Single Payer & Other HealthCare Initiatives

Single Payer & Other HealthCare Initiatives John A. Dodd Jr., CLU ChFC RHU Dodd Brokerage Sponsored by:

Today’s Discussion • Single Payer Structure • Polls & Popular Opinions • Canadian,United Kingdom Systems • Break • Massachusetts Mandate • High Risk Pool • California Mandate Legislation

Single Payer Definition • single-payer health system is a healthcare delivery mechanism sponsored and administered by a single entity, usually the government of a state or nation. Single-payer plans are also commonly referred to as "universal coverage plans" or "socialized medicine. “ • Ie, Clinton Health Security Act of 1993

American Attitudes on HealthCare 56% Happy with the quality of care provided in U.S. 80% Unhappy with U.S. health care spending 75% Like expanding Medicare to cover uninsured ages 55-64 68% Prefer Universal Coverage system to Private marketplace 44% Coverage for everyone more important than keeping taxes down Source: USA Today/Kaiser Family Foundation/ABC News Poll, October 2006

Single-Payer Systems A common promise: “The Canadian system manages to cover the country’s entire population while spending a third less of the country’s gross domestic product than the US system… and produces better outcomes such as lower infant mortality and greater life expectancy.” - John Whiteside, Reuters Author, Consultant & Blogger -

What If the U.S. Implemented Canada’s Single-Payer Plan? • On a per-capita basis, Canada has 20% the number of MRIs as America, & 14% the number of CAT Scans • Make 1/2 drugs approved by FDA in past 5 years illegal • Give 10% more of your Gross Income to government • Cut national Research & Development by $77 Billion (25%) • Stop covering mental-health care • Never again be allowed to visit a specialist or even get a test without first having a visit & referral from a family doctor • Put 7,730,000 people on waiting lists for everything: doctor visits, tests, surgeries, etc. • Source: OECD Statistics 2005; & The Fraser Institute’s Waiting Times Survey 2006

Technology Access • August 2006, 14, 802 died in heat wave emergency because of a shortage of hospital beds & docs on vacation & 35 hour work week • In September 2006 in Scotland, more than 200 hip fracture operations were cancelled (among many other types of surgeries) because of lack of operating room space. • Scotsman.com News • In September 2006 a woman in England found out she was #582 on a waiting-list to replace her analog hearing aid with a more sophisticated digital one. • 24dash.com News • Even when new drugs in Canada receive federal approval, the provinces then each review for local approval. Nova Scotia approves drugs for its formulary in 250 days, approval in Ontario is nearly 500 days • OECD Health Statistics, 2006

“Canada & U.K. Wait Times” 17.7 Weeks: Canada’s 2006 wait-times from referral to surgery 13 Weeks: Britain’s 2007 goal – Diagnostic tests Great Britain 18 Weeks: Britain’s 2007 goal – wait-time from referral to surgery 25 Weeks: Britain’s 2005 wait-time for Cancer & Cardiac tests Canada 9.3 Weeks: Canada’s 1993 wait-times from referral to surgery (Weeks Wait Times) • Source: The Fraser Institute’s Wait Time Survey, 2006;British Wait Time Study, 2005

Canadian Privatization • many private clinics offering specialized services also operate in Canada for diagnostic services with reduced wait times compared to the public health care system • Costs in private clinics are usually covered by private insurance policies. • Canada ranked fifth among the 29 members of the OECD in the percentage of gross domestic product spent on health care in 1997, it ranked in the bottom third for availability of medical technology. (OECD)

Other Canadian Issues • On a per capita basis, Canada performs only about 60 per cent of the transplants as the United States (CTV-CA Jan 2007) • While there are numerous factors contributing to Canada’s shortage of physicians, three significant ones are migration to the United States, reluctance of medical students to choose specialties and locations where they are most needed (Canadian Family Physician 2004)

Americans Value Freedom of Choice 60% Opposed if it means higher taxes or health premiums 76% Opposed if treatments covered by insurance no longer paid for 68% Opposed if it limits doctor choice Source: USA Today/Kaiser Family Foundation/ABC News Poll, October 2006

Will Taxes Increase with Single Payer ? Revenue as % of GDP EuropeanUnion 15 Canada (% of GDP) USA Shortly after Canada implemented nationalized health, taxes rose drastically. (Year) • Source: OECD Revenue Statistics, 2006

It Costs Less Public/Private Health Care $ as % of GDP Total: 9.9 % Private: 3.0% Public: 6.9% Total: 15.3% Public: 6.8% Private: 8.5% (% of GDP) • Source: OECD Health, 2006

It Costs Less Workforce Productivity: GDP Per Capita USA There is a cost: lost productivity Canada European Union 15 (Thousands) (Year) • Source: OECD Economics, 2006

Infant Mortality A Socio-Economic Issue European Union 15 4.2 Canada 5.3 USA 6.9 (Deaths per 1000 Live Births) • Source: OECD Health Statistics 2006, per the 2000 Census.

