School Management and Labor Unions Together Are Attacking Escalating Healthcare Costs

Transcription

1 School Management and Labor Unions Together Are Attacking Escalating Healthcare Costs Ruben Ingram, Executive Director School Employers Association of California Jim Schlotz, Bargaining Specialist, California Teachers Association ion Cindy Young, Senior Membership Benefits Coordinator California School Employees Association California Education Coalition for Health Care Reform (A Joint Labor-Management Committee)

2 Pros and Cons of U.S. System Pros One of the Best systems in the world with technology and state-of of-the-art facilities Cons Fragmented and inefficient Spends more than any other country Massive uninsured, uneven quality, administrative waste

3 Health Insurance Coverage of the Nonelderly Population, 2003 Medicare, Medicaid Other Public 15% Private Non- Group 5% Uninsured 18% Employer- Sponsored 62%

4 Medicare Federal program for over 65 and some disabled individuals Single-payer program administered by the government Financed by federal income tax, employer and employee payroll taxes, and individual premiums No coverage for dental, hearing, or vision Seniors pay 22% of income above Medicare

5 Medicaid Program for low-income and disabled States administer the program 51 different programs (including D.C.) Jointly financed by state and federal taxes with matching funds from the federal (overall 57%)

6 Private Health Insurance Mainly employer-sponsored Administered by private companies For profit (e.g. Blue Cross, HealthNet, United/PacifiCare) Not-for profit (e.g. Blue Shield, Kaiser) Self-insured, but companies usually contract with a 3 rd party administrator

7 Individuals Private Non-Group Self-employed employed Retired No insurance through employer Individuals can be denied on pre-existing existing conditions Financed by individuals out-of of-pocket High risk pay more Low risk pay less

8 Financing U.S. Health Care System Collection of money (from) Employers, employees, individuals Reimbursements (to) Health care providers Two functions shared by insurance companies and government (payers) U.S. is a multi-payer system

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10 Employers, Employees, Individuals Taxes Income taxes Payroll taxes Premiums Employers pay largest share Employees pay remainder Individuals pay out-of of-pocket Employer and individual premiums are collected by private insurers Direct or out-of of-pocket to a provider (e.g. co-payment)

11 Government Medicare, Medicaid, S-CHIP S and VA Taxes to cover enrolled Public employees premiums Tax dollars to pay insurers premiums for federal, state, and local employees Tax subsidy (cost to government) Employees health benefits tax free Employers contributions pre-tax dollars

12 Private Insurers Accept premiums from employers, individuals and government Reimburse providers for enrolled

13 Health Service Providers Providers Doctors Allied health professionals Hospitals Other health care facilities Reimbursed for services (by) Private insurers Government Individuals

14 California Statistics Over six million Californians are uninsured (there are 35 million Californians) Only 6% of the uninsured are immigrants The uninsured are families that work hard, play by the rules, pay their taxes, and yet don t t get basic health coverage 80% of the uninsured are in working families Over 85% of the uninsured are either not offered or not eligible for health insurance from their employer 100,000 classified school employees in California do not qualify for district paid coverage

15 The Studies Confirm It: Healthcare costs continue to rise faster than wages The United States spends more per capita than other modern industrialized countries But what are we getting in terms of quality and accessibility?

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17 Per Capita Spending on Health Care 2002 (in U.S. dollars adjusted for purchasing power parity) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 $5,267 $3,445 $3,083 $2,931 $2,817 $2,643 2,517 U.S. Switz Norway Canada Germany Nether Sweden SOURCE: OECD. Health Data ,160 2,007 U.K. Japan

18 U.S. Leads the World Health spending per capita Infant Mortality Rate % of un-insured Low life expectancy According to the World Health Organization, the U.S. Health Care System Ranks 37 th in Overall Performance (right below Costa Rica)

19 When Other Countries Spend Less, Have Universal Coverage, and Have Better Health Outcomes, Why Is the U.S. So Different? we alone treat health care as a commodity distributed according to the ability to pay, rather than as a social service to be distributed according to medical need. -Executive Summary Physician s s Working Group for Single-Payer National Health Insurance

20 What Model Might Work? How About Medicare Part E We have a good model in place (current Medicare system) Lowest administrative rates Freedom of choice of physicians Capacity to volume purchase

21 Bringing It Home

22 District Revenue Growth & Health Care Cost Increases $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ Revenue Growth Health Increases Revenue Growth Based on School Services Dartboard Projections; Health Care Costs 12% Annually

23 Teacher s s Monthly Net COLA Salary Increases Each Yr over 6 Yrs $4,500 $4,400 $4,300 $4,200 $4,100 $4,000 $3,900 $3,800 $3,700 $3,600 $3,500 $3, Monthly Net Adjusted Net

24 Classified Monthly Net COLA Salary Increases Each Yr over 5 Yrs $2,500 $2,000 $1,500 $1,000 Monthly Net Adjusted Net $500 $

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26 Cost Increases: The Usual Suspects Aging population New technology Those darn trial lawyers! New wonder drugs Irresponsible consumers who use too much because they don t pay enough

27 Average charge per discharge by major health system in Northern California 35,000 30,000 25,000 $22,972 $28,928 $25,939 $22,432 $21,087 $29,196 20,000 $17,133 15,000 10,000 5,000 0 Adventist CHW Daughters HCA Other St. Joseph Average charges per discharge are adjusted for case mix and for differences in facility volume. Sutter

28 Information is Power We need to know Why residents of some communities are hospitalized at far greater rates than in other communities Why some providers charge so much more than their peers for similar services to similar patients Are variations in utilization based on legitimate differences in medical needs or on provider strategies to increase income

29 So What Do We Do About It? As the IWW Organizer Joe Hill said, Don t t mourn, organize!

30 The Organizing Begins Summer 2004, Center for Collaborative Solutions writes a grant proposal to the Federal Mediation and Conciliation Service (FMCS) Health care costs have been rising at an extraordinary rate while revenue increases for the operation of school districts have been falling due to the stagnant state and national economy. This has resulted in a crisis in negotiations between California school districts and the unions Labor-management relations are the most adversarial in recent years Without a statewide effort to find mutually satisfactory solutions, the individual school districts and their unions have little or no power to solve the problem at the local level.

