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Health Care Policy Forum Health Care Legislation You Need to Know Health Care Policy Forum Health Care Legislation You Need to Know

Gold Sponsors Allscripts Glaxo. Smith. Kline, Inc. Owens & Minor, Inc. Wake. Med Health Gold Sponsors Allscripts Glaxo. Smith. Kline, Inc. Owens & Minor, Inc. Wake. Med Health & Hospitals

Silver Sponsor First Citizens Bank Silver Sponsor First Citizens Bank

Bronze Sponsors Iron Mountain Kight’s Medical Corporation Medical Treatment Systems Bronze Sponsors Iron Mountain Kight’s Medical Corporation Medical Treatment Systems

Bronze Sponsors Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP SRI Surgical, Inc. Stryker Bronze Sponsors Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP SRI Surgical, Inc. Stryker Tri. Sure Corporation

Overview of Federal Legislation Dana Simpson Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP Overview of Federal Legislation Dana Simpson Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP

A Primer on Health Reform: Where Do We Stand Today? July 24, 2009 Dana A Primer on Health Reform: Where Do We Stand Today? July 24, 2009 Dana E. Simpson Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Roadmap for Discussion I. Background II. The Process III. A Growing Consensus: Key Areas Roadmap for Discussion I. Background II. The Process III. A Growing Consensus: Key Areas of Agreement IV. Political “Hot Buttons”: Key Areas of Disagreement © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Background © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P. Background © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

What Is Driving Reform: Two Major Problems 1. Access to Insurance Coverage 2. Rising What Is Driving Reform: Two Major Problems 1. Access to Insurance Coverage 2. Rising Cost of Coverage © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Rising Number of Uninsured Rate in Millions and Percent of Uninsured in the US Rising Number of Uninsured Rate in Millions and Percent of Uninsured in the US population: 1987 - 2007 Number of Uninsured 50 40 39. 7 30 Percent of Uninsured 41. 7 42. 6 43. 6 15. 6% 15. 5% 15. 2% 1996 1999 47. 0 45. 7 million 34. 7 31. 0 20 10 12. 9% 13. 9% 15. 3% 15. 8% 15. 3% 0 1987 1990 1993 2002 2006 2007 Year Note: People were considered uninsured if they were not covered by any type of health insurance at any time in that year. Source: U. S. Census Bureau, Current Population Reports: Consumer Income, Poverty, and Health Insurance Coverage in the United States: 2007. © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Costs Straining Business Competitiveness At Average Exchange Rate (US$) US Private Sector Spends more Costs Straining Business Competitiveness At Average Exchange Rate (US$) US Private Sector Spends more per Capita on Health Care than Rest of World Per capita government spending Per capita private spending $6, 000 $6, 350 $5, 000 $4, 000 $3, 628 $3, 430 $3, 064 $3, 000 $2, 936 $2, 000 $1, 000 $474 $81 $0 US Germany Canada UK Japan Mexico $36 China India Note: Figures represent total per capita government spending plus private spending in 2005. China figure does not include Hong Kong and Macao Special Administrative Regions. Source: 2008 World Health Organization Statistics. © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

What’s at Stake with Reform: The Economic Impact of Health Care • Health care What’s at Stake with Reform: The Economic Impact of Health Care • Health care spending represents 17% of GDP (2008) – $2. 37 trillion in total costs – Costs expected to increase 6. 2% annually through 2018 (20% of GDP) • Health care provides over 14 million jobs – 3 million new jobs over next decade © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

A Perfect Storm: The Politics of Reform • Top priority for President Obama and A Perfect Storm: The Politics of Reform • Top priority for President Obama and Congressional Democrats • Best Political Opportunity for Reform Since Harry Truman – Democrats control White House and Congress (60 seats in Senate) – Major stakeholders supporting reform (AMA, hospitals, employers) • BUT – The Devil is in the Details © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Process © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P. Process © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

A Long Time in the Making • Baucus Plan – November 2008 • Stakeholder A Long Time in the Making • Baucus Plan – November 2008 • Stakeholder Meetings – 2007 -2008 – Health Care Reform Dialogue – AHA, AMA, AARP, US Chamber, AHIP, NFIB, etc. © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