Life Expectancy Issue Life Expectancy: A Lifestyle Issue European Union 15 78.1 Canada 79.3 USA 76.8 (Average Age in Years) • Source: Life Expectancy: OECD Health Statistics 2006, per the 2000 Census

CA Single Payer (SB 480) • All Californians covered through newly created single-payer California Health Insurance System (CHIS). • CHIS becomes fully implemented once the Secretary of Health and Human Services determines the Universal Healthcare Fund has sufficient revenue for the program to be operational • Legislation intends for CHIS to consolidate funding from all existing public programs into the Universal Healthcare Fund, potentially including Medicare. • People eligible for federal programs (Medicare and Medi-Cal) would remain enrolled in them and CHIS would pay their premiums and deductibles

Financing CHIS • SB 1014 would require employers to contribute via a 8.17% increase in payroll tax of employee’s income over $7,000 and under $200,000. Contribution would be made in lieu of paying premiums. • SB 1014, would require individuals to contribute a portion of income via taxes, in lieu of paying for health care premiums, copays, and deductibles. First $7,000 of income would be exempt Individuals would pay 3-4% of income (between $7,000 and $200,000). • Individuals would pay an additional 1% on income over $200,000. 06/27/2007 LAST HIST. ACTION : From committee with author's amendments. Read second time. Amended. Re-referred to Com. on HEALTH. , very likely to pass!!

Single Payer Bills Ohio April 25, 2007 and May 15, 2007, Rep Michael Skindell (D-Lakewood) and Sen Dale Miller (D-Cleveland) introduced H.B. 186 and S.B. 168, respectively, to provide universal health care coverage for all Ohioans. These companion bills are essentially the SPAN Ohio government run health care proposal. H.B. 186 has been referred to the House Healthcare Access & Affordability Committee and S.B. 168 has been referred to the Senate Health, Human Services & Aging Committee. June 2007 OAHU Legislative Update

Single Payer Action Network “Ohio Health Care Fund” Financing… • payroll tax paid by employers not to exceed 3.85% • gross receipts tax on businesses not to exceed 3% • tax increases limited ONLY to those earning more than the Social Security tax cap • 5% surtax on adjusted gross income over $200,000 • $11.6 billion in administrative cost savings • funds from government sources. • Workers who lose jobs as a result of the Health Care For All Ohioans Act will receive, at public expense retraining and financial assistance for up to two years in an amount not to exceed $60,000 per

Break American Community Update Nationwide Health Update

Guarantee Issue, Mandates & High Risk Pools • Massachusetts Law • Oregon High Risk Pool • Ohio Projections on High Risk Pool • California Legislation

Current Mass System • Massachusetts small-group market defined as 1 to 50, using a modified community rating mechanism. Health status is not used as a factor in determining small employer group rates • Individual market has been guarantee issue and carriers have not marketed products to individuals through brokers in over 10 years. Carriers such as Fortis, Golden Rule and other “foreign” carriers left Mass when GI laws took effect in 1997. Carriers remaining include Blue Cross/Shield and 4-6 HMO’s • Individual Rates are not adjusted for health factors or smoking, but SIC codes are utilized on self employed applicants.

2007 Mass Coverage Mandate Imposes an individual mandate that requires all residents age 18 and over to demonstrate personal responsibility for health care and purchase health insurance coverage by July 1, 2007. Proof will be verified in 2008 when filing state income taxes. Penalties will be imposed for non-compliance. Non-compliance includes the loss of the personal exemption for tax year 2007 and fines.

Commonwealth Health Insurance Connector Individuals… The connector is a purchasing entity that will facilitate the purchase of private plans by individuals who do not have access to employer-sponsored coverage, small businesses with less than 50 employees and self-employed individual The subsidized part of the state program starts at less than 300% of the federal poverty level — or about $30,630 for an individual. Coverage is free for those earning up to 150% of the poverty level, or about $15,300, and on a sliding scale for the rest, with premiums ranging from $35 to $105 a month.

