Implementing Medi-Cal and Private Insurance Coverage in California
Table of Contents
- This program is presented by university of california television like what you...
- An extender on what chaotic to imagine a state regulating the insurance market...
- Spending reductions and health were were quite a bit larger for example he...
- That upon one part of it will be a very good change and that is the health...
- Sustainability this is the issue that everybody's worried about here in...
- And it'll be turned on its head once this goes into effect stateside to that...
00:00
this program is presented by university
of california television like what you
learn visit our website or follow us on
Facebook and Twitter to keep up with the
latest you see TV programs also make
sure to check out and subscribe to our
YouTube original channel you see TV
prime available only on YouTube
okay good afternoon I think we're going
to get started this afternoon welcome to
this is the second in our series on the
00:43
implications of the Affordable Care Act
for California as we implement it here
in our state this series is sponsored by
our school of public health here at
Berkeley the Goldman School of Public
Policy and also our Robert Wood Johnson
Foundation postdoctoral fellows in
health policy as well so I believe we
have some people from each of those
constituents constituencies here and we
really have a terrific session today we
decided we couldn't really cover these
01:14
topics without having to of the experts
in the state who are on the ground level
dealing with some of these issues so
today I have the pleasure of introducing
us to both Larry Levitt who's with the
Kaiser Family Foundation I'll tell you a
little bit about mr. Levitt in a minute
and Brisbane Aachen the chair and CEO of
Blue Shield here in the state and
together they're going to be covering
the issues and implications of the
health reform act for the medical
population here in California and then
01:46
also in terms of the private commercial
market and some of the challenges facing
Blue Shield along those lines and others
insurers as well i'm going to introduce
both of them at the beginning and then
we'll begin with mr. levitt followed by
mr. Bo doc and they will each speak for
about a half hour and that's going to
allow us a good half hour then for your
questions of which given a month or so
ago there'll be plenty of great
questions so let me begin with with
Larry Levitt who is a senior vice
02:18
president for special initiatives at the
kaiser family foundation he's also a
senior advisor to their president and
he's co-executive director their
initiative on health reform and private
insurance he has an extensive background
I won't mention everything but before
joining the foundation he was a scene
management manager with the Lewin group
in the private sector where he advised a
number of public and private sector
clients on health policy and financing
he also has experienced though as a
02:49
senior health policy advisor in the
White House in the Department of Health
and Human Services and he worked on the
development of President Clinton's
health security act and other health
policy initiatives some of us were
around in those days remember very much
the health security act and thought that
there was going to be a marked change in
US health policy at that point in time
we were a bit premature but it has now
come up come about he actually
co-chaired the working group and cost
containment on the president's Task
03:20
Force on health reform at that time he's
also been a special assistant here in
California to John Garamendi where he
co-authored Garamond he's report on
california health care in the 21st
century he's been a medical economist
with Kaiser Permanente earlier in his
career where he worked on insurance
reform he also has experience in
Massachusetts as well which is another
state that probably along with
California is doing some of the most
innovative work around implementing the
health reform legislation mr. Leavitt
03:52
holds a bachelor's degree in economics
from UC Berkeley and a master's degree
in public policy from the Kennedy School
at Harvard so he's got both coasts
covered mr. Bo dakin is no until all of
us here on campus we've been very
fortunate in having summer Bruce's time
in teaching in our concurrent degree
program between the school public health
and the High School of Business he's
been the chairman and CEO apples shield
now for about 12 years joining them in
04:23
1994 and during that time they've been
the fastest growing health plan in the
state more than doubling the company's
enrollment and revenues have actually
tripled during that time they want a
number of competitions for example with
two large government contracts one
covering the california state employees
and then another one the US military and
families are enrolled in the TRICARE
program mr. Bowdoin is highly
committed to Blue Shield's
not-for-profit mission and in 2002 he
04:54
was the first health plan CEO to offer a
specific proposal to cover the uninsured
and that was fairly prominently featured
nationally in various publications as
well his plan for universal coverage
based on shared responsibility was very
similar to what was proposed by Governor
Schwarzenegger in 2007 he also started
or transformed the Blue Shield of
California foundation and that's now one
of the state's largest healthcare grant
makers with more than 125 million in
05:27
donations over the past four years he's
on a number of different boards which I
won't go into all the details he's been
an advisor to us here at Berkeley with
our health services management program
and has also been a key participant in
the Berkeley forum on improving
California's health care system this is
something we've pulled together and in
the last six months or so you'll be
hearing more about it probably after the
first of the year because it'll be a
part of the fourth presentation will be
making on health reform implementation
05:57
in California so with that please join
me first in welcoming mr. Leavitt Larry
good afternoon you can hear me okay
great well i'm going to broaden the
topic just just a bit here it turns out
on health reform california is actually
the easy case at least when it comes to
the to the politics rarely is anything
easy in california but in this case it's
actually other states where or where
things are a little bit more more
complicated and what i want to talk
06:38
about now that we've gotten through the
election is what's ahead for for health
care programs both the Affordable Care
Act as well as existing programs
Medicare and Medicaid clearly
implementation of the Affordable Care
Act the ACA is a big part of this both
in California and nationally but also
important and frankly maybe even more
important is what happens in deficit
reduction talks that are ongoing now in
in Washington the dealing with the
so-called fiscal cliff which if you're
07:08
in Washington right now you really can't
avoid it seems to have pushed pushed
generals and their affairs off the front
page so you know immediately after the
election huh the reaction of Republican
leaders who of course have been quite
opposed to to the Affordable Care Act
from the start was it was quite Swift
Speaker John Boehner said right after
the election that Obamacare is is the
law of the land a pretty clear statement
but in fact the reaction might have been
07:38
just a little too Swift because on
November 21st he said we can't afford it
and we can't afford to leave it intact
that's why I've been clear that the law
has to stay on the table as both parties
discuss ways to solve our nation's
massive debt challenge and I suspect he
had a few meetings in between those
those two quotes you know in spite of
the the second quote I'd say the odds of
repeal which has been the goal of
conservatives in Washington are
infinitesimal at this point with
Democrats controlling the Senate and the
08:10
White House with President Obama but the
odds of changes to to the law before it
fully gets implemented in 2014 are
certainly greater than that particularly
in the context of the deficit reduction
talks
and they're really to kind of key key
speed bumps ahead for for the
implementation of the law the first is
states who right now are making
decisions about whether to implement
health insurance exchanges which I know
you've heard about from from Peter Lee
here in California and also whether to
08:41
expand their their Medicaid programs the
second as I mentioned are the deficit
reduction talks around around the fiscal
cliff over the coming weeks and months
as I said it's virtually all anyone in
Washington is going to talk about
particularly how to avoid the cliff and
how to achieve long-term deficit
reduction Medicare and Medicaid in
particular over one-fifth of the federal
budget so they are completely
unavoidable in any discussions about
about the budget and the deficit and
09:11
health is an even greater share now that
you throw in the the Affordable Care Act
and the programs associated with that
plus I think Republicans as part of
these negotiations if they're going to
agree to greater revenues which I
suspect they will ultimately I can I
suspect that they're going to demand
reform of entitlement programs or
spending reductions and entitlement
programs like Medicare and Medicaid as a
as a price for that let me start with
implementation of the Affordable Care
09:41
Act and the states and what's ahead with
that you know so far the politics and
ideology have been the driving force
behind the thinking of governors but but
as the decisions get more real and as
they are getting more real I think we'll
we'll see that shifting the fact of the
matter is that while red state governors
are ideologically opposed to the law and
have been so from from the start people