A Silent Starting Gun: The Stimulus Bill • Health Care IT - $19 billion A Silent Starting Gun: The Stimulus Bill • Health Care IT - $19 billion • Comparative Effectiveness Research $1. 1 billion • Community Health Centers - $2 billion • Primary Care Provider Training - $500 million © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Key Players in Health Reform • White House • House of Representatives • Senate Key Players in Health Reform • White House • House of Representatives • Senate © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

White House • Set Goal of Signing Health Reform Bill by End of the White House • Set Goal of Signing Health Reform Bill by End of the Year • Established Principles, but Leaving Details to Congress – Anti-Clinton approach • Engaging Stakeholders – Industry “deals” (Ph. ARMA, AHA) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Senate • Two Key Committees = Two Different Bills – HELP Bill – passed Senate • Two Key Committees = Two Different Bills – HELP Bill – passed last week (13 -10) – Finance Bill – working on “pay fors” and bipartisan compromise • Timeline – Seeking to Pass Bill by August Recess, But Increasingly Unlikely • Key question – What will it take to get 60 votes? © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P. – Reconciliation option

House of Representatives • Three Key Committee = 1 Bill (HR 3200) – Ways House of Representatives • Three Key Committee = 1 Bill (HR 3200) – Ways & Means – passed last week – Education & Labor – passed last week – Energy & Commerce - ? ? (Blue Dogs) • Timeline – Aggressively Pushing to Pass Bill Before August Recess • BUT – doubts by “Blue Dog” Democrats © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

A Growing Consensus: Key Areas of Agreement © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL A Growing Consensus: Key Areas of Agreement © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Consensus Reforms 1. Increase Insurance Coverage for Uninsured – Goal: Improved Access for Uninsured Consensus Reforms 1. Increase Insurance Coverage for Uninsured – Goal: Improved Access for Uninsured 2. Health Care Delivery System Reform – Goal: Lower Costs and Improved Quality © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

1. Increasing Coverage – A Multi-Prong Approach Increased Insurance Coverage Individual Mandate -With Subsidies 1. Increasing Coverage – A Multi-Prong Approach Increased Insurance Coverage Individual Mandate -With Subsidies Insurance Market & Reforms/Insurance Exchange © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P. Expand Public Programs (Medicaid)

Individual Mandate • Fine or Tax Penalty for Individuals Not Purchasing Insurance – Similar Individual Mandate • Fine or Tax Penalty for Individuals Not Purchasing Insurance – Similar to car insurance mandate • Subsidies – Up to 300 -400% of FPL • Establishes Standardized Benefit Packages © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Insurance Market Reforms • No Exclusions Based on Pre-Existing Conditions • Modified Community Rating Insurance Market Reforms • No Exclusions Based on Pre-Existing Conditions • Modified Community Rating – Rates may vary based only on benefits, family, tobacco use, and age (NOT size of employer or health condition) • Guaranteed Issue/Guaranteed Renewability © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Insurance Market Reforms, cont. • Health Insurance Exchange – Facilitate comparison shopping – Standardized Insurance Market Reforms, cont. • Health Insurance Exchange – Facilitate comparison shopping – Standardized benefit plans – Lower costs for individuals/small businesses (benefit of large group rates) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Expand Public Programs • Medicaid Expansion – 133% of FPL (all individuals and families) Expand Public Programs • Medicaid Expansion – 133% of FPL (all individuals and families) • Medicare Part D Drug Program – Fill “donut hole” over time (Ph. ARMA rebates) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

