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Health Care Costs and the Economy

Addressing the Challenges Ahead State Law Resources Fall Meeting Claudia Duck Tucker Regional Director State Advocacy October 19, 2012. Health Care Costs and the Economy. Source: Center for Medicare and Medicaid Services, National Health Expenditures.

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Health Care Costs and the Economy

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  1. Addressing the Challenges AheadState Law Resources Fall MeetingClaudia Duck TuckerRegional Director State AdvocacyOctober 19, 2012

  2. Health Care Costs and the Economy Source: Center for Medicare and Medicaid Services, National Health Expenditures

  3. Health Care Costs and Health Plan Administrative Costs On average, 96% of the annual growth in health spending from 1961-2010 came from areas other than the growth in health plan administrative costs. Source: Center for Medicare and Medicaid Services, National Health Expenditures

  4. Health Care Cost Drivers Medical liability Demographic challenges Provider consolidation Bias toward new and expensive vs. most effective Cost-shifting Lack of transparency Taxes, fees, and compliance costs Fee-for-service (FFS) payment system Unhealthy choices/ lifestyles

  5. Health Plans Leading the Way

  6. Addressing the Challenges Ahead ACA IMPLEMENTATION

  7. Broad Participation Is Critical “Avoiding such spirals requires minimizing adverse selection and instead attracting a broad base of healthy individuals, over which the costs of sick individuals can be spread. Attracting healthier individuals ultimately will help keep premiums more affordable and stable for all members in the risk pool.” - American Academy of Actuaries Source: American Academy of Actuaries, Making Health Care Reform Work: Why Broad Participation Is Necessary, http://www.actuary.org/files/Campaign_2012_Risk_Pool_FINAL_062812.pdf, June 2012

  8. ACA Implementation: Need to focus on affordability and workability

  9. ACA Implementation: Interaction of 2014 Provisions Transitional Reinsurance Cost-sharing Subsidies Premium Subsidies Premiums/Cost of Coverage Essential Benefit Changes Age Rating Compression Premium Tax Modest Incentives to Purchase Coverage

  10. Federal Exchange Grants to the States (as of October 11, 2012) WA MT ND VT # MN @ ME SD WI ♦ OR #@ ID MI NH % WY NY #@ IA @ NE MA #@ PA OH RI # IL @ NV @ UT IN CO @ KS ♦ MO CT # WV CA @ KY @ NJ VA DE OK♦ TN @ NC AZ AR @ MD # NM SC DC AK MS AL GA TX LA FL HI @ Received and Returned Planning Grant (3) # -- Received Early Innovator Grant in Addition to Establishment Grant ♦ -- Returned Early Innovator Grant % -- Returned Planning Grant @ -- Received Additional Level 1 Establishment Grant Received Planning Grant Only (12) Received Level 1 Establishment Grant (28) Received Level 2 Establishment Grant (7) No Grants Received (1)  America's Health Insurance Plans October 2012

  11. State Implementation of ACA: Exchange Activity (as of October 11, 2012) WA MT ND VT MN ME SD WI OR ID MI WY NY NH IA NE MA PA OH RI IL NV UT IN* CO CT KS MO WV CA KY NJ VA DE OK AK TN NC AZ AR MD NM SC DC MS AL GA TX LA HI FL * An Executive Order was issued in 2011 to establish the Indiana Health Benefit Exchange, however, the type of Exchange will be determined by the next governor. State-Based Exchange (16) Federally-Facilitated Exchange (FFE) (6) Partnership Model (4) No Official Decision (25)  America's Health Insurance Plans October 2012

  12. Age-Rating Compression: Higher Premiums for Younger Individuals in 42 States WA ND MT MN VT ME WI SD OR ID MI WY NY NH IA NE MA PA IN OH IL RI NV CO UT CT KS WV MO KY NJ CA VA DE OK TN NC MD AR AZ NM SC AL MS GA TX LA Rate bands less than 5:1 Rate bands 5:1 or greater FL AK HI The ACA limits the age band to 3:1, which will increase costs for younger individuals in the 42 states that currently allow health insurance rates to vary by age by 5:1 or more

  13. Impact of the Premium Tax in the Fully-Insured Commercial Market Oliver Wyman. Estimated Premium Impacts of Annual Fees Assessed on Health Insurance Plans. October 31, 2011.

  14. Independent State Studies Show Significant Benefit “Buy-Up” Due to Essential Benefits Requirement

  15. Essential Health Benefit (EHB) Benchmark Plan: Summary of State Selections (as of October 11, 2012) WA MT ND VT MN ME WI SD OR ID MI WY NY NH IA NE MA PA IL OH IN RI NV UT CO MO KS WV CT NJ KY VA CA DE TN NC OK AZ MD AR NM SC DC GA MS AL LA TX AK FL HI States that have made their final benchmark plan selection (22) States that have indicated that they do not intend to select a benchmark at this time (13) States that are working toward a decision (8 plus DC) No information (7)  America's Health Insurance Plans 2012

  16. State Implementation of ACA: Medicaid Expansion (as of October 11, 2012) WA MT ND VT MN ME SD WI OR ID MI WY NY IA NH NE MA PA IL OH NV UT IN CO RI KS MO CT WV CA VA KY NJ DE OK AK NC TN MD AZ AR NM SC MS AL GA DC TX LA HI FL Not implementing ACA Medicaid expansion (6) Unlikely to implement ACA Medicaid expansion (5) Implementing ACA Medicaid expansion (10) Likely implementing ACA Medicaid expansion (4) Undecided (26)  America's Health Insurance Plans 2012

  17. Stay Connected and Up to Date @AHIPCoverage www.AHIPCoverage.org

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