Health Care Reform and Coverage by niusheng11


									Health Care Reform
  and Coverage

Montana HealthCare Forum
        Liz Fowler
       June 9, 2010
• Impact of Reform on Health Coverage in the U.S.
• Non-Group Market
• Employer Market
   – Small employers
   – Large employers
• Medicaid & CHIP
• Special Populations and Topics
   –   Medicare beneficiaries
   –   Native Americans
   –   Libby, MT
   –   Long term care
• Impact of Health Reform on the Federal Budget
           Health Care Coverage Today
                Sources of Coverage for Non-Elderly
           Non-group & Other
            27 million (10%)
                                                                          150 million (56%)

     50 million (18.7%)

            Medicaid & CHIP
            40 million (15%)

Source: Congressional Budget Office, Score for PPACA and Reconciliation (March 20, 2010).     3
                Health Care Coverage
              Under Health Reform (2019)
                Sources of Coverage for Non-Elderly
           24 million (8.5%)

      Non-group & Other
                                                                          159 million (56%)
        25 million (9%)

      22 million (7.8%)

           Medicaid & CHIP
           51 million (18%)

Source: Congressional Budget Office, Score for PPACA and Reconciliation (March 20, 2010).     4
                                     Change in Sources of Coverage
                                         Under Health Reform
Number Covered (in millions)

                               100                                                       Medicaid & CHIP
                               80                                                        Non-group & Other
                               60                                                        Exchange
                                     2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Congressional Budget Office, Score for PPACA and Reconciliation (March 20, 2010).                  5
 Near-Term Insurance Market Reforms
• Access to Coverage:
   –   Temporary high risk pool for uninsured individuals with pre-existing conditions
   –   Temporary program to reduce premium costs for early retirees (55-64)
   –   Extend coverage for young adults up to age 26
   –   Eliminate pre-existing condition exclusions for children under 19
   –   Prohibit rescissions
• Improved Benefits:
   – Eliminate lifetime dollar limits on coverage and restrict annual dollar limits
   – New plans must cover preventive services without cost sharing
   – Choice of certain health care professionals (e.g., primary care physician) and
     protections for people using emergency services
• Transparency and Accountability:
   – Insurers must meet minimum loss ratios and rebate excessive administrative
     costs back to consumers
   – Insurers must disclose and justify unreasonable rate increases
   – Standard explanation of coverage
   – New web portal to shop for coverage options
   Insurance Market Reforms in 2014
• Access to Coverage:
   – Insurers must make coverage available to individuals without regard to health
     status or medical history (i.e., guarantee issue)
   – Premiums cannot vary by health status – only by age (but limited), geography,
     family size and tobacco use
   – Eliminate pre-existing condition exclusions and limit waiting periods
   – Tax credits to help low- and moderate-income people buy coverage
   – Individual responsibility for most people to have coverage
   – New options through the national plan, CO-OPs and inter-state insurance
• Improved Benefits:
   – Coverage for essential health benefits in the individual and small group market
     and new plans in the group market
   – Limits on out-of-pocket costs
• Transparency and Accountability:
   – Exchanges established to enable individuals and small groups to shop for
   – Plans with excessive premium increases can be prohibited from offering
     coverage through the Exchanges
      Premium Tax Credits for Individuals
• In 2014, advance-able and refundable tax credits and cost sharing
  assistance will help individuals purchase coverage through the
• Credits are available on a sliding scale for individuals and families
  with income up to 400% of the Federal poverty level
    – Calculator:
• Additional cost sharing assistance is available to individuals and
  families up to 250% of poverty
• Tax credits will be paid directly to the insurance company through
  the Exchange on behalf of an individual or family
    – OR, taxpayers can purchase insurance through the Exchange with their own
      funds and claim the credit on their tax return
• If and individual or family opts to receive the tax credit in advance,
  the credit will initially be calculated based on income for the tax
  year ending two years prior to the enrollment period
    – i.e., credit for 2014 determined in 2013 based on 2012 return
                 Individual Responsibility
Beginning in 2014, individuals must have health insurance or face a penalty

                                                                                  Annual Cap
                    • Flat Dollar Amount*:                                         Total penalty
Penalty is the        $95 / $495 / $695 in 2014 / 2015 / 2016 OR                cannot exceed the
 greater of…        • Percent of Income:                                            cost of the
                      1% / 2% / 2.5% in 2014 / 2015 / 2016                      cheapest premium
                                                                                 in the Exchange
                      * Adjusted by family size