2. Delivery System Reform (Cost & Quality) • Emphasizes Prevention and Wellness – Eliminate 2. Delivery System Reform (Cost & Quality) • Emphasizes Prevention and Wellness – Eliminate co-pays for preventive services – Community wellness programs • Strengthens Primary Care – Improves payments/training for primary care physicians (shift focus from specialists/procedures) – Promotes “medical homes” (care coordination) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Delivery System Reform, cont. • Medicare Payment Changes – Rewarding Quality, Not Quantity – Delivery System Reform, cont. • Medicare Payment Changes – Rewarding Quality, Not Quantity – Incentives to reduce hospital readmissions – “Bundled” payments (hospitals + doctors) – Cuts to hospital payments based on productivity adjustments ($100 billion over 10 years) • Fix Physician Payment Structure (SGR) – Top issue for AMA (House includes) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Delivery System Reform, cont. • Comparative Effectiveness Research – How will it impact Medicare Delivery System Reform, cont. • Comparative Effectiveness Research – How will it impact Medicare payments? • Creation of Independent Health Agency (Med. Pac) – Similar to Federal Reserve (insulate Congress/ Administration from reimbursement policy changes) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Political “Hot Buttons”: Key Areas of Disagreement © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL Political “Hot Buttons”: Key Areas of Disagreement © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Top Political Fights • Public Plan Option • Employer Mandate • Cost/How to Pay Top Political Fights • Public Plan Option • Employer Mandate • Cost/How to Pay for Reform © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Public Plan Option • Create Public Plan to “Compete” with Private Insurers • Arguments Public Plan Option • Create Public Plan to “Compete” with Private Insurers • Arguments For – Creates competition for private insurers (lower administrative costs) – Mechanism for lowering costs (base payments on Medicare) • Arguments Against – Will drive private insurers out of business – Back door to single payer system – Will increase cost-shifting to private insurance © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Public Plan Option, cont. • Stakeholders – Support – unions, progressive organizations – Oppose Public Plan Option, cont. • Stakeholders – Support – unions, progressive organizations – Oppose – insurers, US Chamber, many physician groups • Options – Medicare-based plan (House) – HHS negotiating with providers (Senate HELP) – Non-profit cooperatives (Senate Finance option) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Employer Mandate (“Play or Pay”) • House/Senate HELP Plans Have an Employer Mandate – Employer Mandate (“Play or Pay”) • House/Senate HELP Plans Have an Employer Mandate – Senate Finance “leaning against” • Part of paying for expanded coverage (avoid “free riders”) – Penalty if not provide insurance • 8% payroll tax – House • $750 per uninsured FTE – Senate HELP – Exempts certain small businesses – Small business tax credit • Opposed by U. S. Chamber, NFIB, etc. © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Cost/How to Pay for Reform • Cost Drivers – Insurance subsidies; Medicaid expansion • Cost/How to Pay for Reform • Cost Drivers – Insurance subsidies; Medicaid expansion • Biggest Political Issue – Concerns moderate “Blue Dog” Democrats – Likeliest issue to derail reform efforts • CBO Report (July 16 th) – House and Senate HELP Bills do not reign in costs © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Cost/How to Pay for Reform, cont. • Payment Options – Limit tax free treatment Cost/How to Pay for Reform, cont. • Payment Options – Limit tax free treatment of employer provided health benefits – More radical changes in how Medicare reimburses providers – Surtax on income for married couples above $350, 000 (1 -5. 4%) © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

So What’s Missing? • Liability Reform! – Costs of defensive medicine-$41 billion over 5 So What’s Missing? • Liability Reform! – Costs of defensive medicine-$41 billion over 5 years *Journal of American Health Policy – Issue taken off table early by Congress/White House © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Dana E. Simpson Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP P. O. Box Dana E. Simpson Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP P. O. Box 2611 Raleigh, North Carolina 27602 -2611 (919) 821 -6756 [email protected] com © 2009 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L. L. P.

Overview of Federal Legislation Brad Crone Healthcare Leadership Council Overview of Federal Legislation Brad Crone Healthcare Leadership Council

National Healthcare Reform Why North Carolina Matters National Healthcare Reform Why North Carolina Matters

Senator Hagan • Senator Hagan serves on the Senate Health, Education, Labor and Pensions Senator Hagan • Senator Hagan serves on the Senate Health, Education, Labor and Pensions Committee, chaired by Senator Kennedy. • The committee has passed out a committee bill, which will be merged with Senate Finance. • Hagan has worked with NC leaders and industry to find a middle-of-the road approach to addressing coverage issues. She has been an advocate for major health care insurance reform including guaranteed issue, portability, elimination of pre-existing conditions, premium support for low income families and tax credits for small business owners

