation as a cost-raising, tax increasing bill, and urged voters to stop the madness. These ads will most likely keep appearing from now until November, given how divided Americans are over healthcare reform.

Elections, cont. Roughly equal numbers of Americans say passing the bills was a good thing or a bad thing. A larger majority said they were still confused about the new law and how it would affect them and their families. The impact on the November elections will depend in large part on how effectively the administration and Democratic leaders explain and sell the bill, and how effectively critics label it a boondoggle. Republicans are more enthusiastic about voting this fall. Negativity sells and obstructionism helps Republicans in this regard. The democrats are VERY worried.

If Republicans take control of one or both houses of Congress? DEFUND IT: They have vowed to choke off funding for implementation of the legislation? DISMANTLE IT: They will look for provisions that Democrats are on record as opposing and try to prevent them from occurring. DELAY IT: Can vote to postpone cuts to popular Medicare Advantage programs. DISAPPROVE REGULATIONS: The Congressional Review Act of 1996 (CRA) gives Congress the authority to overturn regulations issued by federal agencies if both houses approve, with 2/3 majority needed to override a presidential veto (difficult to pull off)

Republicans, Cont. OVERSIGHT/INVESTIGATION: Conduct numerous public hearings and summon witnesses to testify in ways that would support their agenda. They will also have Donald Berwick to testify before Congress detailing his agenda for implementing the law. DELEGATE TO THE STATES: Could encourage states to press forward with their own programs. The more that states move forward with reform that suits the needs and pocketbooks of their citizens, the easier it would be for Congress to repeal PPACA and start over.

Republicans, cont. Their main focus will be to slow down implementation of the law and make a case to the county of the damage the law will do to our economy. Remember 2010 is also about the 2012 Presidential elections, where a Republican President and Congress could potentially wipe the slate clean and start all over before the 2014 mandates kick in. And dont forget about the gubernatorial races. There are a lot of them up for grabs in November and the states are ultimately decide whether to set up insurance exchanges.

CONCLUSION The Feds Keys to success Its an ongoing campaign: progress must be demonstrated and broadly communicated Adequate resources must be made available. Coordination is key: Somebody has to be on point to drive implementation across federal agencies and other organizations needed to successfully execute the legislation (IPAB?). Experiment, evaluate, be flexible and open to change: This is new, and not everything will work as planned. Transparency: Distrust of the federal government is widespread. Make decisions publicly, communicate openly with everyone (insurers, unions, clinicians, etc.) and listen as well as talk.

Success, cont. Beating up on industries (insurance, drug, etc) may be good politics but it does not create a good trust or a functional working relationship. Create interactive, long-term relationships. Close the loopholes as they become apparent (IPAB?). Control the message In a nutshell Educate the public Deliver the deliverables Handle the insurers Maintain costs

Last key to success An Obama victory in 2012. If democrats lose one or both Congressional houses this year AND the White House in 2012, Congress will begin the process of repealing the law before most of the benefits impacting individuals kick in.

One thing is sure The actual version of the legislation that is implemented will be different than the current version. It will take until the 2020s to determine if this is a success or failure Your institutions key to success is to be informed and adapted quickly to emerging changes.

Informational Resources HHS.gov HealthCare.gov Kff.org (Kaiser Family Foundation Web site click health reform then see implementation timeline, law summary and a variety of other things) Familiesusa.org (click health reform central link)

THANK YOU Stay informed. This is no longer theory. It is very real and will have a significant impact on all of us personally and professionally. The temptation is to be lulled to sleep since most of the guts of this legislation wont go into effect for years to come. It is best to be informed and prepared.

HEALTHCARE REFORM – A LOOK INTO THE CRYSTAL BALL Steve Markesich, CPAM Yale-New Haven Health...

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