              Exceptions to the Individual Responsibility Requirement
 No Mandate                                          No Penalty
 Religious conscience (based on Medicare and IRC)    Unaffordable (premiums >8% of income)
 Immigrants not lawfully present in the U.S.         Income below tax filing threshold
 Incarcerated Individuals                            American Indians
 Those who meet minimum essential coverage           Those without coverage less than 3 months
 automatically (Medicare, Medicaid, TRICARE, CHIP,
 VA, employer, individual, grandfathered)
  Top Five Benefits of Health Reform
           to Small Business
1. Small Business Tax Credits

2. Accessibility through Health Insurance Exchanges

3. More Predictable Premiums

4. New Options for Quality Coverage

5. Transparency and Accountability

 Small Business Health Care Tax Credit
• Starting this year, small businesses with fewer than 25 employees and
  average annual wages less than $50,000 can qualify for tax credits if
  they contribute at least 50 percent of the total premium cost of health
  insurance for their employees
    – Employers can claim the credit for dental and vision benefits in addition
      to health insurance premiums
    – Employers can claim state health tax credits and other subsidies without
      having their federal health care tax credit reduced
    – Sliding scale credit with the full credit available to employers with 10 or
      fewer employees and average annual wages of $25,000 or less
• In 2010-2013, the small business tax credit is worth up to 35% of an
  employer’s contribution to employee plan (25% for non-profit firms)
• Beginning 2014, small businesses can receive tax credits for two years
  worth up to 50% of an employer’s contribution to employee plan
  (35% for non-profit firms)
   Small Business Health Option Program
• Beginning in 2014, small businesses with up to 100 employees will
  have access to state-based Small Business Health Options Program
  (SHOP) Exchanges
• These Exchanges will include web portals that provide standardized,
  easy-to-understand information to make comparing and purchasing
  health care coverage easier for small business employees and
  reduce the administrative hassle that small businesses currently
  face in offering plans
• Small businesses that grow beyond the upper employee limit in the
  SHOP Exchange will be able to continue to purchase health
  insurance through the Exchange
• States can expand the Exchanges to businesses with more than 100
  employees beginning in 2017

    Other Benefits to Small Business
• Employer Responsibility Exempts Small Firms
   – Employers with fewer than 50 employees are exempt from any
     employer responsibility policy – that means 96% of all firms in the U.S.
     are exempt (or 5.8 million out of 6 million total firms)
• Simplifies Cafeteria Plans for Small Businesses
   – Establishes a new employee benefit cafeteria plan for small businesses
     to ease the rules governing traditional cafeteria plans so that small
     businesses can more easily provide tax-free benefits to their
• Reviews the Impact of Reform on Small Businesses
   – Requires the Government Accountability Office (GAO) to specifically
     review the impact of Exchanges on access to affordable health care for
     small businesses to ensure that Exchanges are indeed making a
     difference for small business owners

               Large Employers:
         Priorities for Health Reform
• Creating Greater Consumer Value in the Health Care Marketplace
   – Adoption of interoperable health IT and delivery system reform
   – Greater transparency of cost and quality information for consumers
• Providing More Affordable Health Insurance Options for All
   – Continuation of employer-based health coverage
   – Minimal changes to ERISA
   – More competitive insurance marketplace including sale of insurance
     across state lines
• Placing an Obligation on All Americans To Have Health Insurance
• Offering Health Coverage and Assistance to Low-Income
  Uninsured Individuals and Families
             Employer Responsibility:
             Busting Common Myths
Fact: Employers with fewer than 50 FTEs are not required to provide
      coverage and not subject to a penalty.
Fact: Employers are not required to offer health coverage per se, but if
      they do not provide coverage and their workers use federal tax
      credits, then they must pay a ‘free rider’ penalty.
Fact: Penalties do not apply to part-time workers (although the
      calculation of FTE includes part-time workers).
Fact: Employers that do offer coverage are not required to meet the
      definition of “essential health benefits” and are not required to
      subsidize a certain proportion of the premium.
Fact: Employers offering coverage that is deemed ‘unaffordable’ may
      pay a penalty if workers use federal tax credits.
Fact: Employers are not responsible for keeping track of which
      employees have health insurance for purposes of meeting the
      individual requirement.
      Premium Impact of Health Reform
                                                      Individual    Small Group Large Group
                                                       Market         Market      Market
Differences in Average Premiums Compared
to Current Law Due to:
• Amount of Insurance                                 +27 to +30        0 to +3        Negligible
• Price of Insurance                                   -7 to -10        -1 to -4       Negligible
• Types of People with Insurance                       -7 to -10        -1 to +2         0 to -3
Total Difference Before Accounting for Subsidies     +10 to +13        +1 to -2         0 to -3
Effect of Subsidies
• Share of People Receiving Subsidies                    57%             12%              N.A.
• For Those Receiving Subsidies, Difference in        -56 to -59       -8 to -11          N.A.
  Average Premiums Paid

