Wednesday, May 26, 2010

Federal Health Care Reform & Public Employees

Federal Health Care Reform & Public Employees
Friday, May 21, 2010
12:00 – 1:00
Presentation by the Utah Health Policy Project

The Utah Public Employees’ Association hosted an open forum regarding Federal Health Care Reform and invited the Utah Health Policy Project (UHPP) to present.
UPEA invited all members to participate in the May 19th meeting at the UPEA headquarters. Members were particularly interested in how the reform would affect public employees and whether or not the reforms would solve ballooning premiums within PEHP.

HSAs Not the Solution

The UHPP Board of Trustees Chair, and former PEHP Executive Director, Linn Baker, opened his presentation with a discussion about Health Savings Accounts (HSA). He said that state legislators are endorsing the public employee HSA, which is tied to a High Deductible Health Plan, as a primary benefit for state employees.

Baker predicts that healthy people would opt for the HSA over the traditional PEHP plans because healthy people wouldn’t anticipate ever getting sick. However, a mass migration of healthy members to HSAs would leave high risk individuals in traditional plans. The premiums and deductibles for HSAs and traditional plans are both tied to utilization. Therefore, people in the High Deductible Health Plans would be subject to the same increases in medical costs as people in the traditional plans. Overall, HSAs would not solve the problem of rising medical costs.

Reform Should Give Insured Peace of Mind

Federal reform attempts to solve the problem of rising medical costs by placing restrictions on insurance companies, by requiring everyone to be insured, and by providing incentives to businesses that carry insurance for employees. Jessica Kendrick, UHPP Community Engagement Director, introduced attendees to two families that exemplify problems within the current health insurance system. Her examples addressed issues of pre-existing conditions, gaps in coverage and families who are priced out of the health insurance market. Baker linked these problems to the health insurance industry and brokers who serve as go-betweens.
While private plans are paying go-betweens and lobbyists huge sums, the Public Employee Health Plan costs are driven by the larger market—not profits. Public employees should have an interest in the health care reform because current policy decisions will influence future health care costs to public employees.
Also, Baker said the reform should give some peace of mind because insurance companies can no longer set limits on coverage and requires those companies to cover individuals faced with job loss. Lastly, the legislation should result in more transparency for consumers.

Controversial Mandate

Public employees will probably feel the after affects of health reform as a response to changes in the private sector. Baker said that expanding health insurance coverage may cause premiums to increase, but the federal reform addresses this through the controversial mandate that requires everyone to participate in a health insurance plan.
Theoretically, rising premiums would be mitigated by a healthier risk pool that will result from universal coverage. Currently, some people who can afford to insure themselves choose not to pay premiums—and then use emergency care services to the detriment of those who pay premiums.
Those individuals who choose not to insure themselves would be penalized through the tax code.
Utah is one of 18 states prepared to sue the federal government for requiring all individuals to carry health insurance. Baker suggested that the state could use its resources to apply for federal grants that would lower premiums by addressing malpractice claims and fraud.

Cost Critics

Vocal opponents to the federal reform cite costs as an overall point of opposition. Baker suggested that health care costs have increased more than 10% per year with no ceiling. He said the reform’s initial costs fall well below the cost of doing nothing. The Utah Health Policy Projects gives an unequivocal answer to reform critics:

“The economy remains fragile, and getting health care to millions will have a price tag. But we pay a price for doing nothing as well. The question is: which price is higher? We currently spend more than $2 trillion dollars a year on health care. The Patient Protection and Affordable Care Act will make a short-term investment of roughly $100 billion a year to lower costs and provide coverage to almost all the uninsured. This is absolutely necessary in order to get control of the real cost drivers like "fee for service" payment systems that encourage more "treatments" but discourage prevention. Only with reform will small businesses and families begin to see stability in their premium costs. The new legislation will create true competition to get better prices out of insurance companies. It will provide safer care so we don't spend billions extra to treat preventable mistakes like hospital acquired infections.”

The Utah Health Policy Project has resources to help users understand the reform. Baker also recommended the Reform Implementation Station to understand specific scenarios:

The Utah Public Employees’ Association is tracking the issue very closely and will be directly involved with any decisions that affect public employees. We will update members periodically on issues regarding health care.