National Health Policy Conference February 12, 2007 Washington, D.C. Kim Belshe

National Health Policy National Health Policy ConferenceConference

February 12, 2007February 12, 2007Washington, D.C.Washington, D.C.

Kim BelsheKim Belshe

Our Broken Our Broken Health Care Health Care

SystemSystem6.5 Million Uninsured6.5 Million Uninsured

20% of Population20% of PopulationSource: California Health Interview Survey, 2005

Emergency Departments ClosingEmergency Departments Closing

320

340

360

380

400

1990 1994 1998 2002 2006Source: Office of Statewide Health Planning and Development

The Hidden The Hidden TaxTax

Actual Cost of Medical CareActual Cost of Medical Care

UninsuredUninsured

Cost to Cost to InsuredInsured

10% of premium10% of premium


Source: New America Foundation

Actual Cost of Medical CareActual Cost of Medical Care

UninsuredUninsured

Cost to Cost to InsuredInsured



Medi-Cal Medi-Cal UnderfundingUnderfunding

Source: Administration Analysis of “Cost Shift Hydraulic,” Dobson

The Hidden The Hidden TaxTax

Hidden TaxHidden Tax

Individuals: $455Individuals: $455

Families: $1,186Families: $1,186Source: New America Foundation

Drivers of Cost: Chronic DiseasesDrivers of Cost: Chronic Diseases

Source: Centers for Disease Control and Prevention, 2003, U.S. Data

$153$153 $151$151BILLION BILLION

Cancer & DiabetesCancer & Diabetes Smoking & Physical Smoking & Physical InactivityInactivity

Drivers of Cost: Drivers of Cost: Medical ErrorsMedical Errors

23,000 Deaths23,000 Deaths

Cost: >$4 BillionCost: >$4 Billion

Source: CA Department of Health Services

Fixing Our Broken SystemFixing Our Broken System

Reduce the hidden tax; Reduce the hidden tax; lower costslower costs

Coverage for all; support Coverage for all; support better carebetter care

Healthy CaliforniaHealthy California

Prevention / WellnessPrevention / Wellness

Shared Responsibility Shared Responsibility / Coverage for All / Coverage for All

AffordabilityAffordability

Governor’s Health Care InitiativeGovernor’s Health Care Initiative



Prevention & WellnessPrevention & WellnessHealthier State – Long Term AffordabilityHealthier State – Long Term Affordability

Offer consumers incentives and rewardsOffer consumers incentives and rewards

Promote diabetes prevention and Promote diabetes prevention and treatmenttreatment

Reduce medical errorsReduce medical errors

Reverse obesity trendsReverse obesity trends

Support tobacco cessationSupport tobacco cessation




Shared BenefitShared Benefit

INDIVIDUALSAccess to

affordable coverageHealthier CA

GOVERNMENT Healthy, productive & economically

competitive state





competitive state

DOCTORS & HOSPITALS

Expanded insured pop

Fair compensation





competitive state

DOCTORS & HOSPITALS


Fair compensation


HEALTH PLANS Expanded market

Fair compensation




competitive state

DOCTORS & HOSPITALS


Fair compensation


HEALTH PLANS Expanded market

Fair compensation

EMPLOYERS

Affordable coverage

Healthy, productive workforce



Fixing the Fixing the Broken Broken SystemSystem

Creating an efficient, Creating an efficient, competitive market dynamiccompetitive market dynamic

Payment SourcesPayment SourcesCommercial payer overpaymentCommercial payer overpayment

Medi-Cal/Uninsured UnderpaymentMedi-Cal/Uninsured Underpayment

Shared ResponsibilityShared Responsibility

INDIVIDUALS

Obtain Health Coverage

GOVERNMENT

INDIVIDUALSINDIVIDUALS

Must secure health coverage for Must secure health coverage for themselves and their childrenthemselves and their children

Assume greater personal Assume greater personal responsibility for health and responsibility for health and wellnesswellness

Contribute to paying for their Contribute to paying for their coveragecoverage

DO

CT

OR

S &

HO

SP

ITA

LS

Fixing the Broken System Fixing the Broken System

HEALTH PLANS

EM

PL

OY

ER

S

INDIVIDUALS

Obtain health coverage

Shared Responsibility Shared Responsibility GOVERNMENT

Promote a functional health care systemProvide access to affordable coverageFairly compensate Medi-Cal providers

INDIVIDUALS

GOVERNMENTGOVERNMENT Expand SCHIP/Medi-Cal for all children in families Expand SCHIP/Medi-Cal for all children in families

earning under $60Kearning under $60K

Subsidies to families between $20K-$50K provided Subsidies to families between $20K-$50K provided through new purchasing poolthrough new purchasing pool

County responsible for access for undocumentedCounty responsible for access for undocumented

Expand Medi-Cal to adults in povertyExpand Medi-Cal to adults in poverty

$4 billion increase in Medi-Cal reimbursement rates$4 billion increase in Medi-Cal reimbursement rates