Source: Congressional Budget Office, Letter to Senator Bayh (D-IN) on the Impact of the Senate Health
Reform Bill on Insurance Premiums (November 30, 2009).
NOTE: These estimates do not include additional funding ($10 billion) added to small business tax
credits , additional funding for individual premium tax credits, or other changes made to the
Senate bill after 11-30-2009.                                                                    16
                         Medicaid & CHIP
 States must maintain current Medicaid and CHIP eligibility levels for kids
  until September 30, 2019 but will see a 23 percentage point increase in
  CHIP match rates from 2016 through 2019
 States must maintain current Medicaid eligibility levels for adults until
  January 1, 2014
   — Exception: States experiencing a budget deficit or expected to be in deficit can scale
     back eligibility levels for non-pregnant, non-disabled adults to 133% FPL prior to 2014
 Beginning in 2014, Medicaid will expand to cover non-elderly individuals
  below 133% FPL ($14,400 for an individual, $29,300 for a family of 4)

                       FMAP for Newly Eligible Medicaid Beneficiaries

                     2014 - 2016                          100%
                         2017                             95%
                         2018                             94%
                         2019                             93%
                  2020 and beyond                         90%
Impact of Health Reform on Medicare
•   Savings generated in the program by health reform will extend Medicare solvency
    by 12 years and reduce Part B premiums
•   Coverage in the Part D “donut hole”:
     – This year, seniors will receive a $250 rebate check if they hit the “donut hole”
     – In 2011, seniors will receive a 50% discount on brand-name drugs in the gap
     – In 2013, provides even more coverage for brand-name drugs and begins
        coverage for generics in the gap , and closes the gap completely by 2020
•   Promotes prevention and wellness by eliminating cost sharing for preventive
    benefits and providing an annual wellness visit in Medicare beginning in 2011
•   Increased funding for the State Health Insurance Assistance Program (SHIPs) and
    other community outreach programs
•   Delivery system reforms will focus provider payments on quality of care rather
    than quantity of care, improved care coordination and chronic care management,
    and reduction in hospital readmissions and hospital acquired infections
•   Promotes primary care in Medicare by giving primary care physicians a 10% bonus
•   Eliminates overpayments to private insurance companies in the Medicare
    Advantage program while retaining participation in rural areas and providing
    bonuses to plans that deliver high quality care and good customer service
               Impact on Medicare
           According to the CMS Actuary
                      Pros                                              Cons
• The Medicare Trust Fund will remain       • Medicare cuts may not be politically
  solvent for 12 more years because of the    sustainable over time
  health reform bill (from 2017 to 2029)
                                              – RESPONSE: The payment cuts in
• Medicare beneficiaries will see a             health reform represent
  reduction in Part B premiums of $192          approximately 6% of total Medicare
  per person or $384 per couple in 2018         spending - compared to cuts
  due to reform (and total premium              representing 12% of Medicare
  savings of $847 per person or $1,694 per      spending made by the Balanced
  couple for 2011-2018)                         Budget Act of 1997. And even after
                                                the two Medicare ‘give-back’ bills
• Medicare beneficiaries will also see          that followed the BBA, cuts were
  lower cost sharing: $133 savings for Part     still more, as a proportion of total
  A services and $691 savings for Part B        Medicare spending, than the cuts
  between 2011 and 2018                         in health reform.