Connector Plans & Rates M 38, F 38 2 Children North Hampton, MA Neighborhood Health Plan $1500 ded, $5000 OOP, limited Rx & office visits = $749/mo Fallon Community Health Plan $500 ded, , $2000 OOP, Full Copays, Rx = $1148 Rates From MassConnector web Site Young Adult Plans Mini Med Plans allowed for 19-26 Limits per illness, caps on services, 50-100,000 Max, No Rx Rates Average $119/mo Boston Globe May 2007

Mass Employer Mandate • Requires all employers with 11 or more employees to offer a section 125 plan (POP) • All employers with 11 or more employees who do not provide health insurance will be required to pay an annual $295 per-employee assessment to the state. Funds will be deposited into the commonwealth health care trust fund. • Requires employers with 11 or more employees to make a “fair and reasonable contribution” towards employee health insurance costs.

Connector Group Plans Group…coverage through the Connector is expected to be available in January 2008 This coverage is expected to be portable and plans targeting 19-26 year olds will also be available. Employers participating can offer standard plans from among several carriers within the same group Insurance producers who sell plans through the connector will be paid commissions @ $10 per head/month

Trautwein June Visit to Ohio Senate • Discussed SCHIP – Medicaid Expansion • Find a way to implement High Risk Pool and avoid the Massachusetts System!

Uninsured In Ohio • Approximately 1.3 million persons in Ohio are uninsured • 22% are 19 to 29 years old. • 65% of them have incomes below 200% of Federal Poverty Level. • 82% are in families where at least one person in the family works either full-time or part-time

Current Ohio Guaranteed Access • ORC §3923.58 applies to health insurance companies and MEWAs and requires them to accept individuals during an open enrollment period. The law became effective in 1993. • ORC §3923.581 applies to health insurance companies, health insuring corporations, and MEWAs and requires them to accept federally eligible individuals during an open enrollment period. (HIPAA Law- Alternative Mechanism) • ORC §1751.15 requires health insuring corporations to hold an annual open enrollment period of not less than 30 days for individuals who are not federally eligible individuals at the time they apply for enrollment. This law also became effective in 1997.

Medicaid Expansion All Good? • Approximately 1,173,670 people, or 10% of the population in Ohio, are on Medicaid. • Many states including Ohio pushing up Poverty limits to include more people in Medicaid • Recent Ohio Expansion covers children in families to 300% of poverty (Fam of 4-$62,000), 200% for pregnant women, 90% for other adults • Ohio Waiting for Federal Waiver on Expansion • “Dwindling number of doctors who accept Medicaid is a large, little discussed hurdle to some ambitious efforts to broaden healthcare coverage” – WSJ 7-17-07

High Risk Pool • A high-risk pool is a state-created, non-profit association that offers comprehensive health insurance benefits to individuals with pre-existing health problems. It is overseen by an appointed board of directors (insurers, consumers, medical professionals and legislators). • A private third-party administrator handles day-to-day operations. Pools generally serve: the self-employed; employees of small businesses not offered employer-sponsored health insurance; young people coming off their family’s coverage; and retired persons not yet eligible for Medicare. • Insurance carriers or TPA’s administer plans, may not even appear to be in high risk pool

Oregon Medical Risk Pool • Program Effective since 1990 • 17,581 in pool (Oreg pop = 3,700,000) • Max Premium Rate Under Statute is 125% of standard rate charged in market • Carrier Assessment Program • Credits on Assessments for lower rejection rates • 13% premium increase effective July 1 • Oregon Market Rejections have grown by 38% since 04

Oregon Eligibility Within last 6 months…. • Been refused individual health coverage due to health reasons • involuntary cancellation of individual health benefit coverage because of health reasons • Excluded coverage due to a specific condition exclusion, or limited benefits for a condition • HIPAA Portability

Oregon High Risk Pool Benefits • Benefit Maximums $2,000,000 • $500 - $1500 Deductibles • $1000-$6000 Out of pocket Max • Maternity Included in Rates • 80/60 Coinsurance • Rx Co pays deductible` on Plan 1500 • Unisex, State rate for age 48 for Plan 1000 = $340 • Brokers Receive $75 Referral Fee

Oregon Pre-Ex Exclusion Pre-existing conditions will not be covered until the OMIP policy has been in effect for six months, unless OMIP waives the pre-existing condition limitation period. A pre-existing condition is a condition for which medical treatment or diagnosis was rendered during the six month period immediately preceding the OMIP effective date of coverage. An existing pregnancy is considered a pre-existing condition.