who live in red or conservative states
are actually more likely to benefit from
the Medicaid expansion and the subsidies
for low and middle-income people that
10:13
are that are part of the law in this map
which is part of an interactive graphic
on our website where you can look up any
zip code around the country and find out
what proportion of the people would
benefit from the coverage expansions in
the law if you know your political
geography you can probably see that many
of the darker areas where people will
greater numbers of people will benefit
10
be in more conservative areas of the
country on average about seventeen
percent of people nationwide of the non
elderly population would benefit from
10:44
the Medicaid expansion for subsidies for
people who buy insurance in in health
insurance exchanges but the range is
tremendous in parts of Florida New
Mexico Texas Louisiana and California
over third thirty six to forty percent
of the population would actually benefit
from from these expansions and governors
in fact in Texas and Louisiana have been
quite vocal in their opposition the
governor of Florida was also quite vocal
in his opposition until the election and
it's it's softened a bit since then in
11:16
contrast in areas of Massachusetts
Hawaii New York Connecticut all states
that have either reformed their
insurance markets or expanded their
Medicaid programs substantially there
are areas where just two to four percent
of the population would benefit because
so many people already have insurance
and something that I think's not now
well understood which is what drove us
to do this analysis is how much
variation there is within states as well
and if you take California as an example
there are census areas which is how this
11:46
map is built we're just five percent of
the non elderly population would benefit
from from the ACA and other areas where
there are particularly pockets of high
poverty and high uninsured rates we're
over a third of the population would
benefit so there's some very localized
effects here not just on people but on
health care providers and local
governments as well but turning back to
states and let me start with the
decision about whether to create a
health insurance exchange many states
12:17
waited on the sidelines once the law
pass saying they were waiting for the
Supreme Court decision to play out the
supreme court decision played out then
they continued to wait on the sidelines
until the election happened now the
election has happened and there many of
them are actually still waiting on the
sidelines and but by our recent count 18
states plan to build a state-based
exchange and that includes California as
we've heard and another six intend to
run an exchange in partnership with the
federal government where the state does
something
12:47
in the federal government does others
but 16 states are in fact saying they
won't participate at all at this point
and 11 are still pondering their options
now the question is what what happens if
a state doesn't do it in exchange as I
imagine you know the law anticipated
this situation in fact maybe not the
number of states choosing not to run an
exchange and to defer to the federal
government but at least the concept of
states not not acting in the law
13:17
provided a fallback where if a state did
not set up an exchange the federal
government would would operate the
exchange in that state instead so if you
think about what happens if a state
doesn't act to create an exchange from
the point of view of consumers in fact
not a whole lot is is is different the
insurance market reforms the prohibition
on discrimination against people with
pre-existing condition the tax credits
to make premiums more affordable in
exchanges starting in 2014 which are
13:48
quite substantial by the way all start
to to flow regardless of whether it's
take rates in exchange or not now that's
not to say and and we'll hear more about
this from Bruce I think not say there's
no difference between a federally
operated exchange and a state exchange I
happen to believe there are some big
advantages to a state like California
operating an exchange first of all
states already regulate insurance that
overwhelmingly occurs at the at the
state level so it's very natural to have
14:18
an extender on what chaotic to imagine a
state regulating the insurance market
and licensing insurers in that state and
then the federal government coming in
and running the exchange you definitely
have some potential for chaos and
confusion more importantly I think
states are in a much better position to
do outreach and assist consumers in
navigating the health system always wear
wear a government is coming into contact
with consumers the more locally that can
happen I think
14:51
better and in this this is a formidable
challenge you know people are not going
to just enroll automatically on january
first 2014 it's going to take real
effort to get people who are uninsured
enrolled in medicaid or enrolled in
private insurance plans in the exchange
i mean it'll be interesting to see how
it state like california which is
frankly a way ahead of the rest of the
country how they're going to succeed at
doing this compared to let's say the
federal government you know which will
be operating the exchange and probably
half the states around the country let's
15:25
turn turn to Medicaid and as I'm sure
many of you know the ACA originally
required all states to expand their
Medicaid programs to everyone under one
hundred and thirty-three percent of the
poverty level technically 138 percent of
the poverty level but that's neither
here nor there for now I think um and
just so you have it in your head that's
about fifteen thousand dollars a year
and income for a single person and about
thirty two thousand dollars a year for a
year for for a family unlike with
exchanges though the law provided no
15:57
federal fall back because none was
thought necessary it was assumed that
every state that random Medicaid program
would have to do this expansion so there
was no reason for a federal fall back
fast forward to last summer in the
Supreme Court decision on the ACA and
that altered the equation equation
substantially or the court said that
states essentially did not have to
expand Medicaid and the federal
government could not penalize them for
not doing so in effect making it making
it voluntary the expansion is still
16:29
quite enticing for states in the first
three years the federal government will
cover a hundred percent of the cost of
all new enrollees in Medicaid as a
result of this expansion and over time
that phases down to two ninety percent
so states choosing to go ahead of it
will be able to expand coverage to
low-income uninsured people in their
states frankly for pennies on the dollar
essentially leveraging billions in fact
in federal dollars that will save state
and local governments from the cost of
uncompensated care they bear now and
17:00
also bring in state tax revenues as
federal dollars come into this
but here even more states frankly are
still pondering their options when when
compared to the decision about exchanges
8 say they will not expand Medicaid 5
lean towards not expanding for lean
towards expanding and 12 say they plan
to expand including California which in
fact has already started the expansion
but almost half of states 21 states are
still are still pondering their options
17:29
or have been have been silent now
thinking about the the consequences here
of a state not choosing to expand
Medicaid compared to the exchange here
because of their there being no federal
fallback the consequences are in fact in
fact quite quite different if the state
doesn't chooses not to expand Medicaid
they'll have somewhat lower state costs
because they won't have to pick up in
the out-years at ten cents on the dollar
but there will be no new coverage for
18:02
poor people in that state continued on
compensated care in the state as a
result of continued poor uninsured a
poor uninsured population and an
enormous numbers amount of federal
dollars left on the table in this table
illustrates kind of what what happens if
a state chooses to expand Medicaid
versus a state that doesn't with the
Medicaid expansion as I said everyone up
to one hundred thirty-three percent of
the poverty level is eligible for
Medicaid regardless of their family
circumstances between one hundred and
thirty three percent of the poverty
18:34
level and four times the poverty level
which is over ninety thousand dollars a
year for family of four anyone who
doesn't have access to employer coverage
can get covered in an exchange and has
access to significant tax credits to
make that coverage more affordable and
anyone over four times the poverty level
is is on their own they're guaranteed
access to coverage but but not a subsidy
now without a Medicaid expansion above a
hundred and thirty three percent of
poverty it's the same thing through a
quirk in the law between the poverty
19:05
level and 133 percent of the poverty
level those people who otherwise would
have been eligible for Medicaid if the
state had expanded can now go into the
exchange and get get the tax credits in
a private insurance plan but anyone
under
hundred percent of poverty who's not now
eligible for Medicaid is essentially
essentially out of luck so you have a
you know frankly a somewhat perverse
health care system where there's
expansions and access and coverage and
affordability 22 for the most part those
who lead at the nice need it the least
19:35
those those above poverty I should add
that another group not mentioned here
who were left out frankly in any
scenario or undocumented immigrants who
are not eligible for coverage and
Medicaid or for coverage or tax credits
in the in the exchanges and that's
likely to be a very big deal in
California where large numbers of
