A View From A Blue: Reform Through Uninsured, Individual & - - PowerPoint PPT Presentation

Company Confidential: Do Not Copy

A View From A Blue: Reform Through Uninsured, Individual & Small Group Innovation

November 17, 2008

Mark Wagar, President & CEO Empire BlueCross BlueShield (NY)

• Sr. VP, East Region, WellPoint, Inc.

New York State Health Foundation Reforming New York’s Individual Health Insurance Market

2

Company Confidential: Do Not Copy

<$21,200: 24%

(100% of FPL)

$21,200-$63,600: 43%

(100-300% of FPL)

>$63,600: 33%

(300% of FPL)

Who are the uninsured in New York State?

<$21,200: 37%

(100% of FPL)

$21,200-$63,600: 45%

(100-300% of FPL)

>~$63,600: 18%

(300% of FPL)

U.S. Uninsured New York Uninsured

The state of New York has done relatively well to insure lower income individuals compared with the rest of the country, but not as well for middle class people earning 300% of the Federal Poverty Level

Data compiled from U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 2007; 2007-2008 Poverty Threshold, Federal Register, Vol. 73, No. 15, January 23, 2008, pp. 3971–3972.

*Dollar figures based on family of four, using Federal Poverty Levels

3

Company Confidential: Do Not Copy

The growing burden of health care cost

• ! "#!$

%&&&"'(()

• !"
• !"
• Avg. Health Insurance Premiums and

Worker Contributions for Family Coverage, 1999-2008

4

Company Confidential: Do Not Copy

Health care premiums – cost vs. administration

Other Medical Services 6% Admin, Tax & Compliance 6% Consumer Servs 5% Rx Drug 16% Hospital Costs 18% Physician Services 24% Outpatient Cost 22% Plan Profits 3%

Source: AHIP, “The Factors Fueling Rising Healthcare Costs 2006”

Total health plan costs = 14%

Payment for health care to providers 86%

5

Company Confidential: Do Not Copy

Treating the symptoms, not the disease

As Prices Rise, Private Coverage Decreases

0% 10% 20% 30% 40% 50% 60% 70% 80% 2002 2003 2004 2005 2006 2007 Percentage of Americans in private coverage Percent of family policies costing

• ver $12,000 per year

6

Company Confidential: Do Not Copy

What, me pay for your coverage?

• Small group policies in New York are among the most expensive in

U.S.

• 50% of NY small businesses do not provide coverage
• 54% of employed uninsured work for firms with less than 25

employees

Source: HealthConnect, Q4 2008, Downstate Small Group Rates

7

Company Confidential: Do Not Copy

Individual Market: If you build it – wrong – they may leave

72,822 31,152 37,610 10,146 110,432 41,298

20,000 40,000 60,000 80,000 100,000 120,000 HMO POS Total 1998 2008

In Thousands

*2008 membership through June 30

8

Company Confidential: Do Not Copy

Revising Public Policy

• Enact reforms which reduce the cost of coverage for both

individuals and small businesses

• Balance between private & government coverage
• Create solutions for key uninsured
• Individuals
• small businesses
• working poor

Company Confidential: Do Not Copy

Let’s expand coverage for the two most vulnerable markets

Goal: Reduce the cost of coverage by at least 20% and increase the choice of products & policies for consumers. Summary: All reforms should be taken together to attain desired reductions in premiums.

• Merge the small group, individual & Healthy NY markets
• Community rate by product class with a fixed number of standard

products

• Create stop loss subsidy ($20,000)
• Reduce 8.95% discharge tax on this population (to 4.48%)
• Secure insurers commitment to reduce administrative expenses

through an increase in the minimum medical loss ratio (80%)

10

Company Confidential: Do Not Copy

Estimated premium rate impact of proposals (state verification needed)

These savings are likely to be on the low side because…

• 20%
• 30%

Estimated Net Impact

• 20%
• 30%
• 4. Discount half of

8.95% tax

• 18%
• 28%
• 3. Stop loss (Net
• f 1, 2 and 3

0% to +4% 0-10%

• 2. Community rate

by…(Net of 1 and 2) +9%

• 29%
• 1. Merge Markets

Small Group Individual Direct Pay Change

11

Company Confidential: Do Not Copy

What Next? Start with individual market

• With the State facing economic hardship, reform will need to

come in stages

• Allow affordable options in the individual market; fully fund DP stop

loss

• E.g., cigarette tax increase
• Permit unique products for target populations
• e.g., young invincibles
• near seniors
• temporary coverage
• Target enrollment of the 1.1 million Medicaid eligible uninsured.
• Look at other sources of revenue before moving to small group

reform.

12

Company Confidential: Do Not Copy

Changes that improve care, health and affordability

• Antiquated, paper-based systems lead to inefficient and

unnecessary care and expose patients to undue risk.

• Reducing the cost of health care will make health insurance more

affordable for those in the system and increase access for the uninsured. Pharmaceutical Safety Complex Clinical Cost-of-Care Comparative Effectiveness Clinical Outcomes Research

INTEGRATED RESEARCH NETWORK COLLABORATIVE OUTCOMES ARCHITECTURE

Cost of Health Care Health Care Financing Insurance Market Reform Quality and Safety

• f Health Care

TRANSFORM HEALTH CARE DRIVE CHANGE IN THE DELIVERY SYSTEM

13

Company Confidential: Do Not Copy

Reform: Focus on the delivery system

• Need to address both cost and quality
• Promote evidence-based quality medicine
• Focus on prevention and manage chronic disease – pay primary care

before it disappears

• Improve effective use of drug therapies to prevent and manage

illness

• Reduce medical errors and adverse drug events
• Pay those who deliver what we want – best practices
• Provide information on variation – to all stakeholders
• Benefits to provide consumer engagement
• Expose fraud and abuse

14

Company Confidential: Do Not Copy

What is in the way of helpful reform?

• Realism
• Accountability
• Expectance of share of change
• Will to act
• Articulation of complex problem
• Everyone in this room

Company Confidential: Do Not Copy

Thank you.