Broad Based Funding reduces burden • funding for a high-risk pool would should come from a combination of premiums paid by participants and additional funding sources • partially fund net losses with state appropriations or subsidy and from assessment of health insurers and re-insurers including govt insureds • Possible service charges on hospital admissions and outpatient surgeries

Where Does Ohio Stand? • Thanks to the efforts of Representative Lynn Watchmann, Senator Steve Stivers, Senator Keith Faber, discussion continues. • funding of the pool has been and continues to be the major impediment to the passage of a bill – Lief Study • An Ohio high-risk insurance pool would save $30 million in year one and one quarter of a Billion dollars of uncompensated care in year five. – Lief Study • high-risk insurance pool would create a predictable, reliable and more affordable insurance coverage for uninsured/uninsurable Ohioans. – Lief Study • Rep James Raussen R-Springdale, Chair of House HealthCare Access & Affordability conducting 5 city tour – Cols Business 1st

More on Leif Study-Ohio 1,800 individuals who are currently enrolled in open enrollment and HIPAA plans would likely move to the high-risk pool • Ohio would number approximately 2,800 individuals in the first year in high risk pool, approximately 11,000 individuals by the third year. • In first year, the annual assessment would be approximately $3 per insured life/yr if just assessing insurers and stop loss carriers, only $1 if including more broad based funding • After 5 years, insurer and stop loss carriers annual assessment would be $19/yr, broad based $10/yr

Gov’s Stay Healthy CA • All Californians are required to have coverage. To meet the requirement, a minimum benefit level of $5,000 deductible, with out-of-pocket maximums of $7,500 per person ($10,000 per family), must be maintained. • Pay or play approach - employers with 10 or more employees that choose not to offer coverage contribute 4% of payroll • Employers must establish Section 125 plans • Health plans must guarantee coverage to all Californians. Premiums may vary based only on age and geography, Advocates Individual Mandate Health plans. Must spend 85% of premiums on patient care • Sliding scale contributions of 3%-5% of gross income required to obtain coverage through purchasing pool • 2-4% Fees surcharge on Hospital & Physician Fees, Expand Medicaid

CA AB 8 • Establishes CA Cooperative Health Insurance Purchasing Program • Simplified medical underwriting, standardized individual application form. Requires health plans to offer three uniform benefit designs to facilitate comparison shopping. • No Mandate to Buy Coverage • Employer Pay or Play, pay at least 7.5% of payroll • Health plans must spend 85% of premiums on patient care.

CA SB 8 more • By 2011, all health plans required to guarantee issue and use community rating in the individual market (e.g. premiums may vary based on age and geography, not health condition) for individuals without serious medical conditions. • Individuals with specified serious medical conditions would be eligible for high risk pool to be funded by an assessment on health plans as outlined in AB 2 • Applies rules currently regulating the small group market (such as guaranteed issue) to the mid-sized (51 - 250 employees) employer market. • Health plans must spend 85% of premiums on patient care.

California Politics • “Everything this year!” – Guv • “His (Guv) prestige on the line” – WSJ 7-17-07 • If we can get comprehensive health care reform in CA, it might break the national log jam”-William Novelli CEO of AARP • Blue Cross of CA says if it is forced to offer coverage to all comers, that might lead to higher premiums for people who can now buy reasonably priced coverage – WSJ 7-17-07 • Business Groups will challenge new law because of legislative tax requirement. • CA Restaurant Assn opposes fees on employers “would like to see an acceptable deal this year” WSJ 7-17-07 • Speaker and Guv express a willingness to compromise – WSJ 7-17-07

So - -What Can We Do? Educate about single-payer realities, “Sicko” doesn’t address the reality of health care rationing in other countries Educate employers about other state reforms could lead to “pay or play” approach like CA Advocate Ohio High Risk Pool to cover more of Ohio’s uninsured population with broad based funding Continue to promote consumerism through Consumer Driven Plans

Other Reference Sources • USA Today, Julie Appleby • National Assn of Health Underwriters • Ohio Department of Ins • Leif & Associates- Ohio High Risk Pool Feasibility • Boston Globe • Wall Street Journal

Sign Out • Sign Sheet • Drop Business Card for Drawing • Certificate will be Mailed • Thanks for Attending

Single Payer & Other HealthCare Initiatives