Senator Hagan • Senator Hagan has stated publicly support for a public purchasing coop Senator Hagan • Senator Hagan has stated publicly support for a public purchasing coop plan introduced by Senator Kent Conrad from North Dakota. • She has been reluctant to support any measure that creates a public plan that will directly compete with private market plans • She has been vocal on health, prevention, wellness and medical information/technology – including electronic medical records

Senator Hagan • Senator Hagan remains a key player in the health care reform Senator Hagan • Senator Hagan remains a key player in the health care reform debate because she is a moderate Democrat who has been pushing for a “middle-of-the-road” approach. • Hagan’s staff, Mike Harney, Legislative Director and Michelle Adams, Health Legislative Aide, have been open to comments and suggestions from the health care industry. • Senator Hagan has told health care industry representatives that she knows the politics back home frowns on government run health care

Senator Hagan N. C. Sen. Hagan not ready to back Obama's health care plan Senator Hagan N. C. Sen. Hagan not ready to back Obama's health care plan Barbara Barrett | Mc. Clatchy Newspapers last updated: June 26, 2009 07: 47: 02 AM WASHINGTON — Although U. S. Sen. Kay Hagan told community activists at a health care rally Thursday that she agrees with the need to reform health care, she isn't ready to support President Barack Obama's call for a public health care option. Hagan, a Greensboro Democrat, has come under fire recently after word got out on Capitol Hill that she disagreed with Obama's plan for a public option. Such an option would allow residents to join a government plan if they liked, and would be open to all. Hagan sits on the Senate health committee that is helping write the bill, and her vote could be necessary to get the measure out of committee. "We absolutely have to have a government option, " said Dana Cope, executive director of the State Employees Association of North Carolina. "She represents North Carolinians. She does not represent the big health-care companies. "

Senator Burr • Senator Burr’s Patient’s Choice Act centers around insurance reform measures and Senator Burr • Senator Burr’s Patient’s Choice Act centers around insurance reform measures and provides tax credits, premium support and other financial incentives • Emphasizes portable and affordable health care insurance • More individual choices and control, prevention & wellness • Addresses medical liability with state health courts and expert arbitration panels

On the House Side • Congressman Bobby Etheridge has been added to the powerful On the House Side • Congressman Bobby Etheridge has been added to the powerful Ways & Means Committee, a moderate, Blue-Dog leaning Democrat • Congressman Mike Mc. Intyre is co-chair of the Rural Healthcare Task Force • Congressman G. K. Butterfield served on the Energy & Commerce Committee but doesn’t serve on the healthcare subcommittee; still very influential with House Leadership and White House

On the House Side • Congressman David Price is a Cardinal, subcommittee chair on On the House Side • Congressman David Price is a Cardinal, subcommittee chair on Appropriations; supports public plan option as a means to providing additional coverage; told HLC last week, doesn’t know if public plan option will stick, so we must address coverage issues. • Congressman Brad Miller does not serve on any healthcare committee, has supported public plan option

The Battleground • • • Organizing for America – President Obama’s field team NC The Battleground • • • Organizing for America – President Obama’s field team NC Fair Share Healthcare Reform for All Healthcare for America Now SEIU / NC State Employees Association Move. On. org

The Battleground • Patients First – Americans for Prosperity • NC Freedom • Faithful The Battleground • Patients First – Americans for Prosperity • NC Freedom • Faithful America

How Can I Get Engaged • • • www. hlc. org www. healthcareinfocus. com How Can I Get Engaged • • • www. hlc. org www. healthcareinfocus. com www. gethealthreformright. org www. coalition 4 healthcare. org www. nchealthreform. com Brad Crone, Regional Director Healthcare Leadership Council 3141 John Humphries Wynd Raleigh, NC 27612 -5382 919. 834. 8431

Panel Discussion Jack Bailey Bob Greczyn Bob Seligson Hugh Tilson Panel Discussion Jack Bailey Bob Greczyn Bob Seligson Hugh Tilson

Health Care Policy Forum Health Care Legislation You Need to Know Health Care Policy Forum Health Care Legislation You Need to Know