Source: CMS Office of the Actuary, Estimated Financial Effects of the Patient Protection and
Affordable Care Act, as amended (April 22, 2010)                                               19
             Impact of Health Reform
               on Native Americans
• Reauthorizes the Indian Health Care Improvement Act
• Indians are subject to the individual responsibility requirement to
  purchase coverage but are exempt from the penalty
• No cost-sharing required for health care services provided to Indians
  at or below 300% FPL whether in public or Exchange coverage
• Facilitates enrollment in public programs by making tribes Express
  Lane agencies
• Continued payment for all Medicare Part B services furnished by IHS
• Tribal governments are included in all councils and boards, as well as
  references to local government
• Health services and coverage provided by a tribe to a tribal member
  is tax free to the member
       Health Coverage for Libby, MT
• Allows individuals affected by environmental health hazards to be
  eligible for Medicare. In order to be eligible:
   1) For Libby, an individual must be diagnosed with an asbestos-related
      medical condition and, at least ten years prior to such diagnosis, lived
      – for a total of at least six months – in an area where a public health
      emergency has been declared, or
   2) For future hazard areas, an individual must be diagnosed with a
      medical condition caused by a public health hazard that triggered a
      public health emergency declaration and has been present in the
      affected area for a total of six months
• Provides grants to providers to screen at-risk individuals who may
  have been affected by health hazards which triggered a public
  health emergency declaration
• Creates a Medicare pilot program to provide further supports and
  services to individuals affected by environmental health hazards
                         Long Term Care
•   New, voluntary program for long term services and supports (LTSS)
•   Participants pay monthly premiums and after a five-year vesting period
    become eligible for a lifetime cash benefit
•   Participants’ premiums can be automatically deducted from their payroll
    and collected in a trust fund to pay out future benefits
•   The cash benefit can be used for qualifying individuals with disabilities to
    pay for LTSS that allow them to maintain independence at home or in the
Other Long Term Care Provisions
•   Expansion of Home and Community Based Services (HCBS) option under
    Medicaid to make it easier for states to provide long term care services in
    a home setting instead of a nursing home
•   Community First Choice Option to make HCBS available to patients in an
    institution and others who qualify for long term care services and
     Effect of Health Care Reform
         on the Federal Deficit

Source: CBO presentation to the World Health Care Congress (April 12, 2010).
Impact on National Health Expenditures
    According to the CMS Actuary

                     Pros                                              Cons
• By 2019, health spending will be                • National health spending on health
  growing at a lower rate under health              care will increase by $311 billion over
  reform compared to pre-reform (6.9%               the next ten years
  between 2018-2019 compared to 7.1%
  without the new law)                                  – RESPONSE: But considering that
                                                          national health spending was $2
• By 2019 health spending per person                      trillion last year and will be $30
  will be 10% less per insured person                     trillion over the next ten years, an
  than it would have been if reform had                   increase of $311 billion only
  not passed ($15,132 compared to                         represents one-tenth of one
  $16,812 without the new law)                            percent of total spending
• The public and private share of total
  health spending will remain roughly
  the same as it was pre-reform

Source: CMS Office of the Actuary, Estimated Financial Effects of the Patient Protection and
Affordable Care Act, as amended (April 22, 2010).                                              24
             What’s NOT in Health Reform
MYTH: Health Reform amounts to a government takeover of the health care system
    FACT: Health reform builds on our current public-private system and maintains the current balance
    between government and private spending. And health reform does not include a public option.
MYTH : Health Reform will lead to rationing of health care and medical decisions made by
government bureaucrats
    FACT: Health reform maintains the doctor-patient relationship and, in fact, will provide better information
    to both doctors and patients about available treatment options and the effectiveness of different
    procedures and services.
MYTH : “Death panels” are buried in the fine print of the new health reform law
    FACT: The final legislation does NOT include any provisions regarding payment to Medicare providers for
    voluntary end-of-life counseling.
MYTH: Health reform cuts Medicare benefits and will harm seniors
    FACT: Health reform strengthens Medicare by closing the coverage gap in prescription drug benefits (the
    “donut hole”), adding prevention and wellness benefits, improving quality and extending the life of the
    Medicare trust fund by 10 years.
MYTH : Illegal immigrants will benefit from health reform
    FACT: Immigrants who are not lawfully present in the U.S. are barred from receiving tax credits for health
    coverage or Medicaid and are prohibited from purchasing coverage through the Exchange.
MYTH : Federal taxpayer dollars will subsidize abortion
    FACT: Health reform preserves current law that prohibits federal funding of abortion except in limited
    circumstances by requiring plans that offer abortion services to segregate premium payments for this
    coverage from other health coverage. The law also permits states to prohibit plans participating in the
    Exchange from providing abortion coverage.
MYTH : Failure to buy health insurance will result in jail time
    FACT: The health reform law explicitly prohibits incarceration for failing to purchase insurance.

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