undocumented immigrants are uninsured
and will remain uninsured even after
these provisions go into effect in 2014
so you have a large population of people
relying on the safety net but probably
20:08
much less political support and
financial support for that safety net to
give them access to care so just
thinking about this this Medicaid
expansion as I said stated California
has already decided to to go ahead with
this but the many states have not if you
look at the total cost of expanding
Medicaid is about eight hundred billion
dollars over ten years ninety-three
percent of that cut gets covered by the
federal government leaving seven percent
to be covered by the state so
essentially from a financial point of
20:39
view states are making a decision about
whether covering seven percent of the
costs are covering these low-income
uninsured people is worth it to
leveraging that that 93% of federal
dollars in terms of people about 10
million people would be newly 10 million
currently uninsured people would be
newly eligible for Medicaid if a state
if all states expanded or not if they
didn't States would see savings related
to uncomplicated care in California
21:09
that's often at the county level where
counties cover the cost of public
hospitals or clinics and there's a
multiplier effect as those federal
dollars come into the system and and
providers see higher revenues there's an
effect on state revenues as well which
the state can always always use
so let me turn turn now to the to the
fiscal cliff the other the other
potential potential roadblock roadblock
here and you know if you've been
following the news closely you know
exactly what the fiscal cliff here is
21:42
but but let me review a little bit you
know basically what happens is at the
end of this year a bunch of tax cuts
expire and a bunch of automatic spending
cuts go go into effect this includes
what people refer to as the the bush-era
tax cut will will expire at the end of
this year a temporary temporary payroll
tax cuts will expire the alternative
minimum tax will start to hit more
people if it's not patched or fixed
automatic budget cuts which were the
22:13
result of the debt deal last year will
go into effect and Medicare physician
fees as a result of the sustainable
growth rate formula and Medicare will
kick in and Medicare doctors serving
Medicare patients will see a
twenty-seven percent cut in fees if you
total that all up over ten years it's
about seven point seven trillion dollars
if you if you want to reduce the deficit
that's a good thing it's a seven point
seven trillion dollars in deficit
reduction on the other hand it may very
well trigger a recession when they when
22:46
they kick in at the beginning of the
year now might be a generational thing
but I can't help but think about the
fiscal cliff and not think about
Roadrunner cartoons you'll think I'm not
sure about is whether President Obama is
the roadrunner and Speaker Boehner is
wily coyote or it's the it'll be the
other way around but we will we will
likely find out a few weeks so you know
what's what's likely to happen here is
me know when no one really wants the
fiscal cliff to actually happen some
23:15
people may want to dip their toes over
the cliff a little bit for for political
leverage but no one wants it to actual
all these things to actually go into
effect but what has become as a
essentially a rallying cry for long-term
deficit reduction and and the real
question as I said is we you know which
side which side blinks blinks first and
when thinking about the effects
on health programs and remember that
health is an enormous part of the budget
over over a fifth of the budget their
23:47
number parameters you have to keep in
mind the first is how much how much
deficit reduction are they are they
aiming for you'll hear numbers like in
President Obama's plan from from last
year four trillion dollars in deficit
reduction over over ten years two
million dollars in deficit reduction is
probably the minimum it takes to kind of
stabilize the the total debt that that
the United States hoes even President
Obama's plan for four trillion still
leaves substantial deficits 10 10 years
24:17
from now so to eliminate those deficits
you're looking at you know well over
double that which is which is the kind
of plan you saw from from the House
Republicans from congressman paul ryan
last year so so clearly the amount of
deficit reduction you're aiming for is
going to affect then how much spending
cuts you're going to see in health
programs the other huge parameter even
for a given level of deficit reduction
how you achieve that whether it's
through new revenues or through spending
cuts will also influence the the amount
24:49
of money you need to get out of out of
health programs and finally there's
there's issues of just how you how you
count what the what the arithmetic is
there is no consensus about how to order
back up if you think about reducing the
deficit by two trillion dollars four
trillion dollars six trillion dollars
you always have to think about relative
to what what are you reducing it from
which is referred to as a budget
baseline and there's very little
consensus in Washington particularly
25:19
when you get to the two news coverage of
what that baseline should be so you
might hear two plans might hear one plan
talked about on MSNBC that talks about
four trillion dollars in deficit
reduction and then you flip the channel
to fox and you hear another plan with
four trillion dollars in deficit
reduction but you have no guarantee that
those four trillion dollars are actually
the same the same four trillion dollars
or or mean the same thing
and then finally is is kind of what for
a given level of reductions in health
25:50
spending are they really kind of tweaks
to the to the structure of these
programs of Medicare Medicaid of the
Affordable Care Act or are they
fundamental reforms of these
entitlements and you know the reality is
probably they will they will aim for a
certain level of spending reductions and
they'll call it in title written form
because you have to call it entitlement
reform in order to be perceived as
serious in Washington but but there is a
there is there will be a very big divide
26:21
between some who are willing to save
money in these programs but but want to
retain the the basic the basic structure
and let me make this a little more
tangible to give you a sense so as I
said the president's deficit reduction
plan called for four trillion dollars in
deficit reduction and that included one
point six trillion dollars in revenues
and also counted some cuts in
discretionary programs including health
programs that have already been enacted
26:52
so that plan was left with three hundred
and fifty nine billion dollars in health
reductions over ten years and these were
what i would call mostly tweaks to the
system it included things like applying
drug rebates that medicaid programs now
get around the country from
pharmaceutical companies applying those
two drugs provided to low-income people
in medicare increasing income related
premium so charging higher income people
a little bit more and medicare premiums
than than than the general premiums in
27:24
the program and reducing payments to
providers particularly for for post
acute care after after a hospital stay
and one thing that's port and remember
is it that these 359 billion in savings
are on top of seven hundred sixteen
billion dollars in savings in the
medicare program that were enacted as
part of the Affordable Care Act which
overwhelmingly were reductions in
payments to drug companies insurance
companies and and health care providers
and you may have heard that 716 billion
number bandied about in the campaign
27:56
but but it becomes much harder once
you've once you've taken that much money
out of the out of the system to get to
get further incremental dollars now in
contrast to that sort of at the other
end of the spectrum is the the house
budget plan which was championed by by
Congressman Paul Ryan that plan had much
more in deficit reduction than the
president's plan but also had almost no
increases in revenues so the entire
deficit reduction had to come out of
spending reductions and as a result the
28:26
spending reductions and health were were
quite a bit larger for example he
proposed converting the Medicaid program
to a block grant to States and capping
the growth in that block ramp from year
to year which would have would save at
eight hundred billion dollars over eight
hundred billion dollars over ten years
and then much more in the years after
that he also proposed converting
Medicare to what proponents call a
premium support system what opponents
call a voucher system and that would
save substantial amount of money over
28:58
over time as well so you can see the
differences between these plans and how
they get their deficit reduction and and
what it means for for health programs it
just give you some things to watch for
is this debate unfolds and and it's
unclear latoria unclear how it's going
to going to unfold is very unclear when
when they'll get to specifics but in
Medicare you're likely to see some of
these same ideas that the president
proposed also potentially larger ideas
29:29
like a like a premium supporter voucher
system although i think that's that's
likely to go anywhere now and then also
i think a lot of discussion about
raising the age of eligibility in
medicare right now Medicare people are
eligible for Medicare starting at age 65
the age of eligibility and Social
Security is transitioning to 67 if you
raise the age of eligibility of Medicare
267 as well you would save a lot of
money as people went into the program
later in Medicaid I'm sure we will hear
30:01
about it the potential of a block grant
for Medicaid but again I think that's
