Grace-Marie Turner's May 15, 2013 presentation at the Medicaid and Government Pricing Congress.

1. Health Reform:
Where we are now.
Impact on Pharma.
Medicaid and Government Pricing Congress
May 15, 2013
Grace-Marie Turner
Galen Institute

2. Americans agreed on goals for health reform
The U.S. needs health reform to:
– make coverage more affordable
– assure quality, and
– expand access to insurance
Most people rate their own coverage as
good or excellent
They want stability. Change was for
others.
www.galen.org

3. But many say the ACA changes too much
40% view the law unfavorably
35% of Americans now view the
Affordable Care Act favorably
Cost continues to be the biggest
concern
www.galen.org
Kaiser Health Tracking Poll, April 2013 http://kff.org/health-reform/poll-finding/kaiser-health-tracking-
poll-april-2013/

5. The Red Tape Tower

6. Source: Sarah Kliff, “Is ObamaCare too much work for the Obama administration?” The Washington Post, November 12, 2012,
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/12/is-obamacare-too-much-work-for-the-obama-administration/.
An ACA State Exchange

7. NOTE: Don’t know/Refused answers not shown.
SOURCE: Kaiser Family Foundation Health Tracking Poll (conducted March 5-10, 2013)
Majority Say They Don’t Understand How
ACA Will Impact Them, Including Two-Thirds
of Uninsured and Low-Income
Do you feel you have enough information about the health reform law to understand how it will impact you
personally, or not?
30%
33%
41%
68%
67%
57%
Household income less than $40,000
Uninsured (under age 65)
Total
Yes, have enough information No, do not have enough information

9. Source: Avik Roy, “Fact-Checking the Obama Campaign's Defense of its $716 Billion Cut to Medicare,” Forbes: The Apothecary, August 16, 2012,
http://www.forbes.com/sites/aroy/2012/08/16/fact-checking-the-obama-campaigns-defense-of-its-716-billion-cut-to-medicare/.
The health law in one graph

10. Source: “Health Reform Poses Biggest Challenges to Companies with the Most Part-Time and Low-Paid Employees,” Mercer LLC, August
8, 2012, http://www.mercer.com/press-releases/1472805.
Employers implementing workforce changes
w Mercer study on what employers expect

11. Employers and health coverage
1. Employers with <50 FTE EE’s have no
3k/2k penalty
2. But employers offering qualified and
affordable coverage may actually be
hurting their employees
Example

12. Generous Subsidies in
ExchangesExamples:
A person earning $42,000 a year with a family
of 4 qualifies for $14,759 in new health
insurance subsidies
A single person earning $20,600 qualifies for
$5,156 in new health insurance subsidies
But only if employer doesn’t offer coverage or if
it’s not “affordable” (ie costs >9.5% of income)
www.galen.org

13. Cost of Insurance, Family of 4

15. Impact of new rating rules
James T. O’Connor, Milliman, for America’s Health Insurance Plans. Comprehensive Assessment of ACA Factors That Will Affect Individual Market
Premiums in 2014. http://www.ahip.org/MillimanReportACA2013/ Accessed 4-26-13

16. How to qualify for subsidies
Source: Sen. John Cornyn, Facebook, March 22, 2013,
http://www.facebook.com/photo.php?fbid=10151499130834424&set=a.112318184423.92543.75755694423&type=3&l=83fcd3ca01&permPage=1

17. www.galen.org
Medicaid and the states

18. Health Insurance Coverage of
the Nonelderly Population, 2011
266.4 Million
SOURCE: KCMU/Urban Institute analysis of 2012 ASEC Supplement to the CPS.
Private Non-
group 5.7%

19. Source: Avalere State Reform Insights, Updated April 22, 2013
*AR is proposing to use Medicaid funds to pay for premium assistance through exchanges, pending federal approval;
TN has indicated interest in expansion

20. Key issues facing Pharma
Medicaid expansion
Drug rebates expanded to Duals
Success of coordinated care for duals
Supply chain integrity
Accountable Care Organizations
Drug benefits in the new Exchanges
Government’s ability to pay its bills
www.galen.org

21. Source: Kaiser Family Foundation. www.kff.org

22. SOURCE: Kaiser Family Foundation analysis of the Bureau of Labor Statistics Consumer Expenditure Survey Interview and Expense Files, 2002-
2009, “Health Care on a Budget, The Financial Burden of Health Spending by Medicare Households, An Updated Analysis of Health Care Spending as a
Share of Total Household Spending,” June 2011.
Health Insurance
Spending
Prescription
Drug Spending
Average Health Insurance and Prescription Drug
Spending As a Share of Total Household Spending
by Medicare Households, 2002-2009

23. Part D: Many see it as a model
The Congressional Budget Office said that
spending for the prescription drug benefit
declined by nearly 40% compared to initial
estimates of its 10-year cost
It is saving seniors money as well. The average
monthly drug premium is about $30, far below
the $53 forecast originally.

24. Federal spending as a % GDP

25. www.galen.org
Some realities:

26. States have a big role
Seeking ways improve their markets
Enhanced competition and more choices
of affordable coverage
Medicaid expansion or other state-based
options such as Florida Health Choice
Plus
ACA implementation
www.galen.org

27. What we know for sure
• CHOICE: Americans value innovation, diversity
and choice to accommodate 300 million people
• VALUE IN HEALTH SPENDING: Break down
payment silos to realize the promise of
personalized medicine and achieve cost saving
• FOCUS ON THE PATIENT: Doctors and
patients, not government, should make health care
decisions

28. A market-based solution
“Defined contributions” for health coverage
A system that puts doctors and patients in charge of
medical decisions
Slowing spending while preserving choice and quality
Restructuring financing for a 21st century health
sector
• Medicare
• Medicaid
• Private Insurance

29. www.galen.org
Health insurance market

30. 2013 questions
Will Exchanges be ready by Oct 1?
Will there be bi-partisan support for delay?
Will people enroll after they see the cost?
Will the number of uninsured be higher as
people understand guaranteed issue?
Will private exchanges fill a market need?
www.galen.org

31. The future?
The global move toward
consumerism is real, driven
by greater patient demand
for more control over
decisions.
People will seek more
affordable options outside
the ACA’s centralized
control.

32. Grace-Marie Turner
Galen Institute
703-299-8900
gracemarie@galen.org
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