California Teachers California Teachers AssociationAssociation

UCLAUCLA

Health BenefitsHealth Benefits

August 2008August 2008

Where is Health Care at Where is Health Care at Today?Today?

State EffortsState Efforts

Massachusetts is failingMassachusetts is failing

AB X 11 went down in AB X 11 went down in flames last yearflames last year

1.1. No cost containmentNo cost containment

2.2. Required Californian’s Required Californian’s to purchase health to purchase health insurance with no insurance with no cost controlscost controls

3.3. Affordability ?Affordability ?

Health care debate Health care debate will move will move nationallynationally

Their FrameTheir Frame

Utilization is upUtilization is up

Unhealthy lifestylesUnhealthy lifestyles

MalpracticeMalpractice

Aging populationAging population

Or, put another Or, put another way:way:

““You’re old, fat and You’re old, fat and expensive!expensive!

““If you didn’t over If you didn’t over utilize the health utilize the health care system, it care system, it wouldn’t cost so wouldn’t cost so much!much!

Utilization is UpUtilization is Up

People don’t choose to People don’t choose to go into the hospital:go into the hospital:

Doctors determine Doctors determine medical needmedical need

Insurance Companies Insurance Companies approve itapprove it

It’s simple – It’s simple – Price x’s utilization=Price x’s utilization=

The cost of health careThe cost of health care

MalpracticeMalpractice

Quote from Congressional Budget Office:Quote from Congressional Budget Office:

"But even large savings in premiums can "But even large savings in premiums can have only a small direct impact on health have only a small direct impact on health care spending - private or governmental - care spending - private or governmental - because malpractice costs account for because malpractice costs account for less than 2 percent of that spending”less than 2 percent of that spending”

Source: Congressional Budget Office, “The Long-Term Outlook for Health Care Spending”, November 2007

Aging of US Population Aging of US Population Explains Only Minor Part of Explains Only Minor Part of

Cost GrowthCost Growth

Projections of National Health Projections of National Health Expenditures and Their Share of Gross Expenditures and Their Share of Gross

Domestic Product, 2006-2017Domestic Product, 2006-2017

2,245.62,394.3

2,555.1

3,097.8

3,523.6

4,007.8

2,105.5

4,277.1

3,757.0

3,305.0

2,905.12,725.8

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2006* 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

*2006 are actual data from the 2006 National Health Expenditure Accounts; 2007-2017 are projected data from the 2006 National Health Expenditure Accounts.

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/03_NationalHealthAccountsProjected.asp#TopOfPage (see Projected; NHE Historical and projections, 1965-2017, file nhe65-17.zip) and http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2006; file nhegdp06.zip).

NHE as a % of GDP:

Dollars

in

Billion

s

16.016.0 16.316.3 16.616.6 16.916.9 17.117.1 17.417.4 17.717.7 18.018.0 18.418.4 18.818.8 19.119.1 19.519.5

Per Capita Spending on Health Per Capita Spending on Health Care – 2006Care – 2006

(How Does GM Compete In A Global Market?)(How Does GM Compete In A Global Market?)

SSource: Organization for Economic Co-Operation and Development (OECD) Health Data 2006(in U.S. dollars adjusted for purchasing power parity)

$6,102

$4,077 $3,966$3,165 $3,159 $3,041

2,8252,2492,546

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

U.S.

Switz

Nor

way

Cana

da

Germ

any

Net

her

Swed

en

U.K.

Japa

n

Average Annual Firm and Worker Premium Average Annual Firm and Worker Premium Contributions and Total Premiums for Covered Contributions and Total Premiums for Covered

Workers for Single and Family Coverage, by Plan Workers for Single and Family Coverage, by Plan Type, 2007Type, 2007

* Estimate of Total Premium is statistically different from All Plans estimate by coverage type (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2007.

$3,311

$3,659

$2,856

$3,281

$3,588

$8,568

$3,920

$9,207

$3,709

$7,929

$3,347

$7,837

$3,785

$8,824

$694

$522

$628

$717

$711

$3,236

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

Single

Family

Single

Family

Single

Family

Single

Family

Single

Family

Worker ContributionFirm Contribution

HDHP/SO

HMO

PPO

POS

ALL PLANS

$3,869*

$12,106

$4,299

$11,879

$4,638$12,44

3

$4,337

$11,588

$4,479

$10,693*

Among Firms Offering Health Benefits to Among Firms Offering Health Benefits to Active Workers, Percentage of All Large Active Workers, Percentage of All Large Firms (200 or More Workers) Offering Firms (200 or More Workers) Offering Retiree Health Benefits, 1988-2007*Retiree Health Benefits, 1988-2007*

66%

46%

36%40% 40% 40%

35% 37% 36% 38% 36%33% 35% 33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1988 1991 1993 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

*Tests found no statistical difference from estimate for the previous year shown (p<.05). No statistical tests are conducted for years prior to 1999.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2007; KPMG Survey of Employer-Sponsored Health Benefits, 1991, 1993, 1995, 1998; The Health Insurance Association of America (HIAA), 1988.