unlikely at this point also what some
people think of as a
grant light which is a per capita cap
you know Block Grant is where you give
each day to fix sum of money that they
use with the great deal of flexibility
to provide health care for low-income
people per capita cap would provide a
fixed sum of money but on a per person
basis so the more people have stay
covered the more money they get and
conversely obviously the fewer people
they covered the less money they they
30:32
would get and then finally as the quote
i started with from from speaker boehner
suggests the Affordable Care Act will
certainly be on the table as well in
these deficit reduction talks I think a
repeal and outright repeal is unlikely
but certainly their possibilities of a
delay you know in in the world of
Washington budgeting everything is on a
10 year basis so if you delay the start
of a program by a year it means you have
one less year of spending in that
10-year period so you magically save
money so you get to count it towards
31:04
deficit reduction even though it's going
to cost the same in the end anyway
things there's also likely to be
discussion of reducing the subsidies for
people who buy insurance in the
exchanges the tax credits right now they
go up to or their plan to go up to four
times the poverty level as I said about
ninety thousand dollars a year for a
family of four there are ideas to maybe
scale that back and have them only go up
two to three times the poverty level
which would of course leave leave those
people in that range with with
31:33
significantly higher premiums so we're
you know I think the next several weeks
are going to be its nest next several
weeks and months as States consider
their decisions and start to implement
the Affordable Care Act and as the
deficit reduction talks become a little
clearer we'll say a lot about the future
of health care in this country not just
the health reform law but also also
Medicare and Medicaid but but truth be
told i think i've i've probably said
32:05
that a hundred times that the next few
months are going to be pivotal for the
future of the health care system so and
if you have me back here in a few months
i'll probably say it again so i think
the reality is that these issues are
going to be perpetual issues just
because we passed the Affordable Care
Act and it
it's planned to go into effect january
first 2014 that is that is hardly the
end of it I mean Medicare and Medicaid
past decades ago and we're still talking
about them and we're we're still going
to be talking about all those issues
decades from from now thank you
32:57
there Thank You Larry mine will be a
little bit different in that it is
focused on the private insurance market
that was the topic I was given and I
stayed within the parameters for a
change and and I will focus here on
California for the most part although i
think the discussion about the other
states is marvelously interesting and I
don't for life may have any idea how
33:28
they're going to deal with the states
they're not playing but California
certainly appears like it is going to
play and and we have been involved in in
that in many respects so what we want to
do is just I've got about a month left
and at Blue Shield before I retire so it
a shameless advertisement is necessary
and and then I will talk about the
industry dynamics well be currently we
33:59
currently smell especially individual
small group business today because
that's what the 2014 to 2017 exchange
will be about some of the implementation
challenges both for the exchange itself
although it will just touch on those
Peter should have gone into those in
detail but from a private insurers
standpoint and really from the market
standpoint what are the challenges to
success and that's on the assumption
that there is funding okay so we've been
around this issue for quite some time in
34:31
2002 I made a speech at the Commonwealth
Club and the next day got some credit
for what turned out to be a far more
controversial proposal than we intended
we thought it was high time for
universal coverage and so we stood up
and said that and actually proposed to
specific plan and the next day I was not
getting calls from my friends in the
insurance industry so uh we were uh
35:02
actually very uh focused on
this because it was really part of our
heritage that's the reason we didn't
think it was all that radical in fact
our mission is that to ensure high
quality care to all Californians and you
only do that if you've got universal
coverage now we didn't expect that Blue
Shield would necessarily have 35 million
people on its rolls 15 million would be
fine the the fact the med though is that
really was our mission and so to stand
35:35
up and say we were going to work towards
that across the board for all
Californians we took that next step we
proposed it in 2002 as was discussed we
worked with Governor Schwarzenegger
closely in his play on in 2007 and we
also supported along with Kaiser the
California exchange law that was passed
here in the state to support the
exchange board that exists in Peter was
here and established his position and we
36:05
were also there were not many plans that
were openly in favor of the accountable
Affordable Care Act there were a number
of plans that i would say quietly
endorsed or at least did not argue
against it I there were also a number
that behind the scenes actively worked
against it in fact some of those as it
turned out gave quite a lot of money
through the Chamber of Commerce and at
least temporarily were were on the White
36:35
House list of culprits but the bill
passed and and we certainly would have
written a different bill if we'd written
it as would every american if they sat
down and looked at the bill there's
thousands of pages of things that some
which make i think eminent sense like
the fact that they eliminate
discrimination based on health status
and there are other things that we think
perhaps they went too far too fast and
37:10
may have an impact
on success but we'll talk about that
first just to give you a sense on the
individual market dynamics because the
biggest change is for Californians will
be in the individual market not small
group currently there are lots of
players and I don't want to be
presumptive here but there in fact there
are only really three players that that
matter in terms of the state in terms of
individual coverage if you know i'm not
talking about medicare or medicaid i'm
talking about commercial insurance the
37:41
vast majority of that coverage comes
from anthem blue cross blue shield and
kaiser in that order in terms of market
share so we have traditionally as has
Anthem Blue Cross as ass Kaiser had a
fair block of business in the individual
market one of the key elements of
eligibility for that coverage is
determined by the consumers health
status so it is not unusual for us today
it's not 2014 yet and certainly this
38:14
will go away in 2014 but we do in effect
look at your health history to determine
whether or not we believe that over the
period of time that you're going to be
paying us premium that we have any
chance of recovering that premium and
that in fact we can create a risk pool
that is what we call balanced and there
are some products we charge a little
more for in a little less for but the
fact of the matter is if if you're
hypertensive and have other chronic
diseases the chances of getting an
individual plan from any of these
38:47
carriers is fairly unlikely until
january first 2014 and what we said even
in 2002 we can't by ourselves take this
on because of course we would attract
all of the people that need care and
others would attract those that don't
but on a level playing field which will
have in 2014 we're excited and thrilled
to be part of that market the product
options are actually there's literally
hundreds of individual product options
in the state
39:18
they aren't all that different you
really do have to be an actuary
practically understand the differences
brokers primarily are the way that these
products are sold and their explain to
their consumers and customers in general
these products have higher deductibles
than your group coverage and often they
have narrower networks now in our case
we still brought have a very broad
network as does anthem but in other
39:50
cases not so much but we do have a
fairly high deductibles it wouldn't be
unusual to see it three thousand to five
thousand dollar deductible in one of our
plans nor would it be in our competitors
so there is a significant number of
choices which some people say is a good
thing but it is awfully complex and
frankly you need a broker advisor to
help you with this even if you know the
insurance market my son came to me for
40:20
the first time he just turned 26 and had
to enroll in group insurance and after I
saw the benefits from Wells Fargo I
realized why he needed help so they also
the way that this business model works
is fairly straightforward we work hard
to get what we would kill again of a
balanced risk pool but in effect we are
going to be turning down those that have
more chronic health disease than not and
40:52
charge lower prices than not so these
products are tend to be the least
expensive in the market but that's
because in fact the people that are on
these products tend to have relatively
good health so that is one of the key
parts of the current business model
another key part is not only their
multiple products they're distributed
primarily through brokers that's less
true for Kaiser but for anthem and Blue
Shield most of our products are sold or
41:24
through brokers we do have about thirty
percent sold directly but far more are
sold through thousands of bro
across the state and so we actually
don't in a sale process have a
one-to-one relationship with the
customer and what happens then is in
