Impact of National Health Care Reform on California`s Demand for

for Health
California Program on Access to Care
White Paper:
Impact of National Health Care
Reform on California’s Demand for
Health Professionals
Janet M. Coffman, MA, MPP, PhD
Philip R. Lee Institute for Health Policy Studies
University of California, San Francisco
[email protected]
• The Patient Protection and Affordable Care
Act (PPAC) present great opportunities and
great challenges for California
– Large increase in the number of Californians with
health insurance
– Authorizes additional funding for health workforce
– Compounds the workforce challenges facing
California’s health care organizations
California’s Health Workforce Challenges
Shortages of health professionals
Maldistribution of health professionals
Constraints on capacity of educational programs
New requirements for clinical doctorates in
some fields
• Scope of practice laws
• Reimbursement policies
• The recession
Individual Mandate
• Beginning in 2014, PPAC will
require most Americans to obtain
health insurance or pay a tax
Current Distribution of Californians by
Health Insurance Status
Source: Lavarreda et al., UCLA, 2010
Changes in Medi-Cal
• Eligibility expanded to include all non-elderly
adults and children in families with incomes
up to 133% of the Federal Poverty Level
• Expansion may begin as early as 2010 and
must begin in 2014
• An estimated 1.9 million more Californians
would be eligible in 2016 (Jacobs et al., 2010)
• Greatest impact on childless, non-elderly
Changes in Privately Purchased (i.e.,
Individual) Insurance
• A Temporary High Risk Pool will be established in
summer 2010 for persons with pre-existing
conditions who have been uninsured for at least
6 months (complements existing program)
• Beginning in 2014 insurers will be
– Required to offer coverage to all persons regardless of
health status
– Prohibited from excluding pre-existing conditions or
charging higher premiums to persons who have them
Changes in Privately Purchased (i.e.,
Individual) Insurance
• Requires states to establish health insurance
exchanges by 2014
• Provides subsidies to persons in families with
incomes between 133% and 400% of poverty for
purchase of coverage through an exchange
• An estimated 4.7 million Californians will be
eligible to purchase coverage through the
exchange in 2016 (Jacobs et al., 2010)
– 2.5 million eligible for subsidies
– 2.2 million eligible for unsubsidized coverage
Changes in Employment-based
• Greatest impact on small employers
– Beginning in 2010, employers with ≤ 25 FTE
employees with average wage ≤ $50,000 will also
be eligible for tax credits
– Beginning in 2014, firms with < 100 employees
may purchase coverage through an exchange
– An estimated 3.8 million Californians would be
affected in 2016 (Jacobs et al., 2010)
Changes in Employment-based
• Effects on large employers
– Beginning in 2014, penalties charged to firms with
> 50 employees that do not offer health insurance
whose employees are eligible for subsidies for
purchase of coverage through the exchange
– Beginning in 2018, tax on “Cadillac” health plans
Changes in Medicare
– No changes in eligibility
– Some modest changes in premiums for
coverage of physician services and
– Establishes office within CMS to coordinate
Medicare and Medicaid benefits for dual
Increasing the Number of Californians
with Health Insurance Will
Increase Demand for Care
• Multiple studies have found that persons with
health insurance use more health care
services than persons who are uninsured
• Greatest differences in use
– Preventive services
– Physician visits
– Prescription drugs
Sources: Freeman et al, 2008; IOM, 2009
Reduction in Cost Sharing Will
Increase Demand for Care Among
Some Persons with Health Insurance
• Some persons who purchase coverage
through an exchange will face lower
deductibles, coinsurance, and/or copayments
• Insurers will be required to cover preventive
services recommended by the US Preventive
Services Task Force without cost sharing
• Multiple studies have found that reducing cost
sharing increases use of health care services
Sources: Faulkner and Schauffler, 1997; Goldman et al., 2007; Newhouse, 1993
Lack of Assistance for
Undocumented Immigrants Will
Attenuate the Increase in Demand
• The PPAC does not require undocumented
immigrants to obtain health insurance and
does not improve their access to insurance
• An estimated 18.9% of uninsured Californians
are undocumented immigrants (Jacobs, et al.,
• Undocumented immigrants rely heavily on
safety net providers for care
Option to Pay a Penalty May Limit the
Increase in Persons with Health
Insurance and Demand for Care
• Some persons subject to the individual mandate
may choose to pay a fine rather than buy
• The maximum fine (2.5% of taxable income) will
be lower than the cost of health insurance
• Persons who choose to remain uninsured
– will demand less care
– may delay seeking care until health problems become
Impact of Major Changes in Medicare
Reimbursement is Uncertain
• PPAC will reduce annual updates in Medicare
reimbursement rates for multiple types of
• Restructuring payments to Medicare Advantage
plans will have a greater impact on California
than most states because 34% of Medicare
beneficiaries in California are enrolled in these
plans (Kaiser State Health Facts, 2010)
• Reductions in Medicare and Medicaid
disproportionate share payments will have large
effects on safety net hospitals’ revenue
Incentives for Changing the Delivery
System are Modest
• PPAC authorizes the Centers for Medicare and
Medicaid Services to test innovations in
reimbursement (e.g., bundled payment, medical
home) but it is unclear whether these
demonstration projects will be taken to scale.
• Many delivery system reform initiatives (and
workforce initiatives) will be subject to annual
appropriations – may be difficult to secure
adequate funding in an era of increasing concern
about the deficit.
Implications for California’s Health
Workforce Needs
• Increase in demand for all types of health
• Greatest increases in demand among health
professionals who provide preventive, primary
care, and disease management services
– Primary care providers
– Laboratory personnel
– Imaging personnel
– Pharmacists and pharmacy technicians
Implications for California’s Health
Workforce Needs
• Increase in demand for health professionals
will vary across California
– The percentage of the population that is
uninsured is greatest in inner city and rural areas
– Many of these areas had shortages of health
professionals before PPAC was enacted
– Impact attenuated in some of these areas due to
high percentages of undocumented immigrants
Implications for California’s Health
Workforce Needs
• Increase in demand for health professionals
may vary across organizations providing care
– Many persons who will be newly insured currently
obtain care from safety net providers
– Some will remain uninsured
– Unclear whether those who obtain health
insurance will shift to other providers
– Cuts in Medi-Cal and Medicare disproportionate
share payments may limit safety net hospitals’
demand for health professionals
Implications for California’s Health
Workforce Needs
• Effects on the manner in which health
professionals are utilized may be small
– Most innovations in reimbursement and models
of care are limited to grants and demonstration
– PPAC does not address state scope of practice

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