What we have to look forward What we have to look forward toto

International Foundation of Employee International Foundation of Employee Benefits Plans 07-16-08Benefits Plans 07-16-08

““Shifting Costs to Dependents: Shifting Costs to Dependents: As employers As employers struggle with making their health care budget struggle with making their health care budget dollars stretch further in an environment of dollars stretch further in an environment of continued high costs, some are beginning to cost-continued high costs, some are beginning to cost-shift a portion of their shift a portion of their dependent subsidy dependent subsidy dollars dollars to employees. This is taking many forms, whether to employees. This is taking many forms, whether through increased payroll contributions for through increased payroll contributions for dependent health care coverage or by applying dependent health care coverage or by applying surcharges to encourage dependent spouses to surcharges to encourage dependent spouses to take coverage under their own employer's plans.”take coverage under their own employer's plans.”

What we have to look forward What we have to look forward toto

The Wall Street JournalThe Wall Street Journal July 16, 2008July 16, 2008 Retiree Benefits Take Another HitRetiree Benefits Take Another Hit By Vanessa Fuhrmans and Theo FrancisBy Vanessa Fuhrmans and Theo Francis

““General Motors Corp.'s move to General Motors Corp.'s move to eliminate retiree health eliminate retiree health benefitsbenefits for salaried workers is a for salaried workers is a sobering signalsobering signal to the rest to the rest of the U.S. work force: Even those who are in or near of the U.S. work force: Even those who are in or near retirement shouldn't count on keeping the company retirement shouldn't count on keeping the company coverage they have built up”.coverage they have built up”.

Health Care For America Health Care For America NowNow

(The Committee for What’s Politically (The Committee for What’s Politically Possible)Possible)

Unions, faith based organizations, Unions, faith based organizations, community organizationscommunity organizations

There will be tremendous pressure to:There will be tremendous pressure to: Agree to an individual mandate (it will be Agree to an individual mandate (it will be

called shared responsibility)called shared responsibility) A small employer contribution (it’s $295 A small employer contribution (it’s $295

per person per year for employers in Mass)per person per year for employers in Mass) Marginalize supporters of real reformsMarginalize supporters of real reforms

Health Care Health Care ExecutivesExecutives

H. Edward HanwayH. Edward Hanway Cigna Cigna $15,036,700$15,036,700

Michael McCallisterMichael McCallisterHumanaHumana $29, 298,568$29, 298,568

Larry Glasscock Larry Glasscock WellpointWellpoint $21,677,134$21,677,134

Jay GellertJay GellertHealthNetHealthNet $3,875,444$3,875,444

Stephen Hemsley Stephen Hemsley UnitedHealthUnitedHealth $4,258,717$4,258,717

Source: Modern Health Care- December 2007

Should we have a solution that Should we have a solution that includes insurance companies?includes insurance companies?The states five largest HMOs stockpiled reserves The states five largest HMOs stockpiled reserves

totaling $3.15 billion ($2.2 billion more than totaling $3.15 billion ($2.2 billion more than needed to meet DMHC requirements)needed to meet DMHC requirements)

Wellpoint (Blue Cross) 2007 Profits -$3,094.9 Wellpoint (Blue Cross) 2007 Profits -$3,094.9 million million

Kaiser (not for profit) $12 billion in excess reservesKaiser (not for profit) $12 billion in excess reserves United Health (PacifiCare) – 2007 Profits - $4,159 United Health (PacifiCare) – 2007 Profits - $4,159

millionmillion HealthNet 2007 Profits - $329.3HealthNet 2007 Profits - $329.3 Blue Shield (not for profit) –Reserve is 5 times Blue Shield (not for profit) –Reserve is 5 times

higher than required by the DMHChigher than required by the DMHC

We should not “Surrender in We should not “Surrender in Advance!”Advance!”

Why have incremental reforms Why have incremental reforms proven so ineffective in proven so ineffective in

practice?practice?

““You Can’t Cross a Chasm in You Can’t Cross a Chasm in Small Steps” – David Lloyd Small Steps” – David Lloyd

GeorgeGeorge

Cornerstones Of Our Democracy Cornerstones Of Our Democracy

1848 – First Women’s 1848 – First Women’s Rights Convention held in Rights Convention held in Seneca Falls, New York – Seneca Falls, New York – Nineteenth Amendment Nineteenth Amendment Passed by Congress June Passed by Congress June 4, 1919.  4, 1919.  Ratified August 18, Ratified August 18, 1920.1920.  

1831 Nat Turner leads a 1831 Nat Turner leads a slave revolt in Virginia – slave revolt in Virginia – 1964 Civil Rights Act is 1964 Civil Rights Act is enactedenacted

Late 1940s – 50s Late 1940s – 50s Congress debates Congress debates Medicare – Signed into Medicare – Signed into law July 30, 1965law July 30, 1965

20?? – The great nation 20?? – The great nation of America provides of America provides health insurance to allhealth insurance to all

Something to Ponder…Something to Ponder…

We have publicly funded military to We have publicly funded military to protect usprotect us

We have publicly funded police and We have publicly funded police and fire to keep us safefire to keep us safe

We have publicly funded education to We have publicly funded education to provide education to all childrenprovide education to all children

Why don’t we have publicly funded Why don’t we have publicly funded health care to provide health care to health care to provide health care to all?all?

What should we do?What should we do?

Get our chapters educated and Get our chapters educated and involvedinvolved

Fully participate in the Single Payer Fully participate in the Single Payer Strategy GroupStrategy Group

Fully join the Labor Task Force for Fully join the Labor Task Force for Universal Health CareUniversal Health Care

Conduct Speaker Trainings so we get Conduct Speaker Trainings so we get bigger and betterbigger and better

Have vision and strengthHave vision and strength