effect the broker becomes our customer
and there's a lot of attention and money
paid to brokers for commissions on these
sales and service to brokers really
determines both Commission and service
really determines how you do in terms of
41:57
the market because the products at the
end of the day are very similar even
though there's lots of them we've got
one anthems got one Kaiser might look a
little different because it's an HMO but
but there's a lot of similarity and the
pricing is really reflecting the
benefits that have been chosen the age
sex of the individual and their health
history and those are put into the black
box if you will and then we grind it
around and a price pops out and that
42:27
price is going to reflect are you 50
years old and have you had a history of
heart disease or anything else or are
you 25 years old and maybe you've never
even seen a physician or if you've seen
one it was for dislocated elbow and if
those are the kinds of things that we're
comparing you're going to see two very
different prices in one case you
probably won't get coverage and the
other case you'll probably get coverage
at a very low price and and that's the
way the current business is sold small
42:59
group is guaranteed issue today so we
can't turn down small groups but we can
if you will rate them according to their
age sex and health factors up to a band
that is five percent either side of so
we can't adjust them a little bit but
the bands are relatively narrow so
that's less of a change that's why I say
the biggest change in the market it will
occur in 2014 is for the individuals and
43:31
that upon one part of it will be a very
good change and that is the health
status will have nothing to do with your
eligibility and in fact we will be
sanctioned find the probably even
threatened to lose our license if we
continue to actually use health status
as a way in which we get enrollees so
there'll be very strong prohibitions
from doing that as there should be in my
opinion now the 2014 business model is
44:02
very different we take all comers again
which we think is very good but we've
got to move from a very different view
of how do we think about how we're going
to achieve some level of bottom line and
that isn't going to be by doing a really
good job of deciphering the risk and
turning away the risk that that we
believe is going to be harder for us to
manage and really get much much better
at getting hopefully a diversity in our
risk pool that is hopefully for every
44:33
really sick person we get a really well
person that will be difficult especially
in the early years because think about
it there's a pent up demand in
California for all of the people that
have not been able to get coverage for
many many years they're going to go to
the exchange to get coverage and
probably peeps willing to pay more than
they would otherwise pay because they
need coverage and so they may or may be
at not be eligible for subsidies we
think by far the greatest population
that will grow if the subsidies are
still there after the fiscal cliff
45:04
discussion is that will be that group so
the people that are in that subsidy
category that effectively have been
eligible for commercial insurance are
most likely to enroll the second not
most likely to enroll will be people
that have a fair amount of discretionary
income but have not been able to get
individual coverage because they simply
couldn't get past the underwriting
screens or the health status screens so
the other thing that will be very
45:34
different is the market is
differentiated by what are called the
project defined by metal standards
starting with bronze
and bronze being the lowest and so the
products will be very similar they won't
be identical there will be some product
differentiation but I think what you'll
see for the most part is most of the
products in the exchange will look very
much alike whether there are a Kaiser
46:07
product or whether they're a Blue Shield
product or an anthem product or a health
net product they're going it now I'm
talking about the individual and small
group market we're not talking about
what you're going to see is University
of California employees or students if
you're covered under the group policy
here those will still be untouched by
the law at this point that doesn't come
till much later and so at this point for
individual and small groups they all
have fairly simple choices to make and
46:39
they will pair up those benefit choices
with prices and so since those are the
two primary things that consumers will
have to judge from unless they have a
very strong feeling about Kaiser or a
very strong feeling and this could be
plus or minus a very strong feeling of
blue shield or Anthem Blue Cross or
health net or their county run health
plan or unless they have very strong
feelings they're going to primarily pick
on price that's our view I think is a
47:10
fairly safe view that if someone else is
twenty percent below us on price for the
same benefits especially if you don't
know much about health insurance and you
don't know much about one network from
another and if you go to the book and
your physician is in their provider
network my guess is that price will be
the predominant factor by far at least
in the early going and I think you will
see for this reason that most plans will
47:40
develop multiple options there won't be
a single network right now we have a
network of about 400 hospitals and
55,000 physicians that is not the
network we will offer through the
exchange our network will be much
smaller and our network will be
physicians that we've worked with over
the years that we believe do a better
job both on quality and cost those the
networks are being developed as we speak
48:10
but we will be ready coming into the
2013 time frame to offer those networks
now they won't be dramatically different
they might be half the size of our
current network so there's still going
to be a lot of choice but they won't be
quite as big as what you've seen in the
past that I don't think we'll be alone
in that I think we'll see all of our
competitors is offering new networks as
well this is a swag at best a we brought
in a consultant and these numbers are
what we would believe might happen based
48:43
on the numbers in California neither
this is a private consultants estimate
which I won't name because who knows
what's going to happen but let me tell
you why we think this is going to happen
we of course think individual coverage
will go up now will it look 23 million
members we don't know but we think it's
reasonable to say that there will be
individuals out there the ones that
particularly are subsidized the ones
particularly that knee care and can't
get it that will get it small group goes
down why would small group go down
49:13
because I think small groups that may be
offering coverage will get out of the
health care business I think they will
say here's a certain amount of money
call it a voucher if you will and you
can go get health insurance and i'll pay
you a little more at the end of the
month but in effect you're on your own
keep in mind that many small groups
don't contribute anything they offer
coverage but they'll contribute much
today so this will just allow them to
get out of the administration business
49:44
altogether they'll say you've got you
know 30 choices in the california
exchange we wish you well and
and that will happen now there will be
small groups that go in as a group as
well but there will be some small groups
that will end up as individuals large
group we believe will go down these are
what we call underwritten groups where
we take the risk and the reason for that
is we think that again a certain number
of large groups will take some advantage
50:16
over time of getting out of not so much
the health care business but be moving
to the ASO business was ASO business
administrative services only which means
that they the company takes all the risk
and the reason they would do that is
they would not then be required to offer
this level of benefit because the law
allows for ASO groups to have skinnier
benefits than the exchange benefits and
50:48
I was surprised when I open up the
package for my son they don't have at it
Wells Fargo at least in Colorado where
he works they have an HSA product that
is a three-thousand-dollar deductible
and an HR are a product that is a
two-thousand-dollar deductible that's
the richest plan they offer you can't
get anything that is more comprehensive
than that from wells fargo and they have
well probably a hundred thousand
employees that would guess which was a
shock to me I assumed that they have
51:19
probably had a more comprehensive plan
we certainly do for our employees but
that is all you can get if you work for
wells fargo and now it's not very
expensive but and they contribute
nothing to your HSA which also i
surprised so these are pretty lean
benefits but if you're in the ASO
category the federal government said
that's why we think it will grow you do
not have to play in the exchange you can
continue to offer benefits you can go on
51:50
the risk and you can offer benefits as
you see fit and design the benefit
package as you see fit so we think that
will grow Medicare of course will grow
médicale this is where I mean Larry's an
expert
this area you know people have talked
about two million three million 1
million I don't know how much it's going
to grow but it is certainly going to
grow it you know that expansion from a
hundred percent to 133 percent clearly
there's a group there that is all
52:21
eligible and I would think and hope
actually that Medicaid recipients in the
state of California take the opportunity
to get pretty good coverage for what
they have not been eligible for before
the uninsured of the and this is
important point you know it's still in