DO

CT

OR

S &

HO

SP

ITA

LS


HEALTH PLANS

EM

PL

OY

ER

S

Shared Responsibility Shared Responsibility

INDIVIDUALS


DOCTORS & HOSPITALS

Provide affordable, quality care

Share cost savings

GOVERNMENT Promote functional market

Provide access to affordable coverageFairly compensate Medi-Cal providers

Redistribution to ProvidersRedistribution to Providers

$10 - $15 Billion$10 - $15 Billion

$3.5 Billion$3.5 Billion

New Funds to Providers

Coverage Dividend from Providers

GOVERNMENT

DOCTORS & HOSPITALSDOCTORS & HOSPITALS

2% fee on physician revenues – 2% fee on physician revenues – 4% on hospital revenues4% on hospital revenues

Participation in patient safety Participation in patient safety initiativesinitiatives

At least 85% of hospital payments At least 85% of hospital payments spent on patient carespent on patient care

IND

IVID

UA

LS


HEALTH PLANS

EM

PL

OY

ER

S


HEALTH PLANS Guarantee access to affordable coverage

DOCTORS & HOSPITALS


Share cost savings

INDIVIDUALS


GOVERNMENT Promote functional market

Provide access to affordable coverageFairly compensate Medi-Cal providers

GOVERNMENT

HEALTH PLANS

Guarantee coverage

Only base rates on age and geographic area in the individual market

85% of premiums dedicated to patient care

Offer “Healthy Actions” rewards and incentives within benefit packages

DO

CT

OR

S &

HO

SP

ITA

LS


INDIVIDUALS

EM

PL

OY

ER

S


EMPLOYERSSupport

employee access to affordable coverage

DOCTORS & HOSPITALS


Share cost savings

GOVERNMENT Promote functional health care marketProvide access to affordable coverageFairly compensate Medi-Cal providers

INDIVIDUALS


HEALTH PLANS Guarantee access to affordable coverage

Pass along savings

GOVERNMENT

EMPLOYERS

Offer federal Section125 plans to allow employees to make pre-tax contributions to coverage

Contribute to the cost of coverage – non-offering employers with 10 or more employees will contribute 4% of payroll

DO

CT

OR

S &

HO

SP

ITA

LS


HEALTH PLANS

IND

IVID

UA

LS




AffordabilityAffordability

Affordability: Short TermAffordability: Short TermReduce hidden taxReduce hidden taxTax breaks for individuals & businesses tied Tax breaks for individuals & businesses tied to purchase of health insuranceto purchase of health insuranceEnhance insurer & hospital efficiency by Enhance insurer & hospital efficiency by requiring 85% of premiums & hospital dollars requiring 85% of premiums & hospital dollars on patient careon patient careRemove regulatory barriersRemove regulatory barriersReduce regulatory red tapeReduce regulatory red tape

Affordability: Long-TermAffordability: Long-TermPromote prevention & wellnessPromote prevention & wellness

Accelerate adoption of health information technologyAccelerate adoption of health information technology

Tie Medi-Cal rate increases to performance measuresTie Medi-Cal rate increases to performance measures

Enhance health care quality & efficiency through Enhance health care quality & efficiency through transparency and performance measurestransparency and performance measures

Monitor & evaluate market function & costs and revise Monitor & evaluate market function & costs and revise as necessaryas necessary

FISCAL IMPACTFISCAL IMPACTPrevention$300Tax Incentive$900Counties$2,000Subsidized Coverage

$2,270Medi-Cal/HFPCoverage

$2,638Medi-Cal Rate Increase

$4,039

Other - $203Employer in lieu$1,000County and Other Redirect $2,000Physician/HospitalsRecapture$3,472Federal Funds$5,474

$12 Billion

Cost Fundingin millionsin millions

Federal Funding: $5.47 BillionFederal Funding: $5.47 Billion

$1.77 billion: Redirection of current federal funds $1.77 billion: Redirection of current federal funds used for programs for the uninsuredused for programs for the uninsured

$3.7 billion: New federal funds$3.7 billion: New federal funds

$3.45 billion: guaranteed under current federal $3.45 billion: guaranteed under current federal statute (match for Medi-Cal reimbursement, statute (match for Medi-Cal reimbursement, Healthy Families parental match)Healthy Families parental match)

$250 million: Discretionary funds via 1115 waiver$250 million: Discretionary funds via 1115 waiver

Federal RoleFederal Role

Medicaid funding – Medicaid funding – Rates; Parental Rates; Parental expansionexpansion

Section 1115 waiverSection 1115 waiverDeficit Reduction Act flexibilityDeficit Reduction Act flexibilityValue-driven health careValue-driven health careTax advantages – Tax advantages – HSAs, Section 125 planHSAs, Section 125 plan

Fixing Our Broken System:Fixing Our Broken System:Shared ResponsibilityShared Responsibility

Reduce the hidden tax; Reduce the hidden tax; lower costslower costs

Coverage for all; support Coverage for all; support better carebetter care

Healthy CaliforniaHealthy California

Documents

National Health Policy Conference February 12, 2007 Washington, D.C. Kim Belshe