MDRP 2010 Conference - Reforming Medicaid: Covering the Uninsured and Providing for Long-Term Care

Keynote Speaker:
Dr. Mark McClellan, Director – Engelberg Center for Healthcare Reform, Brookings Institution

There has been much talk in the political arena about how the costs of the new healthcare regulations will be covered. There are several actions within the bill that will help in doing this.

Some include the payment reductions for reimbursement which will be a huge part of the amount off-setting the spending increases. This will also include the provider payment reforms which will reduce the amount states are paying out to the entities for the treatment patients receive. There is an Independent Payment Advisory Board that will be put in place to oversee and help to set those levels.

The closing of the Donut Hole will be helped by the year 2020 through pricing discounts and rebates from manufacturers. This “saved” money will be put back into the system to help slow the increase in pricing that will come from the increase in people being covered. And not only are more people being covered, but we have to keep in mind that patients are living longer. In addition to living longer, diseases are being detected earlier which begins the treatment process earlier and can thus increase the overall healthcare costs for the patients over their lifetimes.

There are also more industry fees imposed upon the insurance, healthcare, and pharmaceutical entities. As well as the implementation of the no excises tax rule for those “Cadillac” plans that may be offered by companies to their employees. This rule will be in effect until 2018. Companies will also be faced with a payroll tax increase of 0.9%, plus a new 3.8% tax on non-wage income (e.g., investments) for individuals earning over $200,000, not indexed.

There were also a few items included in the legislation outside of the healthcare industry. One being the student loan reform language which not only helps to cover those patients in need, but also makes student loan rules also benefits the students/parents of students.

Some provisions in legislation may not help to obtain funds on the back-end, but will be extremely helpful to the agencies that will be paying to cover their patients on the front-end. Language was included that makes insurance subsidy increases to be along with CPI, instead of along with healthcare spending. This change will be seen over the next few years and will help to keep the payments down. With the reduction in inflationary payments and with other cost cutting (e.g., reduction in ER visits by those without individual health coverage, additional preventive services) within the healthcare world, the impact to the agencies will be less than those per-patient costs seen before healthcare reform.

Some of these items are already in effect while others are coming down the pike. But stay tuned as lawsuits unfold which will no doubt have impact on the implementation.

http://www.brookings.edu/health.aspx
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