this state and again 6.5 there's lots of
numbers you can see it from 7.5 down to
two as low as if you're talking about
52:52
continuous uninsured members all the way
through the year down to about three or
four but 6.5 is not a bad number of
uninsured people in California we will
still have probably more than half that
when this is all done so there's still
not universal coverage in the state of
California but this is a big down
payment if it works so what are
challenges well just the bloody rules
themselves are thousands and thousands
53:23
of pages and this is not just our
problem HHS is Dunham actually I think a
pretty good job of getting these
regulations out but they're very complex
and they're very difficult to wind
through the system and of course then we
have to program systems computers and
people to make sure that we're ready for
those the most recent regulations just
came out last week and we have to be
ready by this spring to send in our
offerings so it's right upon us in June
53:55
we send in our our initial package in
April in June they'll take a look at all
that make decisions about who is
qualified who isn't qualified health
plans will then go into testing and then
in October will be offered to the market
we hope to be offered to the market
obviously I guess there's possibility
that we won't i think we probably will
you know we haven't set our rates yet
because we haven't had the essential
benefits to find until just recently and
now we can go about the rate setting
process and there's still a few
54:26
regulations tilma pike we have done I
think a pretty good job on the natural
of having good relationships with the
regulators we know all of the California
exchange board members well we certainly
know Peter Lee well we think they've
done a good job but they do have an
awful lot yet to go and whether they're
going to be ready on january first 2014
there is this issue of savings there's
also the issue of will we be ready and I
think that's you know a legitimate
54:57
question our approach is this has been a
high priority for us we would look
pretty stupid calling for universal
coverage and not focusing on the first
step towards it so we have for the last
couple of years or really before the law
pass started focusing on getting ready
we are developing those narrower
networks including accountable care
organizations which I won't go into now
we do think dramatically reducing the
cost which we have done this last year
in a few places will be the key for our
55:29
success and we are very focused on
looking at understanding at a you know I
think retail sailing skills which I
didn't mention before is going to be it
an asset that health plans really have
not had in the past it is not something
like Amazon or like some of the others
that are absolutely superb at
identifying consumers insights that what
drives their behavior what motivates
them to make behavioral choices
55:59
behavioral economics obviously a huge
field right now we need to get much
better at that and I think all the plans
will be looking at it we are doing it
primarily through the lens of wellness
we have a program called well volution
in which our employees and now the
market can take advantage of and we
encourage people to get their biometrics
check to get if they're found to have a
problem to get that
and indeed to maintain that level of
coverage if they do all of those things
56:29
they get a free day off they get a fair
amount of cash and they reduce their
out-of-pocket premium for health care
down to almost zero and so we already
have a sliding scale for the cost of
health insurance coverage but this takes
it down especially for the people on the
lower end down to about nothing if they
do all these things to get healthy and
we've also made it absolutely mrs. work
for the smokers you have to walk about
three blocks in the ration laughs you
have to walk about three blocks in the
57:00
rain if you want to smoke in one of our
pieces outside our facilities we've also
done some things like added treadmills
that people walk on while they do their
work and at about 1.8 per mile they can
take phone calls they can do claims and
unfortunately we just everybody wants
one but we have to have a building about
three times the size to get them all in
so and we will have fewer products and
hopefully a heck of a lot deeper insight
57:31
sustainability this is the issue that
everybody's worried about here in
California or should be these are much
more comprehensive benefits that have
been offered in the individual market
they're richer benefits they're going to
cost more they're richer benefits to a
population that has that young on
average is sicker they're going to cost
more so one of the ironies of this is
that even though coverage will be much
wider and much more expansive in terms
of access the cost to get coverage will
58:02
go up and I'm just saying on average I'm
not saying for any individual now some
individuals may be paying a lot right
now but many individuals can get
products from us for one hundred fifty
dollars a month some even as low as a
hundred dollars a month there's nothing
to be a product on the exchange it's one
hundred dollars a month or I don't think
very close now the people that are
getting the subsidies that's why we
think people that's getting the
subsidies may very well be by far the
largest group that enrolls because you
58:34
know if the products 350 and they
a substantial subsidy that could get
them into a place more similar to what
they're paying now we do worry about the
weakness of the mandate the mandate is a
small tax as defined by the Supreme
Court I think it's about a hundred
dollars of the first year and as my 25
year old said what were they thinking
because when he turns 26 he has no
intention of getting insurance he said
I'm more than happy to pay my tax rather
59:04
than have to pay a 300-dollar insurance
bill a month and he'll take his chances
and what's the crime about this is of
course then if he finds out that he has
something wrong with him he can go and
roll and so we were in favor of a very
strong individual mandate now I know the
politics of that were incredibly
difficult but it is going to be
important that we get a balance in this
or it could be a problem age rating we
59:35
right now aged rate from seven to one
this goes down to three to one which
means we have people that are paying a
hundred dollars for the product and we
got other people at the other end of the
spectrum paying for the very same
product seven hundred dollars because of
their health their health factors this
now says that the most week in charge is
three to one so if that person is paying
700 now they'll go down to 300 that's
great but the person who's now paying
100 for us to make this even out is
01:00:07
going to have to go up so that
discourages people that are healthier
from coming in and so we will be
lobbying actually this I guess I'm
leaving for Washington ro one more time
to try to phase that component of the
law n getting to a more consistent rate
we agree with but we don't think we can
do it overnight and finally the premium
tax is that we will be paying as
insurers which will be built into your
rates is in the neighborhood of about
nine hundred billion dollars over
01:00:39
I think the first six years it'll cost
us now about three percent more on our
all of our premiums because we get taxed
it's the 716 billion that was saved in
the ACA so it is going to be a massive
undertaking I think we can ask ourselves
and I think the exchange board is
tremendous let me say that I think
they're good people they know what
they're doing and they're still going to
have a heck of a challenge getting ready
for 2014 and will they be ready as a
01:01:09
legitimate question making it work which
is really what we care about and that's
why we are talking about maybe slowing
some of this down to make it work but
it's going to have to be a partly a
shared commitment that we really want
this to happen as part of our social
contract we've always believed that
healthcare is a right at Blue Shield
this means that there are going to
theirs and it a lot we can do on the
prevention side to get costs down
there's a lot health plans and providers
can do to get costs down but there also
01:01:41
has to be a commitment on the part of
the consumer that they're going to be
part of the system because if all we
have are the people that are sickest
getting coverage those premiums will be
out of touch of people that are left
with focusing on affordability obviously
is necessary and we liken it to a
culture of coverage like a culture of
non-smoking if we can get in this
country to the notion that it's just
something that is you know it's the
right thing to do is to have at least
some form of coverage it will
dramatically change the overall cost for
01:02:13
all of us thank
discussion I think it's on now yep okay
open for questions and discussion and
I'm going to start off by asking Bruce
aw11 question and that is you talked
about the fact that the benefits are
going to be fairly standardized and
therefore the differentiation for
companies like Blue Shield is going to
be around prices but the other boleyn
okay and maybe this is partly I
anticipated my question is around the
01:02:56
provider networks that you're going to
be associated with and so see a little
bit about dad I think right now the way
we look at it is the time frame we have
in all candor a lot of us were frozen on
building new networks until you know
there were set on my slide there were
two real potential issues that could
have stopped this in its place one was
the supreme court decision so we looked
01:03:27
at that and said are we going to go out
and recon tracked with hundreds and
thousands of providers till that is over
answer is no and then of course the
election now we went ahead and made the
