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War Room 30 July 2013 Obam( aca )re – Future of Health Care. War Room. Monthly macro discussion Using tools in context Update on HiddenLevers Features Your feedback welcome. Obam( aca )re: Future of Healthcare. Affordable Care Act – What’s in the bag? Obamacare – Impact on Employers - PowerPoint PPT Presentation
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War Room 30 July 2013
Obam(aca)re – Future of Health Care
War Room•Monthly macro discussion
•Using tools in context
•Update on HiddenLevers Features
•Your feedback welcome
Obam(aca)re: Future of Healthcare
I. Affordable Care Act – What’s in the bag?
II. Obamacare – Impact on Employers
III. Obamacare – Winners + Losers
IV. Scenarios
HiddenLevers
AFFORDABLE CARE ACT – WHAT’S IN THE BAG?
US Healthcare – Something had to be done
Healthcare Spending• US ranks first• Per capita ($8608/year)• Percentage of GDP (18%)
Quality of healthcare• US ranks last among first world countries• bad ROI on public + private spending
System = broken• 50million uninsured (16% of population)• Medical debt contributes to 60% of
bankruptcies• 25% of senior citizens declare bankruptcy
due to medical expenses
sources: US Census, World Health Organization, Commonwealth Fund
Guys… I got this.
HiddenLevers data
US Healthcare – Costs Contained as of Late
source: Manhattan Institute
Manhattan Institutedata
Watch out for biased research on Obamacare
Affordable Care Act – Nitty Gritty
Mandate
Health care exchanges:Online marketplace to shop around for healthcare plans
US residents can get their own, or continue with their employer-based coverage
Uninsured face penalties
Tax credits for low income households to cover healthcare
Medicare Cost Cuts = $700b
Cuts already made in Fiscal Cliff deal
Medicare payment board (IPAB) empowered to cut costs
Reductions for re-admissions
Lower premium subsidies
payments to provider based on productivity/outcome
Medicare Advantage program gutted
DELAYED ENFORCEMENT
2013 until 2015
sources: Center for Medicare + Medicaid Services
Obamacare – Rhetoric vs Reality
Political rhetoric
Massachusetts experiment is going great
Opponents of ACA are opponents of universal healthcare
Obamacare will help the US catch up to the rest of the first world
Obamacare = Freedom
Political Reality
Building + running exchanges is going to be difficult – IT challenge
Higher premiums for most, more comprehensive coverage
Premium hikes likely undercut coverage expansion
Health care cost inflation not controlled directly
Lots of concessions to healthcare industry
Politicians: never ever two faced.
Previous healthcare program hiccups:
CHIP
MedicarePart D
Obamacare – Will Young Americans Dodge?
Moms - desperate to have insurance for kids• Insurance profile of 8yr old = excellent• After infants cross 1 year mark, they are super cheap on system.
77% of 18-25 year olds - healthcare is very important• Penalty = 2.5% of income vs cost of insurance• ~$150 for a 26year old in California
You’re not young forever.
I’ve never been young.
No way I’d buy health insurance.
source: Washington Post
We need these people to participate
Penalty will hurt within 2 years
Affordable Care Act – Know your stuff
cost cuts to Medicare
employer-based coverage
the youts
incentives
OBAMACARE – IMPACT ON EMPLOYERSHiddenLevers
Employer-Based Coverage
As Health advances drove up cost in 1920s, new forms of payment needed – enter Blue Cross
Why it Arose Challenges Today
Natural risk pool – employment not typically tied to your future health
Healthcare costs have risen faster than inflation for decades
Tax deductibility and third party payment act as steroids for health care cost growth
Tax deductions enacted during WWII and 50’s fueled growth – benefits as compensation
US firms complain of competitive disadvantage as they bear health care costs
source: EH.net
Employer-based Coverage: History Employer-based coverage• 9% in early 1940s• 70% in 1960s
Tax breaks for health benefits fueled this expansion in ’40s and ‘50s
Health Insurance 1940-1960, USA
But… Employer-based healthcare waning since late 1990s
Source: Source Book of Health Insurance Data, 1965
Health Sector Grows, Others Stagnate
Endless rising employment?Healthcare employment has risen through the recession while all other sectors stagnate.
This shift between sectors puts tremendous pressure on employer healthcare model.
Source: Brookings Institute
Health care gobbling up all resources
Obamacare + Employers: Review
$2k/employee without coverage
small companies exempt
40% tax on expensive plans
enforcement delayed - 2015
Will Obamacare accelerate trendaway from employer healthcare?
Source: Heritage Foundation*
Employer Plan Cost:$15475/yr
Penalty Cost:
$2000/yr
• Employer could drop coverage, pay the penalty, and provide a $13,475k raise to employees.
• Employer drops fast growing expense and HR overhead
• Might become common if Americans become used to buying health insurance directly
*The Heritage Foundation has a vested political interest in the failure of Obamacare.
Employers Ditching Healthcare?
75% of company plans may have to scale backdue to ACA excise tax
Detroit may drop young retirees onto exchanges to cut costs
30% of companies considering dropping insurance per McKinsey
HiddenLevers
OBAMACARE – WINNERS + LOSERS
Obamacare – Winners
pre-existing conditions
pharma+
preventative care
health insurers
newly eligible for Medicaid
anyone under age
26
small business owners
healthcare IT
companies
MFGs+
industrials
Municipalities
Obamacare – Losers
healthy youth
population discontinued health plans
high deductible
plans retailersrestaurantshospitalityhospitals
+ home health
providers
doctors+
care givers
OBAMACARE SCENARIOSHiddenLevers
Obamacare – What does success look like?
exchanges rollout on
time
Americans sign up on exchanges
Medicare cuts stick
big drop in percentage
of uninsured
healthcare cost
inflation contained
Obamacare – What does failure look like?
Congress overrides Medicare cost cuts
no one signs up
ranks of uninsured stays same or grows
healthcare costs
explode
delays in rollout
If that tech rollout is anything like the custodians we’re goners.
Poor word choice doc.
Obamacare – Defunded via Govt shutdown?
political brinksmanship
analysis
government shutdown
threatened
previous attempts failed
smells like summer 2011
resurrection of Fiscal Cliff scenarios
GoodObamacare
succeeds
BadObamacare
fails
UglyObamacare
defunded
Obamacare – Scenario Outcomes
If successful, Obamacare will make USA more competitive by lowering health care costs.
Obamacare will fail if costs balloon, causing a drag on GDP growth.
If attempts to defund the ACA force a government shutdown the US risks a replay of the fiscal cliff – and it’s difficult for the Fed to step up further.
HiddenLevers – Product Update• Healthcare levers - Updated
• Non-correlated Securities Screener
• Proxy mappings for unknown symbols
Coming soon:
1. Muni-Bond Crisis – Scenario Update
2. Integrations: Albridge
eMoney Advisor
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