Health Care Reform Health Care Reform LexiconLexicon

John Dante, FSA, MAAA, FCAPresident and CEODante Actuarial Consulting, LLC

Actuaries Club of Philadelphia MeetingNovember 19, 2009

Where we are todayWhere we are today

Senate HELP Committee bill passed on July 16th

Senate Finance Committee bill passed on Oct 13th

Senate bills have been mergedHouse bill passed on November 7th

Conference Committee will work on merging final Senate and House bills

It will likely take at least to the State of the Union address for President Obama to have something to sign

Single PayerSingle Payer

“Medicare Part E” – Medicare for Everyone

•Single entity pays for health care services but is not involved with the delivery of services•Critics are against what they term a Government takeover of health care•Advantages – most recipients are satisfied with Medicare and having all the nation’s health care information in one place would prove beneficial•Disadvantages – lacks cost controls, anti-fraud and provides inadequate reimbursements according to providers. Financially unsustainable. Adverse impact on Insurers.

Public OptionPublic Option•Plan that is run by Federal Government and will compete with Private Insurers•Meant to keep Private Insurers honest•Both sides fear that they will get all the unhealthy lives•Highly Dependent on structure and reimbursement•When using Medicare reimbursement rates and administrative costs, The Lewin Group estimates that premiums for Public Option will be 30% to 40% less than premiums for comparable private coverage.

Public Option (continued)Public Option (continued)

• House Bill has Public Option with reimbursements that are negotiated with Providers (non-Medicare)•No Public Option in Senate Bills yet but Sen. Reid says there will be one in the combined Bill with an Opt Out provision•“Trigger” – provision that provides for a Public Option only if and when the uninsured do not fall below a threshold in a certain amount of time

ExchangeExchange

•A marketplace where individuals can purchase insurance provided that they are not enrolled in employer sponsored plans, Medicare or Medicaid•Senate Finance Committee Bill has a state run version •House Bill has national version but allows states to form their own•Exchanges are open to small businesses and are expected to include larger businesses over time

Health Care Cooperative Health Care Cooperative (CO-OP)(CO-OP)

•A non-profit member run health insurance organization governed by a Board of Directors elected by its membership

•Both the Senate Finance Committee and House Bills have provisions for the development and funding of CO-OPs

Cadillac TaxCadillac Tax

•An 40% excise tax in the Senate Finance Committee Bill that will apply to employer sponsored health coverage in excess of $8,500 individual and $23,000 family beginning in 2013•The CBO expects this to generate $10($7) and $46($35) billion in revenue in 2013 and 2019, respectively•Threshold only increases each year by CPI + 1%•Called “back loaded” and “a tax trap”

Millionaire TaxMillionaire Tax

•House Bill imposes a 5.4% income tax on individuals making more than $500,000 and couples making more that $1 million

Death Panels MythDeath Panels Myth

•Comes from a Medicare provision in House Bill to reimburse a doctor once every 5 years for a discussion with a patient on what kind of care they would want near the end of their life •Example: I would like to die at home and not in a nursing home.

Reality: Advanced Care Planning Consultations

The Rationing Commission The Rationing Commission MythMyth

Reality: The Medicare Commission

•Senate Finance Committee Bill establishes an independent Medicare Commission to submit proposals to trim excess Medicare cost growth by targeted amounts•Congress must act on these proposals but if they don’t, they are automatically enacted•It applies to Doctors and Home Health Care Providers but not Hospitals

You Lie!You Lie!

•House and Senate both agree that taxpayers should not subsidize insurance for illegal aliens •The question is if they can purchase it at all through the exchanges by paying for it with their own money• The Senate Finance Committee Bill prohibits this •The House Bill is silent on this

Rating ProvisionsRating Provisions

Senate Finance Committee Bill•Age: 3 to 1 limit•Tobacco: 1.5 to 1 limit

House Bill•Age 2 to 1 limit

Both Bills•Geography and Family Composition

1. Evidence Based Medicine2. Coordination of Care3. Electronic Health Records4. Wellness/ Accountability5. Tort Reform6. Eliminate Medicare Fraud7. Eliminate Preventable Infections8. Promote Primary Care Physicians9. Change Payment System

We should control costs first!

What did we miss?What did we miss?

Questions and AnswersQuestions and Answers

Health Care Reform Health Care Reform LexiconLexicon

John Dante, FSA, MAAA, FCAPresident and CEODante Actuarial Consulting, LLC

E-mail: johndante@danteactuarial.comPhone: 570-417-9039