decision to move forward but we weren't
going to turn up the burner full tilt
until after the election so while we got
started we're just getting started on
getting the network's fully done so I
think the first network that we apply to
01:03:55
the exchange will be more cost effective
and
and more differentiating in terms of
both cost and quality than our very
broad in a sense undifferentiated large
network but I think it will be in
subsequent years 2015 where we will be
able to say something about the quality
of the network that we've built the kind
of both the level of savings and the
level of quality outcomes that we will
01:04:30
be tracking through that system but I
suspect for us it'll be 2015 hey just a
brief all participating absolutely
absolutely in fact I hope everything is
available on the exchange it we are
working hard with some other health
plans and with PV GH to try to make a
whole lot of this information including
medicare information transparent it's
01:05:01
it's been a piece of what we've been
doing in the background for the last
three years
a couple of roving mics just keep your
hands up and um I um so the Affordable
Care Act is an attempt to expand
coverage what happens if you're over the
four hundred percent and you currently
have individual coverage yeah with all
the changes you're making does that
affect any of those people yes how there
were two options at the time that the
bill was passed and you could
01:05:35
grandfather your current individual
subscribers it was administrative Lee
there's about a thirty percent turnover
in our individual block every year which
means and so and then likewise maybe a
little bit less so for Kaiser but about
the same for anthem so that means that
every year we lose a third and we add a
new third and so when we looked at that
we said by the time the laws in place
01:06:08
because if you left us you couldn't be
get you lost your grandfathering so we
said to try to keep grandfathering in
place with what will be less than twenty
percent of our enrollees and track all
of that doesn't make a lot of sense and
so we will have next to no grandfathered
individuals that will be going into the
exchange there are some anthem actually
made the decision to do the same thing
and they're not tracking it at all and
so they will have very few going in but
01:06:39
that's the only option is for people
that have grandfathering that is there
in the same plan in the same benefit
plan with the same provider all this
time they haven't changed products they
haven't changed providers they're still
grandfathered and they can continue on
that product and not go into the
exchange and they will be in the product
they're in today now that doesn't mean
that the insurer has to keep the product
forever but
01:07:11
probably for the most part insurers if
they've had those products there'd be no
reason for them to drop them either I
would just add if you think about what
happens to people with coverage many
Bruce talked about the age rating so
younger people with those products will
see their premiums rise older people
with those products will see their
premiums fall but and the benefits will
certainly be richer I mean it's commonly
the case in the individual market that
maternity care isn't covered
prescription drugs often are not covered
or covered in a very limited way mental
01:07:43
health is often not covered or covered
in a very limited way so so that
coverage will will will get more
expansive but obviously more expensive
as well and we did prevail on the
maternity coverage this year two guys
earn ourselves push the bill through to
make maternity coverage of basic
benefits so hi I'm Keith neva diamond
duel masters of Public Policy public
health I had a question you were talking
about out that your Blue Cross was in
favor of a stronger individual mandate
could you elaborate a little bit feel
01:08:13
I'm sorry blue kill not that I'm
sensitive you know 20 years in this job
but I love it i've done nothing i gave
you know yes we really believe that
unless you've got a strong individual
mandate that would mean that there would
be a pretty strong financial
disincentive not to enroll now we didn't
expect it to be you know five hundred
01:08:43
dollars a month but one hundred dollars
a year is hardly a disincentive for
young healthy people so we would have
argued that it would had to bend more
than that we didn't put a price tag on
it but what we said is that it had to be
substantial enough so that you were
making a tough decision when you made
the decision and we always knew that
this would be an uphill battle
politically but we thought it was
01:09:14
essential and we continue to think it's
essential so we would continue to
encourage Congress this is will two
deliveries point
this this will be continued as we go and
we will be back here two years from now
with a retrospective how'd this go and I
wouldn't be surprised that we will find
that the prices went up that there
wasn't a balance risk pool that insurers
dropped out and consequently that the
people in the pool or only the
01:09:45
subsidized folks and they're going to
have to redo certain aspects of the law
if they want to keep all of a much
richer set of players in the market
there's also how is that another element
to the mandate it's not just the penalty
but the exemptions from the mandate as
well for example people in jail or
exempt that's probably not a big deal
but but people who have to pay more than
eight percent of their income or
completely exempt from the penalty which
is a lot of vast swath of middle-income
people actually end up being exempt yeah
01:10:15
hi I'm Kathy McDonald have a question
about these folks who are sicker who are
going to be insured and who haven't
bubble yeah the ones who choose to be
ensure who have not been been insured
both from the sort of thinking about
state policy and thinking about private
insurance what what's sort of being
anticipated in terms of dealing with
that group to manage their costs you'd
mentioned well I try I guess the good
news is because we have been working all
01:10:45
health plans have been working very very
hard on the chronic disease management
side of our business primarily in
Medicare but also we've now driven it
down into the sicker portions of our
population even our CalPERS population
we know that one percent of CalPERS
members are thirty percent of our costs
so we know that the the sicker more
chronic care type people and these are
01:11:17
the kind of people that I think have
probably not been able to get any
coverage anywhere we do have programs
for them and those programs will get
better and better as we go through this
but we know that managing this
population is
be different than managing it's going to
be much much more like managing the
Medicare population than it has been
managing the individual population up
until now until now the individuals of
course have had the least health care
needs of our the populations we manage
01:11:47
and it'll be turned on its head once
this goes into effect stateside to that
yeah I would say there's um there-there
actually a lot of issues pickly public
health issues that I think have not been
fully dealt with for these groups for
example there there are state programs
that care for people with chronic
illnesses and there will be a lot of
fights about how those programs change
or how their funding gets cut as they
become less necessary probably the most
prominent is the Ryan White program for
01:12:18
people with with hiv/aids where that
program provides preventive services and
and community-based services but also a
lot of assistance with drug costs as
those people become eligible for
Medicaid or for private insurance that
that assistance isn't necessarily
necessary but there would be a lot of
resistance to cutting the funding as
well I'm pushing down here
thank you andreas virgin health research
for action being that the average
Californian reads at below an 8th grade
01:12:49
level what are you doing or are you
relying on the exchange to do most of
the outreach and communications to try
to help people understand what their
options are just advertised it is an
interesting approach that the exchange
is taking and I think this approach will
be one that other exchanges I don't
think it's I don't mean to say that it's
going to be unique to California but
they're taking on a very heavy lift that
we traditionally have been responsible
for which is enrolling the individual
01:13:23
communicating their benefits sending out
the initial information and the only
thing that we will be doing and this
isn't even absolutely certain but we
believe will be issuing the ID card so
in fact on that front end where we're
very much involved now in terms of
having the information going to the
enrollee now the question we have to ask
ourselves is how do we align with what
the state's doing and the state hasn't
you know they've not put their draft
01:13:57
booklets in front of us there their
draft website I mean they're they're in
the process of doing that but we're not
clear on how they're going to approach
it and what we want to do is align as
much as we can to support their approach
rather than confuse the consumer and you
know out of left field i just got
something from Blue Shield and I thought
I was dealing with the state and now you
know my enrolled or am I not enrolled we
have to do this in tandem and of course
they're going to be setting the rules as
01:14:26
to how we do it but those rules have not
been defined yet at least not at the
detailed level you need to make them
operational but we will again would
they've been great to work with
you know we talked them practically
every day we will continue to work with
them and try to design our materials as
for throws will design our portals and
they're probably some things that they
