How Americans Pay for Health Care A Brief

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How Americans Pay for Health Care: A Brief Overview October 12, 2010 Merton D.

How Americans Pay for Health Care: A Brief Overview October 12, 2010 Merton D. Finkler, Ph. D. John R. Kimberly Distinguished Professor in the American Economic System Lawrence University

Agenda Spending Patterns Overall Payment Structure Patient Protection and Affordable Care Act – 2010

Agenda Spending Patterns Overall Payment Structure Patient Protection and Affordable Care Act – 2010 • Primary Sources • • – California Health. Care Foundation – Health Care Costs 101 – Kaiser/ HRET Surveys of Employer-Sponsored Benefits – 2010 Milliman Medical Index

National HC Spending/ GDP

National HC Spending/ GDP

Cumulative Impact

Cumulative Impact

Spending Distribution by Sector

Spending Distribution by Sector

Spending Distribution by Payor

Spending Distribution by Payor

Health Plan Enrollment Distribution History

Health Plan Enrollment Distribution History

Spending Distribution, Private Insurance vs. Out-of-Pocket

Spending Distribution, Private Insurance vs. Out-of-Pocket

Worker Identified Premium Payment Trend

Worker Identified Premium Payment Trend

The 80 - 20 Rule Provides Guidance

The 80 - 20 Rule Provides Guidance

Health Reform Effects on Payment • Near Term – New coverage requirements – Expanded

Health Reform Effects on Payment • Near Term – New coverage requirements – Expanded dependent coverage up to age 26 – Remove of lifetime and annual limits – Elimination of cost-sharing for preventive care – Prohibition of pre-existing conditions clauses • Since new requirements for coverage neither require healthy young adults to enroll nor extra Federal support, premiums are likely to rise

Health Reforms continued • Medium Term (2013 – 2014) – Creation of exchanges with

Health Reforms continued • Medium Term (2013 – 2014) – Creation of exchanges with a variety of provisions – Tax changes include increase in Part A payroll tax rate for high income taxpayers – Required coverage for individuals and firms with 50 or more employees • Longer Term (2015 or later) – Multistate compacts for sale of insurance – Excise tax on employer plans with individual premium of $10, 200 or family premium of $27, 500 (2018)

Comments • Three Legs of Health Care Policy (Cost, Quality, and Access) Require Coherent

Comments • Three Legs of Health Care Policy (Cost, Quality, and Access) Require Coherent Attention • Health Care Reform Addresses the Insurance Leg (and partly the access leg) • Despite the assigned burden, the cost of employer organized health care mostly falls on the employee • Demographics and intensive practice styles make our policy choices increasingly severe • There are no free lunches.