31 Key Organizations Sign on from Both Sides California School Boards Association Association of California School Administrators California Association of School Business Officials School Employers Association of California California Teachers Association California Federation of Teachers California School Employees Association Service Employees International Union

32 First Meeting in December, 2004 Key Points settled: It s s too late to nibble around the edges It s s time to end the zero sum game, just fighting over who pays how much Format of the group Labor and management co-chairs chairs Decision making by consensus

33 What We Learned That the conventional wisdom is not what is driving double digit increases in health care SB 840 will provide health care for all school employees and save billions of dollars AB 256 School Pool study may bring short-term term relief We are paying too much for a product with no accountability from providers

34 Overall Goal The overall goal of the Education Coalition for Healthcare Reform is to significantly reduce the rate of increase in health care costs in public education to focus on Protecting and enhancing the quality of education for California students; Maintaining and increasing the real income of public education employees

35 Short-Term Goals Develop an education plan that provides centralized and joint information to districts, unions and consumers Insure transparency of providers Explore plan design changes that make sense We need to buy health care the way Wal- Mart buys its goods Build our market clout until we can demand, and get annual decreases in costs from our suppliers

36 The Coalition Is Preparing To: Provide education and information on cost and quality Provide training for district health benefit committees on industry best practices Advocate for reform through all state and federal bodies

37 Tool Box and Trainings Best Practices for District Insurance Committees Code of Conduct Model Contracts for Brokers and Consultants Advisories for Cash-Out Plans and HSAs Interview Guides for Insurers including Model Contract Data and Information for Local Regions and Areas

38 Intermediate Goals Promote value purchasing through the use of regional purchasing coalitions California Health Care Coalition

39 The California Health Care Coalition (CHCC)

40 CHCC s s Key Premises We must shift the bargaining dynamic from who will pay for rising costs to joint action against industry price gouging and poor quality care. Our greatest opportunity lies in combining our strength as purchasers to challenge excessive industry prices, high per patient costs, and deficient quality.

41 CHCC s s Strategy Organize purchasers Adopt common performance standards Negotiate collectively and directly with the industry to meet its standards or risk losing business Educate plan participants and the general public about our efforts to preserve affordable, quality health care

42 Long-Term Systemic Change Support a single payer plan Support a plan that provides health care for all school employees Support comprehensive health care that covers all citizens

43 Senate Bill SB 840 Senator Kuehl The California Health Insurance Reliability Act (CHIRA)

44 Consolidation of Administration The State of California establishes a benefit-rich health insurance plan to cover all residents There are now 10,000 20,000 public and private health insurance plans It costs 25 40% of every dollar spent on health care goes to administration (less money for health care) In other countries 5% - 10% goes to administration and 90% - 95% goes to health care CHIRA will save billions through reduced administrative costs in the first year!

45 Consolidation of Purchasing State becomes exclusive purchaser of Rx and durable medical equipment.$5.2 billion dollar savings in the first year Revenue neutral for the pharmaceutical industry. With expanded coverage, Rx industry will be expanded to 11 million Californians who now have no drug coverage.

46 Reliable, Affordable Coverage Eligibility - Is based on residency, instead of employment or income Affordable Coverage No New Spending on health care. The system is paid for by federal, state and county monies already being spent on health care. Instead of paying premiums, the Lewin Group estimates the following funding system: Employer payroll tax equal to approximately 8.17% of salaries paid. Employee payroll tax equal to approximately 3.78% of salary. A 1% income tax increase for incomes over $200,000. An additional 1% for incomes exceeding $1M per year. A 3.5% tax on unearned income. Financing is still being worked out however these estimates have been determined to be reliable for determining costs of a single payer system. Caps in Spending - Spending increase are tied to state GDP, population growth, and unemployment rates

47 High Quality Choice CHIRA allows consumers total freedom to choose personal primary care provider Freedom from Paper Medical providers no longer have to go to an HMO to ask for services for patients High Quality Proven financial incentives for doctors that support the delivery of high quality health care

48 What s s Covered? Benefits Hospital, medical, surgical, mental health, dental, vision, prescription drugs, medical equipment, emergency care, skilled nursing after hospitalization, hearing aids, health education.. A comprehensive benefits package!

49 Overall Savings CHIRA saves $8 billion in the first year State and local governments would save $900 million in the first year (state and local government workers and retirees) Aggregate savings to state and local governments from 2006 to 2015 would be $43.8 billion Employers who currently provide coverage would realize an average of a 16% savings compared to the current system

50 Summary There is hope! We need to get organized, raise our expectations, and change the way we do business with the healthcare industry We will be consulting with constituencies as we progress We will track what is working and what is not We will partner with other coalitions so we can create a 900 lb. gorilla to deal with the 800 lb. gorilla called our healthcare system We are in this for the long haul

51 Questions? Thanks!