will ask us not to be engaged in and and
01:14:58
so will have to be obviously very
careful about those areas they want to
control the best thing we can do is make
sure our efforts are complementary oh hi
I'm Anne munos the californian program
and access to care I I was on a
conference call this afternoon with a
national organization on whole health
01:15:27
and we they discussed the fact that it
is possible that HHS will allow a
partial expansion of medical and I was
wondering if you have heard anything
about this well the short answer is no
hHS has been pretty clear up into now
and that they will not allow a partial
expansion and the issue here is that if
you remember my my table that the
Medicaid the Medicaid expansion is up to
01:15:58
one hundred and thirty-three percent of
the the poverty level the exchanges
start covering people at one hundred
percent of the poverty level so there's
some overlap and some states now that
the Medicaid expansion is voluntary have
said well what if we just expanded
Medicaid partially for example let's say
just up to one hundred percent of
poverty or even up to fifty percent of
the poverty so started to do a little
bit so far the the the Obama
administration has said that will not be
possible but as time goes by they
there's certainly some potential for
that them to soften as they see many
01:16:30
states not coming in that that would be
my guess is that if it were going to be
a partial expansion it would be it would
have to at least be to a hundred percent
they would get get covered in the
exchanges or a basic health plan that
could certainly be covered yeah through
that man hi um I have two unrelated
questions I'm I'm rona cousin I'm an
epidemiologist at UCSF um my question
01:17:07
Larry about what's going to happen to
some of the public health infrastructure
when when the affordable care act comes
into play it Brian White's a good
example because it pays not only for
direct provider services but it creates
a whole service infrastructure so how is
her so going to protect that
infrastructure from from cuts and the
same would apply to other categorical
programs and block grants like maternal
and child health it's not just a matter
01:17:39
of no that's service provision no
absolutely well I think you sort of have
a collision coming between the the
implementation of the Affordable Care
Act and the idea that all these people
will now be insured and therefore may
not need these services I mean that was
very true but as a presumption of that
and the deficit reduction the pressure
for deficit reduction in the need to cut
spending and I think it's going to be a
real challenge to maintain funding in
those programs and particularly programs
that serve people who aren't eligible
01:18:10
for example undocumented immigrants when
I was Massachusetts we had a program
that served pregnant and parenting
pregnant women up to two hundred percent
of the poverty level and then Medicaid
was expanded up to one hundred and
eighty-five percent of the poverty level
and everyone expected the caseload on
this program to drop dramatically will
it turns out it didn't because everyone
left were primarily undocumented
immigrants and what what that becomes
known it becomes very difficult to
maintain support for these programs in
the broader political system do other
01:18:43
things I would mention is is I mentioned
that it's part of the deficit reduction
debate there has been there have already
been dramatic cuts in discretionary
probe
which in most public health programs are
discretionary 1.7 trillion dollars over
over 10 years so these programs are
going to be under really severe caps
federally and it's it's it's just going
to be a challenge to maintain funding
for them time for two last questions
maybe one back there and one down here
hi my name is Steve del I'm a doc
01:19:15
anybody who's worked in any other
advanced industrialized country realizes
that along with a much lower percentage
of GDP spent on medical care the whole
way medicine is conducted is rather
different partly this is top-down
there's less money to be spent than
people adjust and partly this is
bottom-up people have a different
approach to medicine altogether yeah
Kaiser does a pretty good job with the
01:19:46
bottom-up approach in terms of
rationalizing how they deal with a host
of human illnesses is there going to be
any kind of attempt to do the same thing
or are we going to be left with what we
have today namely an army of adjusters
whose job it is to control an equal army
of claimants asking for this that and
01:20:17
the other thing well I couldn't speak
for the various armies more than 80 or
the Air Force but I would say this our
current philosophy apart from this on
payment is to kill fee-for-service
payment as far as we're concerned
billing more for widgets is the wrong
incentive and
I think what Kaiser does well is to say
01:20:48
either by salary or by some form of
capitation this is the amount of money
that we have to serve these patients and
there's lots of great ways to use that
money it's the approach we took in
building our accountable care
organization in Sacramento where we've
had a 0% trend for three years now and
tremendous customer satisfaction and and
we're doing the right things smothering
the people with care that need it and
not providing care to people that don't
01:21:19
need it so it can happen in the non
Kaiser system we are ourselves on a very
fast track to get our original goal was
20 we just have pushed it to 30
accountable care organizations across
California over the next two years I
don't know if we can get there it's a
very aggressive target and and frankly
their physician leadership on the ground
is the key to success and we've got to
01:21:52
find or help train the right physician
leaders otherwise not that the hospital
is not important and not to say that all
of the other constituents aren't
important but the key to this is
physician leadership that is going to
appropriately deal with you know being
willing to do the things that are the
right things for the patient and that
sometimes means nothing at all and
sometimes that as I suggested means if
necessary going to their house at two
01:22:26
o'clock in the morning so it is going to
be that kind of care system that we are
investing in others are approaching in
different ways other others of our
competitors they can speak for
themselves but I personally believe that
if we don't approach this in some
fashion like what I just described in
terms of organizing medicine differently
than the ability given all of the cost
pressures the ability to provide quality
01:22:58
health care to Americans is not very
high and I don't think making it a
national system when proved that
especially if it's based on
fee-for-service Barbara hi my name is
Barbara esses and I work for Alaska's
health center and I wanted to thank both
you both Kaiser and Blue Shield its blue
shield with the foundation and the gifts
that you've given to the safety net
without your gifts I think we would not
be able to serve the people that we
serve large proportion of our clients in
the safety net are undocumented workers
01:23:30
what do you perceive the future of that
safety net infrastructure to service the
capacity service continued to service
the immigrant undocumented population I
mean I'll start I I think it's very
tough you know once again similar to the
to ryan white or maternal and child
health programs we were talking about
once there's this presumption that kind
of everyone who who deserves insurance
so to speak has access to it maintaining
01:24:01
support for the safety net is going to
be is going to be very difficult and at
least historically you know it's selling
it on the basis of the the the services
that are being provided undocumented
immigrants has not been a winning
political strategy so so i think it's i
think it's tough and i think the other
thing is in Bruce talked about the
provider networks you know many of the
safety net providers are going to be
working very hard to try and get in the
networks that these private plans are
01:24:31
developing not only for the exchange but
obviously for for medi-cal as well and
they're going to be under the same
pressure to to to get to get revenues in
from from insured patients right but and
to me probably the best potential for a
for a funding stream for four people
were left out of the system particularly
undocumented immigrants is it is
essentially for for these these
providers and you would know better than
I would to to move money
to be able to get some revenues in from
01:25:02
the private paying side or the medical
side and then use those resources to
deal with people who can't pay hi I just
agree it's going to be very tough many
of these providers are getting some form
of revenue even if it's through
foundation grants or others to take care
of these folks they now because we all
know that one of the things we didn't
talk about we all know one of the other
huge challenges California is going to
have its physician capacity and medic
01:25:34
Medicaid in particular so if now medical
physicians can't fill up their practices
with patients who are fully covered
through the exchange it some of the
other programs they've been paid that
sometimes you're there and sometimes
aren't they're probably going to move
towards the programs that are
consistently making payments so I think
that does put us in a very tough
position with people that are
undocumented I I it's just one or more
01:26:06
of the issues incidentally the uninsured
that I commented on did not include the
undocumented so that's actually a bigger
number okay I know there's a few more
questions and you'll have an opportunity
to ask them we have a reception right
outside so please join us and join me in
thanking both of our speakers again
you